Daly City City Council
September 8, 2025

Summary/Conclusion
Approval of the WSA amendment and Tier 2 Plan will modernize key water supply agreements, improve drought response, support water use efficiency, and protect both financial and supply reliability interests of all Wholesale Customers, including the City of Daly City. Staff recommends approval of the resolution.

Staff is available to provide any additional information desired by the City Council members.

Respectfully submitted,

Kaila DeFries

Joshua Cosgrove Kaila DeFries
Director of Water and Wastewater Resources Assistant to the Director of Water and Wastewater Resources

Attachment: Amended WSA
Tier 2 Plan

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3.07. Restrictions on Purchases of Water from Others; Minimum Annual Purchases A. Each Wholesale Customer (except for Alameda County Water District and the cities of Milpitas,
Mountain View and Sunnyvale) agrees that it will not contract for, purchase or receive, with or without compensation, directly or indirectly, from any person, corporation, governmental agency or other entity, any water for delivery or use within its service area without the prior written consent of San Francisco.

B.

The prohibition in subsection A does not apply to:

1. recycled
water;

2. water necessary on an emergency and temporary basis, provided that the Wholesale
Customer promptly gives San Francisco notice of the nature of the emergency, the amount of water that has been or is to be purchased, and the expected duration of the emergency; or

3. water in excess of a Wholesale Customer’s Individual Supply Guarantee.

C.

Minimum Annual Purchase Quantities. Alameda County Water District and the cities of Milpitas, Mountain View and Sunnyvale may purchase water from sources other than San Francisco, provided that San Francisco shall require that each purchase a minimum annual quantity of water from San Francisco. These Minimum Annual Purchase Quantities are set out in Attachment E and shall also be included in the Individual Water Sales Contracts between San Francisco and each of these four Wholesale Customers (collectively referred to as the Original Minimum Purchase Customers). Pursuant to Section 3.04, certain Wholesale Customers may also be required to purchase Temporary Modified Minimum Annual Purchase Quantities, set out in Attachment E-1, from San Francisco. Attachment E will be updated pursuant to Section 3.04 to reflect any reduction in existing Minimum Annual Purchase Quantities and any addition of new Minimum Annual Purchase Quantities when Temporary Modified Minimum Annual Purchase Quantities expire and are removed from Attachment E-1; Individual Water Sales Contracts between San Francisco and any Wholesale Customers who are participants in a transfer under Section 3.04 will similarly be amended, as necessary.

1. Annual Notice. After the end of each fiscal year, the SFPUC will send a written notice to each Wholesale Customer with a Minimum Annual Purchase Quantity, or a Temporary Modified Minimum Annual Purchase Quantity with a copy to BAWSCA. The notice will include:

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(a) the quantity of water
delivered to each of those Wholesale Customers individually and all of the Original Minimum Purchase Customers colle
ctively during the previous fiscal year;
(b) each Wh
olesale Customer’s individual Minimum Annual Purchase Quantity or Temporary Modified Minimum Ann
ual Purchase Quantity (as adjusted for a Rebound Year,
if applicab
le, under Section 3.07.C.2);
(c) whether or not each
Wholesale Customer met its individual Minimum Annual Purchase Quantity or Temporary Modified Minimum Ann
ual Purchase Quantity (as adjusted for a
Rebound Year, if applica
ble);
(d) whether or not the Original Minimum
Purchase Customers collectively purchased a
volume of water from Sa
n Francisco that is equal to or greater than the sum of their four Minimu
m Annual Purchase Quantities (as adjusted for a Rebound Year, if applicable); (e) any Imputed Sales charged to th
e Wholesale Customers; and
(f) the status of any Temporary Modified Minimum Annual Purchase Quantities of the Wholesale Customers.

2. Waiver and Rebound Year. The minimum annual purchase requirements set out in Attachments E and E-1 will be waived during a Drought or other period of water shortage if the water San Francisco makes available to these Wholesale Customers is less than their Minimum Annual Purchase Quantities or Temporary Modified Minimum Annual Purchase Quantities, and may be waived during a state of emergency declared by the Governor of California that impacts water supply use or deliveries from the Regional Water System. Once the waiver is no longer in effect, each of the minimum annual purchase requirements set out in Attachments E and E-1 shall be temporarily set, for one full fiscal year (referred to as the Rebound Year), to the midpoint between (1) the Wholesale Customer’s actual San Francisco purchases for the final year in which the waiver was in effect, up to a maximum of the Customer’s Minimum Annual Purchase Quantity or Temporary Modified Minimum Annual Purchase Quantity, and (2) the Wholesale Customer’s Minimum Annual Purchase Quantity or Temporary Modified Minimum Annual Purchase Quantity set out in Attachment E or Attachment E-1, as applicable. Any fiscal year in which a Wholesale Customer meets its Rebound Year-adjusted Temporary Modified Minimum Annual Purchase Quantity, but not its standard Temporary Modified Minimum Annual Purchase Quantity, will not count as a fiscal year in which the Wholesale Customer has met or exceeded its Temporary Modified Minimum Purchase Quantity for the purposes of Section 3.04.C(4)(a).

D.

Minimum Annual Purchase Quantity Reset. As shown on Attachment E, in Fiscal

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Year 2025-26, the Parties reset the t
hen-existing Minimum Annual Purchase Quantities of the
Original Minimum Purchase Customers to 80% of the average San Francisco purchases of each Customer over the four most recent non-drought years preceding Fiscal Year 2024-25, effective for Fiscal Year 2024-25. If the Parties extend the Term of this Agreement beyond June 30, 2034 pursuant to Section 2.02, the Parties will review the Minimum Annual Purchase Quantities of the Original Minimum Purchase Customers again ten years after the Fiscal Year 2025-26 reset. If the Original Minimum Purchase Customers, or San Francisco, want to propose a reset of the Minimum Annual Purchase Quantities for Fiscal Year 2035-36, they will provide written notice on or before June 30, 2034. The Parties will meet and confer promptly to evaluate written reset proposals. By November 30, 2035, if the Parties have come to an agreement, the SFPUC will calculate the revised Minimum Annual Purchase Quantities based on the agreed upon methodology and provide written notice to the Original Minimum Purchase Customers and BAWSCA. The Original Minimum Purchase Customers will have at least 15 business days to review and meet and confer with the SFPUC with any questions or concerns before the revised quantities are finalized. If the Parties are unable to come to an agreement, the then-existing Minimum Annual Purchase Quantities will remain unchanged. Any changes to the Minimum Annual Purchase Quantities under this Section

3.07.D will be reflected in a revised Attachment E approved with the written concurrence of San Francisco and BAWSCA in accordance with Section 2.03.C. The Parties intend to include a continuing, periodic review of the Minimum Annual Purchase Quantities on a ten-year schedule in the successor to this Agreement.

E.

Collective Minimum Annual Purchase Quantities Considered Before Application of Imputed Sales. Imputed Sales will not apply to any of the individual Original Minimum Purchase Customers in a particular fiscal year if those Customers have collectively purchased a volume of water from San Francisco that is equal to or greater than the sum of their four Minimum Annual Purchase Quantities shown in Attachment E (or adjusted for a Rebound Year pursuant to Section

3.07.C.2, if applicable). If the Original Minimum Purchase Customers do not collectively purchase that sum, any Original Minimum Purchase Customer that has not met its standard or Rebound Year-adjusted Minimum Annual Purchase Quantity will be responsible for Imputed Sales proportional to its share of the difference between that sum and the Original Minimum Purchase Customers’ total purchases from San Francisco. Examples of this calculation are contained in Attachment E-3.

21428629.4
Proposed 2025 Amended and Restated Water Supply Agreement: Sections 2.03, 3.09, and

9.07, and Attachment A Definitions.

2.03. Amendments .

C. Amendments to Attachments. The following attachments may be amended with the written concurrence of San Francisco and BAWSCA on behalf of the Wholesale Customers:

Attachment Name

C Individual Supply Guarantees (amendments reflecting Section

3.04 transfers only)
E Minimum Annual Purchase Quantities (amendments reflecting Section 3.04 transfers and Section 3.07 resets only)
E-1
Temporary Modified Minimum Annual Purchase Quantities
G
Water Quality Notification and Communications Plan
(as may be amended)
J Water Use Measurement and Tabulation
L-1
Identification of WSIP Projects as Regional/Retail
N-1
Balancing Account/Rate Setting Calculation Table
N-2
Wholesale Revenue Requirement Schedules
N-3
Schedule of Projected Water Sales, Wholesale Revenue
Requirement and Wholesale Rates
P Management Representation Letter
R Classification of Existing System Assets (subject to Section

5.11)
Amendments to these attachments shall be approved on behalf of San Francisco by the Commission and on behalf of BAWSCA by its Board of Directors, unless the Commission by resolution delegates such authority to the General Manager of the SFPUC or the Board of Directors by resolution delegates such authority to the General Manager/CEO of BAWSCA.

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3.09. Completion of WSIP
San Francisco will comp
lete construction of the physical facilities in the WSIP by June 30, 2032. The SFPUC agrees to provide for full public review and comment by local and state interests of any proposed changes that delay previously adopted project completion dates or that delete projects. The SFPUC shall meet and consult with BAWSCA before proposing to the Commission any changes in the scope of WSIP projects which reduce their capacity or ability to achieve adopted Level of Service Goals and Objectives. The SFPUC retains discretion to determine whether to approve the physical facilities in the WSIP until after it completes the CEQA process as set forth in Section 4.07.

9.07. City of Brisbane, Guadalupe Valley Municipal Improvement District, Town of Hillsborough
A. The parties acknowledge that San Francisco has heretofore provided certain quantities of
water to the City of Brisbane (“Brisbane”), Guadalupe Valley Municipal Improvement District (“Guadalupe”) and the Town of Hillsborough (“Hillsborough”) at specified rates or without charge pursuant to obligations arising out of agreements between the predecessors of San Francisco and these parties, which agreements are referred to in judicial orders, resolutions of the SFPUC and/or the 1960 contracts between San Francisco and Brisbane, Guadalupe and Hillsborough. The parties intend to continue those arrangements and accordingly agree as follows:

1. Nothing in this Agreement is intended to alter, amend or modify the terms of SFPUC Resolution No
. 74-0053 or the indenture of July 18, 1908 between the Guadalupe Development Company and the Spring Valley Water Company.

2. Nothing in this Agreement is intended to alter, amend or modify the Findings of
Fact and Conclusions of Law and Judgment dated May 25, 1961 in that certain action entitled City and County of San Francisco v. Town of Hillsborough in the Superior Court of the State of California in and for the County of Marin, No. 23282, as modified by the Satisfaction of Judgment filed October 23, 1961 and the Compromise and Release between Hillsborough and San Francisco dated August 22, 1961. The rights and obligations of Hillsborough under these documents shall continue as therein set forth.

3. Nothing in this Agreement is intended to affect or prejudice any claims, rights or re
medies of Guadalupe or of Crocker Estate Company, a corporation, or of Crocker

21428629.4
Land Company, a corporation, or of San Francisco, or of their successors and assigns, respectively, with respect to or arising out of that certain deed dated May 22, 1884, from Charles Crocker to Spring Valley Water Works, a corporation, recorded on May 24, 1884, in Book 37 of Deeds at page 356, Records of San Mateo County, California, as amended by that certain Deed of Exchange of Easements in Real Property and Agreement for Trade in Connection Therewith, dated July 29, 1954, recorded on August 4, 1954, in Book 2628, at page 298, Official Records of said San Mateo County, or with respect to or arising out of that certain action involving the validity or enforceability of certain provisions of said deed entitled City and County of San Francisco v. Crocker Estate Company, in the Superior Court of the State of California in and for the County of Marin, No. 23281.

Attachment A - Definitions

“Imputed Sales” apply when a Wholesale Customer does not meet the minimum annual purchase requirements of Section 3.07.C, as shown on Attachment E and Attachment E-1, except in fiscal years in which a waiver of these requirements is in effect. Imputed Sales are calculated as the difference between (1) a Wholesale Customer’s metered water purchases during a fiscal year, from July 1 to June 30, and (2) the larger of (a) or (b) as follows: (a) the Wholesale Customer’s Minimum Annual Purchase Quantity, as specified in Attachment E and may be adjusted pursuant to Section 3.07.C.2, or (b) the Wholesale Customer’s Temporary Modified Minimum Annual Purchase Quantity, as specified in Attachment E-1 and may be adjusted pursuant to Section 3.07.C.2. If a Wholesale Customer has more than one Temporary Modified Minimum Annual Purchase Quantity, the largest quantity is used for calculating Imputed Sales. Imputed Sales are considered wholesale water usage for the purposes of calculating the Proportional Annual Use, and any fees charged for Imputed Sales are considered wholesale revenues.

“Level of Service Goals and Objectives” refers to the “Phased WSIP Goals and Objectives” adopted by the Commission in Resolution No. 08-0200 dated October 30, 2008 as part of the approval of the WSIP, as updated and expanded by the "2023 Amended and Updated Water Enterprise Level of Service Goals and Objectives," adopted by the Commission in Resolution No. 23-0210 dated November 28, 2023, and any amendments that may be adopted by the Commission.

