Item PFA-3 - Water Revenue Bonds

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City anticipates servicing these customers from the purchase of additional supplies from its resources described in "Water Sources and Supply; Water Purchases" below. The Project; Future Water System Improvements The City established its Water Master Plan (the "Water Master Plan") in 2017 to document a multi -year capital improvement program for a planning period which covers fiscal years 2017-18 through 2039-40. The Water Master Plan established a capital improvement program ("CIP") to assist the City with future improvements and replacement of existing facilities to maintain the City's Water System. The CIP consists of, amongst other things, regularly scheduled repairs and replacements to the Water System including, but not limited to, the rehabilitation and refurbishment of wells, reservoirs, MWD connections, pump stations and appurtenances; drilling new or replacement wells, replacement of cast iron pipes, valves, and connections, improvements to wellhead treatment facilities, pressure regulating stations, service meter upgrades, supervisory control and data acquisition communications and instrumentation upgrades, sustainable energy improvements, and emergency power systems. These projects are ongoing and included in each year's the City's budgeting process. While the City has an ongoing CIP with respect to repair and replacement of facilities as needed, it does anticipate new major capital improvements in the next five years which are eligible to be financed by the proceeds of the Bonds. See "THE FINANCING PLAN — The Project" herein for a description of the improvements to the Water System anticipated to be financed by the proceeds of the Bonds. Storage Capacity The City's existing 55 million gallons of storage capacity provides the Water System with one day (based on average daily use) of emergency supplies. The City also maintains interconnections with the cities of Orange, Fountain Valley and Tustin, and with the Mesa Water District, which serve adjacent areas that could provide water in the event of an emergency. Water Sources and Supply; Water Purchases For Fiscal Year 2024-25, the City estimates 85% of its water supply to be sourced from local groundwater, which it receives under the jurisdiction of the Orange County Water District ("OCWD")The City owns and operates a total of 21 wells located within the City limits. Total capacity is 32,000 gallons per minute ("GPM"), or 46 million gallons per day ("MGD"). In addition, the City is a charter member of Metropolitan Water District of Southern California ("MWD"). As such, it has rights to the water supply of MWD on a parity basis with other member agencies of MWD. The City relies on MWD for approximately 15% of its water supply at the present time. The cost of purchasing MWD water represents 27% of the City's water supply costs. The table below shows a summary of water supply for Fiscal Years 2018-19 through 2022-23. 19