CITY COUNCIL REGULAR MEETING AGENDA Tuesday, February 17, 2026 7:00 PM City Council Chamber 200 Old Bernal Avenue Pleasanton, CA 94566 The meeting will be held in-person, broadcast live on Channel 29 and streamed live for viewing at the following links TV30 https://www.tri-valleytv.org, the City's website in the Meetings portal (a red dot will indicate a live meeting) https://www.cityofpleasantonca.gov/, and the City's YouTube channel: https://www.youtube.com/user/TheCityofPleasanton. Public participation: It is requested that members of the public wishing to address the City Council submit a speaker card. When public comment is opened on an agenda item, individuals may speak once per agenda item. To submit written public comment regarding an open session item on this meeting agenda visit https://forms.cityofpleasantonca.gov/f/writtenpubliccomment. Comments will be accepted by the City Clerk’s Office until 12:00 p.m. on the day of the Council meeting. In Person at Council Chamber: Submit a physical speaker card to the City Clerk at the meeting. When your name is called, please provide comment at the podium. CALL TO ORDER • Welcome and Pledge of Allegiance - Cm. Nibert Resolution No. 2026-003 • Roll Call Ordinance No. 2304 REPORT ON CLOSED SESSION AGENDA AMENDMENTS CONSENT CALENDAR Items listed on the consent calendar are considered routine in nature and may be enacted by one motion. If discussion is required, that particular item will be removed from the consent calendar and will be considered separately. City Manager 1. Approve meeting minutes of February 3, 2026 Finance 2. Accept the monthly disbursements and investment report for December 2025 Public Works Page 1 of 1443. Authorize the City Manager to enter into a subdivision improvement agreement with Robson Homes, LLC for Tract 8631 and adopt a Resolution of Summary Vacation for a public service easement located at 475 Saint John Street MEETING OPEN TO THE PUBLIC 4. Public Comment regarding items not listed on the agenda – Speakers are limited to 3 minutes. PUBLIC HEARINGS AND OTHER MATTERS If necessary to ensure completion of the following items, the Mayor may alter time limits. 5. Accept the FY 2025/26 Mid-Year Budget Update report including a presentation on the General Fund forecast, and adopt a resolution approving FY 2025/26 budget amendments 6. Receive the financial plan analysis for the 2026 sewer rate study and approve Implementation Scenario 1 - Maintain MATTERS INITIATED BY COUNCIL COUNCIL REPORTS Brief reports on conferences, seminars, and meetings attended by the Council CITY MANAGER UPDATES ADJOURNMENT Notice Under Government Code §54957.5, any writings/documents regarding an open session item on this agenda and items received by the City Clerk’s Office by 12:00 p.m. on the day of the meeting provided to a majority of the City Council after distribution of the agenda packet will be available for public inspection on the City’s website https://www.cityofpleasantonca.gov/ and also at the Pleasanton Library located at 400 Old Bernal Ave., Pleasanton, CA 94566. There is a 90-day limit for the filing of a challenge in the Superior Court to certain City administrative decisions and orders, which require a hearing by law, the receipt of evidence, and the exercise of discretion. The 90-day limit begins on the date the decision is final (Code of Civil Procedure § 1094.6). Further, if you challenge an action taken by the City Council in court, you may be limited, by California law, including but not limited to Government Code §65009, to raising only those issues you or someone else raised in the public hearing, or in written correspondence delivered to the City Council prior to or at the public hearing. The City Council may be requested to reconsider a decision if the request is made prior to the next City Council meeting, City Council Agenda Page 2 of 3 February 17, 2026 Page 2 of 144regardless of whether it is a regular or special meeting. Accessible Public Meetings The City of Pleasanton can provide special assistance for persons with disabilities to participate in public meetings. To make a request for a disability-related modification or accommodation (e.g., an assistive listening device), please contact the City Clerk’s Office at 123 Main Street, Pleasanton, CA 94566 or (925) 931-5027 at the earliest possible time. If you need translation or interpretation assistance, please provide at least two working days’ notice prior to the meeting date. City Council Agenda Page 3 of 3 February 17, 2026 Page 3 of 144 Item #1 CITY OF PLEASANTON CITY COUNCIL MINUTES Tuesday, February 3, 2026 7:00 PM CALL TO ORDER Mayor Balch called the Regular Meeting of the City Council to order at the hour of 7:00 p.m. from the Council Chamber located at 200 Old Bernal Avenue. ROLL CALL Present: Councilmembers Eicher, Gaidos, Nibert (teleconference), Testa, Mayor Balch Absent: None. AGENDA AMENDMENTS None. CONSENT CALENDAR Mayor Balch opened public comment. There being no speakers, Mayor Balch closed the public comment. MOTION: It was m/s by Councilmember Eicher/Councilmember Gaidos to approve the consent calendar as recommended. Motion passed by the following vote: Ayes: Councilmembers Eicher, Gaidos, Nibert, Testa, Mayor Balch Noes: None Absent: None City Manager 1. Approve meeting minutes of January 13, 2025 and January 20, 2025 Recommendation: Approve meeting minutes of January 13, 2025 and January 20, 2025. Library and Recreation 2. Authorize the City Manager to enter into the second amendment to the services agreement with Folger Graphics for Activities Guide and City Newsletter printing services in an amount not to exceed $51,525 until November 30, 2026, for a total amount not to exceed $411,829 City Council Minutes Page 1 of 4 February 3, 2026 Page 4 of 144 Recommendation: Authorize the City Manager to enter into the second amendment to the services agreement with Folger Graphics for Activities Guide and City Newsletter printing services in an amount not to exceed $51,525 until November 30, 2026, for a total amount not to exceed $411,829. Public Works 3. Accept public improvements performed by Sierra Nevada Construction, Inc., for the Annual Slurry Sealing of Various Streets Project, CIP No. 25504, and approve a budget amendment to return $83,939 to the Gas Tax Fund Recommendation: 1. Accept the project as complete and authorize the City Clerk to file a Notice of Completion. 2. Authorize release of the retention in the amount of $14,743 to Sierra Nevada Construction, Inc., 30 days after the recordation of the Notice of Completion. 3. Approve a budget amendment to return the project’s unused balance of $83,939 to the Gas Tax fund balance (Fund 160). MEETING OPEN TO THE PUBLIC 4. Public Comment regarding items not listed on the agenda – Speakers are limited to 3 minutes. Mayor Balch opened public comment. The following individuals provided comment: Herb Hastings, Jan Coleman-Knight, Huiling Song, Cindi Sabatini, Linda Kelly, Kathryn Stroud, and Brian Jenkins. Mayor Balch closed the public comment. PUBLIC HEARINGS AND OTHER MATTERS 5. Receive an update on the Regional Groundwater Facilities Improvement Project – Phase 1 Feasibility Study Results Recommendation: Receive an update on the Regional Groundwater Facilities Improvement Project – Phase 1 Feasibility Study Results. Presentation by Siew-Chin Young, Public Works Director, and Todd Yamello, Utilities Planning Manager. Mayor Balch opened public comment. There being no speakers, Mayor Balch closed the public comment. City Council Minutes Page 2 of 4 February 3, 2026 Page 5 of 1446. Receive an update on stakeholder engagement and provide direction on a potential Transient Occupancy Tax (TOT) measure on the November 2026 ballot Recommendation: 1. Direct staff to proceed with development of a Transient Occupancy Tax ballot measure for the November 2026 election; 2. Provide direction on a target rate of 12 percent, with phased implementation (10 percent effective July 1, 2027; 12 percent effective July 1, 2028); and 3. Authorize staff to return with draft ballot language for City Council consideration. Presentation by Melinda Denis, Deputy Director of Community and Economic Development. Mayor Balch opened public comment. The following individuals provided comment: Tim Howard. Mayor Balch closed the public comment. MOTION: It was m/s by Councilmember Nibert/Councilmember Testa to approve the item to proceed with developing the measure with phased implementation and to return with draft ballot language for City Council consideration. Motion passed by the following vote: Ayes: Councilmembers Eicher, Gaidos, Nibert, Testa, Mayor Balch Noes: None Absent: None 7. Consider developing a policy for evaluation of development-related General Plan amendments and re-zoning requests Recommendation: Direct staff to develop a policy for evaluation of development-related General Plan amendments and re-zoning requests. Presentation by Ellen Clark, Community Development Director. Mayor Balch opened public comment. There being no speakers, Mayor Balch closed the public comment. MOTION: It was m/s by Councilmember Testa/Councilmember Eicher to approve development of a policy for early review and direction on discretionary property re-zone requests to be considered by the City Council for future consideration and adoption. Motion passed by the following vote: Ayes: Councilmembers Eicher, Gaidos, Nibert, Testa, Mayor Balch Noes: None Absent: None City Council Minutes Page 3 of 4 February 3, 2026 Page 6 of 144 Councilmember Nibert left the meeting at 10:14 p.m. MATTERS INITIATED BY COUNCIL Councilmember Testa requested a discussion on alternatives for mitigating downtown vacancies. The City Council agreed that the item could be part of the planned City Council workshop in March. COUNCIL REPORTS Councilmembers reported on regional and local meetings attended. CITY MANAGER UPDATES The City Manager provided informational updates on the community and organization. ADJOURNMENT Mayor Balch adjourned the meeting at 10:35 p.m. ______________________ Jocelyn Kwong, City Clerk City Council Minutes Page 4 of 4 February 3, 2026 Page 7 of 144 Item #2 CITY COUNCIL AGENDA REPORT February 17, 2026 Finance TITLE: ACCEPT THE MONTHLY DISBURSEMENTS AND INVESTMENT REPORT FOR DECEMBER 2025 SUMMARY Attached is the City of Pleasanton monthly disbursement and investment report for December 2025. RECOMMENDATION Accept claim disbursements in the amount of $22,712,218 and the investment report for the month of December 2025. BACKGROUND The City's Investment Policy requires the Director of Finance to submit a monthly transaction report to the City Council within 60 days of the end of the reporting period in accordance with California Government Code Section 53607. The Investment Policy also requires the Director of Finance to submit a quarterly report to the City Council on the status of the City's investment portfolio no later than 45 days after the end of each month. This report shall include the types of investments, the amount of money invested with various institutions, purchase and maturity dates, and yield on investments. The Director of Finance certifies that the investment portfolio complies with the investment policy and will meet cash flow needs for the next six months. This report also includes check and electronic payment information for December 2025. DISCUSSION The book value of the City of Pleasanton primary investment portfolio increased by $20.7 million from $229.4 million to $250.1 million during the quarter ending December 31, 2025. This increase was mainly due to revenue from property tax. The fiscal year-to-date effective rate of return on the portfolio was 2.13 percent. The average days to maturity (ADM) decreased from 497 days on September 30, 2025, to 427 days on December 31, 2025. Local Agency Investment Fund The City's investment in the Local Agency Investment Fund (LAIF) increased to $56.5 million from $35.6 million last quarter ending September 30, 2025. The quarterly LAIF apportionment interest rate was 4.20 percent with ADM of 244 days. The average monthly effective yield was 4.03 percent in December, 4.10 percent in November, and 4.15 percent in October. As of December 31, 2025, approximately 34.1 percent of the total portfolio consisted of Federal Agency Securities, while the LAIF Investment was 22.6 percent of the portfolio. Corporate Notes accounted for 13.7 percent of the portfolio, Treasury Securities 25.0 percent, Page 1 of 7 Page 8 of 144Government Money Market and Cash 1.8 percent, Supranationals 1.6 percent, Asset-Backed Securities 1.0 percent, and Certificates of Deposit 0.2 percent. • Fair Market Value of total portfolio — $249,507,864 • Fiscal year-to-date effective rate of return — 2.13 percent • Weighted average days to maturity – 427 days • Fiscal year-to-date net interest earnings — $2,522,826 Asset Composition As of December 31, 2025, the effective rate of return is 2.13 percent. Page 2 of 7 Page 9 of 144The effective fiscal year rate of return on the portfolio was 2.13 percent, an increase of 0.70 percent from 1.43 percent from last quarter and an increase of 0.39 percent from 1.74 percent reported at the same time last year. As reported previously, the Federal Reserve (the Fed) had been raising interest rates since March 2022 but halted rate increases in July 2023. With the recent rate cut of 0.25 percent in December 2025, the Federal Funds Rate target range was lowered to 3.5 percent to 3.75 percent. Some of the securities in the City’s investment portfolio were purchased before the rate hikes, resulting in a lower investment return. The purchases and sales during the quarter were aimed to rebalance the portfolio, with the goal of achieving higher investment returns over time. As of December 31, 2025, the entire portfolio, exclusive of CDs and LAIF, was held in third- party safekeeping for the benefit of the City of Pleasanton at Bank of New York Mellon. Bank of New York Mellon is a contractual agent for the City. As of December 31, 2025, all investments in the portfolio are authorized by State of California Government Section 53600 et. seq., and the City's investment policy. Securities rated below "AA-/AA3" Page 3 of 7 Page 10 of 144 Purchases, Maturities, and Sells During the quarter, the City's investment manager, Chandler Asset Management, purchased a number of securities on behalf of the City. Several securities were also sold/matured as presented in the tables below. Certain securities were sold at a loss with the intent of reinvesting the funds with higher yields, as these securities were purchased before COVID with much lower yields. Staff will continue to monitor cash inflows and outflows, taking into consideration anticipated construction costs for large capital projects and unexpected events. Below is a list of all the trades that occurred during the quarter ending December 31, 2025. Section 115 Trust Fund In December 2018, the City Council approved the investment of $28.0 million of various reserves into a Section 115 Trust Fund to help smooth the pension liabilities, which are expected to grow in the long run. The investment is made in two separate portfolios: the first for $6.7 million in a Conservative portfolio which is available to pay the annual unfunded liabilities if necessary, and the second for $21.3 million in a long-term Capital Growth portfolio. Page 4 of 7 Page 11 of 144In February 2020, the City Council authorized Finance staff to deposit, and withdraw from, the Conservative portfolio an additional amount up to the total annual required CalPERS payment. In March and December 2020, two additional $5.0 million contributions were deposited into the Conservative portfolio for a total of $16.7 million deposited into the Conservative portfolio. As presented in the chart below, the Conservative portfolio balance was $21.6 million at the end of December 31, 2025, an increase of $0.3 million from the prior quarter. The Conservative portfolio investment return for the quarter ended December 31, 2025 was 1.42 percent, and the five-year annualized return was 3.87 percent. The second portfolio (Capital Growth) addresses the longer-term pension liabilities with an initial investment of $21.6 million. The focus of this portfolio is to earn a higher rate of return over the next 10 years or so before the City needs to draw upon it. Page 5 of 7 Page 12 of 144 The Capital Growth portfolio balance was $38.4 million at the end of December 31, 2025, an increase of $0.9 million from the prior quarter. The Capital Growth portfolio quarterly investment return was 2.33 percent, and the five-year annualized return was 7.90 percent. The two portfolios total $60.0 million, which are held by a third party for the benefit of the City of Pleasanton at US Bank. US Bank is the contractual agent for PARS trust investments that are managed by PFM Asset Management (formerly Highmark Capital Management). EQUITY AND SUSTAINABILITY Not applicable, as this item is a routine administrative matter of City business. OUTREACH No outreach was conducted, as this item is a routine administrative matter of City business. STRATEGIC PLAN ALIGNMENT Not applicable, as this item is a routine administrative matter. Page 6 of 7 Page 13 of 144FISCAL IMPACT There is no fiscal impact associated with acceptance of this report. Prepared by: Submitted by: Approved by: Minh Nguyen, Junior Susan Hsieh, Director of Finance Gerry Beaudin, City Accountant Manager Attachments: 1. Disbursements & Investment Report Page 7 of 7 Page 14 of 144 Attachment 1 December 2025 DISBURSEMENTS CHECK REGISTER* DATE CHECK NUMBER AMOUNT 12/4/2025 84139-84325$ 5,860,720 12/11/2025 84340-84473 2,701,210 12/19/2025 84486-84643 1,188,978 12/26/2025 84650-84666 2,088,207 $ 11,839,114 ACH PAYMENTS DATE CHECK NUMBER AMOUNT 12/4/2025 84118-84138 $ 2,623,286 12/11/2025 84326-84339 3,103,773 12/19/2025 84474-84485 248,308 12/26/2025 84644-84649 137,237 Payroll & Tax Related ACH Payments 880,688 $ 6,993,293 WIRE TRANSFERS DATE AMOUNT 12/11/2025 Escrow Fee for Low Income Housing Assistance Program$ 40,000 $ 40,000 PAYROLL TRANSFERS DATE AMOUNT 12/10/25$ 1,882,157 12/23/25 1,957,653 $ 3,839,810 TOTAL DISBURSEMENTS $ 22,712,218 * Detailed registers available upon request. Page 15 of 144 Portfolio Snapshot December 31, 2025 Sector Allocation 1.0% Certificates of Deposit - Bank 1.6% 0.2% Portfolio Characteristics LAIF 22.6% 32.9% Government Money Market & Cash Total Market