21464591.6

ATTACHMENT E

MINIMUM ANNUAL PURCHASE QUANTITIES
(Section 3.07.C)

AGENCY MINIMUM ANNUAL PURCHASE QUANTITY
(IN MGD)1
Alameda County Water District 6.682
City of Milpitas 4.371
City of Mountain View 6.047
City of Sunnyvale 7.412
1 In Fiscal Year (FY) 2025-26, the then-existing Minimum Annual Purchase Quantities for Alameda County Water District and the Cities of Milpitas, Mountain View, and Sunnyvale were reset to 80% of each of those four customers’ average San Francisco purchases over the four non-drought years preceding FY 2024-25 (FY 2017-18, FY 2018-19, FY 2019-20, and FY 2020-21), effective FY 2024-25. Prior to this reset, from the effective date of this Agreement (July 1, 2009) through FY 2023-24, those four customers had the following Minimum Annual Purchase Quantities:

1. Alameda County Water District: 7.648 MGD

2. City of Milpitas: 5.341 MGD

3. City of Mountai n View: 8.930 MGD

4. City of Sunnyvale: 8.930 MGD

21464584.11
ATTACHMENT E-3

21464584.11
ATTACHMENT E-3
Illustrations of Imputed Sales Considering Collective Regional Water System Use by Original Minimum Purchase Customers Compared to Sum of Minimum Annual Purchase Quantities Pursuant to Section 3.07.E
Scenario 1: Collective Purchases Equal to or Greater Than Sum of MAPQs1 (No Imputed Sales)2 Line
# Wholesale Customer

A B C D
E = (D[LINE #]
/ D5) × (B5 -
A5)
MAPQ
RWS3
Use
(mgd)
RWS
Over
MAPQ
(mgd)
RWS
Under
MAPQ
(mgd)
Proportion of
Use Under
Total MAPQ
(mgd)
1 Alameda County Water District 6.682 7.682 1.00 N/A
2 City of Milpitas 4.371 3.871 -0.50 N/A
3 City of Mountain View 6.047 5.047 -1.00 N/A
4 City of Sunnyvale 7.412 7.912 0.50 N/A
5 Total 24.512 24.512 1.50 -1.50 N/A
Scenario 2: Collective Purchases Less Than Sum of MAPQs (by 1.0 mgd) (Imputed Sales)4 Line
# Wholesale Customer

A B C D
E = (D[LINE #]
/ D5) × (B5 -
A5)
MAPQ
RWS
Use
(mgd)
RWS
Over
MAPQ
(mgd)
RWS
Under
MAPQ
(mgd)
Proportion of
Use Under
Total MAPQ
(mgd)
1 Alameda County Water District 6.682 7.182 0.50 N/A
2 City of Milpitas 4.371 3.871 -0.50 -0.25
3 City of Mountain View 6.047 4.547 -1.50 -0.75
4 City of Sunnyvale 7.412 7.912 0.50 N/A
5 Total 24.512 23.512 1.00 -2.00 -1.0
1 Minimum Annual Purchase Quantity (MAPQ)
2 In Scenario 1, the Original Minimum Purchase Customers’ collective purchases from San Francisco in a particular fiscal year (Line 5B) are equal to the sum of their Minimum Annual Purchase Quantities (Line 5A). Therefore, no Imputed Sales are applied to individual Original Minimum Purchase Customers that purchased less than their individual Minimum Annual Purchase Quantities (in this scenario, Milpitas and Mountain View). 3 Regional Water System (RWS)
4 In Scenario 2, the Original Minimum Purchase Customers’ collective purchases from San Francisco in a particular fiscal year (Line 5B) are 1.0 mgd less than the sum of their Minimum Annual Purchase Quantities (Line 5A).

Therefore, Imputed Sales are applied proportionally to any individual Original Minimum Purchase Customer that purchased less than its individual Minimum Annual Purchase Quantity (in this scenario, Milpitas and Mountain View), so that customer is responsible for its share of the difference between the sum of all Minimum Annual Purchase Quantities (Line 5A) and the collective amount of RWS use (Line 5B). In this scenario, Mountain View is responsible for 75% and Milpitas is responsible for 25% of the 1.0 mgd difference between Line 5A and Line 5B.

21464584.11

Scenario 3: Collective Purchases Equal to or Greater Than Sum of MAPQs – with Rebound Year-Adjusted MAPQs (No Imputed Sales)5 Line # Wholesale Custome r
A B
C = A -
((A[LINE #] -
B[LINE #]) / 2) D E F
G = (F[LINE #] /
F5) × (D5 - C5)
MAPQ
RWS Use
in Waiver’s
Final Year
Rebound
Year-Adjusted
MAPQ
RWS Use
(mgd)
RWS Over
Rebound
Year-
Adjusted
MAPQ (mgd)
RWS Under
Rebound
Year-
Adjusted
MAPQ (mgd)
Proportion of
Use Under
Total Rebound
Year-Adjusted
MAPQ (mgd)
1 Alameda County Water District 6.682 5.682 6.182 7.512 1.33 N/A 2 City of Milpitas 4.371 3.371 3.871 3.591 -0.28 N/A 3 City of Mountain View 6.047 5. 047 5.547 4.847 -0.70 N/A 4 City of Sunnyvale 7.412 6.412 6.912 7.782 0.87 N/A 5 Total 24.512 20.512 22.5 12 23.732 2.20 -0.98 N/A

5 In Scenario 3, the Original Minimum Purchase Customers’ collective purchases from San Francisco in a particular fiscal year (Line 5D) are greater than the sum of their Rebound Year-adjusted Minimum Annual Purchase Quantities that are currently in effect pursuant to Section 3.07.C.2 (Line 5C). Therefore, no Imputed Sales are applied to individual Original Minimum Purchase Customers that purchased less than their individual Rebound Year-adjusted Minimum Annual Purchase Quantities (in this scenario, Milpitas and Mountain View).

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ATT

ACHMENT H

WATER SHORTAGE ALLOCATION PLAN
This Water Shortage Allocation Plan (“Plan”), also known as the Tier 1 Shortage Plan, describes the method for allocating water between the San Francisco Public Utilities Commission (“SFPUC”), on the one hand, and the Wholesale Customers collectively, on the other, during shortages caused by drought.

The Plan also implements a method for allocating water among the individual Wholesale Customers, known as the Tier 2 Drought Response Implementation Plan (“Tier 2 Plan”), which has separately been adopted by the Wholesale Customers and does not include the SFPUC. The Plan includes provisions for transfers, banking, and excess use charges. The Plan applies only when the SFPUC determines that a system-wide water shortage due to drought exists, and all references to “shortages” and “water shortages” are to be so understood. This Plan was initially adopted pursuant to Section 7.03(a) of the 1984 Settlement Agreement and Master Water Sales Contract and has been incorporated and updated to correspond to the terminology used in the 2009 Water Supply Agreement between the City and County of San Francisco and Wholesale Customers in Alameda County, San Mateo County and Santa Clara County (“Agreement”), as amended and restated from time to time.

SECTION 1. SHORTAGE CONDITIONS

1.1. Projected Available SFPUC Water Supply. The SFPUC shall make an annual determination as to whether or not a shortage condition exists. The determination of projected available water supply shall consider, among other things, stored water, projected runoff, water acquired by the SFPUC from non- SFPUC sources, inactive storage, reservoir losses, allowance for carryover storage, and water bank balances, if any, described in Section 3.

1.2 Projected SFPUC Customer Purchases. The SFPUC will utilize purchase data, including volumes of water purchased by the Wholesale Customers and by Retail Customers (as those terms are used in the Agreement) in the year immediately prior to the drought, along with other available relevant information, as a basis for determining projected system-wide water purchases from the SFPUC for the upcoming Supply Year (defined as the period from July 1 through June 30).

1.3. Shortage Conditions. The SFPUC will compare the projected available water supply (Section 1.1) with projected system-wide water purchases (Section 1.2). A shortage condition exists if the SFPUC determines that the projected available water supply is less than projected system-wide water purchases in the upcoming Supply Year. When a shortage condition exists, SFPUC will determine whether voluntary or mandatory actions will be required to reduce purchases of SFPUC water to required levels.

1.3.1 Voluntary Response. If the SFPUC determines that voluntary actions will be sufficient to accomplish the necessary reduction in water use throughout its service area, the SFPUC and the Wholesale Customers will make good faith efforts to reduce their water purchases to stay within their annual Tier 1 and Tier 2 allocations as applicable (see Section 2 of this Attachment H) and associated monthly water use budgets. The SFPUC will not impose excess use charges during periods of voluntary rationing, but may suspend the prospective accumulation of water bank credits, or impose a ceiling on further accumulation of bank credits, consistent with Section 3.2.1 of this Plan.

1.3.2 Mandatory Response. If the SFPUC determines that mandatory actions will be required to accomplish the necessary reduction in water use in the SFPUC service area, the SFPUC may implement excess use charges as set forth in Section 4 of this Plan.

1.4. Period of Shortage. A shortage period commences when the SFPUC determines that a water shortage exists, as set forth in a declaration of water shortage emergency issued by the SFPUC pursuant to

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California Water Code Sections 350 et seq. Termination of the water shortage emergency will be declared by resolution of the SFPUC.

SECTION 2. SHORTAGE ALLOCATIONS

2.1. Annual Tier 1 Allocations between the SFPUC and the Wholesale Customers. The annual water supply available during shortages will be allocated between the SFPUC and the collective Wholesale Customers as follows:

Level of System Wide
Reduction in Water Use
Required
Share of Available Water
SFPUC Share Wholesale Customers Share

5% or less
6% through 10%
11% through 15%
16% through 20%

35.5%

36.0%

37.0%

37.5%

64.5%

64.0%

63.0%

62.5%
This Plan refers to the SFPUC’s and Wholesale Customers’ respective shares of available water so established as the SFPUC’s and Wholesale Customers’ Tier 1 allocations. The water allocated to the SFPUC shall correspond to the total allocation for all Retail Customers. In the event that the SFPUC share of the available water supply in the above table results in Retail Customers having a positive allocation (i.e., a supply of additional water rather than a required percentage reduction in water use), the SFPUC’s percentage share of the available water supply in the table shall be reduced to eliminate any positive allocation to Retail Customers, with a corresponding increase in the percentage share of the available water supply allocated to the Wholesale Customers. For any level of required reduction in system-wide water use during shortages, the SFPUC shall require Retail Customers to conserve a minimum of 5%, with any resulting reallocated supply credited to storage for inclusion in calculation of projected available water SFPUC water supply in a subsequent year (Section 1.1).

The parties agree to reevaluate the percentages of the available water supply allocated to Retail and Wholesale Customers by May 1, 2028.

2.2 Annual Tier 2 Allocations among the Wholesale Customers. The annual water supply allocated to the Wholesale Customers collectively during system wide shortages of 20 percent or less (i.e., the Wholesale Customers’ Tier 1 allocation) will be apportioned among them based on a methodology, known as the Tier 2 Plan, that has been separately adopted by all of the Wholesale Customers, and not the SFPUC, as described in Section 3.11(C) of the Agreement. In any year for which the methodology must be applied, the Bay Area Water Supply and Conservation Agency (“BAWSCA”) will calculate each Wholesale Customer’s individual percentage share of the amount of water allocated to the Wholesale Customers collectively pursuant to Section 2.1. Following the declaration or reconfirmation of a water shortage emergency by the SFPUC, BAWSCA will deliver to the SFPUC General Manager a list, signed by the President of BAWSCA’s Board of Directors and its General Manager, showing each Wholesale Customer together with its percentage share and stating that the list has been prepared in accordance with the methodology adopted by the Wholesale Customers. The SFPUC shall allocate water to each Wholesale Customer, as specified in the list. The shortage allocations so established (known as Tier 2 allocations) may be transferred as provided in Section 2.5 of this Plan. If BAWSCA or all Wholesale Customers do not provide the SFPUC with individual allocations, the SFPUC may make a final allocation decision after first meeting and discussing allocations with BAWSCA and the Wholesale Customers.

3 21606945.9
The Tier 2 Plan methodology adopted by the Wholesale Customers utilizes the rolling average of each individual Wholesale Customer’s purchases from the SFPUC during the three immediately preceding Supply Years. The SFPUC agrees to provide BAWSCA by November 1 of each year a list showing the amount of water purchased by each Wholesale Customer during the immediately preceding Supply Year.

The list will be prepared using Customer Service Bureau report MGT440 (or comparable official record in use at the time), adjusted as required for any reporting errors or omissions, and will be transmitted by the SFPUC General Manager or his designee.

2.3. Limited Applicability of Plan to System Wide Shortages Greater Than Twenty Percent. The Tier 1 allocations of water between the SFPUC and the Wholesale Customers collectively, provided for in Section 2.1, apply only to shortages of 20 percent or less. The SFPUC and Wholesale Customers recognize the possibility of a drought occurring which could create system-wide shortages greater than 20 percent despite actions taken by the SFPUC aimed at reducing the probability and severity of water shortages in the SFPUC service area. If the SFPUC determines that a system wide water shortage greater than 20 percent exists, the SFPUC and the Wholesale Customers agree to meet within 10 days and discuss whether a change is required to the allocation set forth in Section 2.1 in order to mitigate undue hardships that might otherwise be experienced by individual Wholesale Customers or Retail Customers. Following these discussions, the Tier 1 allocations set forth in Section 2.1 of this Plan, or a modified version thereof, may be adopted by mutual written consent of the SFPUC and the Wholesale Customers. If the SFPUC and Wholesale Customers meet and cannot agree on an appropriate Tier 1 allocation within 30 days of the SFPUC’s determination of water shortage greater than 20 percent, then (1) the provisions of Section

3.11(C) of the Agreement will apply, unless (2) all of the Wholesale Customers direct in writing that a Tier 2 allocation methodology agreed to by them be used to apportion the water to be made available to the Wholesale Customers collectively, in lieu of the provisions of Section 3.11(C).

