Pleasanton, Calif. – At a Special City Council Meeting on Tuesday, March 4, the City of Pleasanton presented a Water Enterprise Financial Analysis for City Council consideration. The analysis outlined multiple funding scenarios to establish a financial framework for prioritizing and funding critical water infrastructure projects that will meet the City’s immediate and future water system needs.
The Financial Plan Analysis is the first step in the City’s three-step rate-setting process, which began in September when the City selected Water Resources Economics, LLC to conduct water and sewer rate and connection fee studies. This financial planning tool evaluates the City’s financial health and funding needs to achieve a sustainable, reliable water system while meeting operational, maintenance, and capital improvement costs over the next four years.
“With an aging water system, rising costs, and new regulatory requirements, we are taking a thoughtful, strategic approach to setting water rates,” said Jack Balch, Mayor of Pleasanton. “We’ve spent the past two years working to fully understand what’s needed to keep our water system fully operational and ready to meet our future needs. Now, as we listen to the community, we will work through decisions to cover critical costs, invest in the future, and ensure we provide safe, reliable water to the community.”
The financial plan analysis was developed based on the Water System Management Plan (WSMP). It included three implementation scenarios, each evaluating revenue needs, expenses, reserve recommendations, and funding scenarios to determine the funding needed for financial sufficiency. In addition, the analysis outlined a no-revenue increase scenario, which demonstrated significant financial and operational risks of not adjusting rates.
After reviewing the options, the City Council unanimously supported staff’s recommendation to adopt the “Enhance” scenario. This balanced approach prioritizes the most critical water-related projects within the first five years of the WSMP’s proposed 20-year Capital Improvement Plan (CIP). The Enhance scenario was developed based on feedback from the Pleasanton Water Advisory Group, which reviewed the financial plan analysis and recommended this approach.
The City Council made its selection from three funding scenarios as outlined below:
- Stabilize – Spreads capital investments evenly over 20 years, deferring most projects for infrastructure rehabilitation, which increases short-term risks and long-term costs. (Estimated five-year cost: $63 million)
- Enhance – Prioritizes the most critical projects within the first five years while deferring some infrastructure rehabilitation projects, resulting in slightly higher near-term costs but reduced long-term risks. (Estimated five-year cost: $73.2 million)
- Accelerate – Frontloads all WSMP priority projects within five years, lowering long-term costs but increasing short-term financial and staff capacity demands. (Estimated five-year cost: $108 million)
While the Enhance scenario requires a slightly higher upfront investment than the Stabilize option, it reduces long-term infrastructure costs and helps maintain reliable water service by minimizing costly emergency repairs and service disruptions.
“Taking this balanced approach is the right choice for Pleasanton and reflects our commitment to planned progress,” said City Manager Gerry Beaudin. “We appreciate the City Council’s leadership in making difficult, yet thoughtful, decisions to meet the needs of our water system while maintaining high-quality service for our residents.”
Since 2023, the City has taken a systematic approach to planning the future of its water system. In January, the City Council approved the WSMP, which assessed existing water assets, anticipated improvements, and operations and maintenance requirements over the next 20 years. By adopting the Enhance scenario, the City has committed to a balanced, strategic approach that considers financial responsibility, infrastructure investment, and ratepayer impacts.
While the proposed scenarios in the financial plan analysis identified projected revenue needs and suggested debt issuance, it did not set the rates. The next step in the rate-setting process will be a comprehensive cost-of-service analysis to calculate proposed water rates and connection fees and assess customer impacts. Preliminary rates and rate structures will be presented to the City Council on May 6.
Any future rate adjustments will follow the required ratepayer notification process, ensuring public notification, transparency, and a formal public hearing before adoption.
For more information about the City of Pleasanton’s water quality, supply, projects, and conservation, visit www.PleasantonWater.com.
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