Value $249,507,864 1.8% Medium Term Notes Effective Rate of Return 2.13% Treasury Securities 13.7% Federal Agency Issues - Coupon Average Days to Maturity 427 Federal Agency Issues - Callable 1.2% 25.0% Supranationals *Based on Market value Asset Backed Securities Maturity Distribution Assigned Credit Ratings of Investments 5.0% 180,000,000 LAIF 22.6% 160,000,000 65.2% FDIC 140,000,000 120,000,000 Cash & Money Market Funds 100,000,000 0.2% A 80,000,000 1.8% AA 60,000,000 10.0% 40,000,000 15.6% AAA 20,000,000 9.4% 8.6% 1.2% - 60.4% 0-1 Yrs 1-2 Yrs 2-3 Yrs 3-4 Yrs 4-5 Yrs Page 16 of 144CITY OF PLEASANTON Account Report for the Period PARS Post-Employment Benefits Trust 12/1/2025 to 12/31/2025 Susan Hsieh Director of Finance City of Pleasanton 123 Main Street Pleasanton, CA 94566 Account Summary Balance as of Balance as of Source 12/1/2025 Contributions Earnings Expenses Distributions Transfers 12/31/2025 PENSION - Short Term 1075 $21,507,224.52 $0.00 $83,524.00 $5,901.56 $0.00 $0.00 $21,584,846.96 PENSION - Long Term 1076 $38,259,343.75 $0.00 $136,634.72 $10,591.91 $0.00 $0.00 $38,385,386.56 Totals $59,766,568.27 $0.00 $220,158.72 $16,493.47 $0.00 $0.00 $59,970,233.52 Investment Selection Source PENSION - Short Term City of Pleasanton PENSION - Long Term City of Pleasanton - Capital Growth Investment Objective Source PENSION - Short Term Individual Custom Account PENSION - Long Term Individual Custom Account Investment Return Annualized Return Source 1-Month 3-Months 1-Year 3-Years 5-Years 10-Years Plan's Inception Date PENSION - Short Term 0.39% 1.42% 7.39% 7.26% 3.87% - 6/21/2018 PENSION - Long Term 0.36% 2.33% 15.63% 14.63% 7.90% - 6/21/2018 Information as provided by US Bank, Trustee for PARS; Not FDIC Insured; No Bank Guarantee; May Lose Value Past performance does not guarantee future results. Performance returns may not reflect the deduction of applicable fees, which could reduce returns. Information is deemed reliable but may be subject to change. Investment Return: Annualized rate of return is the return on an investment over a period other than one year multiplied or divided to give a comparable one-year return. Account balances are inclusive of Trust Administration, Trustee and Investment Management fees Headquarters - 4350 Von Karman Ave., Suite 100, Newport Beach, CA 92660 800.540.6369 Fax 949.250.1250 www.pars.org Page 41 of 144 MALIA M. COHEN California State Controller LOCAL AGENCY INVESTMENT FUND REMITTANCE ADVICE Agency Name PLEASANTON Account Number As of 1/15/2026, your Local Agency Investment Fund account has been directly credited with the interest earnedon your deposits forthe quarter ending 12/31/2025. EarningsRatio 0.00011512010685708 Interest Rate 4.20% Dollar Day Total $ 3,403,526,907.22 Quarter End Principal Balance $ 56,500,000.00 Quarterly Interest Earned $ 391,814.38 Page 42 of 144 Item #3 CITY COUNCIL AGENDA REPORT February 17, 2026 Public Works - Engineering Division TITLE: AUTHORIZE THE CITY MANAGER TO ENTER INTO A SUBDIVISION IMPROVEMENT AGREEMENT WITH ROBSON HOMES, LLC FOR TRACT 8631 AND ADOPT A RESOLUTION OF SUMMARY VACATION FOR A PUBLIC SERVICE EASEMENT LOCATED AT 475 SAINT JOHN STREET SUMMARY Robson Homes, LLC processed a development application for a mixed-use subdivision that includes 14 single-family lots, one commercial lot, and three common area parcels at 475 Saint John Street. The 2-acre property is located in downtown Pleasanton on the north side of Saint John Street, south of the Arroyo del Valle Creek. The site was previously occupied by Barone’s Restaurant, which has since been demolished, and grading improvements have started. The proposed “Saint John” development includes a two-and-a-half-story detached single- family home with zero side setbacks, as well as two single-story retail/commercial buildings with a plaza and parking lot. All units are accessible from a private road, Barone Lane, located off Saint John Street. Staff reviewed the final map for Tract 8631, improvement plans, and the Subdivision Improvement Agreement, and found the documents to be in substantial conformance with the requirements of the entitlement approvals. Staff therefore recommends approval of these documents. With the development, the improvements conflict with a portion of a public service easement (PSE) granted to the City in 1976. The existing PSE is ten feet wide, beginning along the Saint John Street frontage and continuing north along the western side of the property, terminating at the north, where the property abuts Arroyo del Valle Creek. This PSE must be vacated by the City to accommodate the approved development. A replacement PSE will be granted with the recording of Tract Map 8631. RECOMMENDATION 1. Authorize the City Manager to execute the Subdivision Improvement Agreement with Robson Homes, LLC (Attachment 1). 2. Authorize the City Engineer to approve the final map (Attachment 2) and improvement plans for Tract 8631. 3. Authorize the City Clerk to record the final map with the Alameda County Clerk- Recorder, including the acceptance of a public service easement for utility services, a public water line easement for water services, as well as an easement for emergency vehicle access, all as offered for dedication to the City on the final map. 4. Approve the Resolution of Summary Vacation for the PSE (Attachment 4) to be Page 1 of 4 Page 43 of 144 vacated. BACKGROUND Robson Homes, LLC processed a Design Review Approval and Vesting Tentative Map 8631 pursuant to the application filed as P21-1173 for the 2.06-acre property located at 475 Saint John Street. See Attachment 3 for the vicinity map. Public hearings were conducted as follows. BOARD/COMMITTEE/COMMISSION ACTION On October 23, 2024, the Planning Commission approved the Design Review and Vesting Tentative Map 8631 entitlements. COUNCIL ACTION On January 9, 2025, the City Council adopted Resolutions Nos. 2025-001 and 2025-002, thus approving the entitlements and Vesting Tentative Map 8631. DISCUSSION Approval of the final map for Tract 8631, where the map substantially complies with the conditions of approval for the vesting tentative map, is a ministerial act by the City Council, as per California Government Code Section 66474.1. The developer provided surety bonds in conformance with California Government Code Section 66499. Submitted surety bonds assure both the developer’s performance and payment for labor and materials. The agreement also requires the developer to guarantee completed improvements for a period of one year. The on-site sanitary sewer and storm drainage networks, as well as the private roads and common areas, will be owned and managed by a homeowners association (HOA). A public water main extends into the subdivision, metering each home and commercial building within easements dedicated to the City. The private road will accommodate emergency vehicle access and provide space for utilities (electricity, gas, and telecommunication services). Staff reviewed the final map, improvement plans, and Subdivision Improvement Agreements, and found the documents to be in substantial conformance with the requirements of City Council Resolutions Nos. 2025-001 and 2025-002, and the associated conditions of approval. Staff therefore recommends approval of these documents. The complete set of Improvement Plans for Tract 8631 is provided as Attachment 5 and is available for public review via a Laserfiche web link, due to file size. California Streets and Highways Code § 8330 et seq. establishes the procedure by which the City may vacate a public easement. This process requires formal notice to all parties that may benefit from the easement. The beneficiaries of the public service easement (PSE) proposed for vacation include utility providers operating within the City of Pleasanton, such as PG&E, AT&T, Comcast, and others. When an easement has not been utilized for its intended purpose, state law allows the City to use a simplified “summary” vacation process. Under this process, easement beneficiaries are afforded the opportunity to protest the proposed vacation. The City provided formal notice to each potential easement beneficiary requesting confirmation of any objection to the proposed PSE vacation. No objections were received within the prescribed response period. Page 2 of 4 Page 44 of 144 As the City’s legislative body, the City Council is authorized to summarily vacate public easements that are no longer necessary or relevant. The PSE granted by Instrument No. 76- 99334 qualifies for vacation because planned improvements will occupy the easement area, and no public utility facilities currently exist within the easement. Adoption of the Resolution of Summary Vacation for the public service easement (Attachment 4), together with the recordation of Tract Map 8631, effectuates the removal of the existing PSE and the dedication of a replacement PSE. CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) City Council Resolution No. 2025-001 confirmed, under CEQA Guidelines Section 15183 (Consistency Checklist), that no additional environmental review is required because the development application is consistent with the General Plan and Zoning and will not have site-specific impacts. EQUITY AND SUSTAINABILITY Not applicable, as this item is an administrative matter of City business. OUTREACH Approval of the development application involved public hearings before both the Planning Commission and City Council. Condition of Approval 27 of Resolution No. 2025-001 requires the subdivider to notify neighbors within 300 feet of the project site of the construction schedule. Notification letters were sent to easement beneficiaries, as required by California Streets and Highways Code §8335(b)(5). No easement beneficiary submitted an objection to the proposed PSE vacation. STRATEGIC PLAN ALIGNMENT Approval of this action advances the ONE Pleasanton strategic goal of Building a Community Where Everyone Belongs. FISCAL IMPACT The proposed project is anticipated to result in limited additional long-term operation, maintenance, and replacement costs to the City compared to the existing condition. On-site sanitary sewer and storm drainage facilities, as well as private roads and common areas, will be privately owned and maintained by an HOA or other private entity and will not become a City responsibility. The project includes public water infrastructure that will be owned and maintained by the City. Ongoing operation, maintenance, and future replacement costs associated with public water facilities will be addressed through the City’s established water enterprise fund and incorporated into future water rate analyses, consistent with standard City practice. No other public infrastructure requiring City maintenance is proposed as part of the project. This development is expected to generate the following approximate revenue from impact fees: Page 3 of 4 Page 45 of 144 Impact Fee Subtotal Capital Facilities Fee $612,000 Transportation Development Fee $140,000 Tri-Valley Transportation Development Fee $118,000 Affordable Housing Fee $2,105,000 Total $2,975,000 Prepared by: Submitted by: Approved by: Adam Nelkie, Assistant Dir. Siew-Chin Yeong, Director of Public Gerry Beaudin, City of Public Works - Works Manager Engineering Attachments: 1. Subdivision Improvement Agreement 2. Final Map for Tract 8631 3. Vicinity Map 4. Resolution of Summary Vacation for Public Service Easement 5. Subdivision Improvement Plans – Tract 8631 Page 4 of 4 Page 46 of 144Page 47 of 144Page 48 of 144Page 49 of 144Page 50 of 144Page 51 of 144Page 52 of 144Page 53 of 144Page 54 of 144Page 55 of 144Page 56 of 144Page 57 of 144Page 58 of 144Page 59 of 144 Page 60 of 144 Page 61 of 144 Page 62 of 144 Page 63 of 144 Page 64 of 144 Page 65 of 144 ATTACHMENT 3 ARROYO DEL VALLE CREEK 475 SAINT JOHN ST TRACT 8631 Page 66 of 144 ATTACHMENT 4 RESOLUTION NO. 2026-__ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PLEASANTON FOR SUMMARY VACATION OF PUBLIC SERVICE EASEMENT AT 475 SAINT JOHN STREET WHEREAS, On June 22, 1976, Loretto Winery Ltd. granted to City of Pleasanton a 10’- wide by approximately 449’-long Public Service Easement across the property at APN 94-114-7 (commonly known as 475 Saint John Street) according to the Grant Deed recorded as Instrument #76-99334 (Reel 4414, Images 285 to 287) in official records of Alameda County; and WHEREAS, the current owners of the encumbered property, Robson Homes LLC, have asked the City to vacate said public service easement in its entirety as part of their planned subdivision of the property pursuant to Vesting Tentative Map 8631 as approved by the Pleasanton City Council on January 9, 2025, according to Resolution No. 2025-002; and WHEREAS, following the prescribed procedure in California Streets and Highways Code §8330 et seq., the City of Pleasanton notified local utility purveyors who benefit from said public service easement about the proposed vacation asking whether they would object; and WHEREAS, having received no objections within the prescribed deadline for objecting, and having determined that no utilities exist within said easement, staff have recommended to the Pleasanton City Council that said easement be summarily vacated; and WHEREAS, the City Council, as legislative body, has been granted the authority to summarily vacate public easements that are no longer needed or relevant. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PLEASANTON DOES RESOLVE, DECLARE, DETERMINE AND ORDER THE FOLLOWING: SECTION 1. This Resolution of Summary Vacation for Public Service Easement at 475 Saint John Street is hereby adopted based on the following: • The summary vacation of Public Service Easement is made under California Streets and Highways Code §8330 et seq. • The Public Service Easement to be summarily vacated is described on the Grant Deed recorded on June 22, 1976, as Instrument #76-9934 (Reel 4414, Images 285 to 287) in official records of Alameda County. • This Resolution is prima facie evidence that the Public Service Easement is determined to be excess. • That from and after the date this Resolution is recorded or referenced on a final map of the property, the vacated Public Service Easement no longer constitutes a street, highway, or public service easement. • That all entities having any right, title, or interest in the Public Service Easement being vacated have been notified of this action, and no objections were received. Page 1 of 2 Page 67 of 144 SECTION 2. This Resolution shall be referenced on the final map for Tract 8631 at the time the Clerk executes the City Clerk’s Statement thus effectuating said vacation upon recordation of said map. PASSED, APPROVED AND ADOPTED by the City Council of the City of Pleasanton at a regular meeting held on February 17, 2026. I, Jocelyn Kwong, City Clerk of the City of Pleasanton, California, certify that the foregoing resolution was adopted by the City Council at a regular meeting held on the 17th day of February 2026 by the following vote: Ayes: Noes: Absent: Abstain: __________________________ Jocelyn Kwong, City Clerk APPROVED AS TO FORM: _________________________________ Daniel G. Sodergren, City Attorney Page 2 of 2 Page 68 of 144 Subdivision Improvement Plans – Tract 8631 The complete set of Improvement Plans for Tract 8631 is available for public review via the following Laserfiche web link: ATTACH 5-Subdivision Improvement Plans - Laserfiche WebLink (Cover sheet shown below for reference) Page 69 of 144 Item #5 CITY COUNCIL AGENDA REPORT February 17, 2026 Finance TITLE: ACCEPT THE FY 2025/26 MID-YEAR BUDGET UPDATE REPORT INCLUDING A PRESENTATION ON THE GENERAL FUND FORECAST, AND ADOPT A RESOLUTION APPROVING FY 2025/26 BUDGET AMENDMENTS SUMMARY The Mid-Year Budget Report provides an update on the City’s financial projections for FY 2025/26 and the next nine years. Revenue and expenditure projections are developed using historical information, projected program activities, economic forecasts, estimates from revenue consultants, and local information. The report details proposed budget adjustments across the General Fund, Enterprise Funds, Internal Service Funds, Special Revenue Funds, and Capital Projects Funds. Updated Long-Term Financial Forecast This report also provides an update on the General Fund Long-Term Financial Forecast. Four scenarios are presented: baseline (most likely), recession (pessimistic), hotel tax measure (optimistic), and new development projects (very optimistic). Overall, economic indicators suggest the U.S. economy will soften through the first part of 2026, driven by policy uncertainty, inflationary pressure, and a cooling labor market. Growth is expected to resume later in 2026 and 2027, driven by artificial intelligence (AI) investment, tax incentives, and additional Fed Reserve rate cuts. However, risks remain due to potential tariffs/trade tensions, as well as persistent inflation. Other factors and assumptions influencing the City’s financial outlook include: • The economy remains resilient. However, the labor market has shown signs of slowdown. Consumers have been focusing more on essentials and value while awaiting a more stable, predictable economy. This is reflected in the lower sales tax revenue projection for FY 2025/26 and the next several years. • Property tax increased by less than 3.0% in FY 2024/25 due to a cooling real estate market. While modest growth is projected in FY 2025/26, the increase for FY 2026/27 is expected to be lower if the resolved appeals related to assessed value reduction (e.g., commercial and office buildings) are enrolled in the tax roll, along with Proposition 8 temporary reductions due to a property’s market value falling below the factor-based year value. If these reductions are deferred to future years, the growth rate in FY 2026/27 is expected to be higher, and the increases in future years are expected to be lower. Due to a lower base- year assessed value from FY 2024/25 and potential reductions, the updated property tax projection during the financial forecast period is lower than previously estimated. • Business license tax experienced a significant growth in FY 2024/25, driven by higher gross receipts, new businesses such as Costco, and the relocation of Kaiser's workers to Pleasanton. The FY 2025/26 and forecast period revenues have been updated to a higher Page 1 of 13 Page 70 of 144 level. FY 2025/26 development revenue has also been adjusted to reflect