The provisions of this Plan relating to transfers (in Section 2.5), banking (in Section 3), and excess use charges (in Section 4) shall continue to apply during system-wide shortages greater than 20 percent.

2.4. Monthly Water Budgets. Within 10 days after adopting a declaration of water shortage emergency, the SFPUC will determine the amount of Tier 1 water allocated to the Wholesale Customers collectively pursuant to Section 2.1. The SFPUC General Manager, using the Tier 2 allocation percentages shown on the list delivered by BAWSCA pursuant to Section 2.2, will calculate each Wholesale Customer’s individual annual Tier 2 allocation. The SFPUC General Manager, or his designee, will then provide each Wholesale Customer with a proposed schedule of monthly water budgets based on the pattern of monthly water purchases during the Supply Year immediately preceding the declaration of shortage (the “Default Schedule”). Each Wholesale Customer may, within two weeks of receiving its Default Schedule, provide the SFPUC with an alternative monthly water budget that reschedules its annual Tier 2 allocation over the course of the succeeding Supply Year. If a Wholesale Customer does not deliver an alternative monthly water budget to the SFPUC within two weeks of its receipt of the Default Schedule, then its monthly budget for the ensuing Supply Year shall be the Default Schedule proposed by the SFPUC.

Monthly Wholesale Customer water budgets will be derived from annual Tier 2 allocations for purposes of accounting for excess use. Monthly Wholesale Customer water budgets shall be adjusted during the year to account for transfers of shortage allocation under Section 2.5 and transfers of banked water under Section 3.4.

2.5. Transfers of Shortage Allocations. Voluntary transfers of shortage allocations between the SFPUC and any Wholesale Customers, and between any Wholesale Customers, will be permitted using the same procedure as that for transfers of banked water set forth in Section 3.4. The SFPUC and BAWSCA shall be notified of each transfer. Transfers of shortage allocations shall be deemed to be an emergency transfer and shall become effective on the third business day after notice of the transfer has been delivered to the SFPUC. Transfers of shortage allocations shall be in compliance with Section 3.05 of the

4 21606945.9
Agreement. The transferring parties will meet with the SFPUC, if requested, to discuss any effect the transfer may have on its operations.

SECTION 3. SHORTAGE WATER BANKING

3.1. Water Bank Accounts. The SFPUC shall create a water bank account for itself and each Wholesale Customer during shortages in conjunction with its resale customer billing process. Bank accounts will account for amounts of water that are either saved or used in excess of the shortage allocation for each agency; the accounts are not used for tracking billings and payments. When a shortage period is in effect (as defined in Section 1.4), the following provisions for bank credits, debits, and transfers shall be in force. A statement of bank balance for each Wholesale Customer will be included with the SFPUC’s monthly water bills.

3.2. Bank Account Credits. Each month, monthly purchases will be compared to the monthly budget for that month. Any unused shortage allocation by an agency will be credited to that agency’s water bank account. Credits will accumulate during the entire shortage period, subject to potential restrictions imposed pursuant to Section 3.2.1. Credits remaining at the end of the shortage period will be zeroed out; no financial or other credit shall be granted for banked water.

3.2.1. Maximum Balances. The SFPUC may suspend the prospective accumulation of credits in all accounts. Alternatively, the SFPUC may impose a ceiling on further accumulation of credits in water bank balances based on a uniform ratio of the bank balance to the annual water allocation. In making a decision to suspend the prospective accumulation of water bank credits, the SFPUC shall consider the available water supply as set forth in Section 1.1 of this Plan and other reasonable, relevant factors.

3.3. Account Debits. Each month, monthly purchases will be compared to the budget for that month.

Purchases in excess of monthly budgets will be debited against an agency’s water bank account. Bank debits remaining at the end of the fiscal year will be subject to excess use charges (see Section 4).

3.4. Transfers of Banked Water. In addition to the transfers of shortage allocations provided for in Section 2.5, voluntary transfers of banked water will also be permitted between the SFPUC and any Wholesale Customer, and among the Wholesale Customers. The volume of transferred water will be credited to the transferee’s water bank account and debited against the transferor’s water bank account.

The transferring parties must notify the SFPUC and BAWSCA of each transfer in writing (so that adjustments can be made to bank accounts), and will meet with the SFPUC, if requested, to discuss any affect the transfer may have on SFPUC operations. Transfers of banked water shall be deemed to be an emergency transfer and shall become effective on the third business day after notice of the transfer has been delivered to the SFPUC. If the SFPUC incurs extraordinary costs in implementing transfers, it will give written notice to the transferring parties within ten (10) business days after receipt of notice of the transfer. Extraordinary costs means additional costs directly attributable to accommodating transfers and which are not incurred in non-drought years nor simply as a result of the shortage condition itself.

Extraordinary costs shall be calculated in accordance with the procedures in the Agreement and shall be subject to the disclosure and auditing requirements in the Agreement. In the case of transfers between Wholesale Customers, such extraordinary costs shall be considered to be expenses chargeable solely to individual Wholesale Customers and shall be borne equally by the parties to the transfer. In the case of transfers between the SFPUC and a Wholesale Customer, the SFPUC’s share of any extraordinary transfer costs shall not be added to the Wholesale Revenue Requirement.

3.4.1. Transfer Limitations. The agency transferring banked water will be allowed to transfer no more than the accumulated balance in its bank. Transfers of estimated prospective banked credits and the “overdrafting” of accounts shall not be permitted. The price of transfer water originally derived from the SFPUC system is to be determined by the transferring parties and is not specified herein. Transfers of banked water shall be in compliance with Section 3.05 of the Agreement.

5 21606945.9
SECTION 4. WHOLESALE EXCESS USE CHARGES

4.1. Amount of Excess Use Charges. Monthly excess use charges shall be determined by the SFPUC at the time of the declared water shortage consistent with the calendar in Section 6 and in accordance with Section 6.03 of the Agreement. The excess use charges will be in the form of multipliers applied to the rate in effect at the time the excess use occurs. The same excess use charge multipliers shall apply to the Wholesale Customers and all Retail Customers. The excess use charge multipliers apply only to the charges for water delivered at the rate in effect at the time the excess use occurred.

4.2 Monitoring Suburban Water Use. During periods of voluntary rationing, water usage greater than a customer’s allocation (as determined in Section 2) will be indicated on each SFPUC monthly water bill.

During periods of mandatory rationing, monthly and cumulative water usage greater than a Wholesale Customer’s shortage allocation and the associated excess use charges will be indicated on each SFPUC monthly water bill.

4.3. Suburban Excess Use Charge Payments. An annual reconciliation will be made of monthly excess use charges according to the calendar in Section 6. Annual excess use charges will be calculated by comparing total annual purchases for each Wholesale Customer with its annual shortage allocation (as adjusted for transfers of shortage allocations and banked water, if any). Excess use charge payments by those Wholesale Customers with net excess use will be paid according to the calendar in Section 6. The SFPUC may dedicate excess use charges paid by Wholesale Customers toward the purchase of water from the State Drought Water Bank or other willing sellers in order to provide additional water to the Wholesale Customers. Excess use charges paid by the Wholesale Customers constitute Wholesale Customer revenue and shall be included within the SFPUC's annual Wholesale Revenue Requirement calculation.

4.4. Tier 1 Family Plan. During periods of mandatory rationing, the SFPUC will not assess excess use charges on any of the Wholesale Customers if the Wholesale Customers’ collective cumulative purchases over the course of the Supply Year are less than the Wholesale Customers’ Tier 1 allocation, as set forth in Section 2.1. If the Wholesale Customers’ collective cumulative purchases exceed the Wholesale Customers’ Tier 1 allocation, the SFPUC shall assess excess use charges on each individual Wholesale Customer that exceeded its individual Tier 2 allocation (established in accordance with Section 2.2) over the course of the Supply Year in proportion to each individual Wholesale Customer’s share of the collective Wholesale Customers’ purchases that exceeded the Wholesale Customers’ Tier 1 allocation.

SECTION 5. GENERAL PROVISIONS GOVERNING WATER SHORTAGE

ALLOCATION PLAN

5.1. Construction of Terms. This Plan is for the sole benefit of the parties and shall not be construed as granting rights to any person other than the parties or imposing obligations on a party to any person other than another party.

5.2. Governing Law. This Plan is made under and shall be governed by the laws of the State of California.

5.3. Effect on Agreement. This Plan describes the method for allocating water between the SFPUC and the collective Wholesale Customers during system-wide water shortages of 20 percent or less. This Plan also provides for the SFPUC to allocate water among the Wholesale Customers in accordance with directions provided by the Wholesale Customers through BAWSCA under Section 2.2, and to implement a program by which such allocations may be voluntarily transferred among the Wholesale Customers.

The provisions of this Plan are intended to implement Section 3.11(C) of the Agreement and do not affect, change or modify any other section, term or condition of the Agreement.

6 21606945.9

5.4. Inapplicability of Plan to Allocation of SFPUC System Water During Non-Shortage Periods.

The SFPUC’s agreement in this Plan to a respective share of SFPUC system water during years of shortage shall not be construed to provide a basis for the allocation of water between the SFPUC and the Wholesale Customers when no water shortage emergency exists.

5.5. Termination. This Plan shall expire at the end of the Term of the Agreement. The SFPUC and the Wholesale Customers can mutually agree to revise or terminate this Plan prior to that date due to changes in the water delivery capability of the SFPUC system, the acquisition of new water supplies, and other factors affecting the availability of water from the SFPUC system during times of shortage.

SECTION 6. ALLOCATION CALENDAR

6.1. Annual Schedule. The annual schedule for the shortage allocation process is shown below. This schedule may be changed by the SFPUC to facilitate implementation.

6.1.1 In All Years Target Dates

1. SFPUC delivers list of annual purchases by each Wholesale Customer during the immediately preceding Supply Year
November 1

2. SFPUC meets with the Wholesale Customers and presents water supply forecast for the following Supply Year
February

3. SFPUC issues initial estimate of available water supply February 1

4. SFPUC announces potential first year of drought (if applicable) February 1

5. SFPUC and Wholesale Customers meet upon request to exchange information concerning water availability and projected system- wide purchases
February 1-May 31

6. SFPUC issues revised estimate of available water supply, and confirms continued potential shortage conditions, if applicable March 1

7. SFPUC issues final estimate of available water supply April 15 th or sooner if adequate
snow course measurement data
is available to form a robust
estimate on available water
supply for the coming year.

8. SFPUC determines amount of water available to Wholesale Customers collectively
April 15
th or sooner if adequate
snow course measurement data
is available to form a robust
estimate on available water
supply for the coming year.

In Drought Years Target Dates

9. SFPUC formally declares the existence of water shortage emergency (or end of water shortage emergency, if applicable) under Water Code Sections 350 et. seq.

April 15-30

10. SFPUC declares the need for a voluntary or mandatory response April 15-30

11. BAWSCA submits calculation to SFPUC of individual Wholesale Customers’ percentage shares of water allocated to Wholesale Customers collectively
April 15- 30

7 21606945.9

12. SFPUC determines individual shortage allocations, based on BAWSCA’s submittal of individual agency percentage shares to SFPUC, and monthly water budgets (Default Schedule)
April 25—May 10

13. Wholesale Customers submit alternative monthly water budgets (optional)
May 8-May 24

14. Final drought shortage allocations are issued for the Supply Year beginning July 1 through June 30
June 1

15. Monthly water budgets become effective July 1

16. Excess use charges indicated on monthly Suburban bills August 1 (of the beginning year) through June 30 (of the
succeeding year)

17. Excess use charges paid by Wholesale Customers for prior year August of the succeeding year

Tier 2 Drought
Response
Implementation
Plan

Drought Shortage
Allocation Plan for the
Regional Water System
Wholesale Customers

i
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Table of Contents

1. Introduction ........................................................................................................................ 1

2. Relationship to Water Supply Agreement ........................................................................... 1

3. Development Process ........................................................................................................ 1

4. Plan Policy Principles ......................................................................................................... 2

5. Allocation Formula .............................................................................................................. 2 Base Period Calculations................................................................................................ 2 Tier 2 Plan Allocation Formula Inputs ............................................................................. 2 Step 0: Establish SFPUC Minimum and Maximum Cutback ........................................... 3 Step 1: Efficient Residential Allocation............................................................................ 4 Step 2: Non-Residential Base Allocation ........................................................................ 4 Step 3: SFPUC Maximum Cutback Reserve................................................................... 5 Step 4: Seasonal Allocation ............................................................................................ 5 Step 5: SFPUC Purchases and ISG-Based Allocation .................................................... 5

6. Plan Implementation ........................................................................................................... 5

7. Plan Term .......................................................................................................................... 6

Attachments
Attachment A: List of Abbreviations and Definitions ................................................................... 8 Attachment B: Tier 2 Plan Data Sources and Calculations ........................................................10 Attachment C: Example of Tier 2 Plan Excel-Based Model Calculations ...................................15

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1. Introduction
The Tier 2 Drought Response Implementation Plan (the “Plan” or “Tier 2 Plan”) describes the method for allocating the water made available by the San Francisco Regional Water System (“RWS”) among the Wholesale Customers during shortages caused by Drought. This Plan is adopted pursuant to Section 3.11(C) of the Amended and Restated Water Supply Agreement between the City and County of San Francisco and the Wholesale Customers in Alameda, San Mateo, and Santa Clara Counties (the “WSA”).

