PLEASANTON, CA — The Pleasanton City Council will consider borrowing up to $16.5 million for water-system improvements, the latest major investment prompted by aging infrastructure and the loss of the city's groundwater wells due to PFAS contamination.
The council will vote Tuesday whether to approve financing documents for water revenue bonds that will be repaid over 25 years using revenue from customers' water bills. The city already issued $17.3 million in water bonds in 2024, and a city study identified approximately $35 million in additional debt financing needed through 2030, which includes this current round.
Historically, the city received about 20-30% of its water from three city-owned groundwater wells. The city stopped operating the wells in 2022 after detecting PFAS, and now relies entirely on water purchased from regional wholesaler Zone 7 Water Agency.
The city has embarked on an estimated $27 million project to create new wells in partnership with Zone 7. The new bonds would help pay for the new wells, advanced water meters, emergency power improvements, and annual upgrades to Pleasanton's distribution system, according to a city staff report.
The city could borrow as much as $16.5 million, but the bonds' principal is currently estimated at $14.15 million, staff say. Annual principal and interest payments would total approximately $1 million, while total debt service is projected at $24.65 million over 25 years.
Pleasanton customers are also facing four consecutive water-rate increases: 15% in both 2026 and 2027, followed by 8% in 2028 and 2029.
S&P Global Ratings assigned the proposed bonds an "AA" rating with a stable outlook, though noted that Pleasanton's water utility has lower cash reserves than similarly rated systems. According to S&P's most recent median data, AA-rated water systems carry approximately 649 days' cash on hand, while the city ended Fiscal Year 2024/25 with approximately 200 days' cash on hand and $20.9 million in unrestricted cash reserves.
See here for more information, and here for Tuesday's full agenda.
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