one-time activities. • The City started applying a 2.0% staff vacancy factor in the 2023-25 budget cycle. Given the ongoing unfilled positions across various departments and savings over the last few years, the vacancy factor has been adjusted to 3.0% for the long-term financial forecast. • CalPERS’s FY 2024/25 investment return was strong at 12.1%. This will result in lower projected unfunded pension liabilities and contributions starting in FY 2027/28. The reduced contributions are reflected in the long-term financial forecast. However, normal cost rates (or service credits earned by employees) are expected to increase in some years due to other demographic factors, such as increased life expectancy and cost-of-living adjustments. The increases will vary depending on agencies’ plans. In summary, lower property and sales taxes are partially offset by increases in business license tax and one-time development revenues, anticipated savings from vacant positions, and reduced pension costs. As a result of these key changes, the FY 2025/26 General Fund budget is balanced without using the $1.0 million pension trust funds approved in the adopted budget, mainly due to vacancy savings and a recommended $0.5 million in additional transfer from the Capital Reserve Fund. Structural Deficit Beyond current budget cycle, the General Fund structural deficit during each year of the financial forecast period ranges from approximately $6.0 million to approximately $10.0 million, consistent with the gap reflected in the forecast in the 2025-27 adopted budget. Deferred Maintenance and Asset Management Needs The updated financial forecast does not reflect additional funding for deferred maintenance, as identified in the Asset Management Plan (AMP) presented to the City Council in December 2025. When staff return to the City Council for direction on the AMP funding plan and priority projects, the budget will be adjusted accordingly. Contributions to the Capital Improvement Program and deferred maintenance remain at the same level reflected in the adopted budget. As part of the mid-term budget update in May 2026, the FY 2026/27 budget and the long- term financial forecast will be updated based on a more recent economic outlook and financial data. Revenue and expenditure projections may vary from what is presented in this report. RECOMMENDATION Accept the FY 2025/26 Mid-Year Budget Update report including a presentation on the General Fund forecast, and adopt a resolution approving FY 2025/26 budget amendments. BACKGROUND The City follows a multi-step operating budget process that starts with the approval of a two- year budget, the adoption of a Mid-Term Budget after the first year, and the adoption of Mid- Year Budget adjustments during each of the two years of the budget. This report is the Mid- Year Budget report for the first year of the biennial budget that recommends adjustments to the FY 2025/26 Budget adopted by the City Council on June 17, 2025. Page 2 of 13 Page 71 of 144Staff reviewed all revenue sources using more up-to-date information and proposed adjustments as appropriate. Proposed expenditure adjustments reflect necessary budget updates and have been kept to a minimum whenever possible. Exhibit A to the attached Resolution outlines the recommended adjustments to various funds and their financial impacts. The discussion section of this report also summarizes the recommended adjustments and their respective impacts on the budget and fund balances. Staff regularly monitors expenditures, cautiously forecasts revenues, and recommends addressing changes whenever appropriate to maintain a balanced budget. The Mid-Year Budget report helps staff address budget variances in a timely manner. DISCUSSION FY 2025/26 Mid-Year Budget Update and Proposed Adjustments General Fund Overview As described below, staff recommends decreasing revenue and expenditure totals by $0.06 million and $0.57 million, respectively, and increasing the net transfer total by $0.50 million. Adjustments to the net transfer include increasing the transfer from the Capital Reserve Fund by $0.50 million. The Adopted FY 2025/26 included using $1.00 million from the Section 115 Pension Trust; however, with the recommended mid-year adjustments, funds from the Section 115 Pension Trust are no longer needed. As a result of these changes, along with the use of $0.35 million in program reserves, staff expects the General Fund will have a year-end revenue over expenditure net total of just over $0.02 million, as shown in Table 1 below. (Table 2 includes more details.) Table 1. General Fund Overview Page 3 of 13 Page 72 of 144 Table 2. General Fund Overview by Category General Fund Revenues As presented in Table 2 above, General Fund revenues are estimated to decrease by $0.06 million based on revised projections that incorporate current revenue trends and year-to-date actual revenues. This net decrease is based on adjustments across several revenue categories, including decreases in the City’s two largest revenue sources, Property Tax and Sales Tax, offset by increases in other revenue categories, such as Business License Tax, Development Services Fees, and Recreation Fees. Key revenue adjustments are highlighted below: • A decrease of $1.22 million in Property Tax revenue. This decrease is mainly due to a higher-than-anticipated reduction in assessed value resulting from resolved appeals and temporary reductions allowed under Proposition 8, according to the latest consultant projection. Property Tax is the City’s largest revenue source. Page 4 of 13 Page 73 of 144 • A decrease of $0.16 million in Sales Tax revenue. With the softening of the labor market, the general consensus among economists is forecasting a slight reduction in consumer spending as they shift their focus to essentials. Sales Tax is the City’s second largest revenue source. • An increase of $0.55 million in Business License Tax. The final FY 2024/25 Business License Tax total was $6.71 million, well above the budgeted amount, fueled by increased gross receipts, new businesses headlined by a new Costco store, and the relocation of Kaiser’s administrative division. A similar revenue total is anticipated for FY 2025/26. • An increase of $0.59 million in Development Services Fees is primarily based on year- to-date collected, as well as anticipated Planned Unit Development Application, Plan Check and Public Works Inspection Fee revenues in the second half of this fiscal year. • An increase of $0.18 million in Recreation Fees is mostly due to higher than anticipated Facility/Field Rental Fee revenues. General Fund Expenditures As presented in Table 2 above, General Fund expenditures are projected to decrease slightly by $0.57 million. The most significant adjustments are personnel budget based on year-to-date actuals and updated year-end projections. Personnel Expenses – Personnel costs are expected to be $1.15 million lower than the adopted budget. Adjustments in this category reflect revised year-end projections based on up- to-date information, including year-to-date actuals, vacancies, and City Council approvals. The Mid-Year Budget does not include any new permanent positions. Non-Personnel Expenses – Non-personnel expenses (all expenditure categories other than Personnel) are projected to increase by a net total of $0.58 million as described in more detail below. • Transportation & Training – A net increase of $0.17 million is due to a series of adjustments. An increase of $0.10 million for vehicle-related expenses, consisting of additional fuel costs for Police and repair and maintenance costs for Public Works, is recommended. The remaining increases are to fund staff training costs in Police and Human Resources, as well as to restore $2,700 in funding for the City’s pRide Parking Cashout Program. • Materials, Supplies & Services – A net increase of $0.46 million consists of $0.02 million increase in Human Resources budget for the workplace investigation contract; a $0.28 million increase in Community and Economic Development budget for various professional service costs related to East Pleasanton and Objective Design Standards projects, the City match for the Council-approved Safe Streets and Roads for All grant, and funding for software subscriptions; $0.06 million in Non-Departmental for homeless encampment cleanup costs; a $0.18 million increase in Library & Recreation budget to replace aging equipment and additional contract services; and a $0.02 million increase in Public Works budget to account for additional utility costs. These increases are offset by $0.11 million decrease in the Police Department temporary staffing budget. • Capital Outlay and Debt Services – A net decrease of $0.05 million is due to delays in Page 5 of 13 Page 74 of 144 the procurement of books for the Library. General Fund Reserves and Fund Balance – Projected total General Fund reserves at the end of FY 2025/26 are $53.64 million, with the unrestricted General Fund reserve at $31.45 million. The City’s current reserve policy requires a minimum reserve between 16.7 and 25.0 percent of operating expenses, with a target of 20.0 percent. The unrestricted General Fund reserve of $31.45 million equals 20.4 percent of the General Fund operating expenses. Table 3. General Fund Reserves Enterprise Funds Water Operations and Maintenance Fund – As shown in Table 4 below, recommended changes to the Water Operations and Maintenance Fund include increases of $2.93 million in revenues and $2.38 million in operating expenses. The result of these adjustments is an increase in net income by $0.56 million and an estimated ending fund balance of $14.35 million, which equals 34.6 percent of the total FY 2025/26 operating expenses. The City’s reserve policy requires reserves to stay between 30.0 and 40.0 percent, with a target of 35.0 percent. Based on year-to-date actual water and recycled water usage data and a projected year-end total, as well as accounting for the new rate effective January 1, 2026, staff recommends increasing the water sales revenue budget by $2.98 million and the recycled water sales revenue budget by $0.05 million. These are offset by a decrease of $0.10 million in water meter installation and credit card convenience fee revenues. Some expenditure adjustments are recommended. The largest increase is to the water purchase budget by $1.24 million based on the updated water and recycled water usage projections. Other operating budget adjustments include a $0.11 million increase in contract service and machinery and equipment costs for required state-mandated water testing; $0.07 million for additional utility costs; $0.10 million for valve repair replacements, $0.29 million for purchasing a valve truck; $0.57 million in additional professional service costs for several operating projects and initiatives, such as water system operations manual and Supervisory Control and Data Acquisition (SCADA) standards developments, water modeling/fire flow analysis, asset management program support, and cross connection control plan. Page 6 of 13 Page 75 of 144 Table 4. Water Operations and Maintenance Fund Overview Sewer Operations and Maintenance Fund – As shown in Table 5 below, recommended changes to the Sewer Operations and Maintenance Fund include increasing the expenditure budget by $1.07 million. Just over $0.80 million of that increase is for a new Vac-Con Combo Truck. This vehicle was originally expected to be delivered in FY 2024/25, but it arrived in the current fiscal year. Other expenditure adjustments include $0.27 million for additional utility costs, personnel budget allocation adjustments, and parts and equipment costs. The result of these adjustments is an estimated ending fund balance of $6.71 million, which equals 32.9 percent of FY 2025/26 operating expenses. The City’s policy requires reserves equal to a minimum of 30.0 percent, a maximum of 40.0 percent, with a target of 35.0 percent. The Sewer Rate Study is currently underway and will be presented to the City Council later this year with the proposed new rate going into effect starting on January 1, 2027. Associated budget adjustments to the FY 2026/27 budget will be presented either as a separate staff report or through the FY 2026/27 mid-year budget review report. Table 5. Sewer Operations and Maintenance Fund Overview Internal Service Funds Recommended changes to internal service funds include 1) increasing expenditure in the Police Vehicle Replacement Fund by $0.23 million for outfitting of new vehicles and purchasing leased vehicles; and 2) increasing revenue and expenditure in the Library & Recreation Replacement Fund by $0.06 million based on estimated contribution and spending in the Page 7 of 13 Page 76 of 144current fiscal year. Special Revenue Funds Recommended changes to special revenue funds include 1) increasing expenditure by $2,700 in the Recycling & Waste Management Fund to account for personnel budget adjustment; 2) increasing expenditure by $0.01 million in the HAPPY Public Art Donation Fund based on final public art installation costs; 3) decreasing revenue and expenditure by $0.05 million in the Miscellaneous Operating Grants Fund based on revised Office of Traffic Safety grant utilization estimates and a removal of state grant budget for the Zippy Outreach Vehicle; 4) increasing expenditure by $0.15 million in the Community Access Television Fund for replacing audio and video equipment to meet the new state-mandate under SB 707; 5) increasing expenditure by $0.3 million in the Lower Income Housing Fund to restore funding for the Pleasanton Downpayment Assistance Program and add Housing and Human Services (HHS) grants approved by the Council earlier this fiscal year; 6) increasing expenditure by $0.02 million in the HOME Program Fund to add HHS grants; 7) increasing developer contribution revenue by $0.50 million in the Urban Forestry Fund based on year-to-date actuals and revised projected total and $0.03 million increase in contract service costs for additional tree planting; 8) a series of adjustments in the City’s Landscape Maintenance District and Geological Hazard Abatement Funds based on final Council-approved budget from the July 15, 2025 meeting; 9) increasing revenue by $1.00 million in the Pleasanton Garbage Rate Reserve Fund to account for additional recycling revenue from the contract with GreenWaste; and 10) adding revenue and expenditure budget in the Measure BB Paratransit Fund for about $0.60 million. Capital Funds Recommended changes to capital funds include 1) increasing revenue by $0.54 million in the Public Facilities Impact Fees Fund based on revised impact fee projections and increasing expenditure by $0.01 million for the Delucchi Park Musical Plaza project; 2) increasing revenue by $0.42 million in the Traffic Impact Fee Fund based on updated revenue projections; 3) increasing expenditure by $0.49 million in the Measure B Bike and Pedestrian Fund to ensure all remaining funds are spent by the end of this fiscal year; 4) increasing transfer revenue in the Recycled Water CIP Fund by $0.10 million to align with the transfer amount from the Recycled Water Operating Fund; 5) increasing revenue in the Sewer Expansion CIP Fund and Water Expansion CIP Fund by $0.07 million and $0.01 million, respectively, based on revised new connection fee revenue projections; 6) increasing expenditure in the Sewer Replacement CIP Fund by $0.09 million based on updated interfund expense estimates; and 7) increasing transfer revenue in the Water Replacement CIP Fund by $0.06 million to align the transfer amount from the Water Operating Fund and increasing expenditure by $0.01 million based on updated interfund expense estimates. The summary of recommended mid-year adjustments is as follows: • The FY 2025/26 General Fund revenue budget will decrease by $58,000; the General Fund expenditure budget will decrease by $572,802; General Fund net transfer budget will increase by $500,000. • All Other Funds budgets for FY 2025/26 will increase revenues by $6,124,980; decrease net transfers by $344,912; and increase expenditures by $5,022,400. Page 8 of 13 Page 77 of 144General Fund Ten-Year Financial Forecast The General Fund long-term financial forecast projects the future financial outcome and serves as a fiscal management tool to guide policy and decision-making. It helps the City to assess sustainability and develop strategies to identify resources to support essential community services. Taxes account for over 80.0 percent of the General Fund revenue, with the top sources including property tax, sales tax, business license tax, and transient occupancy tax. Property tax represents over 50.0 percent of the General Fund revenue. Compared to some agencies, the City’s revenue stream is less diversified, with greater reliance on property taxes. As a service organization, the City’s key cost drivers are personnel costs and materials, supplies, and services, accounting for over 90.0% of the General Fund expenditure. Due to the economic factors stated earlier, overall, revenues have decreased compared to the prior financial forecast, mainly due to lower property tax and sales tax projections, partially offset by an increase in business license tax. Expenditures also decreased mainly due to the incorporation of a 3.0 percent vacancy factor instead of 2.0 percent starting in FY 2026/27, reductions in pension contributions, and lower general liability insurance-related costs. The General Fund structural deficit remains close to the projection from the prior financial forecast, ranging mostly from $6.00 million to $10.0 million. Based on the revised projection, the annual reduction for property tax ranges from $1.2 million to $3.8 million. For sales tax, the reduction ranges from $0.2 million to $0.8 million, but its growth is expected to outpace the prior projection towards the end of the forecast period due to higher annual estimated growth rates. The increase in business license tax ranges from $0.5 million to $1.3 million. Overall, these changes, along with other revenue adjustments such as increases in franchise fees, will result in an average annual decrease of approximately $1.9 million in revenues over the forecast period. With a higher vacancy rate and expected reductions in pension contributions due to CalPERS investment gains, net of other salary and benefit adjustments, personnel costs are expected to decrease by