2. Relationship to Water Supply Agreement
The WSA includes a Water Shortage Allocation Plan which, among other things, (a) provides for the allocation of available water between Retail Customers (e.g., retail water customers within the City and County of San Francisco) and the Wholesale Customers collectively during system- wide water shortages of 20 percent or less, (b) contemplates the adoption by the Wholesale Customers of this Plan for allocation of the Wholesale Customers share of available water, (c) commits the SFPUC to implement this Plan, (d) provides for banking of unused allocation, and (e
) pr
ovides for the transfer of both banked water and shortage allocations between and among the Wholesale Customers and commits the SFPUC to implement such transfers. That plan is referred to as the Tier 1 Plan and is included as Attachment H to the WSA.

The Tier 1 Plan also provides the methodology for determining the Overall Average Wholesale Customer Reduction, expressed as a percentage cutback from prior year’s normal SFPUC purchases, and Overall Wholesale Customer Allocation, in million gallons per day (MGD), both of which are used in determining the final Allocation Factor for each Wholesale Customer. The Overall Average Wholesale Customer Reduction is determined by dividing the volume of water available to the Wholesale Customers (the “Overall Wholesale Customer Allocation” or “Tier 1 Allocation”), shown as a share of available water in Section 2 of the Tier 1 Plan, by the prior year’s normal total Wholesale Customers’ RWS purchases and subtracting that value from one.

3. Development Process
Between January 2022 and June 2024, Bay Area Water Supply and Conservation Agency (BAWSCA), supported by Woodard & Curran technical consultants, facilitated negotiations between the Wholesale Customers through a series of meetings, workshops, and workgroups to develop a formula and implementation plan to allocate RWS supplies in the event of shortage caused by a SFPUC declared Drought, as defined in the WSA. These meetings, workshops, and workgroups provided a forum for in-depth discussion of the objectives, mechanics, and policy aspects of the elements of an updated Plan.

The Wholesale Customers began negotiations by reviewing the prior Plan, then discussed and agreed upon four policy principles to lay the foundation for a revised Plan. BAWSCA, with support from Woodard & Curran as the technical consultant team, introduced potential elements of a formula to align with the agreed upon policy principles. In monthly workshops, the Wholesale Customers discussed these options and provided feedback on which elements should be included in the Plan, along with suggested refinements. These workshops, and the discussions, suggestions, and comments expressed by the Wholesale Customers during this process, were the primary forum through which this Plan was developed.

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4. Plan Policy Principles
The Wholesale Customers collectively developed four policy principles (the “Policy Principles”) to guide the development and performance of the Tier 2 Plan. The Tier 2 Plan and associated Tier 2 Plan Allocation Model were developed in consideration of these policy principles, with the intent to abide by each policy principle while minimizing conflicts between policy principles. The policy principles are summarized below and implemented in Attachment B, Tier 2 Plan Data Sources and Calculations.

1. Policy Principle #1 - Provide sufficient water for the basic health and safety needs of customers.

2. Policy Principle #2 - Minimize economic and other adverse impacts of water shortages on customers and the BAWSCA region.

3. Policy Principle #3 - Provide predictability of drought allocations through consistent and predetermined rules for calculation, while allowing for flexibility to respond to unforeseen circumstances.

4. Policy Principle #4 - Recognize benefits of, and avoid disincentives for, water use efficiency and development of alternative water supply projects.

5. Allocation Formula
Guided by the Policy Principles, the Wholesale Customers developed a specific formula for apportioning the Overall Wholesale Customer Allocation among the individual Wholesale Customers. The Tier 2 Allocation Model requires several inputs to calculate each Wholesale Customer’s allocation. First, Base Period data are collected to be used as inputs in the Tier 2 formula. Next each Wholesale Customer’s allocation is calculated in five steps.

Base Period Calculations
The Base Period in the Tier 2 Plan is defined as the average of each Wholesale Customer’s two years with the highest volumes of SFPUC purchases from the previous three non-Drought years. A non-Drought year is defined as a full fiscal year (July 1 through June 30) in which the SFPUC has not declared a water shortage emergency, as defined in the WSA. BAWSCA’s Annual Survey, which compiles and publishes data self-reported by the Wholesale Customers, is the primary source for model inputs.

Tier 2 Plan Allocation Formula Inputs
• Population: Each Wholesale Customer’s population as reported in the most recently published Annual Survey and is not tied to Drought or non-Drought year status. • Base Period SFPUC Purchases: The average of each Wholesale Customer’s two years with the highest volumes of SFPUC purchases from the previous three non- Drought years.
• Base Period Total Potable Water Production: Total potable production as reported in the Annual Survey.

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• Base Period SFPUC Reliance: Each Wholesale Customer’s Base Period SFPUC Purchases divided by Base Period Total Potable Water Production, expressed as a percentage.
• Base Period Percent Indoor Demand: The single lowest month’s total potable demand (a proxy for indoor use) divided by the average monthly total potable demand, expressed as a percentage. The resulting percentages are averaged for the two selected Base Period years.
• Base Period Percent Non-Residential Demand: Each Wholesale Customer’s potable water consumption from the Base Period from all customer categories except residential, divided by the Wholesale Customer’s Base Period Total Potable Water Production, expressed as a percentage. The resulting percentages are averaged for the two selected Base Period years.
• Individual Supply Guarantee (ISG): Each Wholesale Customer’s share of the Supply Assurance, as shown on Attachment C to the WSA, with proxies for Hayward, San Jose, and Santa Clara in order to provide inputs for the Tier 2 Allocation Formula There are three exceptions to the Base Period Calculations: (1) Coastside County Water District (“Coastside CWD”) Base Period SFPUC Purchases and Base Period SFPUC Reliance, (2) Stanford Base Period Percent Indoor Demand, and (3) Stanford Population Calculation. (1) Coastside CWD Base Period SFPUC Purchases will be calculated as 94% of its Base Period Total Potable Water Production. Base Period SFPUC Reliance will be fixed at 94%. More information is provided in Attachment B.
(2) Stanford’s Base Period Percent Indoor Demand calculation will exclude demand from the month of December and/or January when the campus is closed and demand is abnormally low.
(3) Stanford’s population is calculated as described in Attachment B.

Furthermore, three Wholesale Customers do not have an ISG and a proxy is used in the Tier 2 Plan: (1) Hayward, (2) San Jose, and (3) Santa Clara. Background on ISG and each ISG proxy is described in Attachment B.

Data sources, methodologies, and equations used to calculate each input are described further in Attachment B.

Step 0: Establish SFPUC Minimum and Maximum Cutback
The Minimum and Maximum Cutback establish the upper and lower bounds for each Wholesale Customer’s final allocation.

No water is allocated in this step. Instead, allocations in subsequent steps are limited such that no Wholesale Customer’s final allocation is outside the upper and lower bounds (i.e., above the Minimum Cutback or below the Maximum Cutback) established in this step.

Minimum Cutback: Each Wholesale Customer will contribute to meeting the Overall Average Wholesale Customer Reduction by taking a Minimum Cutback from its Base Period SFPUC

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Purchases (up to its ISG or proxy). This establishes the upper limit of each Wholesale Customer’s potential final allocation. The Minimum Cutback, expressed as a percentage, is equal to 1/3 times the Overall Average Wholesale Customer Reduction, but no less than 5%.

Maximum Cutback: The Maximum Cutback establishes the lower limit of each Wholesale Customer’s potential final allocation. The Maximum Cutback, expressed as a percentage, is equal to 1.5 times the Overall Average Wholesale Customer Reduction. The Maximum Cutback is calculated from each Wholesale Customer’s Base Period SFPUC Purchases (up to its ISG, or proxy).

Step 1 Override Exception: If a Wholesale Customer’s allocation in Step 1 exceeds the upper limit established by the Minimum Cutback at 1/3 times the Overall Average Wholesale Customer Reduction, the Wholesale Customer’s Minimum Cutback will be reduced, but the Minimum Cutback will be no less than 5%.

Calculations and an example of the Step 1 Override Exception are provided in Attachment B.

Step 1: Efficient Residential Allocation
Step 1 allocates water on a residential per capita basis, based on the State Indoor Water Use Efficiency Standard1 and the portion of each Wholesale Customer’s water demand met by the RWS.

The per capita efficient residential volume, in gallons, will align with the State Residential Indoor Water Use Efficiency Standard, established as 47 gallons per capita per day (GPCD) through 2029 and 42 GPCD beginning in 2030. This step multiplies the per-capita volume by each Wholesale Customer’s Population and Base Period SFPUC Reliance to determine the total amount of supply allocated to each Wholesale Customer in this step.

Step 2: Non-Residential Base Allocation
Step 2 allocates water based on each Wholesale Customer’s estimated non-residential indoor/base demand.

To calculate non-residential indoor/base demand, each Wholesale Customer’s Base Period SFPUC Purchases are multiplied by:
• Base Period Percent Indoor Demand
• Base Period Percent Non-Residential Demand
• Non-Residential Base Allocation Factor – this is equal to one minus 50% of the Overall Average Wholesale Customer Reduction.
o For example, in a 20% Overall Average Wholesale Customer Reduction, the Non-Residential Base Allocation Factor will be 90% (1 – (20% ÷ 2)) of each Wholesale Customer’s non-residential indoor/base demand. 1 SB 1157, signed into law in September 2022, established the standard for efficient indoor residential water use be 47 gallons per capita per day (“GPCD”), lowering to 42 GPCD in 2030.

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Step 3: SFPUC Maximum Cutback Reserve
The Maximum Cutback establishes the lower limit for each Wholesale Customer’s final allocation. See Step 0 for more information.

No water is allocated in this step. Instead, this step calculates the gap between each Wholesale Customer’s allocation after Step 2 and the lower limit of its potential final allocation. This step then reserves the sum of the gap for all Wholesale Customers from the Overall Wholesale Customer Allocation for Step 5. This Maximum Cutback Reserve ensures, after other steps are applied, that sufficient water is available in the final step to provide that each Wholesale Customer’s final allocation is equal to, or greater than, the lower limit of its potential allocation established by the Maximum Cutback.

Step 4: Seasonal Allocation
Step 4 allocates water based on estimated seasonal purchases from the RWS.

The inverse of each Wholesale Customer’s Base Period Percent Indoor Demand (1 - % Indoor Demand) is used to estimate percent seasonal demand, which is then multiplied by Base Period SFPUC Purchases to estimate each Wholesale Customers’ SFPUC seasonal purchases. Each Wholesale Customer’s estimated SFPUC seasonal purchases are multiplied by the Seasonal Cutback Factor to establish each Wholesale Customer’s Seasonal Allocation.

The Seasonal Cutback Factor is calculated based upon the Overall Wholesale Customer Allocation remaining to be allocated after Step 2. Of the remaining Overall Wholesale Customer Allocation after Step 2 (less the Maximum Cutback Reserve), 50% is allocated through the Seasonal Minimum Allocation Step. The detailed methodology for calculating the Seasonal Cutback Factor is described in Attachment B.

Step 5: SFPUC Purchases and ISG-Based Allocation
Step 5 allocates the water remaining after Step 4 to get agencies as close to the “Target Allocation” as possible. Each Wholesale Customer’s Target Allocation is based on a weighted share of two-thirds Base Period SFPUC Purchases and one-third ISG (or proxy) while ensuring each agency’s final allocation is between the Minimum and Maximum Cutback limits.

The detailed methodology for calculating the Base Period SFPUC Purchases and ISG weighted allocation is described in Attachment B.

6. Plan Implementation
The Tier 2 Plan applies when, and only when, the SFPUC declares a Drought that has is a system-wide water shortage of 20 percent or less. The Tier 2 Plan applies only to water acquired and distributed by the SFPUC to the Wholesale Customers through the WSA and has no effect on water obtained by a Wholesale Customer from any source other than the SFPUC.

Shortages Greater than 20 Percent
In no way should it be construed that the Wholesale Customers relieve the SFPUC of its obligations established in the Level of Service goals adopted in the Water System Improvement

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Program (“WSIP”), including the level of service goal to “meet dry-year delivery needs while limiting drought rationing to a maximum 20 percent system-wide reduction water service during extended droughts” (2023 Amended and Updated LOS Goals and Objectives, SFPUC Resolution No. 23-0210, adopted November 28, 2023, updating the Resolution No. 08-0200, adopted October 30, 2008). Should conditions occur that result in system-wide shortages greater than 20%, the provisions in WSA Section 3.11(C) apply. The Tier 2 Plan calculations may be used during discussions with the SFPUC on how to implement reductions above 20% with the Wholesale Customers and for planning purposes only to estimate potential Wholesale Customer allocations for system-wide shortages greater than 20% (e.g., to inform efforts such as Urban Water Management Plans).

BAWSCA Role in Plan Implementation
In accordance with the WSA, upon the SFPUC’s declaration or reconfirmation of a water shortage emergency, BAWSCA will calculate and provide the SFPUC with each Wholesale Customer’s individual percentage share of the amount of water allocated to the Wholesale Customers collectively.

