CITY COUNCIL REGULAR MEETING AGENDA 9-15-26

36 Outstanding Indebtedness The City has the following outstanding long-term debt related to its Water System. 2015 SRF Loan. In June 2015, the City entered into an agreement with the California State Water Resources Control Board for State Revolving Fund project financing in the amount of $19,875,720 to fund the City of Pleasanton Recycled Water Project. The loan is secured by and payable solely from net revenues from the ownership or operation of the City’s Water Enterprise. The agreement also requires that the City maintain and fund a separate account in an amount equal to one year of debt service. The City satisfied the debt service requirement by maintaining $438,935 in restricted cash balance. The agreement was amended in September 2015 to reduce the project funding to $11,317,177. The project was completed in October 2016 and the City had drawn a total of $11,088,917. The loan bears annual interest of 1.0 percent, and principal and interest payments are due October 31 of each year. The outstanding balance on June 30, 2026, was $8,200,805. The note is secured by a lien on and pledge of the Water Enterprise Fund, net water revenues and any water reserve fund on parity with the Installment Payments. In addition, the agreement contains a subjective acceleration clause that allows the lender to accelerate payment of the entire principal. 2024 Water Revenue Bonds. In May 2024, the City and the Authority entered into an installment sale agreement under which the City is obligated to make installment payments to the Authority. These installment payments constituted “Revenues” pledged under an indenture, pursuant to which the Authority issued its 2024 Water Revenue Bonds, which have an outstanding principal balance as of June 30, 2026 of $16,605,000. Repayment of the installment payments is secured by a pledge of the “Net Revenues” of the Water System. Funds and Reserves The City currently maintains separate funds for the Water System. Each of these funds is treated as a separate accounting entity but are consolidated for rate setting. The Water Operating Fund is the main operating fund of the Water System. The fund is used to pay for all operating and maintenance costs for the Water System. The fund is also used for ongoing capital and replacement projects as budgeted each year. The Water CIP Fund is used for specific capital improvement projects that were budgeted in past years. Each year, the City sets aside the full cost of capital improvements approved that year by transferring money from the Water Operating Fund to the Water CIP Fund. The Water CIP Fund typically carries a significant balance that is reserved for the remaining costs of projects approved in prior years but still under construction. The Water Connection Fees Fund was established to record connection fees that are paid by developers to connect new services to the water system, and are used to fund improvements and expansion of the water system to accommodate new development. The fees also cover the incremental cost of future expansion and improvements necessary to accommodate new developments. The City’s fiscal policies and fiscal practices provide as follows, among other things: Page 246 of 318