approximately $0.9 million annually on average over the forecast period. The lower projection for general liability-related expenses is expected to reduce costs by approximately $0.7 million annually on average. The combined reduction in expenditures averages about $1.6 million annually. For the Ten-Year Financial Forecast, staff has prepared four forecast scenarios. The first scenario assumes the City’s revenues will continue to grow at a measured pace to maintain the current level of service, with the local economy experiencing no major downturn during the ten-year period. The second scenario assumes a recession in FY 2027/28, impacting the City’s major revenue categories. The third scenario assumes an increase in Transient Occupancy Tax rates. The fourth scenario considers all of the known development projects in various stages, makes assumptions on when they will be completed, and estimates what type of impact they would have in terms of additional revenues. Please note that for the FY 2026/27 projection, updates to revenue and expenditure projections focus mainly on the key categories mentioned above, as specific adjustments to the adopted budget will be proposed by departments as part of the mid-term budget update. Page 9 of 13 Page 78 of 144Baseline Scenario Financial assumptions drive the forecast model. Assumptions used to generate the General Fund Budget and Ten-Year Financial Forecast are based on recent historical actuals, the updated mid-year revenue and expenditure projections, as well as any known future revenues, commitments, and/or obligations. FY 2025/26 and FY 2026/27 revenues are updated based on current revenue trends and estimates provided by the City’s property and sales tax consultant. Expenditures are projected based on recent actuals and the FY 2025/26 mid-year budget update, which incorporates information not available during the development of the biennial budget, including new Council-approved salary and cost-of-living adjustments and updated estimates of unfunded pension liability payments. Beyond FY 2026/27, the key fiscal assumptions driving the baseline forecast scenario include: • Property Tax increase will range from 3.7 percent to 3.8 percent per year. • Sales Tax increase will range from 2.8 percent to 3.0 percent per year. • Business License Tax will increase 3.0 percent per year. • Transient Occupancy Tax will increase 2.0 percent per year. • Franchise Fees will increase 2.5 percent per year. • Permits, Charges for Services, Recreation Revenues, and Interfund Charges will increase 3.0 percent per year. • Other Operating Revenues will increase 2.0 percent per year. • Salaries and Benefits are projected to increase by 6.0 percent in FY 2027/28, but the rate of increase is expected to come down to the 2.0 to 3.0 percent range in later years mostly due to decreasing annual unfunded pension liability estimates starting in FY 2029/30. It should be noted that CalPERS achieved investment returns higher than its target of 6.8 percent over the past two fiscal years. Unfunded pension liability estimates are highly dependent on annual investment returns and can fluctuate from year to year. • Non-Personnel costs collectively will increase between 3.0 and 4.0 percent per year. Additional General Fund functional assumptions include: • Operating transfers to support other programs range from $1.18 million to $1.46 million. • Capital Project Transfer from the General Fund will range from $3.50 million to $5.25 million based on a $0.25 million increase every year. Except for the last two forecast years, the contribution in the first eight years falls short of the City’s $5.00 million minimum goal. The contributions for FY 2025/26 and FY 2026/27 are $1.00 million and $3.25 million. • To address the City’s deferred maintenance needs, additional contributions for deferred maintenance range from $5.63 million to $6.25 million. The contributions for FY 2025/26 and FY 2026/27 are $5.22 million and $5.54 million. Please note these are the same numbers included in the prior forecast model. Additional cost estimates from the Asset Management Plan are expected later this fiscal year. Based on the project update presented to the City Council in December 2025, funds needed to maintain the General Fund-supported assets were estimated at approximately $63 million per year. • The forecast does not include the use of pension/other reserves, as drawdowns on reserves require further direction from the City Council. Page 10 of 13 Page 79 of 144 • The forecast does not reflect budget balance strategies such as cost reductions. Below is a summary of the baseline scenario. Note: In FY 2022/23, the Council approved an update to the City’s General Fund Reserve Policy to align with the Government Finance Officers Association’s best practice to maintain at least two months (16.7 percent) of operating expenditures in unrestricted fund balance. The City’s reserve target is 20.0 percent. Resources were retained in the General Fund in FY 2022/23 to meet the reserve target. Recession Scenario The second scenario assumes a recession starting in FY 2027/28. Assumptions include the following: • Property tax revenue will increase by 1.0 percent less than the baseline at 2.7 percent in FY 2028/29 and FY 2029/30 before returning to the baseline level for the remaining years. • Sales tax will decrease by 5.0 percent in FY 2027/28, decrease by another 2.0 percent in FY 2028/29, increase by 1.0 percent in FY 2029/30, and resume increasing at the baseline level for the remaining years. • Business license tax will increase by 1.0 percent less than the baseline at 2.0 percent in FY 2027/28, remain flat in FY 2028/29, increase by 1.0 percent in FY 2029/30, and resume increasing at the baseline level for the remaining years. • Recreation revenue will increase by 1.0 percent less than the baseline at 2.0 percent in FY 2027/28, increase by 1.0 percent annually in FY 2028/29 and FY 2029/30, and resume increasing at the baseline level for the remaining years. Based on these revenue changes, below are the projected ten-year numbers. Transient Occupancy Tax Scenario The third scenario assumes an increase in transient occupancy tax rates starting in FY 2027/28. Assumptions include the following: • The transient occupancy tax rate will increase from 8.0 percent to 10.0 percent in FY 2027/28 and increase by another 2.0 percent to 12.0 percent in FY 2028/29. Based on increased revenues from the transient occupancy tax, below are the projected ten- year numbers. Page 11 of 13 Page 80 of 144 Development Related Revenue Scenario The fourth scenario assumes an increase in property tax and permit revenues based on the projected completion of planned development projects. Assumptions include the following: • The property tax will increase at varying rates higher than the baseline numbers each year, ranging from 3.7 percent to 5.5 percent. • One-time permit-related revenues in the forecasted period are estimated to be $9.02 million. • Please note that development projects can be delayed or even cancelled for various reasons. Staff made reasonable estimates for each project based on the information available at the time. In addition, the City’s resource needs to support additional services and infrastructure from the completed development projects have not yet been built into the expenditure estimate. Based on these assumptions, the projected ten-year numbers are shown below. Four Scenario Comparison Below is the table and chart showing the projected surplus (or deficit) numbers for the forecast period. As mentioned previously, the fourth scenario, based on development activities, will require additional City resources, both personnel and non-personnel, to adequately support and maintain the new infrastructure. The City’s expenditures are expected to continue outpacing revenues for the next several Page 12 of 13 Page 81 of 144years due to rising operating costs and revenue limitations. Based on the underlying assumptions, the baseline scenario forecast projects annual deficits of $5.93 million to $9.99 million. Please refer to the Baseline Long-Term Financial Forecast attached to the staff report for more details. EQUITY AND SUSTAINABILITY Ensuring the long-term fiscal sustainability of the City’s organization ensures that the City can continue to provide programs and services to serve all of Pleasanton's diverse communities. OUTREACH No outreach was conducted, as this item is an administrative matter of City business. STRATEGIC PLAN ALIGNMENT Approval of this action advances the ONE Pleasanton strategic goal of Funding Our Future, which is focused on fiscal sustainability. FISCAL IMPACT The recommended adjustments to various funds and the financial impact to each fund are outlined in Exhibit A. The discussion section of this report also summarizes the recommended adjustments and their respective impacts to the budget and fund balances. Prepared by: Submitted by: Approved by: Chris Yi, Financial Services Susan Hsieh, Director of Finance Gerry Beaudin, City Manager Manager Attachments: 1. Attachment 1 - Resolution 2. Exhibit A to Resolution - Budget Adjustment Summary 3. Attachment 2 - Ten-Year Financial Forecast - Baseline Scenario 4. Attachment 3 - FY26 Mid-Year Budget Review and General Fund Forecast Presentation Page 13 of 13 Page 82 of 144 ATTACHMENT 1 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PLEASANTON, ACCEPTING THE FY 2025/26 MID-YEAR BUDGET REPORT AND APPROVING THE FY 2025/26 BUDGET AMENDMENTS WHEREAS, staff periodically presents to the City Council reports regarding the financial condition of the City, along with any recommendations for budget amendments and technical corrective actions needed; and WHEREAS, the City Council adopted the FY 2025/26 Budget (“Budget”) on June 17, 2025, and WHEREAS, staff prepared a Mid-Year Budget update that includes recommended amendments to the Budget. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PLEASANTON DOES RESOLVE, DECLARE, DETERMINE AND ORDER THE FOLLOWING: SECTION 1. Allocate the $22,650 General Fund surplus to the Unrestricted General Fund Reserve. SECTION 2. It amends the Budget as outlined in Exhibit A. PASSED, APPROVED AND ADOPTED by the City Council of the City of Pleasanton at a regular meeting held on February 17, 2026. I, Jocelyn Kwong, City Clerk of the City of Pleasanton, California, certify that the foregoing resolution was adopted by the City Council at a regular meeting held on February 17, 2026, by the following vote: Ayes: Councilmembers Noes: Absent: Abstain: Jocelyn Kwong, City Clerk APPROVED AS TO FORM: Daniel G. Sodergren, City Attorney 1 Page 83 of 144 FY 2025/26 BUDGET - MID YEAR ADJUSTMENT SUMMARY Exhibit A NET NET NET BUDGET RECOMMENDED MID-YEAR BUDGET RECOMMENDED MID-YEAR BUDGET RECOMMENDED MID-YEAR REVENUES REVENUES REVENUES TRANSFERS TRANSFERS TRANSFERS EXPENDITURES EXPENDITURES EXPENDITURES GENERAL FUND $ 160,544,762 $ (58,000) $ 160,486,762 $ (7,104,000) $ 500,000 $ (6,604,000) $ (154,782,064) $ 572,802 $ (154,209,262) Capital Reserve Fund$ - $ - $ - $ (1,000,000) $ (500,000) $ (1,500,000) $ - $ - $ - ENTERPRISE FUNDS Water / Recycled Water$ 42,956,003 $ 2,933,900 $ 45,889,903 $ (1,592,636) $ - $ (1,592,636) $ (39,043,279) $ (2,376,789) $ (41,420,068) Storm Drain$ 987,000 $ - $ 987,000 $ 625,000 $ - $ 625,000 $ (1,740,922) $ 15,051 $ (1,725,871) Sewer$ 18,647,979 $ - $ 18,647,979 $ (851,000) $ - $ (851,000) $ (19,323,349) $ (1,066,157) $ (20,389,506) Subtotal $ 62,590,982 $ 2,933,900 $ 65,524,882 $ (1,818,636) $ - $ (1,818,636) $ (60,107,550) $ (3,427,895) $ (63,535,445) INTERNAL SERVICE FUNDS Police Vehicle Replacement$ 417,900 $ - $ 417,900 $ - $ - $ - $ (595,000) $ (225,000) $ (820,000) Library & Recreation Replacement$ - $ 65,000 $ 65,000 $ - $ - $ - $ - $ (65,000) $ (65,000) Subtotal $ 417,900 $ 65,000 $ 482,900 $ - $ - $ - $ (595,000) $ (290,000) $ (885,000) SPECIAL REVENUE FUNDS Recycling & Waste Management$ 235,900 $ - $ 235,900 $ - $ - $ - $ (247,579) $ (2,686) $ (250,265) HAPPY Public Art Donations$ 11,800 $ - $ 11,800 $ - $ - $ - $ (110,000) $ (12,316) $ (122,316) Miscellaneous Operating Grants$ 867,672 $ (53,821) $ 813,851 $ - $ - $ - $ (819,541) $ 53,821 $ (765,720) Community Access Television$ 30,000 $ - $ 30,000 $ - $ - $ - $ (120,000) $ (150,000) $ (270,000) Lower Income Housing$ 3,000,500 $ - $ 3,000,500 $ - $ - $ - $ (839,853) $ (330,726) $ (1,170,579) HOME Program$ 140,331 $ - $ 140,331 $ - $ - $ - $ (140,373) $ (16,250) $ (156,623) Urban Forestry$ 119,200 $ 500,000 $ 619,200 $ (25,000) $ - $ (25,000) $ (52,031) $ (25,000) $ (77,031) Lemoine GHAD$ 11,160 $ (238) $ 10,922 $ - $ - $ - $ (30,787) $ - $ (30,787) Laurel Creek GHAD$ 72,572 $ (5,411) $ 67,161 $ - $ - $ - $ (95,110) $ - $ (95,110) Moller GHAD 95-1$ 15,600 $ (200) $ 15,400 $ - $ - $ - $ (23,686) $ - $ (23,686) Oak Tree Farm GHAD 94-1$ 18,765 $ (2,261) $ 16,504 $ - $ - $ - $ (38,480) $ - $ (38,480) Ponderosa Landscape 84-1$ 17,113 $ 15,204 $ 32,317 $ - $ - $ - $ (22,668) $ (30,000) $ (52,668) Windsor Landscape 93-1$ 24,266 $ - $ 24,266 $ - $ - $ - $ (14,981) $ (17,594) $ (32,575) Bonde Landscape 93-2$ 27,289 $ 14,311 $ 41,600 $ - $ - $ - $ (26,989) $ (25,311) $ (52,300) Moller Landscape 95-1$ 63,757 $ 11,819 $ 75,576 $ - $ - $ - $ (123,503) $ 36,703 $ (86,800) Oak Tree Farms Landscape 94-1$ 21,686 $ 6,476 $ 28,162 $ - $ - $ - $ (21,924) $ (40,376) $ (62,300) Pleasanton Garbage Service Rate Reserve$ 2,101,500 $ 1,000,000 $ 3,101,500 $ (1,193,760) $ - $ (1,193,760) $ (1,196,664) $ - $ (1,196,664) Measure BB - Paratransit$ - $ 612,201 $ 612,201 $ - $ - $ - $ - $ (592,544) $ (592,544) Subtotal $ 6,779,111 $ 2,098,080 $ 8,877,191 $ (1,218,760) $ - $ (1,218,760) $ (3,924,170) $ (1,152,278) $ (5,076,448) Page 84 of 144 NET NET NET BUDGET RECOMMENDED MID-YEAR BUDGET RECOMMENDED MID-YEAR BUDGET RECOMMENDED MID-YEAR REVENUES REVENUES REVENUES TRANSFERS TRANSFERS TRANSFERS EXPENDITURES EXPENDITURES EXPENDITURES CAPITAL FUNDS Public Facilities Impact Fees$ 17,800 $ 536,000 $ 553,800 $ - $ - $ - $ (1,165,182) $ (10,461) $ (1,175,643) Traffic Impact Fees$ 191,100 $ 415,000 $ 606,100 $ - $ - $ - $ (5,331,957) $ - $ (5,331,957) Measure B Bike & Pedestrian$ 7,989 $ - $ 7,989 $ - $ - $ - $ (190,000) $ (49,200) $ (239,200) Recycled Water CIP$ - $ - $ - $ 434,894 $ 100,001 $ 534,895 $ (834,894) $ - $ (834,894) Sewer Expansion CIP$ 57,400 $ 70,000 $ 127,400 $ - $ - $ - $ (28,558) $ - $ (28,558) Sewer Replacement CIP$ 207,700 $ - $ 207,700 $ 1,000,000 $ - $ 1,000,000 $ (6,791,237) $ (85,466) $ (6,876,703) Water Expansion CIP$ 74,700 $ 7,000 $ 81,700 $ - $ - $ - $ - $ - $ - Water Replacement CIP$ 94,500 $ - $ 94,500 $ 10,613,848 $ 55,087 $ 10,668,935 $ (11,950,436) $ (7,100) $ (11,957,536) Subtotal $ 651,189 $ 1,028,000 $ 1,679,189 $ 12,048,742 $ 155,088 $ 12,203,830 $ (26,292,264) $ (152,227) $ (26,444,491) Total 230,983,944 6,066,980 237,050,924 907,346 155,088 1,062,434 (245,701,047) (4,449,598) (250,150,646) Page 85 of 144 ATTACHMENT 2 City of Pleasanton General Fund Ten-Year Financial Forecast Summary Level - Baseline Scenario 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Actual Actual Actual Budget Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Forecast Revenues Property Taxes 86,075,776 90,241,390 92,605,525 96,546,900 98,850,100 102,477,800 106,229,500 110,120,600 114,156,500 118,494,400 122,997,200 127,671,100 132,522,600 Sales & Use Taxes 26,183,661 23,963,541 25,286,992 25,803,500 26,071,600 26,797,700 27,615,200 28,464,700 29,340,600 30,220,800 31,127,400 32,061,200 33,023,000 Business License Tax 5,853,515 5,802,541 6,706,963 6,500,000 6,695,000 6,895,900 7,102,800 7,315,900 7,535,400 7,761,500 7,994,300 8,234,100 8,481,100 Transient Occupancy Tax 5,004,019 5,259,180 5,337,470 5,471,300 5,580,700 5,692,300 5,806,100 5,922,200 6,040,600 6,161,400 6,284,600 6,410,300 6,538,500 Other Taxes 1,351,006 1,545,656 1,478,456 1,450,000 1,462,000 1,491,200 1,521,000 1,551,400 1,582,400 1,614,000 1,646,300 1,679,200 1,712,800 Franchise Taxes 3,284,092 3,440,134 3,534,124 3,491,400 3,545,800 3,634,400 3,725,300 3,818,400 3,913,900 4,011,700 4,112,000 4,214,800 4,320,200 Permits 3,592,588 3,872,848 4,985,810 3,872,000 3,310,050 3,409,400 3,511,700 3,617,100 3,725,600 3,837,400 3,952,500 4,071,100 4,193,200 Recreation Revenues 4,197,090 4,663,652 4,954,749 4,907,198 4,730,698 4,872,600 5,018,800 5,169,400 5,324,500 5,484,200 5,648,700 5,818,200 5,992,700 Other Revenue 17,202,970 12,961,296 28,771,964 12,444,464 12,840,403 13,454,300 13,801,800 14,158,500 14,524,800 14,901,000 15,287,200 15,683,800 16,091,100 Subtotal Revenues 152,744,716 151,750,238 173,662,053 160,486,762 163,086,351 168,725,600 174,332,200 180,138,200 186,144,300 192,486,400 199,050,200 205,843,800 212,875,200 Transfers-In 4,883,453 3,751,843 1,367,145 2,887,000 3,494,000 1,391,800 1,433,600 1,476,600 1,520,900 1,566,500 1,613,500 1,661,900 1,711,800 Use of Reserves* 349,150 2,000,000 Total Revenues $ 157,628,169 $ 155,502,080 $ 175,029,198 $ 163,722,912 $ 168,580,351 $ 170,117,400 $ 175,765,800 $ 181,614,800 $ 187,665,200 $ 194,052,900 $ 200,663,700 $ 207,505,700 $ 214,587,000 Expenditures Personnel Salaries & Benefits (excluding Pension) 57,906,756 62,490,945 66,897,881 65,353,341 67,125,600 72,117,234 74,478,657 76,974,257 79,556,918 82,257,882 85,011,815 87,884,911 90,840,871 Pension (includes LPFD) 20,501,373 21,139,934 22,998,077 26,425,053 27,886,322 28,924,500 30,524,100 30,389,800 30,193,700 28,989,400 29,059,400 28,308,200 28,053,500 LPFD Salaries & Benefits (Pleasanton only) 15,702,552 18,280,053 19,452,555 19,128,997 19,850,609 20,743,900 21,677,400 22,652,900 23,672,300 24,737,600 25,850,800 27,014,100 28,229,700 Subtotal Personnel Costs 94,110,681 101,910,933 109,348,513 110,907,391 114,862,530 121,785,634 126,680,157 130,016,957 133,422,918 135,984,882 139,922,015 143,207,211 147,124,071 Non-Personnel Costs Transportation & Training 1,693,003 1,795,505 1,625,519 1,673,859 1,479,559 1,509,200 1,539,400 1,570,200 1,601,600 1,633,600 1,666,300 1,699,600 1,733,600 Repairs & Maintenance (Includes all R&R Funds) 8,028,209 6,531,803 5,495,860 5,475,285 5,646,115 5,815,500 5,990,000 6,169,700 6,354,800 6,545,400 6,741,800 6,944,100 7,152,400 Materials, Supplies & Services 24,916,946 26,549,008 30,823,954 31,591,098 32,992,997 34,329,100 35,733,000 37,208,900 38,761,400 40,395,400 42,116,100 43,929,200 45,840,600 Capital Outlay 1,829,159 1,484,449 2,361,407 1,002,025 1,052,025 1,073,100 1,094,600 1,116,500 1,138,800 1,161,600 1,184,800 1,208,500 1,232,700 Leases & Others 482,932 1,056,866 13,717,017 365,000 365,000 372,300 379,700 387,300 395,000 402,900 411,000 419,200 427,600 Fire (Pleasanton only) 2,479,516 3,167,911 3,142,786 3,194,604 3,194,604 3,290,400 3,389,100 3,490,800 3,595,500 3,703,400 3,814,500 3,928,900 4,046,800 Subtotal Non-Personnel Costs 39,429,765 40,585,543 57,166,542 43,301,871 44,730,300 46,389,600 48,125,800 49,943,400 51,847,100 53,842,300 55,934,500 58,129,500 60,433,700 Operating Transfers 5,953,932 9,083,029 1,328,970 3,270,000 1,150,000 1,184,500 1,220,000 1,256,600 1,294,300 1,333,100 1,373,100 1,414,300 1,456,700 Capital Projects Transfers 7,905,144 2,277,255 5,871,578 1,000,000 3,250,000 3,500,000 3,750,000 4,000,000 4,250,000 4,500,000 4,750,000 5,000,000 5,250,000 Deferred Infrastructure - - - 5,221,000 5,541,000 6,060,000 5,976,000 5,892,000 5,805,000 5,717,000 5,627,000 6,000,000 6,250,000 Total Expenditures $ 147,399,522 $ 153,856,759 $ 173,715,603 $ 163,700,262 $ 169,533,830 $ 178,919,734 $ 185,751,957 $ 191,108,957 $ 196,619,318 $ 201,377,282 $ 207,606,615 $ 213,751,011 $ 220,514,471 Annual Surplus / (Deficit)** $ 10,228,647 $ 1,645,321 $ 1,313,595 $ 22,650 $ (953,479) $ (8,802,334) $ (9,986,157) $ (9,494,157) $ (8,954,118) $ (7,324,382) $ (6,942,915) $ (6,245,311) $ (5,927,471) *Use of reserves from prior years are reflected in the actuals. ** As noted in the staff report, available resources in FY 2022/23 were retained in the General Fund to meet the City's 20.0% reserve target. 