In the event that shortage conditions change and the SFPUC takes action to declare an increase or decrease to the system-wide shortage level, BAWSCA will recalculate the Tier 2 Plan and submit new Allocation Factors to the SFPUC. When rerunning the Tier 2 calculations, the Base Period will not change to provide predictability (Policy Principle #3). The only inputs that will change are the Overall Wholesale Customer Allocation and population, if a more recent Annual Survey has been published.

If the appropriate base period data, as specified in this Plan, are not available when BAWSCA initially calculates the Tier 2 Allocation Factors, the Base Period may be updated. However, BAWSCA may only provide the SFPUC with updated Allocation Factors if the Commission takes action to declare or reconfirm a shortage condition.

Each year, BAWSCA will provide the Wholesale Customers with a review of the Tier 2 Plan.

The annual review will include:
• Calculation of each Wholesale Customer’s Allocation Factor for regional shortages of 10% and 20% for the current Base Period, based upon the most recent published BAWSCA Annual Survey;
• Review of Base Period data used to develop the calculations.

7. Plan Term
The term of the Tier 2 Plan will be the same as the WSA term and may be extended by the written agreement of all the Wholesale Customers. The Tier 2 Plan negotiators chose to coordinate the Plan term with WSA term in order to avoid simultaneous renegotiation of these related agreements. Pursuant to WSA Section 2, the WSA expires on June 30, 2034. In December 2031, the SFPUC may provide written notice to the Wholesale Customers that it is willing to extend the WSA for five years, through June 30, 2039. Between January 1, 2032 and June 30, 2032, any Wholesale Customer may accept the SFPUC's offer to extend the Term by providing a written notice of extension to the SFPUC. If the WSA is extended, the Tier 2 Plan

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shall expire on December 31, 2034, unless extended by the written agreement of all Wholesale Customers. The Wholesale Customers will meet to review and potentially negotiate amendments to the Tier 2 Plan between July 2032 and June 2034.

If the SFPUC is not willing to extend the term of the WSA, or the Wholesale Customers decline the offer to extend the term of the WSA, the term of the Tier 2 Plan shall be automatically extended for two additional years through December 31, 2036 to allow for more time for the Wholesale Customers to meet to review and potentially negotiate amendments to the Tier 2 Plan between July 2034 and June 2036.

Sample schedules described above are provided in the table below.

Date
Extension of WSA with Limited
Negotiated Changes
Parties must renegotiate WSA
Terms
Dec 2031 SFPUC indicates willingness to extend
term of WSA for 5 years
SFPUC indicates willingness to extend
term of WSA for 5 years
Jan - Jun
2032
Wholesale Customers accept offer to
extend term of WSA
Wholesale Customers decline offer to
extend term of WSA
Jul 2032 -
Jun 2034
Wholesale Customers meet to review,
extend and potentially negotiate
amendments to the Tier 2 Plan
SFPUC and Wholesale Customers
negotiate amendments to WSA
Jul 2034 –
Jun 2036
W holesale Customers meet to review
and potentially negotiate amendments
to the Tier 2 Plan

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Attachment A: List of Abbreviations and Definitions
Abbreviations
BAWSCA – Bay Area Water Supply and Conservation Agency
GPCD – gallons per capita per day
ISG – Individual Supply Guarantee
MGD – million gallons per day
RWS – San Francisco Regional Water System
SFPUC – San Francisco Public Utilities Commission
WSA – Amended and Restated Water Supply Agreement between the City and County of San Francisco and the Wholesale Customers in Alameda, San Mateo and Santa Clara Counties WSIP – Water System Improvement Program
Definitions
Allocation Factor – Each Wholesale Customer's portion of the Overall Wholesale Customer Allocation, expressed as a percent.

Base Period – The average of each Wholesale Customer’s two years with the highest volumes of SFPUC purchases from the previous three non-Drought years.

BAWSCA Annual Survey – An annual survey of the Wholesale Customers, conducted by BAWSCA, to update key service area information including actual and projections of Wholesale Customer water demand and population.

Drought – “[a] water shortage caused by lack of precipitation, as reflected in resolutions of the Commission calling for voluntary or mandatory water rationing based on evaluation of water stored or otherwise available to the Regional Water System, whether or not the Commission declares a water shortage emergency pursuant to Water Code §§ 350 et seq., as amended from time to time." (WSA, Attachment A)
Individual Supply Guarantee – “[each] Wholesale Customer’s share of the Supply Assurance, as shown in Attachment C [to the WSA]." (WSA, Attachment A) Overall Average Wholesale Customer Reduction – The percent cutback from Base Period SFPUC Purchases, calculated by dividing the Overall Wholesale Customer Allocation by the sum of the Wholesale Customer's Base Period SFPUC Purchases.

Overall Wholesale Customer Allocation or Tier 1 Allocation – The volume of water available to the Wholesale Customers from the RWS.

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Regional Water System – “[the] water storage, transmission and treatment system operated by the SFPUC in Tuolumne, Stanislaus, San Joaquin, Alameda, Santa Clara, San Mateo and San Francisco counties, including projects constructed under the WSIP, but excluding Direct Retail and Direct Wholesale assets." (WSA, Attachment A)
SFPUC Purchases – For the purposes of the Tier 2 Plan, SFPUC Purchases are defined as the volume of water purchased by and delivered to a Wholesale Customer for use within its service area. SFPUC Purchases specifically exclude (1) In-Lieu Water, which is Regional Water System water pursuant to the WSA and the Regional Groundwater Storage and Recovery Project Operating Agreement and (2) Imputed Sales, both defined in the WSA, Attachment A.

Supply Assurance – “[the] 184 MGD maximum annual average metered supply of water dedicated by San Francisco to public use in the Wholesale Service Area (not including San Jose and Santa Clara) in the 1984 Agreement and Section 3.01 of this Agreement." (WSA, Attachment A)
Tier 1 Plan or Tier 1 Shortage Plan – “[the] Water Shortage Allocation Plan (Attachment H) adopted by the SFPUC and the Wholesale Customers in conjunction with this Agreement [the WSA] describing the method for allocating water between the SFPUC and the Wholesale Customers collectively for shortages of up to 20% of deliveries from the Regional Water System, as amended from time-to-time." (WSA, Attachment A) Tier 2 Plan or Tier 2 Drought Response Implementation Plan – The method of apportioning the Tier 1 Allocation among the 26 Wholesale Customers.

Tier 2 Plan Allocation Model – The Excel-based tool used for applying the Tier 2 Plan allocation methodology and determining each Wholesale Customer's Allocation Factor.

Wholesale Customers – “[the] 26 water customers identified in Section 1.02 [of the WSA] that are contracting for purchase of water from San Francisco pursuant to [the WSA].” (WSA, Attachment A)

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Attachment B: Tier 2 Plan Data Sources and Calculations BAWSCA Annual Survey
Each year, BAWSCA conducts an annual survey of its members in order to update key BAWSCA service area information including population, current and projected water use, and climatology. BAWSCA begins collecting data in October of each year. The Wholesale Customers submit data through BAWSCA’s Water Conservation Database. Between approximately January and March, BAWSCA reviews the Wholesale Customers’ submissions for potential errors and works with Wholesale Customers to confirm and finalize the data. The final report is published around March of each year for the fiscal year ending the previous June 30 th.

Base Period inputs will use data published in the Annual Surveys from the previous three non- Drought years. Depending on when the SFPUC declares a shortage emergency, the most recent non-Drought year’s Annual Survey may not be finalized and published. If the most recent non-Drought year’s Annual Survey is not available, the Base Period inputs will use data from the three most recent non-Drought year’s published in Annual Surveys.

Base Period
The Tier 2 Plan uses historical SFPUC purchases, total potable water production, monthly potable production, potable consumption by customer category, and population for Steps 0 through 5. These values are established using a historical base period with established water supply and delivery data.

The Base Period for all inputs except population is defined as the average from the highest two years of SFPUC Purchases over the most recent three non-Drought years. The selection of Base Period is unique to each Wholesale Customer. Two example agencies are provided in the table below, where the data associated with the highest two years are highlighted.

Previous Non-
Drought Year
Agency A Agency B
SFPUC
Purchases
Percent Non-
Residential
SFPUC
Purchases
Percent Non-
Residential
Year 1 2.50 70% 5.90 58%
Year 2 2.75 69% 6.20 56%
Year 3 2.40 67% 6.10 55%
Calculation (2.5 0 + 2. 75)
2 ( 0.7 0 + 0. 69)
2 ( 6.2 0 + 6. 10)
2 ( 0.5 6 + 0. 55)
2 Average of Highest
Two Years 2.63 70% 6.15 55.5%
Coastside CWD Special Provisions for Base Period Calculations Coastside CWD Base Period SFPUC Purchases will be calculated as 94% of its Base Period Total Potable Water Production. Base Period SFPUC Reliance will be fixed at 94%.

21418818.2
Coastside CWD’s high variability in SFPUC purchases from year to year, the California Coastal Commission limitations on growth in its service area, and geographical and hydrological isolation set it apart from other Wholesale Customers. Uniquely among the Wholesale Customers, Coastside CWD does not have interties with other Wholesale Customers or agencies. Additionally, it has junior rights on local surface water supplies. To ensure resiliency, Coastside CWD must maximize its use of Denniston Creek in normal years to provide evidence to the State in its ongoing case to perfect its water rights. This results in low RWS purchases in non-drought years, which are the source of each Wholesale Customer’s Base Period. The Coastside CWD special provisions for Base Period SFPUC Purchases ensure its dry year reliance on the RWS is reflected in the Tier 2 Plan.

Minimum Cutback Factor
The minimum cutback factor is used to establish the upper limit at or below which each Wholesale Customer’s final allocation will be. The minimum cutback factor is equal to 1/3 times the Overall Average Wholesale Customer Reduction, expressed as a percentage. Base Period SFPUC Purchases (up to ISG or proxy) are multiplied by 1 minus the minimum cutback factor.

An example equation is provided below.

𝑊𝑊ℎ𝑜𝑜
𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜 𝐶𝐶𝐶𝐶𝑜𝑜𝐶𝐶𝑜𝑜𝐶𝐶𝑜𝑜𝐶𝐶 𝑓𝑓
𝑓𝑓𝑓𝑓𝑜𝑜𝑜𝑜 𝑜𝑜𝑜𝑜
𝑜𝑜𝑜𝑜𝑎𝑎𝑜𝑜𝐶𝐶
𝑓𝑓𝑜𝑜𝑓𝑓 𝐶𝐶𝑢𝑢
𝑢𝑢𝑜𝑜
𝐶𝐶 𝑜𝑜
𝑓𝑓𝐶𝐶𝑓𝑓𝐶𝐶 = 𝐵𝐵𝑜𝑜
𝑜𝑜𝑜𝑜 𝑃𝑃𝑜𝑜
𝐶𝐶𝑓𝑓𝑜𝑜𝑃𝑃 𝑆𝑆
𝑆𝑆𝑃𝑃𝑆𝑆
𝐶𝐶 𝑃𝑃𝐶𝐶
𝐶𝐶𝑎𝑎ℎ𝑜𝑜
𝑜𝑜𝑜𝑜𝑜𝑜 × �1 −
(1 3⁄ × 𝑂𝑂
𝑂𝑂𝑜𝑜
𝐶𝐶𝑜𝑜𝑜𝑜𝑜𝑜 𝐴𝐴
𝑂𝑂𝑜𝑜𝐶𝐶𝑜𝑜
𝐴𝐴
𝑜𝑜 𝑊𝑊ℎ𝑜𝑜
𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜 𝐶𝐶𝐶𝐶𝑜𝑜𝐶𝐶𝑜𝑜𝐶𝐶𝑜𝑜𝐶𝐶 𝑅𝑅𝑜𝑜
𝑃𝑃𝐶𝐶𝑎𝑎𝐶𝐶𝑓𝑓𝑜𝑜𝑓𝑓)�
Step 1 Override Exception
If a Wholesale Customer’s allocation in Step 1 (Efficient Residential Allocation) is greater than the upper limit of its potential allocation established by the Minimum Cutback, the Step 1 allocation will override. However, no Wholesale Customer’s final cutback will be less than 5%.

For example, in a 20% Overall Average Wholesale Customer Reduction, the Minimum Cutback will be 6.67% (20% × 1/3). An example Wholesale Customer’s calculation is provided below.

Base Period SFPUC Purchases 5.0 MGD
Minimum Cutback Factor - 6.67%
Upper Limit of Potential Final Allocation 4.67 MGD
Population 101,000
Base Period SFPUC Reliance 100%
Residential Efficient Allocation 47 GPCD
Step 1 Allocation 4.75 MGD
The ex
ample agency’s final cutback will be 5.1% as calculated below:

4.75 𝐶𝐶
𝐴𝐴𝑃𝑃 5
.0 𝐶𝐶
𝐴𝐴𝑃𝑃 − 1 = −5
.1%⁄
Maximum Cutback Factor
The maximum cutback factor is used to establish the lower limit at or above each Wholesale Customer’s final allocation. The maximum cutback factor is equal to 1.5 times the Overall Average Wholesale Customer Reduction, expressed as a percentage. Base Period SFPUC

21418818.2
Purchases (up to ISG or proxy) are multiplied by 1 minus the minimum cutback factor. An example equation is provided below.

𝑊𝑊ℎ𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜 𝐶𝐶𝐶𝐶𝑜𝑜𝐶𝐶𝑜𝑜𝐶𝐶𝑜𝑜𝐶𝐶 𝑓𝑓
𝑓𝑓𝑓𝑓𝑜𝑜𝑜𝑜 𝑜𝑜𝑜𝑜
𝑜𝑜𝑜𝑜𝑎𝑎𝑜𝑜𝐶𝐶
𝑓𝑓𝑜𝑜𝑓𝑓 𝑜𝑜
𝑜𝑜
𝑙𝑙
𝑜𝑜𝐶𝐶 𝑜𝑜
𝑓𝑓𝐶𝐶𝑓𝑓𝐶𝐶
= 𝐵𝐵𝑜𝑜
𝑜𝑜𝑜𝑜 𝑃𝑃𝑜𝑜
𝐶𝐶𝑓𝑓𝑜𝑜
𝑃𝑃 𝑆𝑆𝑆𝑆𝑃𝑃𝑆𝑆
𝐶𝐶 𝑃𝑃𝐶𝐶
𝐶𝐶𝑎𝑎ℎ𝑜𝑜
𝑜𝑜𝑜𝑜𝑜𝑜
× �1 − (1
.5 × 𝑂𝑂𝑂𝑂𝑜𝑜
𝐶𝐶𝑜𝑜𝑜𝑜𝑜𝑜 𝐴𝐴
𝑂𝑂𝑜𝑜𝐶𝐶𝑜𝑜
𝐴𝐴
𝑜𝑜 𝑊𝑊ℎ𝑜𝑜
𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜𝑜 𝐶𝐶𝐶𝐶𝑜𝑜𝐶𝐶𝑜𝑜𝐶𝐶𝑜𝑜𝐶𝐶 𝑅𝑅𝑜𝑜
𝑃𝑃𝐶𝐶𝑎𝑎𝐶𝐶𝑓𝑓𝑜𝑜𝑓𝑓)�
Efficient Residential Volume
The Tier 2 Plan uses a per-capita volume, in gallons, to calculate each Wholesale Customer’s Efficient Residential Allocation (Step 1 of the Allocation Model). The per-capita volume is 47 gallons per capita per day through 2029 and 42 GPCD beginning in 2030, consistent with the State of California Indoor Residential Water Use Standard for 2025 established by SB 1157.

SFPUC Reliance
For agencies with multiple potable water sources, the Tier 2 Plan calculates SFPUC Reliance by dividing each agency’s Base Period SFPUC Purchases by Base Period Total Potable Water Production, expressed as a percentage. SFPUC Reliance is used in Step 1 to calculate multi- source agency’s Residential Efficient Allocation met by the RWS.

Population
The Tier 2 Plan uses population reported in the most recently published Annual Survey to calculate each Wholesale Customer’s Efficient Residential Allocation in Step 1.

BAWSCA reviews data submitted for the Annual Survey and works with agencies to ensure the information is correct before making it public. As part of this annual review, BAWSCA will flag any agencies that have reported population increases greater than 5%. BAWSCA will first confirm with the agency that there are no reporting errors. If the reported data are correct, BAWSCA will include a note to all agencies during the annual review of the Tier 2 Plan.

Stanford University Population Calculation
Stanford has historically reported its population in the BAWSCA Annual Survey using data from the Stanford Office of Institutional Research & Decision Support, which annually documents population based on student enrollment and data from human resources. This number captures all students (undergraduate and graduate), post-docs, faculty, and staff that are employed and work on campus. The population report does not directly capture residential population that is not enrolled or employed (significant others or dependents). However, it would include a daytime population component. Stanford reviewed several population sources and calculation methods including census data. Based on review of the available sources for population information, Stanford proposed, and the BAWSCA agencies agreed, to utilize a formula that captures student and faculty/staff residential population. This new approach would eliminate the inclusion of daytime staff and faculty who do not live on campus.

The formula takes the Office of Institutional Research & Decision Support data and uses only the "Total Students" and adds a multiplier of 2.57 people per residence (single and multi-family) for the faculty/staff housing area.

21418818.2
Stanford Population = (Faculty/Staff Housing Residences x 2.57) + ("Total Students" from Population Report)
Percent Indoor Demand
For each Base Period year, percent indoor demand is calculated by dividing each Wholesale Customer’s lowest month of potable production by the Wholesale Customer’s average monthly potable production. The two resulting percentages are averaged together. An example equation is provided below, where Y
1 and Y2 represent the two Base Period years.
% 𝐼𝐼𝑓𝑓
𝑃𝑃𝑜𝑜𝑜𝑜𝐶𝐶 𝑆𝑆
𝑜𝑜𝑜𝑜 =
𝐿𝐿𝑜𝑜𝑙𝑙𝑜𝑜
𝑜𝑜𝐶𝐶 𝑀𝑀
𝑜𝑜𝑓𝑓𝐶𝐶ℎ 𝑃𝑃𝐶𝐶
𝑜𝑜𝑃𝑃𝐶𝐶
𝑎𝑎𝐶𝐶𝑓𝑓𝑜𝑜𝑓𝑓, 𝑌𝑌1
𝐴𝐴𝑂𝑂𝑜𝑜𝐶𝐶𝑜𝑜𝐴𝐴𝑜𝑜 𝑀𝑀 𝑜𝑜𝑓𝑓𝐶𝐶ℎ𝑜𝑜 𝑙𝑙 𝑃𝑃𝐶𝐶 𝑜𝑜𝑃𝑃𝐶𝐶 𝑎𝑎𝐶𝐶𝑓𝑓𝑜𝑜𝑓𝑓, 𝑌𝑌1 + 𝐿𝐿𝑜𝑜𝑙𝑙𝑜𝑜 𝑜𝑜𝐶𝐶 𝑀𝑀 𝑜𝑜𝑓𝑓𝐶𝐶ℎ 𝑃𝑃𝐶𝐶 𝑜𝑜𝑃𝑃𝐶𝐶 𝑎𝑎𝐶𝐶𝑓𝑓𝑜𝑜𝑓𝑓, 𝑌𝑌2
𝐴𝐴𝑂𝑂𝑜𝑜𝐶𝐶𝑜𝑜𝐴𝐴𝑜𝑜 𝑀𝑀 𝑜𝑜𝑓𝑓𝐶𝐶ℎ𝑜𝑜 𝑙𝑙 𝑃𝑃𝐶𝐶 𝑜𝑜𝑃𝑃𝐶𝐶 𝑎𝑎𝐶𝐶𝑓𝑓𝑜𝑜𝑓𝑓, 𝑌𝑌2 2 Percent Seasonal Demand
Percent seasonal demand is calculated as the inverse of percent indoor demand.

𝑃𝑃𝑜𝑜
𝐶𝐶𝑎𝑎𝑜𝑜𝑓𝑓𝐶𝐶 𝑆𝑆𝑜𝑜
𝑜𝑜𝑜𝑜𝑜𝑜𝑓𝑓𝑜𝑜𝑜𝑜 𝐷𝐷𝑜𝑜
𝐶𝐶𝑜𝑜𝑓𝑓𝑃𝑃 = 1 − % 𝐼𝐼𝑓𝑓
𝑃𝑃𝑜𝑜𝑜𝑜𝐶𝐶 𝐷𝐷𝑜𝑜
𝐶𝐶𝑜𝑜𝑓𝑓𝑃𝑃
Percent Non-Residential Demand
For each Base Period year, percent non-residential demand is calculated by first dividing each Wholesale Customer’s potable water consumption from all residential customer categories by the Wholesale Customer’s total annual potable production. The resulting percentage is subtracted from one to calculate the inverse and thus captures all non-residential demands including non-revenue water and dedicated irrigation meters2. The two resulting percentages from the two Base Period years are averaged together. An example equation is provided below, where Y1 and Y2 represent the two Base Period years.
% 𝑁𝑁
𝑅𝑅 𝑆𝑆
𝑜𝑜𝑜𝑜 =
(1 − 𝑅𝑅𝑜𝑜
𝑜𝑜𝑓𝑓𝑃𝑃𝑜𝑜𝑓𝑓𝐶𝐶𝑓𝑓𝑜𝑜𝑜𝑜 𝑆𝑆
𝑜𝑜𝑜𝑜, 𝑌𝑌1
𝑃𝑃𝑜𝑜 𝐶𝐶𝑜𝑜 𝑃𝑃𝑜𝑜 𝑜𝑜 𝑃𝑃𝐶𝐶 𝑜𝑜 𝑃𝑃𝐶𝐶 𝑎𝑎𝐶𝐶𝑓𝑓𝑜𝑜𝑓𝑓, 𝑌𝑌1
) + (1 − 𝑅𝑅𝑜𝑜 𝑜𝑜𝑓𝑓𝑃𝑃𝑜𝑜𝑓𝑓𝐶𝐶𝑓𝑓𝑜𝑜𝑜𝑜 𝑆𝑆 𝑜𝑜𝑜𝑜, 𝑌𝑌2
𝑃𝑃𝑜𝑜 𝐶𝐶𝑜𝑜 𝑃𝑃𝑜𝑜 𝑜𝑜 𝑃𝑃𝐶𝐶 𝑜𝑜 𝑃𝑃𝐶𝐶 𝑎𝑎𝐶𝐶𝑓𝑓𝑜𝑜𝑓𝑓, 𝑌𝑌2
)
2 Individual Supply Guarantee (ISG)
Use of ISG in the Tier 2 Plan
Each Wholesale Customer’s ISG is used in the Tier 2 Plan calculations with proxies for Hayward, San Jose and Santa Clara, in order to provide inputs for the Tier 2 Allocation Formula.

See WSA, Attachment C for a current list of ISG values.

Hayward’s de facto ISG (22.1 MGD) is used in place of permanent ISG for the purposes of the Tier 2 Plan calculations. This figure is used in WSA, Attachment D, to determine whether Hayward’s increased use requires pro-rata reduction of remaining Wholesale Customers’ ISG. 2 Prior to FY 22-23, all consumption recorded under the dedicated irrigation sector in the Water Conservation Database is assumed to be non-residential. Starting in FY 22-23, Wholesale Customers were given the option to separate out residential vs. non-residential dedicated irrigation consumption.

21418818.2
San Jose and Santa Clara’s temporary and interruptible contract amounts (4.5 MGD each) are used in place of ISG for the purposes of the Tier 2 Plan calculations.

Background on ISG
San Francisco has a perpetual legal obligation and commitment (Supply Assurance) to deliver 184 MGD to the 24 permanent Wholesale Customers collectively. The Supply Assurance is subsequently allocated among the 24 permanent Wholesale Customers through Individual Supply Guarantees (ISG), which represent each Wholesale Customer’s share of the 184 MGD Supply Assurance. San Jose and Santa Clara are not included in San Francisco’s Supply Assurance obligation; rather each has a temporary and interruptible water supply contract with San Francisco. Through the WSA and its individual contracts with San Jose and Santa Clara, San Francisco has many requirements to plan for water supply development and analyze the sufficiency of water supply to San Jose and Santa Clara. For example, San Francisco must complete a CEQA review and provide at least a 10-year notice of interruption.

Hayward does not have an Individual Supply Guarantee
San Francisco and Hayward entered into a water supply contract on February 9,1962 (the "1962 contract") which provided that San Francisco would supply Hayward with all water supplemental to water controlled by Hayward, in sufficient quantity to supply the total water needs of Hayward’s service area "on a permanent basis." This 1962 contract remains the Individual Water Sales Contract between San Francisco and Hayward. Due to the terms of this ongoing contract, Hayward does not have an ISG. If Hayward’s purchases exceed 22.1 MGD for three consecutive years, the remaining 23 Wholesale Customer's ISG will be reduced on a pro rata (WSA, Attachment D).

Currently, the sum of the 23 Wholesale Customers fixed ISG is 161.9 MGD. 184 MGD Supply Assurance - 161.9 MGD = 22.1 MGD water available for Hayward purchases (i.e., Hayward’s “de facto” ISG)
Hayward’s proxy ISG for the purpose of the Tier 2 Plan is 22.1 MGD.

San Jose and Santa Clara do not have an Individual Supply Guarantee During the term of the 1984 Settlement Agreement, San Francisco provided water to San Jose and Santa Clara on a temporary and interruptible basis, pursuant to SFPUC Resolution No. 85- 0256. The SFPUC has contracted to supply a combined annual average of 9 MGD to San Jose and Santa Clara (4.5 MGD each) through 2028. The 9 MGD allocated to San Jose and Santa Clara is not included in the Supply Assurance. San Francisco will decide whether to make San Jose and Santa Clara permanent customers by December 31, 2028. (WSA, Sec. 4.05) San Jose and Santa Clara’s proxy ISG for the purpose of the Tier 2 Plan is 4.5 MGD each.