16.7% is the minimum reserve recommended by the Government Finance Officers Association. Page 86 of 144 2/9/2026 FY 2025/26 Mid-Year Budget Review and General Fund Forecast Update City Council Meeting February 17, 2026 1 Agenda Economic Outlook Budget Highlights Proposed Budget Long-Term Financial Adjustments Forecast 2 2 1 Page 87 of 144 2/9/2026 Economic Outlook • The U.S. economy is projected to soften through the first part of 2026 before rebounding • Growth is expected to be driven by AI investment, tax incentives, and potential rate cuts by the Federal Reserve • However, risks remain due to policy uncertainty, inflationary pressure, and a cooling labor market 3 3 Budget Highlights – General Fund • A balanced budget maintaining essential City services • Lower revenue and expenditure projection • Increase in contribution from Capital Reserve • Eliminating the use of Pension Trust Funds • Out-year operating deficits close to prior forecast 4 4 2 Page 88 of 144 2/9/2026 General Fund Key Budget/Forecast Factors • Lower property tax due to resolved appeals and potential temporary reductions to assessed value • Lower sales tax due to consumer spending focusing on essentials and value • Higher business license tax attributable to significant growth in the prior fiscal year • Higher vacancy factor, anticipated pension cost reduction, and lower general liability insurance costs resulting in savings Note: Pension obligations can vary from year to year mainly due to investment gains/losses 5 5 General Fund Overview • Revenues: Decrease by $60K • Expenditures: Decrease by $0.6 million • Net Transfers: Increase by $0.5 million • Use of Reserves/Trust: Decrease by $1.0 million • Net Surplus: $23K 6 6 3 Page 89 of 144 2/9/2026 General Fund Revised Revenue Budget 7 7 General Fund Revised Expenditure Budget 8 8 4 Page 90 of 144 2/9/2026 General Fund - Major Adjustments • Negative/red numbers represent a decrease in revenue or expenditure Recommended Description Adjustment Revenues & Transfers In/Use of Reserves • Property Tax -$1.2M • Sales Tax -$0.2M • Business License Tax $0.6M • Development Services Fees $0.6M • Contribution from Capital Reserve Fund $0.5M • Use of Pension Trust Funds -$1.0M Expenditures & Transfers Out • Personnel -$1.1M • Materials, Supplies & Services $0.5M 9 9 Budget Highlights – Other Funds • Higher water revenue to fund program activities and rebuild reserve • Higher expenditure for the sewer repair and replacement program • Additional recycling revenue (restricted revenue) • Higher development impact fees (restricted one-time revenue) • Increase in expenditure across various funds to support programs 10 10 5 Page 91 of 144 2/9/2026 Water and Sewer Funds - Major Adjustments • Both Water and Sewer Fund reserves are slightly below the 35% reserve target Recommended Fund Description Adjustment Water • Water Service Charges $2.9M • Zone 7 Water Purchase $1.2M • Value truck and contract related projects $0.8M Sewer • Vac-con combo truck $0.8M 11 11 Other Funds - Major Adjustments Recommended Funds Description Adjustment Internal Service • Outfitting and leased costs for police vehicles $0.2M Special Revenue • Developer contribution to the Urban Forestry Fund $0.5M • Recycling revenue – work through GreenWaste $1.0M Capital Projects • Public Facilities impact fees $0.5M • Traffic impact fees $0.4M 12 12 6 Page 92 of 144 2/9/2026 Update on General Fund Long-Term Financial Forecast • Long-term forecast projects the future financial outcome and serves as a strategic tool to guide policy and decision-making • Four scenarios are included: 1. Baseline (most likely) 2. Recession (pessimistic) 3. Hotel tax measure (optimistic) 4. New development projects (very optimistic) • Forecast does not reflect budget balancing strategies • Operating deficits range from $6.0M to $10.0M* *The $44.0M annual funding gap identified in the Asset Management Plan is not addressed in the forecast. 13 13 Key Assumptions Beyond Current Budget Cycle (Revenue Annual Growth) • Property tax: 3.7% to 3.8% (Note: FY27 growth rate is projected to be less than 3.0%) • Sales tax: 2.8% to 3.0% • Business license tax: 3.0% • Hotel tax: 2.0% • Franchise fees: 2.5% • Permits, charges for services, recreation revenues, and interfund charges: 3.0% • Other operating revenues: 2.0% 14 14 7 Page 93 of 144 2/9/2026 Key Assumptions Beyond Current Budget Cycle (Expenditure Annual Growth) • No change in funding level to the Capital Improvement Program and Deferred Maintenance Program* • Personnel costs: 6.0% in FY28, 4.0% in FY29, and decrease to 2.0% to 3.0% in later years due to lower pension costs • Non-personnel costs: 3.0% to 4.0% • Operating transfers: $1.2M to $1.5M • Capital contribution: $3.5M to $5.3M • Deferred maintenance: $5.6M to $6.3M *The $44.0M annual funding gap identified in the Asset Management Plan is not addressed in the forecast. 15 15 Baseline Scenario – Projected Surplus/Deficit Note: FY23 available resources were retained in the General Fund to meet the City's 20.0% reserve target. 16.7% is the minimum reserve recommended by the GFOA. 16 16 8 Page 94 of 144 2/9/2026 Four Scenario Comparison FY 2022/23 FY 2023/24 FY 2024/25 FY 2025/26 FY 2026/27 FY 2027/28 FY 2028/29 FY 2029/30 FY 2030/31 FY 2031/32 FY 2032/33 FY 2033/34 FY 2034/35 10-yr Total Baseline $ 10,228,647 $ 1,645,321 $ 1,313,595 $ 22,650 $ (953,479) $ (8,802,334) $ (9,986,157) $ (9,494,157) $ (8,954,118) $ (7,324,382) $ (6,942,915) $ (6,245,311) $ (5,927,471) $ (64,607,674) Recession in 2028 $ 10,228,647 $ 1,645,321 $ 1,313,595 $ 22,650 $ (953,479) $ (10,946,334) $ (14,773,657) $ (16,227,857) $ (15,906,918) $ (14,503,282) $ (14,355,315) $ (13,899,011) $ (13,830,271) $ (115,373,474) TOT-based Rev Inc $ 10,228,647 $ 1,645,321 $ 1,313,595 $ 22,650 $ (953,479) $ (7,379,234) $ (7,083,057) $ (6,532,957) $ (5,933,618) $ (4,243,482) $ (3,800,415) $ (3,040,011) $ (2,658,071) $ (41,601,674) Dev-based Rev Inc $ 10,228,647 $ 1,645,321 $ 1,313,595 $ 22,650 $ 666,121 $ (7,850,434) $ (5,244,307) $ (7,273,657) $ (5,363,218) $ (1,423,482) $ 495,185 $ 3,430,389 $ 6,199,229 $ (16,341,524) Note: The forecast does not include the $44.0M annual funding gap identified in the Asset Management Plan ($440.0M over the forecast period). Additional resources are required to address deferred maintenance needs. 17 17 Looking Forward March - April 2026 - Pension Strategy February-June 2026 - FY 2027/29 Budget Organizational Engagement Plan Assessment May – June 2026 - Funding Plan for Asset Management* - Mid-Term Budget Update *To support sustainable and serviceable community infrastructure (library, police and fire stations, parks and trails, roadways, stormwater system, etc.). 18 18 9 Page 95 of 144 2/9/2026 Recommendation • Staff recommends that the City Council accept the Mid-Year Budget Report and approve the proposed budget amendments 19 19 Thank You! 20 10 Page 96 of 144 Item #6 CITY COUNCIL AGENDA REPORT February 17, 2026 Public Works - Utilities Division TITLE: RECEIVE THE FINANCIAL PLAN ANALYSIS FOR THE 2026 SEWER RATE STUDY AND APPROVE IMPLEMENTATION SCENARIO 1 - MAINTAIN SUMMARY The City of Pleasanton (City) owns and operates a sewer system that collects wastewater from approximately 21,000 service connections and transports it to the Dublin San Ramon Services District (DSRSD) and the City of Livermore (for the Ruby Hill service area) for treatment and disposal. In 2025, the City completed its Sewer System Management Plan (SSMP) and supplemental long-term sewer Capital Improvement Program (CIP) to guide management of the sewer program, ensure the sustainability of its infrastructure, and reduce the risk of sewer overflows. To ensure financial sustainability during the implementation of its SSMP, the City is conducting the 2026 Sewer Rate Study (Rate Study). The goal of the Rate Study is to establish cost- based, fair, and legally defensible rates and connection fees to support the City’s sewer program. The first step in the Rate Study is the development of a long-term financial plan that projects the revenues required from sewer rates to cover the full scope of operational and capital costs associated with the sewer program. The City has completed the financial analysis, which includes three implementation scenarios that vary the balance of investment in near-term program improvements versus the level of risk to the program. Staff is now recommending that the City Council approve Implementation Scenario 1 - Maintain, which offers a balanced approach of near-term improvement spending versus program risk. After receiving direction on an implementation scenario, next steps include performing a cost- of-service analysis to allocate costs to each customer class; developing rate and connection fee schedules; preparing a rate study report and Proposition 218 notice; and conducting a public review period and hearing to adopt sewer rates. If approved, new sewer rates and connection fees would go into effect on January 1, 2027. RECOMMENDATION Receive the financial plan analysis for the 2026 sewer rate study and approve Implementation Scenario 1 - Maintain. BACKGROUND The City owns and operates a sewer collection system that consists of approximately 253 miles of gravity sewers, approximately 4.9 miles of force mains, 8 siphons, 11 active pump stations, and approximately 21,000 service connections. The average dry weather flow is approximately 6 million gallons per day (MGD). The City has agreements with Dublin San Ramon Services District (DSRSD) and City of Livermore (for the Ruby Hill service area) for wastewater treatment, and is a member of Livermore-Amador Valley Water Management Agency (LAVWMA) for treated wastewater disposal. The City also has agreements with Page 1 of 10 Page 97 of 144Alameda County that allow sewage flows from their Castlewood Service Area to be transported through the City’s collection system for treatment at DSRSD. On June 17, 2025, the City Council approved the City’s 2025 Sewer System Management Plan (SSMP). The SSMP is a living document that guides management of the City’s sewer program and is required by the State Water Resources Control Board (SWRCB). The SSMP has identified that the City’s resources are currently insufficient to implement its program properly and recommends improvements to operation and maintenance (O&M) activities to reduce the risk of sewer system overflows. As a supplement to the SSMP, the City also developed a long- term sewer Capital Improvement Program (CIP) that identifies infrastructure needs over the next 20 years. The City Council approved the long-term sewer CIP on November 4, 2025. To ensure financial sustainability during the implementation of its SSMP, the City has contracted with a firm specializing in utility rate work to conduct the 2026 Sewer Rate Study (Rate Study). The goal of the Rate Study is to establish cost-based, fair, and legally defensible rates and connection fees to support the City’s sewer program. The objectives of the Rate Study are: • Prepare a five-year financial plan (FY26 through FY30) to meet economic targets and determine revenue needs. • Conduct a cost-of-service analysis based on the most recent data and customer use characteristics. • Develop a four-year sewer rate schedule for FY27 through FY30. Note that new rates would go into effect on January 1, 2027, for FY27 (mid-term), and then on July 1 for the beginning of each following fiscal year. • Develop updated sewer connection fees for 2027 that will be annually increased by the consumer price index (CPI). • Document the proposed rate development process in a report. DISCUSSION The first step in the Rate Study is the development of a financial plan, which serves as a comprehensive strategy to ensure the City’s sewer enterprise is financially sustainable and sufficient. The financial plan outlines the projected revenue required from sewer rates over a 5- year study period to cover the full scope of operational and capital costs associated with the sewer program and meet financial performance targets. The key components of a financial plan include: • Cost Analysis: A thorough assessment of the sewer program expenses, including operations, maintenance, staffing, infrastructure upgrades, and other essential functions. Note that the financial plan assumes a full pass-through of treatment rate revenues to cover expenses for wastewater treatment services provided by DSRSD and the City of Livermore. • Revenue Requirements: The determination of the total amount of funding required to meet these costs, while also providing for future contingencies. • Long-Term Financial Stability: A strategic approach to ensuring the sewer program remains financially healthy with adequate reserves to address future challenges and Page 2 of 10 Page 98 of 144 maintain service reliability. Key inputs to the financial plan include the SSMP and the long-term sewer CIP. The long-term financial plan evaluates three implementation scenarios that vary the balance between investment in near-term program improvements and program risks associated with improvement deferrals. The three scenarios evaluated are Scenario 1 – Maintain, Scenario 2 – Prioritize, and Scenario 3 – Defer. These scenarios are further defined later in this section. In addition to these scenarios, the financial plan includes a Status Quo scenario as a control. The Status Quo scenario evaluates the City’s currently adopted sewer rates with no rate revenue adjustments to illustrate the long-term financial impacts of maintaining rates at existing levels. This scenario assesses whether current rates are sufficient to fund operating and capital expenses while maintaining adequate fund balances. Financial performance under each scenario is evaluated against two primary targets: fund balance and reserve policy requirements, and debt coverage requirements. The City’s current reserve range is 30 percent to 40 percent, with a target equal to 35 percent of annual operating expenses, inclusive of DSRSD and Livermore treatment costs, but exclusive of capital improvement projects. While the City’s sewer enterprise does not currently carry debt, all new debt is evaluated using a minimum debt coverage requirement of 125 percent. The results of the implementation scenario analysis provide the basis for assessing the financial feasibility of each scenario investment level and for identifying the sewer rate adjustments necessary to maintain financial stability, meet policy targets, and support long-term system reliability. The results of the financial plan analysis for each scenario are summarized below. Refer to Attachment 1 for a detailed summary of inputs assumed in the financial analysis. Status Quo Scenario The Status Quo scenario assumes that there are no adjustments to the City’s existing sewer collection rates and no new debt issued to fund CIP. While the Status Quo scenario assumes the same underlying O&M and CIP needs as the Maintain scenario, it assumes no rate adjustments or debt financing, thereby highlighting the financial impacts of maintaining current rates. Table 1 shows the current sewer collection rate revenues (including no additional rate revenues), projected O&M expenses, and projected CIP funding. Table 1: Rate Revenues and Expenses (Status Quo) Page 3 of 10 Page 99 of 144Figure 1 shows the results of the Status Quo scenario in four graphs: • The Revenue Requirement graph compares the revenues (lines) and expenses (stacked bars). Note that the revenues and expenses are inclusive of pass-through revenues for treatment costs paid to DSRSD and the City of Livermore. The pass- through revenues are equal to the treatment costs. In this scenario, the City’s revenues are insufficient to cover expenses. • The Fund Balance graph compares the projected ending balances for the combined sewer enterprise fund (green bars) and the reserve policy targets (dashed line). In this scenario, the City’s combined sewer enterprise fund will be negative starting in FY 2028. • The Debt Coverage graph compares the calculated debt coverage (blue line) and the required debt coverage (dashed black line). In this scenario, the City does not have any debt service, and therefore, no debt coverage requirement applies. • The Capital Projects graph shows the total CIP funding by funding source. In this scenario, the City will fund its sewer CIP with rates/cash (green bars). Figure 1: Projected Financial Plan (Status Quo) Scenario 1 - Maintain The Maintain scenario is an implementation plan that offers a balanced approach of near-term improvement spending versus program risk. For operations, this scenario includes costs to: supplement internal inspection and flushing of sewer piping and maintenance holes with contract services to document baseline conditions over the next seven years; establish a pipe blockage and root control program that is compliant with new regulations; perform specialty inspections and develop