Tier 2 Drought Implementation Plan
July 2024 Model Concept - Efficient Res Allocation + Non-Res Base Allocation + Seasonal Allocation + Base SFPUC Purchases/ISG-Based Allocation - Variable Base Year Model Set-up/Assumptions Base Years
Allocation Year/Projection Year FY24-25 Non-Drought Year 1 FY18-19 Tier 1 Shortage Allocation (mgd) 114.20 Non-Drought Year 2 FY19-20 Base Period SFPUC Purchases (mgd) 134.34 Non-Drought Year 3 FY20-21 Overall Reduction from Base Period
Required -15.0%
SFPUC Maximum Cutback Factor -22.5% Error Message(s) (if applicable) SFPUC Minimum Cutback Factor -5.0%
Non-Residential Base Allocation % 92.5%
Step 5 Reserved % of Remaining Tier
1 Allocation (less Step 3 Reserved)
after Step 2
50%
Unreserved % of Remaining Tier 1
Allocation (less Step 3 Reserved and
Step 5 Reserved) After Step 2
50%
Seasonal Allocation % 7.9%
Step 5 ISG Weighting 33%
Step 5 Base SFPUC Purchases
Weighting 67%
Residential Efficient Allocation (R-
GPCD) 47.0
Adjustment % for SFPUC Minimum
Cutback, if efficient residential
allocation is greater than minimum
cutback
95%
Effective Date for Model Run (update for
testing only) 12/16/2024
Instructions:

1. Adjust aqua cells in OVERVIEW tab to adjust model
parameters. If there are errors in the inputs, an error message will appear in Columns E-F.

2. View allocation calculations and results in "Tier 2
Allocation" and "Agency Charts" tabs.

Calculation Steps for July 2024 Model Concept:

0. SFPUC Minimum Cutback
a. Calculate Minimum Cutback from Lesser of Base Period SFPUC Purchases and ISG (Lesser of Base Period SFPUC Purchases and ISG × [1+SFPUC Minimum Cutback Factor]) b. Calculate Efficient Residential Allocation (population × per capita allocation × % SFPUC reliance)
c. Determine if Minimum Cutback is greater than the Efficient Residential Allocation d. If Efficient Residential Allocation is greater than the Minimum Cutback, an agency's cutback may be no less than 5%

1. Efficient Residential Allocation
a. Calculate Efficient Residential Allocation (population × per capita allocation) b. Account for % SFPUC Reliance
c. Provide Efficient Residential Allocation

2. Non-Residential Base Allocation
a. Incorporate Estimated % Indoor Use (see glossary for definition and calculation of % Indoor Use) b. Incorporate % Non-Residential Use
c. Calculate Non-Residential Base Allocation (% Indoor Use × % Non-Residential Use × Base Period SFPUC Purchases × Non-Residential Indoor Allocation %) d. Add Non-Residential Base Allocation to the Step 1 Allocation

3. Calculate Potential SFPUC Maximum Cutback Need
a. Calculate SFPUC Maximum Cutback (Base Period SFPUC Purchases × [1+ SFPUC Maximum Cutback Factor])
b. Reserve the sum of the potential SFPUC Maximum Cutback need for Step 5 (Maximum Cutback Reserve)

4. Seasonal Allocation
a. Determine % Seasonal Use (1 - % Indoor Use)
b. Calculate seasonal SFPUC Purchases (Base Period SFPUC Purchases × % Seasonal Use) c. Calculate Seasonal Allocation (seasonal SFPUC Purchases × Seasonal Allocation %) d. Add the Seasonal Allocation to the Step 2 Allocation

5. Base Period/ISG-Based Allocation
a. Calculate weighted average of Base Period SFPUC Purchases and ISG, up to Minimum Cutback b. Calculate Weighted Share of total Tier 1 Allocation to Wholesale Customers (agency weighted average Base Period SFPUC Purchases/ISG ÷ total Wholesale Customer weighted average × Tier 1 Allocation)
c. Calculate the gap between Step 4 allocation and the lesser of 1) weighted share, or 2) Minimum Cutback
d. Allocate remaining supplies, except Maximum Cutback Reserve, among agencies with a gap, proportionately to gap, up to the Minimum Cutback
e. Confirm allocation meets Maximum Cutback; allocate water from Maximum Cutback Reserve up to Maximum Cutback
f. Allocate remaining supplies among agencies with a gap, proportionately to gap, up to the Minimum Cutback
Attachment C: Example of Tier 2 Plan Excel-Based Model Calculations

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FY24-25
Tier 2 Allocation Model FY22-23
Relevant Base Period Data 1. E
fficient Residential Allocation
Agency Selected
Base Year 1
Selected
Base Year 2
Base
Period
SFPUC
Purchases
(mgd)
Base Period
Reliance on
SFPUC
ISG
(mgd)
Total
Potable
Production
(mgd)
Lesser of Base
Period SFPUC
Purchases and
ISG (mgd)
SFPUC
Minimum
Cutback
(mgd)
SFPUC
Maximum
Cutback
(mgd)
Is efficient
residential
allocation
greater than
minimum
cutback?
Adjusted SFPUC
Minimum
Cutback, if
efficient
residential
allocation is
greater than

0. Effective
S
FPUC
Minimum
Cutback
(mgd)
Population
% Potable
Demand
Reliance on
SFPUC
Allocation
based on
efficient
residential
indoor use
(mgd)
Efficient
Residential
Allocation

1. Efficient
R
esidential
(
mgd)
Alameda CWD 2021 2020 8.63 22% 13.76 39.32 8.63 8.20 6.69 8.20 344,000 22% 16.17 3.55 3.55 Brisbane 2019 2020 0.65 100% 0.98 0.65 0.65 0.62 0.50 0.62 4,851 100% 0.23 0.23 0.23 Burlingame 2020 2019 3.45 100% 5.23 3.45 3.45 3.28 2.67 3.28 31,080 100% 1.46 1.46 1.46 Coastside 2021 2019 1.69 94% 2.18 1.80 1.69 1.61 1.31 1.61 18,890 94% 0.89 0.83 0.83 CWS - Total 2021 2020 29.23 95% 35.68 30.62 29.23 27.77 22.66 27.77 262,704 95% 12.35 11.78 11.78 Daly City 2020 2019 3.84 64% 4.29 6.00 3.84 3.64 2.97 3.64 107,000 64% 5.03 3.22 3.22 East Palo Alto 2020 2019 1.57 100% 3.46 1.57 1.57 1.49 1.21 1.49 29,519 100% 1.39 1.39 1.39 Estero 2020 2021 4.32 100% 5.90 4.32 4.32 4.10 3.35 4.10 37,443 100% 1.76 1.76 1.76 Hayward 2021 2019 14.26 100% 22.10 14.26 14.26 13.55 11.06 13.55 159,800 100% 7.51 7.51 7.51 Hillsborough 2021 2020 2.66 100% 4.09 2.66 2.66 2.53 2.06 2.53 11,592 100% 0.54 0.54 0.54 Menlo Park 2019 2020 3.09 100% 4.46 3.09 3.09 2.94 2.40 2.94 20,319 100% 0.95 0.95 0.95 Mid-Peninsula 2020 2021 2.63 100% 3.89 2.63 2.63 2.50 2.04 2.50 30,159 100% 1.42 1.42 1.42 Millbrae 2019 2020 1.92 100% 3.15 1.92 1.92 1.83 1.49 1.83 20,666 100% 0.97 0.97 0.97 Milpitas 2020 2021 5.67 67% 9.23 8.49 5.67 5.39 4.40 5.39 81,067 67% 3.81 2.54 2.54 Mountain View 2021 2020 7.78 87% 12.46 8.90 7.78 7.40 6.03 7.40 81,501 87% 3.83 3.35 3.35 North Coast 2021 2020 2.39 100% 3.84 2.39 2.39 2.27 1.85 2.27 37,082 100% 1.74 1.74 1.74 Palo Alto 2021 2020 9.95 100% 16.58 9.95 9.95 9.45 7.71 9.45 68,624 100% 3.23 3.23 3.23 Purissima Hills 2021 2020 1.82 100% 1.62 1.82 1.62 1.54 1.26 1.54 7,350 100% 0.35 0.35 0.35 Redwood City 2020 2021 8.62 100% 10.93 8.62 8.62 8.19 6.68 8.19 90,928 100% 4.27 4.27 4.27 San Bruno 2020 2021 0.93 30% 3.25 3.09 0.93 0.89 0.72 0.89 43,910 30% 2.06 0.62 0.62 San Jose 2019 2020 4.27 99% 4.50 4.29 4.27 4.05 3.31 4.05 43,036 99% 2.02 2.01 2.01 Santa Clara 2020 2021 3.25 20% 4.50 16.27 3.25 3.09 2.52 3.09 132,476 20% 6.23 1.24 1.24 Stanford 2020 2019 1.43 100% 3.03 1.43 1.43 1.36 1.11 1.36 20,000 100% 0.94 0.94 0.94 Sunnyvale 2021 2020 9.47 54% 12.58 17.68 9.47 8.99 7.34 8.99 156,317 54% 7.35 3.93 3.93 Westborough 2020 2019 0.80 100% 1.32 0.80 0.80 0.76 0.62 0.76 13,486 100% 0.63 0.63 0.63 Total 134.34 193.02 196.04 134.14 1,853,800 87.13 60.49 Allocated 60.49
Unallocated 53.71
Reserved 0
Allocation Year/Projection Year

0. E
stablish SFPUC Minimum Cutback
No water is allocatied in this step
Establishes the upper limit of each agency's final allocation Most Recent Annual Survey Data Year

Tier 2 Allocation Model
Agency
Alameda CWD
Brisbane
Burlingame
Coastside
CWS - Total
Daly City
East Palo Alto
Estero
Hayward
Hillsborough
Menlo Park
Mid-Peninsula
Millbrae
Milpitas
Mountain View
North Coast
Palo Alto
Purissima Hills
Redwood City
San Bruno
San Jose
Santa Clara
Stanford
Sunnyvale
Westborough
Total
Allocated
Unallocated
Reserved
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
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




2. Non-Residential Base Allocation 3 . S FPUC Maximum Cutback "Reserve" 4. S easonal Allocation 5. B ase SFPUC Purchases/ISG-Based Allocation with Minimum Cutback Estimated %
Indoor Use
% Non-
Residential
Use
Non-
Residential
Base
Allocation
(mgd)

2. N
on-
Residential
Base
Allocation
(mgd)
SFPUC Maximum
Cutback (mgd)2
Does Step 2
Allocation Meet
SFPUC Maximum
Cutback?
SFPUC
Maximum
Cutback
Shortfall
(mgd)
% Seasonal
Use
Seasonal
SFPUC
Purchases
(mgd)
Seasonal
Allocation
(mgd)

4. S easonal
Allocation
(mgd)
Weighted
Average of Base
Period SFPUC
Purchases (up to
ISG) and ISG
(mgd)
Weighted Share
of Tier 1
Allocation (mgd)
Lesser of
Weighted Share
and Minimum
Cutback
Allocation
(i.e., Target
Allocation)
Target
Allocation
Based Gap
(mgd)
Target
Based
Allocation 1
(mgd)
69% 41% 2.22 5. 77 6.69 0.92 31% 2.71 0. 22 5.99 10.33 7.68 7.68 1.69 0.31 66% 68% 0.27 0.50 0.50 0.01 34% 0.22 0.02 0.51 0.76 0.56 0.56 0.05 0.01 73% 40% 0.93 2. 39 2.67 0.28 27% 0.93 0. 07 2.46 4.04 3.00 3.00 0.54 0.10 64% 46% 0.47 1. 30 1.31 0.01 36% 0.60 0. 05 1.35 1.85 1.38 1.38 0.03 0.01 61% 30% 5.02 16.80 22.66 5.85 39% 11.26 0.89 17.69 31.36 23.32 23.32 5.62 1.05 88% 23% 0.73 3. 64 2.97 0.00 12% 0.46 0. 04 3.64 3.99 2.96 2.96 0.00 0.00 79% 18% 0.21 1.49 1.21 0.00 21% 0.33 0.03 1.49 2.19 1.63 1.49 0.00 0.00 63% 45% 1.13 2.89 3.35 0.46 37% 1.58 0.13 3.01 4.84 3.60 3.60 0.59 0.11 72% 45% 4.33 11. 85 11.06 0.00 28% 3.95 0. 31 12.16 16.85 12.53 12.53 0.37 0.07 36% 9% 0.08 0.62 2.06 1.44 64% 1.70 0.14 0.76 3.13 2.33 2.33 1.57 0.29 53% 63% 0.94 1. 90 2.40 0.50 47% 1.47 0. 12 2.01 3.54 2.63 2.63 0.62 0.12 68% 27% 0.45 1. 87 2.04 0.18 32% 0.86 0. 07 1.93 3.05 2.27 2.27 0.33 0.06 76% 36% 0.49 1.46 1.49 0.03 24% 0.46 0.04 1.49 2.33 1.73 1.73 0.24 0.04 78% 51% 2.08 4. 62 4.40 0.00 22% 1.23 0. 10 4.72 6.85 5.09 5.09 0.37 0.07 66% 43% 2.04 5. 39 6.03 0.65 34% 2.64 0. 21 5.60 9.33 6.94 6.94 1.34 0.25 80% 24% 0.42 2.16 1.85 0.00 20% 0.48 0.04 2.20 2.87 2.13 2.13 0.00 0.00 61% 38% 2.11 5. 34 7.71 2.37 39% 3.90 0. 31 5.65 12.14 9.03 9.03 3.38 0.63 38% 12% 0.07 0. 42 1.26 0.84 62% 1.13 0. 09 0.51 1.62 1.21 1.21 0.70 0.13 68% 34% 1.81 6.08 6.68 0.60 32% 2.80 0.22 6.31 9.38 6.98 6.98 0.67 0.13 78% 29% 0.20 0. 82 0.72 0.00 22% 0.21 0. 02 0.84 1.70 1.26 0.89 0.05 0.01 69% 62% 1.68 3.69 3.31 0.00 31% 1.33 0.11 3.79 4.34 3.23 3.23 0.00 0.00 73% 50% 1.10 2. 35 2.52 0.17 27% 0.88 0. 07 2.42 3.66 2.72 2.72 0.31 0.06 63% 45% 0.38 1. 32 1.11 0.00 37% 0.53 0. 04 1.36 1.96 1.46 1.36 0.00 0.00 69% 42% 2.54 6.48 7.34 0.86 31% 2.98 0.24 6.71 10.49 7.80 7.80 1.09 0.20 73% 26% 0.14 0. 76 0.62 0.00 27% 0.22 0. 02 0.76 0.97 0.72 0.72 0.00 0.00