emergency response plans for all lift stations; enhance staff training; and update/enhance vehicles and equipment that are used to monitor and maintain the sewer system to reduce the risk of overflows. For capital improvements, near-term projects include two pipeline capacity improvements, rehabilitation of four lift stations, complete replacement of Lift Station 05, emergency generator improvements, replacement of 0.5 to 1 mile of piping per Page 4 of 10 Page 100 of 144year, Amberwood Siphon rehabilitation, and specialty inspections of force mains and large- diameter piping. Table 2 shows the current and additional sewer collection rate revenues, O&M expense program, and proposed CIP funding for the Maintain scenario. Total City O&M expenses over five years are equal to $48.9 million. Total CIP costs over five years are equal to $38.5 million, and $28.0 million of those CIP costs are projected to be funded through new debt issuances. Table 2: Additional Revenues, O&M, and CIP Spending (Maintain) Figure 2 shows the results of the Maintain scenario in four graphs: • The Revenue Requirement graph compares revenues (lines) and expenses (stacked bars). Note that the revenues and expenses are inclusive of pass-through revenues for treatment costs paid to DSRSD and City of Livermore. In this scenario, the City’s revenues will be sufficient to meet all expenses from FY 2028 and onward. • The Fund Balance graph compares the projected ending balances for the combined sewer enterprise fund (green bars) and the reserve policy targets (dashed line). In this scenario, the City will meet its combined sewer enterprise fund balance targets by the end of FY 2030. • The Debt Coverage graph compares the calculated debt coverage (blue line) and the required debt coverage (dashed black line). In this scenario, the City meets its debt coverage requirements for the new debt issued to fund CIP. • The Capital Projects graph shows the total CIP funding by funding source. In this scenario, the City will fund its sewer CIP with rates/cash (green bars) and new debt (blue bars). Page 5 of 10 Page 101 of 144 Figure 2: Projected Financial Plan (Maintain) Scenario 2 - Prioritize The Prioritize scenario reduces the City’s risk by more proactively investing in near-term improvements. In this scenario, O&M improvements are the same as the Maintain scenario but include implementing staffing recommendations in the near term (as opposed to deferring to out years) to address the deficiencies identified in the 2025 SSMP. It also includes increasing the budget by 20 percent to supplement contract services for inspection of piping and maintenance holes to expedite documenting baseline conditions to approximately five years (rather than seven). For capital improvements, this scenario includes the same near-term projects as the Maintain scenario plus it increases the number of lift station rehabilitations by four and increases pipe replacement to 1 to 2 miles per year. Table 3 shows the current and additional sewer collection rate revenues, O&M expense program, and proposed CIP funding for the Prioritize scenario. Total City O&M expenses over five years are equal to $54.0 million. Total CIP costs over five years are $51.5 million, and $37.0 million of those costs are projected to be funded through new debt issuances. Table 3: Additional Revenues, O&M, and CIP Spending (Prioritize) Page 6 of 10 Page 102 of 144Figure 3 shows the results of the Prioritize scenario in four graphs: • The Revenue Requirement graph compares the revenues (lines) and expenses (stacked bars). In this scenario, the City’s revenues will be sufficient to meet all expenses from FY 2028 and onward. • The Fund Balance graph compares the projected ending balances for the combined sewer enterprise fund (green bars) and the reserve policy targets (dashed line). In this scenario, the City will meet its combined sewer enterprise fund balance targets by the end of FY 2030. • The Debt Coverage graph compares the calculated debt coverage (blue line) and the required debt coverage (dashed black line). In this scenario, the City meets its debt coverage requirements for the new debt issued to fund CIP. • The Capital Projects graph shows the total CIP funding by funding source. In this scenario, the City will fund its sewer CIP with rates/cash (green bars) and new debt (blue bars). Figure 3: Projected Financial Plan (Prioritize) Scenario 3 - Defer The Defer scenario defers some near-term improvements to reduce spending, but as a result, increases program risk. In this scenario, O&M improvements are the same as the Maintain scenario, as additional deferments are not recommended for regulatory compliance. For capital improvements, this scenario includes the same near-term projects as the Maintain scenario, with the exception that it defers the four lift-station rehabilitations and a portion of the emergency generator improvements. Although keeping the improvements in the near term, it also defers one pipeline capacity improvement and the Amberwood Siphon improvement by two years. Table 4 shows the current and additional sewer collection rate revenues, O&M expense program, and proposed CIP funding for the Defer scenario. Total City O&M expenses over five years are equal to $48.9 million. Total CIP costs over five years are equal to $34.0 million, and $24.0 million of those costs are projected to be funded through new debt issuances. Page 7 of 10 Page 103 of 144 Table 4: Additional Revenues, O&M, and CIP Spending (Defer) Figure 4 shows the results of the Defer scenario in four graphs: • The Revenue Requirement graph compares the revenues (lines) and expenses (stacked bars). In this scenario, the City’s revenues will be sufficient to meet all expenses from FY 2028 and onward. • The Fund Balance graph compares the projected ending balances for the combined sewer enterprise fund (green bars) and the reserve policy targets (dashed line). In this scenario, the City will meet its combined sewer enterprise fund balance targets by the end of FY 2030. • The Debt Coverage graph compares the calculated debt coverage (blue line) and the required debt coverage (dashed black line). In this scenario, the City meets its debt coverage requirements for the new debt issued to fund CIP. • The Capital Projects graph shows the total CIP funding by funding source. In this scenario, the City will fund its sewer CIP with rates/cash (green bars) and new debt (blue bars). Figure 4: Projected Financial Plan (Defer) Page 8 of 10 Page 104 of 144SUMMARY Table 5 summarizes the three financial plan scenarios and their impact on the City’s sewer enterprise. • The Maintain scenario requires $27.4 million in additional City rate revenues over five years and $28.0 million in new debt to fund a total of $48.9 million in O&M expenses (excluding DSRSD and Livermore treatment) and $38.5 million in CIP. • The Prioritize scenario requires $38.0 million in additional City rate revenues over five years and $37.0 million in new debt to fund a total of $54.0 million in O&M expenses (excluding DSRSD and Livermore treatment) and $51.5 million in CIP. • The Defer scenario requires $25.0 million in additional City rate revenues over five years and $24.0 million in new debt to fund a total of $48.9 million in O&M expenses (excluding DSRSD and Livermore treatment) and $34.0 million in CIP. Table 5: Summary of Financial Plan Scenarios After analyzing all three scenarios, and comparing to the Status Quo scenario, staff is recommending Scenario 1 - Maintain. The analysis shows that the Status Quo is not financially sustainable to support the City's sanitary sewer system and current regulatory requirements. A rate adjustment is needed to ensure the financial sustainability of the City's sewer system. While all three implementation scenarios meet financial policies, the Maintain scenario (Scenario 1) balances near-term cost with long-term risk, providing funding for critical near- term improvements. EQUITY AND SUSTAINABILITY As a full-service municipality, the City provides a wide range of services and programs to meet the needs of all community members, including sewer collection. Setting reasonable sewer rates supports the fiscal sustainability of the City's sewer enterprise fund. OUTREACH The City has proactively shared information on sewer activities through a series of public outreach communications and events to promote collaboration and transparency. Activities to date include: Page 9 of 10 Page 105 of 144 • Livermore Pleasanton Fire Department Fire Expo - Booth, Handouts, Displays • New Web Pages (2) for Sewer Services & Programs and Sewer Rates, Ongoing Updates • Social Media Posts (1) - Monthly • Pleasanton Pipeline E-Newsletter Articles (2) - Quarterly STRATEGIC PLAN ALIGNMENT Approval of this action advances the ONE Pleasanton Strategic Plan goal of Funding our Future, Strategy 3 – Evaluation and update enterprise revenue sources, including utility rates, connection fees and user fees to address growth and meet current needs. FISCAL IMPACT The financial plan analysis summarized in this agenda report preliminarily identifies fiscal impacts to the sewer enterprise funds for implementation of its SSMP and long-term sewer CIP. Prepared by: Submitted by: Approved by: Siew-Chin Yeong, Director Siew-Chin Yeong, Director of Public Gerry Beaudin, City of Public Works Works Manager Attachments: 1. Sewer Rate Study Inputs Presentation, January 30, 2026 2. Presentation Page 10 of 10 Page 106 of 144SEWER RATESTUDY INPUTS PRESENTATION January 30, 2026 1 Agenda • Revenue inputs and assumptions • Expense inputs and assumptions • Debt inputs and assumptions • CIP inputs and assumptions • Reserve inputs and assumptions 2 1 Page 107 of 144Rate Study Overview Financial Cost-of- Rate Rate Plan Service Design Adoption Determine Annual Rate Allocate Costs of Sewer Develop Sewer Rate Structure Document Rate Revenue Needs to Maintain System Most Suitable to Meet Study in Report Financial Sufficiency District’s Goals and Determine Cost to Serve Each Objectives Adopt Rates According Develop Funding Customer Class to Proposition 218 Plan forCIP Evaluate Fixed Revenue Ratio Process 3 SEWER REVENUES 2 Page 108 of 144Non-Rate Revenue Inflationary Assumptions • Interest income is calculated based on average fund balances and a 1.8% interest rate (may be revised to reflect most current numbers recommended by City Finance team) • Interfund reimbursement revenue is held constant at $2.5k annually • Implied subsidy from OPEB fund is $39k in FY 2026 and held constant at $43k annually going forward • All other non-rate revenues (miscellaneous revenue, assessment dist penalties, etc.) are $0 for the study period Inputs 5 Rate Revenues • Rate revenues (excluding proposed rate increases) are calculated based on projected customer accounts and usage data • The current rate schedule includes: • City of Pleasanton (Collection) rates adopted through 7/1/2025 with assumed CPI increases of 2.7% effective 1/1/2026 and 3% effective 7/1/2026 • Ruby Hill (Collection) customers are charged 90% of Pleasanton rates • DSRSD (Treatment) rates adopted and proposed through 7/1/2030 • Livermore (Treatment) rates adopted and proposed through 7/1/2029 • Note that 10% reduction in Livermore rates may end in FY 2027 Inputs 6 3 Page 109 of 144 Rate Revenues • Rate revenues include: • Bi-monthly fixed service charges by customer class (charged per dwelling unit) • Consumption charges based on consumption in ccf • City of Pleasanton customers are charged Pleasanton rates for collection and DSRSD rates fortreatment • Ruby Hill customers are charged 90% of Pleasanton rates forcollection and Livermore rates for treatment (Livermore discount ends in FY 2027) Inputs 7 Adopted Rates –Pleasanton CurrentRates FY 2025 FY 2026 FY 2027 City of Pleasanton (Collection) Bi-Monthly Fixed Charges Residential Single Family $29.96 $30.77 $31.70 Duplex $45.64 $46.87 $48.28 Condo $20.57 $21.13 $21.77 Multi-Family $15.67 $16.09 $16.58 Consumption Charges Commercial Auto Steam Cleaning $1.68 $1.73 $1.79 Bakery $1.67 $1.72 $1.78 Laundry $1.68 $1.73 $1.79 Grocery with Disposal $1.62 $1.66 $1.71 Mortuary $1.97 $2.02 $2.09 Restaurant, Fast Food $1.58 $1.62 $1.67 Restaurant, Full Service $1.58 $1.62 $1.67 All Other $1.42 $1.46 $1.51 Institutional Schools, Submetered $1.37 $1.41 $1.46 Schools, Not Submetered $0.90 $0.92 $0.95 Ruby Hill (Collection) All Customers 90% 90% 90% Inputs 8 4 Page 110 of 144 Treatment Rates –DSRSD CurrentRates FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 FY 2031 DSRSD (Treatment) Bi-Monthly Fixed Charges Residential Single Family $59.97 $61.58 $65.58 $69.52 $73.69 $77.37 $81.24 Duplex $105.44 $108.28 $131.17 $139.04 $147.38 $154.75 $162.49 Condo $45.47 $46.69 $51.16 $54.22 $57.48 $60.35 $63.37 Multi-Family $45.47 $46.69 $51.16 $54.22 $57.48 $60.35 $63.37 Consumption Charges Commercial/Institutional/Industrial Less than or equal to 300 mg/L $3.39 $3.48 $3.80 $4.14 $4.51 $4.74 $4.98 Between 300 and 450 mg/L $4.33 $4.45 $4.85 $5.29 $5.77 $6.06 $6.36 Between 450 and 600 mg/L $5.27 $5.41 $5.92 $6.49 $7.11 $7.46 $7.83 Between 600 and 750 mg/L $6.21 $6.38 $6.98 $7.64 $8.37 $8.78 $9.22 Between 750 and 900 mg/L $7.15 $7.15 $8.01 $8.75 $9.55 $10.03 $10.53 Between 900 and 1,050 mg/L $8.08 $8.30 $9.06 $9.90 $10.81 $11.35 $11.92 Greater than 1,050 mg/L $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 DSRSD’s rate study is in process; rates will be effective July 1, 2026 Inputs 9 Treatment Rates –Livermore CurrentRates FY 2025 FY 2026 FY2027 FY2028 FY2029 FY 2030 Livermore (Treatment) Bi-Monthly Fixed Charges 10% reductionin Livermorerateswillend in FY 2027 Residential Single Family $128.97 $134.98 $155.98 $162.22 $168.70 $175.46 Consumption Charges Commercial Restaurant, Full Service $10.98 $11.36 $13.12 $13.65 $14.19 $14.76 All Other $4.88 $4.87 $5.63 $5.85 $6.08 $6.33 10% reduction in Livermore may end in FY 2027; has not been decided yet Inputs 10 5 Page 111 of 144 Customer Accounts (Dwelling Units) Customer Accounts FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 City of Pleasanton Collection/ DSRSD Treatment Utility Billing Single Family 18,895 18,895 18,895 18,895 18,895 18,895 Single Family w/2nd Res 206 206 206 206 206 206 Condo 1,585 1,585 1,585 1,585 1,585 1,585 Multi-Family 5,895 5,895 5,895 5,895 5,895 5,895 Subtotal - Utility Billing 26,581 26,581 26,581 26,581 26,581 26,581 Property Tax Roll Single Family 179 179 179 179 179 179 Single Family w/2nd Res 0 0 0 0 0 0 Condo 256 256 256 256 256 256 Multi-Family 0 0 0 0 0 0 Subtotal - Property Tax Roll 435 435 435 435 435 435 Ruby Hill Collection/ Livermore Treatment Utility Billing Single Family 851 851 851 851 851 851 Subtotal - Utility Billing 851 851 851 851 851 851 Projections 11 Customer Usage –City of Pleasanton Billed Consumption (ccf) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 City of Pleasanton Commercial (Net of EVAP Credits) Auto Steam Cleaning 143 143 143 143 143 143 Bakery 18,591 18,591 18,591 18,591 18,591 18,591 Laundry 543 543 543 543 543 543 Grocery with Disposal 5,159 5,159 5,159 5,159 5,159 5,159 Mortuary 87 87 87 87 87 87 Restaurant, Fast Food 27,667 27,667 27,667 27,667 27,667 27,667 Restaurant, Full Service 105,993 105,993 105,993 105,993 105,993 105,993 All Other 430,482 430,482 430,482 430,482 430,482 430,482 Subtotal - Commercial (Net of EVAP Credits) 588,665 588,665 588,665 588,665 588,665 588,665 Institutional Schools submetered 12,416 12,416 12,416 12,416 12,416 12,416 Schools not submetered 33,462 33,462 33,462 33,462 33,462 33,462 Subtotal - Institutional 45,878 45,878 45,878 45,878 45,878 45,878 Total - City of Pleasanton 634,543 634,543 634,543 634,543 634,543 634,543 Projections 12 6 Page 112 of 144 Customer Usage –DSRSD Billed Consumption (ccf) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 DSRSD Commercial/Institutional (Net of EVAP Credits) Less than or equal to 300 mg/L 480,304 480,304 480,304 480,304 480,304 480,304 Between 300 and 450 mg/L 0 0 0 0 0 0 Between 450 and 600 mg/L 27,623 27,623 27,623 27,623 27,623 27,623 Between 600 and 750 mg/L 105,805 105,805 105,805 105,805 105,805 105,805 Between 750 and 900 mg/L 5,226 5,226 5,226 5,226 5,226 5,226 Between 900 and 1,050 mg/L 18,723 18,723 18,723 18,723 18,723 18,723 Greater than 1,050 mg/L 0 0 0 0 0 0 Subtotal - Commercial/Institutional (Net of EVAP Credits) 637,681 637,681 637,681 637,681 637,681 637,681 Total - DSRSD 637,681 637,681 637,681 637,681 637,681 637,681 Projections 13 Customer Usage –Ruby Hill &Livermore Billed Consumption (ccf) FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Ruby Hill Collection / Livermore Treatment Commercial Restaurant, Full Service 4,649 4,649 4,649 4,649 4,649 4,649 All Other 786 786 786 786 786 786 Subtotal - Commercial 5,435 5,435 5,435 5,435 5,435 5,435 Total - Ruby Hill Collection / Livermore Treatment 5,435 5,435 5,435 5,435 5,435 5,435 Projections 14 7 Page 113 of 144 OtherCustomers –Castlewood &Alco Other Customers Units FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Pleasanton Collection Castlewood Single Family DU 206 206 206 206 206 206 Restaurant, Full Service ccf 5,603 5,603 5,603 5,603 5,603 5,603 Alco All Other ccf 38,628 38,628 38,628 38,628 38,628 38,628 DSRSD Treatment Castlewood Single Family DU 206 206 206 206 206 206 Between 600 and 750 mg/L ccf 5,603 5,603 5,603 5,603 5,603 5,603 Alco Less than or equal to 300 mg/L ccf 38,628 38,628 38,628 38,628 38,628 38,628 Note thatCastlewood customers are charged 7.875% of Pleasanton charges Projections 15 Rate Revenue Summary –City of Pleasanton Calculated Rate Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 City of Pleasanton (Collection) Bi-Monthly Fixed Charges Residential $4,266,570 $4,324,200 $4,514,405 $4,514,405 $4,514,405 $4,514,405 Subtotal - Bi-Monthly Fixed Charges $4,266,570 $4,324,200 $4,514,405 $4,514,405 $4,514,405 $4,514,405 Consumption Charges Commercial $863,196 $875,066 $916,564 $916,564 $916,564 $916,564 Institutional $47,126 $47,709 $49,916 $49,916 $49,916 $49,916 Subtotal - Consumption Charges $910,321 $922,774 $966,480 $966,480 $966,480 $966,480 Total - City of Pleasanton (Collection) $5,176,892 $5,246,975 $5,480,885 $5,480,885 $5,480,885 $5,480,885 Projections 16 8 Page 114 of 144 Rate Revenue Summary –Ruby Hill Calculated Rate Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Ruby Hill (Collection) Bi-Monthly Fixed Charges Residential $137,678 $139,539 $145,674 $145,674 $145,674 $145,674 Subtotal - Bi-Monthly Fixed Charges $137,678 $139,539 $145,674 $145,674 $145,674 $145,674 Consumption Charges Commercial $7,615 $7,713 $8,056 $8,056 $8,056 $8,056 Institutional $0 $0 $0 $0 $0 $0 Subtotal - Consumption Charges $7,615 $7,713 $8,056 $8,056 $8,056 $8,056 Total - Ruby Hill (Collection) $145,294 $147,253 $153,730 $153,730 $153,730 $153,730 Projections 17 Rate Revenue Summary –DSRSD Calculated Rate Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 DSRSD (Treatment) Bi-Monthly Fixed Charges Residential $9,103,930 $9,226,124 $10,041,853 $10,644,513 $11,283,359 $11,846,828 Subtotal - Bi-Monthly Fixed Charges $9,103,930 $9,226,124 $10,041,853 $10,644,513 $11,283,359 $11,846,828 Consumption Charges Commercial/Institutional/Industrial $2,619,501 $2,654,101 $2,938,693 $3,207,167 $3,500,462 $3,676,599 Subtotal - Consumption Charges $2,619,501 $2,654,101 $2,938,693 $3,207,167 $3,500,462 $3,676,599 Total - DSRSD (Treatment) $11,723,430 $11,880,225 $12,980,546 $13,851,680 $14,783,822 $15,523,427 Projections 18 9 Page 115 of 144 Rate Revenue Summary –Livermore Calculated Rate Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Livermore (Treatment) Bi-Monthly Fixed Charges Residential $658,521 $673,864 $796,434 $828,295 $861,382 $895,899 Subtotal - Bi-Monthly Fixed Charges $658,521 $673,864 $796,434 $828,295 $861,382 $895,899 Consumption Charges Commercial $54,882 $55,761 $65,420 $68,057 $70,748 $73,595 Subtotal - Consumption Charges $54,882 $55,761 $65,420 $68,057 $70,748 $73,595 Total - Livermore (Treatment) $713,403 $729,625 $861,854 $896,352 $932,130 $969,493 Projections 19 Rate Revenue Summary –Adjustments Calculated Rate Revenue Note FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 Rate Adjustments Pleasanton Collection Industrial Inputs $28,564 $28,564 $28,564 $28,564 $28,564 Industrial Pretreatment Inputs $0 $0 $0 $0 $0 Castlewood Calculated $3,572 $3,620 $3,779 $3,779 $3,779 Alco Calculated $54,852 $55,624 $58,328 $58,328 $58,328 Total - Pleasanton Collection $86,988 $87,808 $90,671 $90,671 $90,671 DSRSD Treatment Industrial Inputs $26,310 $26,310 $26,310 $26,310 $26,310 Industrial Pretreatment Inputs $68,358 $68,358 $68,358 $68,358 $68,358 Castlewood Calculated $108,916 $110,387 $120,164 $128,732 $137,976 Alco Calculated $130,949 $132,687 $146,786 $159,920 $174,212 Total - DSRSD Treatment $334,532 $337,742 $361,618 $383,319 $406,856 Projections 20 10 Page 116 of 144 Rate Revenue Summary –Total&Revenue Check Calculated Rate Revenue FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Subtotal - Pleasanton $5,409,173 $5,482,035 $5,725,286 $5,725,286 $5,725,286 $5,725,286 Subtotal - DSRSD $12,057,963 $12,217,967 $13,342,164 $14,234,999 $15,190,677 $15,946,013 Subtotal - Livermore $713,403 $729,625 $861,854 $896,352 $932,130 $969,493 Total - Sewer Rate Revenues $18,180,538 $18,429,628 $19,929,303 $20,856,638 $21,848,094 $22,640,792 Revenue Check (FY 2025) Pleasanton DSRSD Livermore Total Calculated $5,409,173 $12,057,963 $713,403 $18,180,538 Actual /Budget $5,411,707 $12,164,991 $710,543 $18,287,241 Difference (%) 0.0% -0.9% 0.4% -0.6% Difference ($) ($2,533) ($107,028) $2,859 ($106,703) Projections 21 Revenue Summary Revenues FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Actual Projected Projected Projected Projected Projected Revenues Rate revenues and interest income (in green) from this year onward are calculated. Sewer O&M and Replacement (Funds 430, 431, 434) SEWER SERVICE CHARGE PLEASANTON $5,296,816 $5,482,035 $5,725,286 $5,725,286 $5,725,286 $5,725,286 SEWER SERVICE CHARGE DSRSD $12,164,991 $12,217,967 $13,342,164 $14,234,999 $15,190,677 $15,946,013 SEWER SERV @RUBYHILL -LIVERMR $710,543 $729,625 $861,854 $896,352 $932,130 $969,493 INTEREST - CITY FUNDS $411,107 $233,601 $108,093 $80,279 $115,643 $160,283 FEMA/OES GRANT-DISASTER AID $31,576 $0 $0 $0 $0 $0 MISCELLANEOUS REVENUE $1,572 $0 $0 $0 $0 $0 WRITE-OFF OF STALE DATED CHKS $172 $0 $0 $0 $0 $0 ASSESSMENT DIST PENALITIES $118 $0 $0 $0 $0 $0 INTERFUND REIMB - REVENUE $387 $2,500 $2,500 $2,500 $2,500 $2,500 GENERAL FUND SUBSIDY (DISCOUNT PROGRAM) $114,891 $0 $0 $0 $0 $0 IMPLIED SUBSIDY FROM OPEB FUND $23,000 $39,000 $43,000 $43,000 $43,000 $43,000 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Subtotal - Sewer O&M and Replacement (Funds 430, 431, 434) $18,755,173 $18,704,728 $20,082,896 $20,982,417 $22,009,236 $22,846,575 Total - Revenues $18,755,173 $18,704,728 $20,082,896 $20,982,417 $22,009,236 $22,846,575 Projections 22 11 Page 117 of 144 SEWER EXPENSES Expense Inflationary Assumptions • Three expense categories: • Base Expenses • New Expense Programs (Dependent on CIP Scenario) • Additional Staffing (Dependent on CIP Scenario) • All base expenses are inflated by 3% each yearbased on FY 2026 projected values except for: • Benefits and utilities which are inflated by 5% • R&R fund (Fund 434) base expenses are held constant at $0 after FY 2026 • New expense program and additional staffing cost values were provided by staff Inputs 24 12 Page 118 of 144 Base Expense Detail Sewer Fund Expenses Object Escalation Type FY 2025 FY 2026 Actual Projected Sewer O&M and Replacement (Funds430 and 431) REGULAR FULL TIME 400001 Salaries Fixed $997,787 $1,695,311 TEMPORARY SALARIES 400003 Salaries Fixed $41,606 $78,000 VACATION 400031 Salaries Fixed $47,174 $0 SICK 400032 Salaries Fixed $24,090 $0 FLOATING HOLIDAY 400033 Salaries Fixed $26,438 $0 ADMIN LEAVE 400034 Salaries Fixed $8,161 $0 OTHER LEAVE 400035 Salaries Fixed $55,447 $0 COMP TIME TAKEN 400036 Salaries Fixed $14,053 $0 OVERTIME 400051 Salaries Fixed $5,010 $35,000 PREMIUM PAY - PERSABLE 400061 Salaries Fixed $29,370 $19,279 PREMIUM PAY-NON PERSABLE 400062 Salaries Fixed $32,231 $0 MANAGER VEHICLE ALLOWANCE 400065 Salaries Fixed $3,080 $3,480 MEAL ALLOWANCE - PCEA 400066 Salaries Fixed $84 $0 BILINGUAL PAY 400067 Salaries Fixed $0 $1,300 ADMIN LEAVE BUYBACK 400069 Salaries Fixed $8,598 $6,077 VACATION LEAVE BUYBACK 400070 Salaries Fixed $18,337 $0 COMP TIME BUYBACK 400072 Salaries Fixed $2,092 $0 MISC OTHER PAY 400073 Salaries Fixed $258 $0 MEDICARE- ER 400102 Benefits Fixed $18,983 $25,274 MEDICAL - ER 400103 Benefits Fixed $212,975 $366,518 DENTAL - ER 400104 Benefits Fixed $14,909 $25,234 VISION - ER 400105 Benefits Fixed $196 $237 BEN/EAP 400106 Benefits Fixed $467 $730 APPLE - ER 400107 Benefits Fixed $159 $0 LIFE AD&D - ER 400108 Benefits Fixed $644 $922 LTD - ER 400109 Benefits Fixed $2,647 $3,966 STD -ER 400110 Benefits Fixed $746 $1,191 457 CONTRIB 400112 Benefits Fixed $17,194 $27,437 RHSP CONTRIB 400113 Benefits Fixed $6,421 $10,348 UNUSED VACATION/COMP 400122 Benefits Fixed $3,188 $2,472 RETIREE MEDICAL ACCRUAL EXPENS 400152 Benefits Fixed $152,840 $135,026 Inputs 25 Base Expense Detail Sewer Fund Expenses Object Escalation Type FY 2025 FY 2026 Actual Projected Sewer O&M and Replacement (Funds 430 and 431) WORKERS COMP ACCRUAL EXP 400153 Benefits Fixed $94,765 $115,818 RETIREMENT EXPENSE 400202 Benefits Fixed $601,834 $739,729 TRAVEL & TRAINING EXP 410102 General Fixed $15,499 $25,000 MISC PERSONNEL COSTS 410105 General Fixed $1,850 $5,000 GASOLINE-CITY VEHICLE 410106 Utilities Fixed $37,970 $50,000 MISC REPAIRS & MAINT CONTRACTS 420101 General Fixed $120,982 $62,000 PARTS & EQUIPMENT 420102 General Fixed $26,218 $25,000 PROFESSIONAL SERVICES 430101 General Fixed $32,577 $145,000 OTHER PROFESSIONAL SERVICES 430105 General Fixed $66,616 $56,000 CONTRACT SERVICES 430107 General Fixed $101,851 $75,000 SEWER SERVICE FEES-DSRSD 431132 Utilities Variable $12,164,991 SEWER SERV @RUBYHILL - LIVERMR 460107 Utilities Variable $710,543 ELECTRICITY 431133 Utilities Variable $161,284 $110,000 OFFICE SUPPLIES 433153 General Fixed $490 $2,500 MISC SUPPLIES AND EQUIPMENT 433154 General Fixed $80,652 $75,000 DATA PROCESSING EQUIP/SOFTWARE 433155 General Fixed $81,045 $75,000 DUES,PUBLICATIONS,FILMS,BOOKS 433156 General Fixed $12,779 $20,000 UNIFORM COSTS 433157 General Fixed $5,866 $9,000 RENTAL EXPENSES 433158 General Fixed $138,268 $50,000 INSURANCE 433159 General Fixed $0 $96,000 HAZARDOUS MATERIAL DISPOSAL 433161 General Fixed $0 $10,000 MISC SERVICE CHARGES 433167 General Fixed $23,201 $25,000 MISCELLANEOUS EXPENSE 433170 General Fixed $0 $30,000 INTERFUNDEXPENSE (Fund 430) 433172 General Fixed $1,320,398 $1,389,400 INTERFUNDEXPENSE (Fund 431) 433172 General Fixed $260,448 $330,000 WRITE-OFF EXPENDITURE 433177 General Fixed $20,828 $0 Subtotal - Sewer O&M and Replacement (Funds 430 and 431) $17,826,139 $5,958,249 Inputs 26 13 Page 119 of 144 Base Expense Detail Sewer Fund Expenses Object Escalation Type FY 2025 FY 2026 Actual Projected Sewer R&R (Fund 434) MISC REPAIRS & MAINT CONTRACTS 420101 General Fixed $77,867 $0 CONTRACT SERVICES 430107 General Fixed $0 $300,000 MACHINERY AND EQUIPMENT 440104 General Fixed $158,689 $175,000 BUILDINGS & STRUCTURES 440105 General Fixed $0 $720,000 VEHICLES 440107 General Fixed $69,786 $1,280,000 Placeholder Placeholder Fixed Placeholder Placeholder Fixed Placeholder Placeholder Fixed Placeholder Placeholder Fixed Placeholder Placeholder Fixed Subtotal - Sewer R&R (Fund 434) $306,341 $2,475,000 Inputs 27 Base Expense Summary Expenses Summary FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Actual Projected Projected Projected Projected Projected Expenses Sewer O&M and Replacement (Funds 430 and 431) DSRSD Treatment $12,164,991 $12,217,967 $13,342,164 $14,234,999 $15,190,677 $15,946,013 Livermore Treatment $710,543 $729,625 $861,854 $896,352 $932,130 $969,493 Base Expenses $4,950,605 $5,958,249 $6,169,295 $6,388,286 $6,615,543 $6,851,399 New Expense Programs $0 $0 $1,775,000 $1,775,000 $1,775,000 $1,925,000 Staffing Related to CIP Scenarios $0 $0 $1,000,000 $1,300,000 $1,300,000 $1,000,000 Sewer R&R (Fund 434) Base Expenses $306,341 $2,475,000 $0 $0 $0 $0 New Expense Programs $0 $0 $954,613 $550,000 $550,000 $550,000 Total - Expenses $18,132,481 $21,380,841 $24,102,925 $25,144,638 $26,363,351 $27,241,905 • Note that DSRSD and Livermore Treatment expenses are based on calculated values from the revenue summary Projections 28 14 Page 120 of 144 New Expense Program - Maintain - Summary Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Maintain Sewer O&M (Fund 430) Sewer Operator Salary Adjustment Allowance $0 $0 $350,000 $350,000 $350,000 $350,000 Engineering On-Call Support $0 $0 $50,000 $50,000 $50,000 $50,000 Contract:CCTV Inspection and Flushing $0 $0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 Contract: Root Foaming Program $0 $0 $200,000 $200,000 $200,000 $200,000 Software: Manhole Condition Assessment $0 $0 $100,000 $100,000 $100,000 $100,000 Lift Station Inspection Program $0 $0 $0 $0 $0 $150,000 FOG Inspection Program $0 $0 $0 $0 $0 $0 Creating SOPs for daily operational duties $0 $0 $25,000 $25,000 $25,000 $25,000 Station Emergency Response Plan for all 10 lift station $0 $0 $50,000 $50,000 $50,000 $50,000 Sewer Siphon Inspections (8), approx. 2,600 LF total $0 $0 $0 $0 $0 $0 Financial Management Allowance $0 $0 $0 $0 $0 $0 Administration Support Allowance $0 $0 $0 $0 $0 $0 Sewer Operator Allowance $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Subtotal - Sewer O&M (Fund 430) $0 $0 $1,775,000 $1,775,000 $1,775,000 $1,925,000 Sewer R&R (Fund 434) Emergency Repair (Unprogrammed) $0 $0 $0 $0 $0 $0 Manhole Smart Cover Upgrade $0 $0 $50,000 $50,000 $50,000 $50,000 Sewer collection system repairs (pipe spot repairs and facility repairs) $0 $0 $500,000 $500,000 $500,000 $500,000 Equipment and Vehicles (SEWER) $0 $0 $404,613 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Subtotal - Sewer R&R (Fund 434) $0 $0 $954,613 $550,000 $550,000 $550,000 Total - Maintain $0 $0 $2,729,613 $2,325,000 $2,325,000 $2,475,000 Inputs 29 New Expense Program - Prioritize - Summary Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Prioritize Sewer O&M (Fund 430) Sewer Operator Salary Adjustment Allowance $0 $0 $350,000 $350,000 $350,000 $350,000 Engineering On-Call Support $0 $0 $150,000 $150,000 $150,000 $150,000 Contract:CCTV Inspection and Flushing $0 $0 $1,200,000 $1,200,000 $1,200,000 $1,200,000 Contract: Root Foaming Program $0 $0 $200,000 $200,000 $200,000 $200,000 Software: Manhole Condition Assessment $0 $0 $100,000 $100,000 $100,000 $100,000 Lift Station Inspection Program $0 $0 $0 $0 $0 $150,000 FOG Inspection Program $0 $0 $0 $0 $0 $0 Creating SOPs for daily operational duties $0 $0 $50,000 $50,000 $50,000 $50,000 Station Emergency Response Plan for all 10 lift station $0 $0 $50,000 $50,000 $50,000 $50,000 Sewer Siphon Inspections (8), approx. 2,600 LF total $0 $0 $100,000 $100,000 $0 $0 Financial Management Allowance $0 $0 $250,000 $250,000 $250,000 $250,000 Administration Support Allowance $0 $0 $250,000 $250,000 $250,000 $250,000 Sewer Operator Allowance $0 $0 $250,000 $250,000 $250,000 $250,000 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Subtotal - Sewer O&M (Fund 430) $0 $0 $2,950,000 $2,950,000 $2,850,000 $3,000,000 Sewer R&R (Fund 434) Emergency Repair (Unprogrammed) $0 $0 $0 $0 $0 $0 Manhole Smart Cover Upgrade $0 $0 $100,000 $100,000 $100,000 $100,000 Sewer collection system repairs (pipe spot repairs and facility repairs) $0 $0 $500,000 $500,000 $500,000 $500,000 Equipment and Vehicles (SEWER) $0 $0 $504,613 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Subtotal - Sewer R&R (Fund 434) $0 $0 $1,104,613 $600,000 $600,000 $600,000 Total - Prioritize $0 $0 $4,054,613 $3,550,000 $3,450,000 $3,600,000 Inputs 30 15 Page 121 of 144 New Expense Program - Defer - Summary Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Defer Sewer O&M (Fund 430) Sewer Operator Salary Adjustment Allowance $0 $0 $350,000 $350,000 $350,000 $350,000 Engineering On-Call Support $0 $0 $50,000 $50,000 $50,000 $50,000 Contract:CCTV Inspection and Flushing $0 $0 $1,000,000 $1,000,000 $1,000,000 $1,000,000 Contract: Root Foaming Program $0 $0 $200,000 $200,000 $200,000 $200,000 Software: Manhole Condition Assessment $0 $0 $100,000 $100,000 $100,000 $100,000 Lift Station Inspection Program $0 $0 $0 $0 $0 $150,000 FOG Inspection Program $0 $0 $0 $0 $0 $0 Creating SOPs for daily operational duties $0 $0 $25,000 $25,000 $25,000 $25,000 Station Emergency Response Plan for all 10 lift station $0 $0 $50,000 $50,000 $50,000 $50,000 Sewer Siphon Inspections (8), approx. 2,600 LF total $0 $0 $0 $0 $0 $0 Financial Management Allowance $0 $0 $0 $0 $0 $0 Administration Support Allowance $0 $0 $0 $0 $0 $0 Sewer Operator Allowance $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Subtotal - Sewer O&M (Fund 430) $0 $0 $1,775,000 $1,775,000 $1,775,000 $1,925,000 Sewer R&R (Fund 434) Emergency Repair (Unprogrammed) $0 $0 $0 $0 $0 $0 Manhole Smart Cover Upgrade $0 $0 $50,000 $50,000 $50,000 $50,000 Sewer collection system repairs (pipe spot repairs and facility repairs) $0 $0 $500,000 $500,000 $500,000 $500,000 Equipment and Vehicles (SEWER) $0 $0 $404,613 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Subtotal - Sewer R&R (Fund 434) $0 $0 $954,613 $550,000 $550,000 $550,000 Total - Defer $0 $0 $2,729,613 $2,325,000 $2,325,000 $2,475,000 Inputs 31 Additional Staffing Summary Expenses FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Staffing Related to CIP Scenarios Maintain Engineering/Administration FTEs $0 $0 $600,000 $900,000 $900,000 $600,000 Additional Allowance for Program Management $0 $0 $400,000 $400,000 $400,000 $400,000 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Total - Maintain $0 $0 $1,000,000 $1,300,000 $1,300,000 $1,000,000 Prioritize Engineering/Administration FTEs $0 $0 $600,000 $1,200,000 $900,000 $600,000 Additional Allowance for Program Management $0 $0 $400,000 $400,000 $400,000 $400,000 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Total - Prioritize $0 $0 $1,000,000 $1,600,000 $1,300,000 $1,000,000 Defer Engineering/Administration FTEs $0 $0 $600,000 $600,000 $900,000 $900,000 Additional Allowance for Program Management $0 $0 $400,000 $400,000 $400,000 $400,000 Placeholder $0 $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 $0 Total - Defer $0 $0 $1,000,000 $1,000,000 $1,300,000 $1,300,000 Inputs 32 16 Page 122 of 144 Total Expense Summary –Maintain Scenario Expenses Summary FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Actual Projected Projected Projected Projected Projected Expenses Sewer O&Mand Replacement(Funds430 and 431) DSRSD Treatment $12,164,991 $12,217,967 $13,342,164 $14,234,999 $15,190,677 $15,946,013 Livermore Treatment $710,543 $729,625 $861,854 $896,352 $932,130 $969,493 Base Expenses $4,950,605 $5,958,249 $6,169,295 $6,388,286 $6,615,543 $6,851,399 New Expense Programs $0 $0 $1,775,000 $1,775,000 $1,775,000 $1,925,000 Staffing Related to CIP Scenarios $0 $0 $1,000,000 $1,300,000 $1,300,000 $1,000,000 Sewer R&R (Fund 434) Base Expenses $306,341 $2,475,000 $0 $0 $0 $0 New Expense Programs $0 $0 $954,613 $550,000 $550,000 $550,000 Total - Expenses $18,132,481 $21,380,841 $24,102,925 $25,144,638 $26,363,351 $27,241,905 % Change 17.9% 12.7% 4.3% 4.8% 3.3% Projections 33 Total Expense Summary –Prioritize Scenario Expenses Summary FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Actual Projected Projected Projected Projected Projected Expenses Sewer O&Mand Replacement(Funds430 and 431) DSRSD Treatment $12,164,991 $12,217,967 $13,342,164 $14,234,999 $15,190,677 $15,946,013 Livermore Treatment $710,543 $729,625 $861,854 $896,352 $932,130 $969,493 Base Expenses $4,950,605 $5,958,249 $6,169,295 $6,388,286 $6,615,543 $6,851,399 New Expense Programs $0 $0 $2,950,000 $2,950,000 $2,850,000 $3,000,000 Staffing Related to CIP Scenarios $0 $0 $1,000,000 $1,600,000 $1,300,000 $1,000,000 Sewer R&R (Fund 434) Base Expenses $306,341 $2,475,000 $0 $0 $0 $0 New Expense Programs $0 $0 $1,104,613 $600,000 $600,000 $600,000 Total - Expenses $18,132,481 $21,380,841 $25,427,925 $26,669,638 $27,488,351 $28,366,905 % Change 17.9% 18.9% 4.9% 3.1% 3.2% Projections 34 17 Page 123 of 144 TotalExpense Summary –Defer Scenario Expenses Summary FY 2025 FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Actual Projected Projected Projected Projected Projected Expenses Sewer O&Mand Replacement(Funds430 and 431) DSRSD Treatment $12,164,991 $12,217,967 $13,342,164 $14,234,999 $15,190,677 $15,946,013 Livermore Treatment $710,543 $729,625 $861,854 $896,352 $932,130 $969,493 Base Expenses $4,950,605 $5,958,249 $6,169,295 $6,388,286 $6,615,543 $6,851,399 New Expense Programs $0 $0 $1,775,000 $1,775,000 $1,775,000 $1,925,000 Staffing Related to CIP Scenarios $0 $0 $1,000,000 $1,000,000 $1,300,000 $1,300,000 Sewer R&R (Fund 434) Base Expenses $306,341 $2,475,000 $0 $0 $0 $0 New Expense Programs $0 $0 $954,613 $550,000 $550,000 $550,000 Total - Expenses $18,132,481 $21,380,841 $24,102,925 $24,844,638 $26,363,351 $27,541,905 % Change 17.9% 12.7% 3.1% 6.1% 4.5% Projections 35 SEWER DEBT 18 Page 124 of 144 Existing and Proposed Debt • The City has no existing debt • The City is proposing new debt depending on the CIP scenario chosen based on the following assumptions: Key Assumptions FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Proposed Debt Terms Interest Rate 6.0% 6.0% 6.0% 6.0% 6.0% Term (years) 30 30 30 30 30 Issuance Costs 2.0% 2.0% 2.0% 2.0% 2.0% • Proposed debt will be subject to a debt coverage requirement of 125% which means that net operating revenues divided by annual debt service must be greater than 125% in each year of the study period Inputs 37 Proposed Debt –Maintain Scenario Proposed Debt FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Debt Proceeds for CIP $0 $0 $11,000,000 $10,500,000 $6,500,000 Debt Issuance $0 $0 $11,224,490 $10,714,286 $6,632,653 Annual Debt Service Payment $0 $0 $815,447 $778,381 $481,855 Proposed Debt Debt Issuance - FY 2026 $0 $0 $0 $0 $0 Debt Issuance - FY 2027 $0 $0 $0 $0 Debt Issuance - FY 2028 $815,447 $815,447 $815,447 Debt Issuance - FY 2029 $778,381 $778,381 Debt Issuance - FY 2030 $481,855 Debt Issuance - FY 2031 Debt Issuance - FY 2032 Debt Issuance - FY 2033 Debt Issuance - FY 2034 Debt Issuance - FY 2035 Total - Proposed Debt $0 $0 $815,447 $1,593,828 $2,075,683 Projections 38 19 Page 125 of 144 Proposed Debt –Prioritize Scenario Proposed Debt FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Debt Proceeds for CIP $0 $0 $16,000,000 $12,000,000 $9,000,000 Debt Issuance $0 $0 $16,326,531 $12,244,898 $9,183,673 Annual Debt Service Payment $0 $0 $1,186,105 $889,579 $667,184 Proposed Debt Debt Issuance - FY 2026 $0 $0 $0 $0 $0 Debt Issuance - FY 2027 $0 $0 $0 $0 Debt Issuance - FY 2028 $1,186,105 $1,186,105 $1,186,105 Debt Issuance - FY 2029 $889,579 $889,579 Debt Issuance - FY 2030 $667,184 Debt Issuance - FY 2031 Debt Issuance - FY 2032 Debt Issuance - FY 2033 Debt Issuance - FY 2034 Debt Issuance - FY 2035 Total - Proposed Debt $0 $0 $1,186,105 $2,075,683 $2,742,867 Projections 39 Proposed Debt –Defer Scenario Proposed Debt FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Debt Proceeds for CIP $0 $0 $3,500,000 $9,500,000 $11,000,000 Debt Issuance $0 $0 $3,571,429 $9,693,878 $11,224,490 Annual Debt Service Payment $0 $0 $259,460 $704,250 $815,447 Proposed Debt Debt Issuance - FY 2026 $0 $0 $0 $0 $0 Debt Issuance - FY 2027 $0 $0 $0 $0 Debt Issuance - FY 2028 $259,460 $259,460 $259,460 Debt Issuance - FY 2029 $704,250 $704,250 Debt Issuance - FY 2030 $815,447 Debt Issuance - FY 2031 Debt Issuance - FY 2032 Debt Issuance - FY 2033 Debt Issuance - FY 2034 Debt Issuance - FY 2035 Total - Proposed Debt $0 $0 $259,460 $963,710 $1,779,157 Projections 40 20 Page 126 of 144 SEWER CIP CIP Summary –MaintainScenario Capital Improvement Projects (CIP) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Maintain Priority A - Capacity & Reliability Improvement Projects Project 1B: Upsize Sunol Blvd Sewers $1,664,000 $0 $0 $0 $0 Project 2A: Bernal Ave Pipe Bridge $0 $432,640 $3,295,852 $0 $0 Project 3: Upsize Pipes downstream of Stoneridge Mall $0 $0 $0 $0 $0 Project 4A: East Pleasanton Capacity Project A (Kiewit and Arroyo Lago) $0 $0 $0 $0 $270,432 Project 4B: East PleasantonCapacity Project B (Amazon, East Lakes, SiteH) $0 $0 $0 $0 $0 West Las Positas Boulevard Multimodal Reconstruction $520,000 $0 $0 $0 $0 Sewer Capacity Evaluation $38,140 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - Capacity & Reliability Improvement Projects $2,222,140 $432,640 $3,295,852 $0 $270,432 Priority A - Lift Station Projects LS-02, -07, -08, -10 Improvements $0 $0 $0 $0 $0 LS-04, -12, -13, -15 Improvements $0 $0 $528,686 $549,834 $0 LS-05 Full Replacement Project $0 $0 $911,140 $6,211,949 $0 EARS and EALS Condition Assessment, Capacity Evaluation, and Predesign $31,302 $540,908 $0 $0 $0 Generator Replacement - Sewer and Storm $1,934,400 $0 $0 $1,169,859 $3,649,959 Sewer Station S-14 Electrical Improvements $668,864 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - Lift Station Projects $2,634,566 $540,908 $1,439,826 $7,931,641 $3,649,959 Projections 42 21 Page 127 of 144 CIP Summary –MaintainScenario Capital Improvement Projects (CIP) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Maintain Priority A - Condition AssesmentProjects Pipeline Replacement (1-2 mile of system) $759,200 $540,800 $1,687,296 $1,754,788 $1,824,979 Amberwood Siphon $0 $292,032 $3,442,084 $0 $0 Priority A - Annual Sewer System Improvements for Resurfacing $0 $270,400 $281,216 $292,465 $304,163 Large Diameter Inspection Study $0 $162,240 $0 $0 $0 Denker Road Sewer Replacement $676,000 $1,081,600 $0 $0 $0 Cathodic Protection and I&I Studies $0 $162,240 $0 $0 $0 Cathodic Protection Installation $0 $0 $562,432 $584,929 $608,326 Force Main Desktop Analysis and Inspections $0 $324,480 $337,459 $0 $0 Sewer System Management Plan $138,069 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - Condition AssesmentProjects $1,573,269 $2,833,792 $6,310,487 $2,632,182 $2,737,469 Total - Maintain $6,429,976 $3,807,340 $11,046,164 $10,563,823 $6,657,859 Projections 43 CIP Summary –Prioritize Scenario Capital Improvement Projects (CIP) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Prioritize Priority A - Capacity & Reliability Improvement Projects Project 1B: Upsize Sunol Blvd Sewers $1,664,000 $0 $0 $0 $0 Project 2A: Bernal Ave Pipe Bridge $0 $432,640 $3,295,852 $0 $0 Project 3: Upsize Pipes downstream of Stoneridge Mall $0 $0 $0 $0 $0 Project 4A: East Pleasanton Capacity Project A (Kiewit and Arroyo Lago) $0 $0 $0 $0 $270,432 Project 4B: East Pleasanton Capacity Project B (Amazon, East Lakes, Site H) $0 $0 $0 $0 $0 West Las Positas Boulevard Multimodal Reconstruction $520,000 $0 $0 $0 $0 Sewer Capacity Evaluation $38,140 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - Capacity & Reliability Improvement Projects $2,222,140 $432,640 $3,295,852 $0 $270,432 Priority A - Lift Station Projects LS-02, -07, -08, -10 Improvements $0 $0 $0 $830,600 $863,824 LS-04, -12, -13, -15 Improvements $0 $0 $528,686 $549,834 $0 LS-05 Full Replacement Project $0 $0 $911,140 $6,211,949 $0 EARS and EALS Condition Assessment, Capacity Evaluation, and Predesign $31,302 $540,908 $0 $0 $0 Generator Replacement - Sewer and Storm $1,934,400 $0 $0 $1,169,859 $3,649,959 Sewer Station S-14 Electrical Improvements $668,864 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - Lift Station Projects $2,634,566 $540,908 $1,439,826 $8,762,241 $4,513,782 Projections 44 22 Page 128 of 144 CIP Summary –Prioritize Scenario Capital Improvement Projects (CIP) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Prioritize Priority A - Condition AssesmentProjects Pipeline Replacement (1-2 mile of system) $759,200 $973,440 $6,749,184 $3,509,576 $3,649,959 Amberwood Siphon $0 $292,032 $3,442,084 $0 $0 Priority A - Annual Sewer System Improvements for Resurfacing $0 $378,560 $393,702 $409,450 $425,829 Large Diameter Inspection Study $0 $162,240 $0 $0 $0 Denker Road Sewer Replacement $676,000 $1,081,600 $0 $0 $0 Cathodic Protection and I&I Studies $0 $162,240 $0 $0 $0 Cathodic Protection Installation $0 $0 $1,124,864 $1,169,859 $1,216,653 Force Main Desktop Analysis and Inspections $0 $324,480 $337,459 $0 $0 Sewer System Management Plan $138,069 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - Condition Assesment Projects $1,573,269 $3,374,592 $12,047,293 $5,088,885 $5,292,440 Total - Prioritize $6,429,976 $4,348,140 $16,782,971 $13,851,125 $10,076,654 Projections 45 CIP Summary –Defer Scenario Capital Improvement Projects (CIP) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Defer Priority A - Capacity & Reliability Improvement Projects Project 1B: Upsize Sunol Blvd Sewers $1,664,000 $0 $0 $0 $0 Project 2A: Bernal Ave Pipe Bridge $0 $0 $0 $467,943 $3,564,793 Project 3: Upsize Pipes downstream of Stoneridge Mall $0 $0 $0 $0 $0 Project 4A: East Pleasanton Capacity Project A (Kiewit and Arroyo Lago) $0 $0 $0 $0 $270,432 Project 4B: East Pleasanton Capacity Project B (Amazon, East Lakes, Site H) $0 $0 $0 $0 $0 West Las Positas Boulevard Multimodal Reconstruction $520,000 $0 $0 $0 $0 Sewer Capacity Evaluation $38,140 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - Capacity & Reliability Improvement Projects $2,222,140 $0 $0 $467,943 $3,835,225 Priority A - Lift Station Projects LS-02, -07, -08, -10 Improvements $0 $0 $0 $0 $0 LS-04, -12, -13, -15 Improvements $0 $0 $0 $0 $0 LS-05 Full Replacement Project $0 $0 $911,140 $6,211,949 $0 EARS and EALS Condition Assessment, Capacity Evaluation, and Predesign $31,302 $540,908 $0 $0 $0 Generator Replacement - Sewer and Storm $1,934,400 $0 $0 $292,465 $912,490 Sewer Station S-14 Electrical Improvements $668,864 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - Lift Station Projects $2,634,566 $540,908 $911,140 $6,504,414 $912,490 Projections 46 23 Page 129 of 144CIP Summary –Defer Scenario Capital Improvement Projects (CIP) FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Defer Priority A - ConditionAssesmentProjects Pipeline Replacement (1-2 mile of system) $759,200 $340,704 $1,687,296 $1,754,788 $1,824,979 Amberwood Siphon $0 $0 $0 $315,862 $3,722,958 Priority A - Annual Sewer System Improvements for Resurfacing $0 $0 $281,216 $292,465 $304,163 Large Diameter Inspection Study $0 $162,240 $0 $0 $0 Denker Road Sewer Replacement $676,000 $1,081,600 $0 $0 $0 Cathodic Protection and I&I Studies $0 $162,240 $0 $0 $0 Cathodic Protection Installation $0 $0 $562,432 $584,929 $608,326 Force Main Desktop Analysis and Inspections $0 $324,480 $337,459 $0 $0 Sewer System Management Plan $138,069 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Placeholder $0 $0 $0 $0 $0 Subtotal - Priority A - ConditionAssesment Projects $1,573,269 $2,071,264 $2,868,403 $2,948,044 $6,460,427 Total - Defer $6,429,976 $2,612,172 $3,779,543 $9,920,401 $11,208,141 Projections 47 CIP Scenario Summary CIP Scenarios FY 2026 FY 2027 FY 2028 FY 2029 FY 2030 Scenarios Maintain $6,429,976 $3,807,340 $11,046,164 $10,563,823 $6,657,859 Prioritize $6,429,976 $4,348,140 $16,782,971 $13,851,125 $10,076,654 Defer $6,429,976 $2,612,172 $3,779,543 $9,920,401 $11,208,141 • Provided CIP was inflated by 4% starting in FY 2026 • All CIP is expected to be funded through rates/reserves and debt Projections 48 24 Page 130 of 144CIP Funding –Maintain Scenario Projections 49 CIP Funding –Prioritize Scenario Projections 50 25 Page 131 of 144CIP Funding –Defer Scenario Projections 51 SEWER RESERVES 26 Page 132 of 144Reserves • Current reserve policy targets: • Operating target: 35% of operating expenses • Current reserves: • O&M and Replacement (Fund 430, 434, and 431): $17,647,652 as of 7/1/2025 Inputs 53 Sanjay Gaur Founder / President sgaur@water-economics.com Nancy Phan Principal Consultant nphan@water-economics.com Grace Hunzicker Project Analyst ghunzicker@water-economics.com 54 27 Page 133 of 144City of Pleasanton City Council Meeting, Sewer Financial Plan – February 17, 2026 1 Agenda • Rate Study Overview • Purpose of the Financial Plan • Sewer System Management Plan and Long-Term Sewer CIP • Financial Performance Targets • Financial Plan Scenarios • Key Takeaways • Next Steps and Schedule 2 Page 134 of 144Rate Study Overview Financial Plan Cost-of-Service Rate Design Rate Adoption Develop funding plan Allocate costs of Develop sewer rate Document rate study for SSMP / CIP sewer system structure most in report suitable to meet Determine annual Determine cost to City’s goals and Adopt sewer rates rate revenue needs to serve each customer objectives according to maintain financial class Proposition 218 sufficiency Evaluate customer process and rate classes We are here 3 Purpose of the Financial Plan • Establish a long-term financial strategy for the sewer enterprise • Ensure sewer rate revenues are sufficient to: • Fund operating and capital needs (for each scenario) • Maintain financial stability • Meet reserve and debt coverage policy targets • Support implementation of the Sewer System Management Plan (SSMP) and long-term Capital Improvement Plan (CIP) • Three alternatives / scenarios for SSMP implementation 4 Page 135 of 144Sewer System Management Plan • The financial plan is primarily driven by the costs of the SSMP and supplemental long-term sewer CIP • SSMP implementation scenarios: • Maintain • Prioritize • Defer • Each scenario supports different policy objectives Minimize Near- Reduce Long- Invest in Aging Improve O&M Ability to SSMP Scenario Term Costs Term Costs Infrastructure Program Implement Maintain ★★ ★★ ★★ ★★ ★★ Prioritize ★ ★★★ ★★★ ★★★ ★ Defer ★★★ ★ ★ ★★ ★★★ 5 Sewer System Management Plan • What SSMP scenario is most aligned with the City’s policy goals and financial objectives? SSMP 5-Year O&M 5-Year CIP Objective Potential Challenges Scenario (FY 2026-30) (FY 2026-30) Meet requirements and Balances cost and risk, but does Maintain $48.9 million $38.5 million stabilize system condition not fully optimize either Higher near-term rate impacts and Invest early to minimize Prioritize increased reliance on debt $54.0 million $51.5 million long-term risk financing Increased long-term system risk Limit near-term costs by Defer due to delayed rehabilitation and $48.9 million $34.0 million postponing projects replacement 6 Page 136 of 144Financial Performance Targets Financial Policy What is it? How much is it? What is it for? Pay for unexpected Operating and Capital 35% of annual operating Approximately $8.4M operating cost increases, Reserve Target expenses (FY 2026) emergencies, etc. Net revenues (revenues Debt Coverage Avoid technical default, 125% of annual debt minus operating expenses) Requirement maintain debt rating to service must be 1.25x annual debt (for new debt only) issue debt in the future service 7 Status Quo (Control Scenario) • Assumes no adjustments to current sewer collection rates • Assumes no new debt issued to fund capital improvements • Reflects the same underlying O&M and CIP needs as the Maintain scenario • Illustrates the long-term financial impacts of maintaining current rates • What happens to the City’s sewer enterprise if we do not increase rate revenues? 8 Page 137 of 144Financial Plan – Status Quo Scenario Revenue Requirement • Stacked bars are expenses • Lines are current/ proposed revenues (current = proposed for status quo scenario) • Without increasing rate revenues, there is an operating deficit starting in FY 2026 9 Financial Plan – Status Quo Scenario Fund Balance • Bars are total combined reserves • Dashed line is reserve policy target (35% of annual O&M expenses) • Without increasing rate revenues, fund balances are negative starting in FY 2028 10 Page 138 of 144Financial Plan – Status Quo Scenario Debt Coverage • City’s sewer enterprise currently does not have outstanding debt • Blue line is calculated debt coverage (no debt in Status Quo scenario) • Dashed line is debt coverage requirement (125% of debt service) 11 Financial Plan – Status Quo Scenario Capital Project Funding • Assumes “Maintain” SSMP scenario • Blue bars are debt funded projects (no new debt for status quo) • Green bars are rate funded projects 12 Page 139 of 144Financial Plan – Status Quo Scenario Fiscal Revenue Debt Year Increase Proceeds 2027 $0.0M $0.0M 2028 $0.0M $0.0M 2029 $0.0M $0.0M 2030 $0.0M $0.0M Total $0.0M $0.0M • Does not meet financial performance targets • Funds O&M and CIP costs associated with the Maintain scenario 13 Financial Plan Scenarios • The City needs to increase its sewer collection rate revenues to: • Avoid operating deficits • Maintain adequate reserve balances • Fund CIP for each SSMP alternative • How do we “solve” the financial plan for each SSMP alternative? • Revenue adjustments – increase sewer collection rate revenues each year • Issue new debt – issue debt to fund CIP, reduces amount of CIP funded by cash/rates 14 Page 140 of 144Financial Plan – Maintain Scenario Fiscal Revenue Debt Year Increase Proceeds 2027 $2.9M $0.0M 2028 $6.9M $11.0M 2029 $8.1M $10.5M 2030 $9.5M $6.5M Total $27.4M $28.0M • Meets financial performance targets • Funds O&M and CIP costs associated with the Maintain scenario 15 Financial Plan – Prioritize Scenario Fiscal Revenue Debt Year Increase Proceeds 2027 $4.2M $0.0M 2028 $9.7M $16.0M 2029 $11.2M $12.0M 2030 $12.9M $9.0M Total $38.0M $37.0M • Meets financial performance targets • Funds O&M and CIP costs associated with the Prioritize scenario 16 Page 141 of 144Financial Plan – Defer Scenario Fiscal Revenue Debt Year Increase Proceeds 2027 $2.6M $0.0M 2028 $6.2M $3.5M 2029 $7.4M $9.5M 2030 $8.8M $11.0M Total $25.0M $24.0M • Meets financial performance targets • Funds O&M and CIP costs associated with the Defer scenario 17 Summary of Financial Plan Scenarios Financial Plan Maintain Prioritize Defer City Rate Revenue Increases $27.4 million $38.0 million $25.0 million New Debt to Fund CIP $28.0 million $37.0 million $24.0 million 5-Year CIP Costs $38.5 million $51.5 million $34.0 million 5-Year O&M Costs (excluding $48.9 million $54.0 million $48.9 million Treatment) Meet requirements and Invest early to minimize Limit near-term costs by Objective stabilize system condition long-term risk postponing projects 18 Page 142 of 144Key Takeaways • Status Quo is not financially sustainable • All three implementation scenarios meet financial policies • Higher investment levels require higher rates and debt • Tradeoff between near-term cost and long-term risk • Financial plan supports informed selection of an SSMP implementation alternative • What is the Council’s preferred SSMP implementation alternative? • Maintain (Staff recommendation) • Prioritize • Defer 19 Next Steps and Schedule • Begin sewer cost-of-service analysis, rate development, and connection fee calculation • Council Meeting 2 – sewer rates and connection fees • Council Meeting 3 – receive sewer rate study report and Proposition 218 notice • Public review period • Council Meeting 4 – Public Hearing to adopt sewer rates • New rates to go into effect if approved on January 1, 2027 20 Page 143 of 144Sanjay Gaur Founder / President sgaur@water-economics.com Nancy Phan Principal Consultant nphan@water-economics.com 21 Page 144 of 144