31.83 91.90 103.98 15.18 44.87 3.56 95.38 153.57 114.20 113.58 19.56 3.64

91.90 91.90 95.38

22.30 22.30 18.82
0 15.18 15.18
No water is allocatied in this step
Establishes the lower limit of an agency's final
allocation and potential need is reserved for Step 5
Basis for Target Allocation (SFPUC
Purchases / ISG weighting from
OVERVIEW tab)
Target Allocation First Iteration of Base Per
Allocation

Tier 2 Allocation Model
Agency
Alameda CWD
Brisbane
Burlingame
Coastside
CWS - Total
Daly City
East Palo Alto
Estero
Hayward
Hillsborough
Menlo Park
Mid-Peninsula
Millbrae
Milpitas
Mountain View
North Coast
Palo Alto
Purissima Hills
Redwood City
San Bruno
San Jose
Santa Clara
Stanford
Sunnyvale
Westborough
Total
Allocated
Unallocated
Reserved
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 
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 
 
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 
 
 
 
 
 
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 
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 
First Iteration
of Target
Based
Allocation
(mgd)
Does Step 5
Initial Allocation
Meet SFPUC
Maximum
Cutback?
Maximum
Cutback
(mgd)
Initial Step 5
Allocation with
Maximum
Cutback (mgd)
Target
Allocation
Based Gap
(mgd)3
Target
Based
Allocation 2
(mgd)
Second
Iteration of
Target Based
Allocation
(mgd)
Equal or Greater
than Weighted
Share/Minimum
Cutback
Target
Allocation
Based Gap 3
(mgd)
Third
Iteration of
Target Based
Allocation
(mgd)

5. Weighted
S
hare/
Maximum
Cutback Based
Allocation
(mgd)
Final Allocation
(mgd)
Cutback
Percentage
Allocation
Factor

6.30 0.39 6.69 0.99 0.88 7.57 0.11 0.00 7.57 7.57 12.3% 6.6%

0.52 0.00 0.52 0.04 0.04 0.56 0.00 0.00 0.56 0.56 13.8% 0.5%

2.56 0.11 2.67 0.33 0.29 2.97 0.04 0.00 2.97 2.97 14.0% 2.6%

1.35 0.00 1.35 0.02 0.02 1.38 0.00 0.00 1.38 1.38 18.8% 1.2%

18.74 3.91 22.66 0.66 0.59 23.24 0.07 0.00 23.24 23.24 20.5% 20.4%

3.64 0.00 3.64 0.00 0.00 3.64 0.00 0.00 3.64 3.64 5.0% 3.2%

1.49 0.00 1.49 0.00 0.00 1.49 0.00 0.00 1.49 1.49 5.0% 1.3%

3.12 0.23 3.35 0.25 0.22 3.57 0.03 0.00 3.57 3.57 17.3% 3.1%

12.23 0.00 12.23 0.30 0.27 12.50 0.03 0.00 12.50 12.50 12.4% 10.9%

1.05 1.01 2.06 0.27 0.24 2.30 0.03 0.00 2.30 2.30 13.6% 2.0%

2.13 0.27 2.40 0.24 0.21 2.61 0.03 0.00 2.61 2.61 15.7% 2.3%

2.00 0.05 2.04 0.23 0.20 2.24 0.03 0.00 2.24 2.24 14.9% 2.0%

1.54 0.00 1.54 0.19 0.17 1.71 0.02 0.00 1.71 1.71 11.1% 1.5%

4.79 0.00 4.79 0.30 0.27 5.06 0.03 0.00 5.06 5.06 10.8% 4.4%

5.85 0.19 6.03 0.90 0.80 6.84 0.10 0.00 6.84 6.84 12.2% 6.0%

2.20 0.00 2.20 0.00 0.00 2.20 0.00 0.00 2.20 2.20 7.7% 1.9%

6.28 1.44 7.71 1.31 1.17 8.88 0.15 0.00 8.88 8.88 10.8% 7.8%

0.64 0.62 1.26 0.00 0.00 1.26 0.00 0.00 1.26 1.26 30.9% 1.1%

6.43 0.25 6.68 0.29 0.26 6.95 0.03 0.00 6.95 6.95 19.5% 6.1%

0.85 0.00 0.85 0.04 0.04 0.88 0.00 0.00 0.88 0.88 5.5% 0.8%

3.79 0.00 3.79 0.00 0.00 3.79 0.00 0.00 3.79 3.79 11.1% 3.3%

2.47 0.05 2.52 0.20 0.18 2.70 0.02 0.00 2.70 2.70 16.9% 2.4%

1.36 0.00 1.36 0.00 0.00 1.36 0.00 0.00 1.36 1.36 5.0% 1.2%

6.92 0.42 7.34 0.47 0.41 7.75 0.05 0.00 7.75 7.75 18.1% 6.8%

0.76 0.00 0.76 0.00 0.00 0.76 0.00 0.00 0.76 0.76 5.0% 0.7%

99.02 8.92 107.95 7.04 6.25 114.20 0.79 0.00 114.20 114.20

99.02 107.95 114.20 114.20

0.00 6.25 0.00 0.00

15.18 0.00 0.00 0.00
Third Iteration of Base Period/ISG-Based Allocation
If all agencies meet their Target Allocation, remaining water is allocated up to Minimum Cutback
iod/ISG-Based Maximum Cutback Second Iteration of Base Period/ISG-Based Allocation

Tier 2 Allocation Model
Agency
Alameda CWD
Brisbane
Burlingame
Coastside
CWS - Total
Daly City
East Palo Alto
Estero
Hayward
Hillsborough
Menlo Park
Mid-Peninsula
Millbrae
Milpitas
Mountain View
North Coast
Palo Alto
Purissima Hills
Redwood City
San Bruno
San Jose
Santa Clara
Stanford
Sunnyvale
Westborough
Total
Allocated
Unallocated
Reserved
Instructions: Copy/paste the table below into the "Historical Saves" tab, columns A through F. Instructions: Copy/paste the table below into the "Historical Saves" tab, columns A through F.

Agency
Allocatio
n Year
(FY)
Allocatio
n Year
(integer)
Final
Allocation
(mgd)
Cutback
Percentag
e
Allocation
Factor Input Category Value
Allocati
on Year
(FY)
Allocatio
n Year
(integer)
Alameda CWD FY24-25 2025 7.57 12% 7% Allocation Year/Projection Year FY24-25 FY24-25 2025 Brisbane FY24-25 2025 0.56 14% 0% Tier 1 Shortage Allocation (mgd) 114.20 FY24-25 2025 Burlingame FY24-25 2025 2.97 14% 3% Overall Reduction from Base Period Required -15% FY24-25 2025 Coastside FY24-25 2025 1.38 19% 1% SFPUC Maximum Cutback Factor -22% FY24-25 2025 CWS - Total FY24-25 2025 23.24 20% 20% SFPUC Minimum Cutback Factor -5% FY24-25 2025 Daly City FY24-25 2025 3.64 5% 3% Non-Residential Base Allocation % 93% FY24-25 2025 East Palo Alto FY24-25 2025 1.49 5% 1% Step 5 Reserved % of Remaining Tier 1 Allocation (less Step 50% FY24-25 2025 Estero FY24-25 2025 3.57 17% 3% Unreserved % of Remaining Tier 1 Allocation (less Step 3 50% F Y24-25 2025 Hayward FY24-25 2025 12.50 12% 11% Seasonal Allocation % 8% FY24-25 2025 Hillsborough FY24-25 2025 2.30 14% 2% Step 5 ISG Weighting 33% FY24-25 2025 Menlo Park FY24-25 2025 2.61 16% 2% Step 5 Base SFPUC Purchases Weighting 67% FY24-25 2025 Mid-Peninsula FY24-25 2025 2.24 15% 2% Residential Efficient Allocation (R-GPCD) 47.0 FY24-25 2025 Millbrae FY24-25 2025 1.71 11% 1% Adjustment % for SFPUC Minimum Cutback, if efficient 95% FY24-25 2025 Milpitas FY24-25 2025 5.06 11% 4%
Mountain View FY24-25 2025 6.84 12% 6%
North Coast FY24-25 2025 2.20 8% 2%
Palo Alto FY24-25 2025 8.88 11% 8%
Purissima Hills FY24-25 2025 1.26 31% 1%
Redwood City FY24-25 2025 6.95 19% 6%
San Bruno FY24-25 2025 0.88 5% 1%
San Jose FY24-25 2025 3.79 11% 3%
Santa Clara FY24-25 2025 2.70 17% 2%
Stanford FY24-25 2025 1.36 5% 1%
Sunnyvale FY24-25 2025 7.75 18% 7%
Westborough FY24-25 2025 0.76 5% 1%

City Council Meeting Agenda Report Item # _____

Oc
Meeting Date: September 8, 2025

Subject: Zone Change ZC 04-24-16507 - Rezoning Parcels to CC Commercial Cannabis Combining District (CONTINUED PUBLIC HEARING)

Recommended Action

Approve Zone Change ZC 04-24-16507, rezoning certain parcels to CC Commercial Cannabis Combining District.

City Council Discussion

On June 26, 2025, the City Council voted 5-0 to continue Zone Change ZC 04-24-16507. At that meeting the Council received public testimony expressing concern about an existing child day care center located within the boundaries of a proposed new retail cannabis eligibility zone on Mission Street between Crocker Avenue and Templeton Avenue. As an outcome of this testimony and the Council’s deliberations, Councilmember Manalo requested staff to conduct further research as to which properties would be removed from the new eligibility zone if a 500-foot boundary was established around Semillitas de Amor’s Daycare located at 6133 Mission Street. In response to this request, staff developed the requested boundary map and this map has revealed that almost the entirety of the proposed new zone would be affected, except for approximately 15 parcels west of Templeton Avenue (see Attachment D – Radius Map for 6133 Mission Street).

Background

In 2016, California voters enacted Proposition 64, intended to create a comprehensive system to legalize, control, and regulate the cultivation, processing, manufacture, distribution, testing, and sale of non-medical cannabis, and to tax the cultivation and retail sale of cannabis for non-medical use. In November 2018, Daly City voters approved a business license tax on all cannabis businesses of up to ten percent of gross receipts in anticipation of the future allowance of cannabis sales. In October 2019, the City Council adopted an ordinance that authorized commercial cannabis activities and established the process for permitting and regulating commercial cannabis activities in Daly City. The ordinance requires that, in addition to a State license, operators of commercial cannabis businesses in Daly City obtain a Commercial Cannabis Business License from the City of Daly City.

The ordinance also required staff to present for adoption to the Planning Commission and City Council an overlay district in which commercial cannabis operations would be allowed to operate.

In November 2020, the Council Committee accepted for recommendation to the Planning Commission and City Council a series of maps intended to implement an approximate 600-foot buffer zone around schools and youth centers throughout Daly City. These overlay district maps are based generally on whether the frontage of a property (where the property abuts the public right-of-way) is greater than 600 feet from a public/private school and/or youth center.

City Council Staff Report
Rezoning Parcels to CC Commercial Cannabis Combining District Page 2 Zone Change ZC 04-24-16507 September 8, 2025

In March 2021, the City Council approved Zone Change ZC 01-21-14846, which enacted amendments to the Zoning Ordinance and Zoning Map Establishing -CC Commercial Cannabis Combining District. These amendments to the Zoning Ordinance, which currently exist in the Daly City Municipal Code as Chapter 17.56 - CC-Commercial Cannabis Combining District, allowed cannabis retailers and cannabis delivery businesses in six “eligibility zones,” with one retailer or delivery business in each zone. In July 2023, the City Council approved a seventh eligibility zone that solely included the property at 1618 Sullivan Avenue (see Attachment A – Current Retail Cannabis Eligibility Zones Map).

At the time of the 1618 Sullivan Avenue rezoning approval, Councilmember Daus-Magbual expressed concern that the Council would not need to have to consider additional eligibility zones if there were additional opportunities for cannabis retail sales in Daly City. In September 2023 a Council Committee directed staff to prepare a proposal for rezoning additional sites into the -CC overlay zone for Planning Commission and City Council consideration. Another Council Committee and the Small Business Commission recently reviewed the same proposal.

Discussion

As initially proposed to the Planning Commission and City Council, the -CC combining district was proposed to apply to approximately 230 properties in 12 distinct eligibility zones (see Attachment B – Initially Proposed Retail Cannabis Eligibility Zones Map). This quantity of eligibility zones and their geographic distribution was agreed to and recommended by a Council Committee, using in most part an approximate 600-foot buffer zone around schools and youth centers throughout Daly City.

At the time of the Planning Commission public hearing to consider the -CC combining district in February 2021, residents expressed concerns about the number of eligibility zones that were proposed and called for a greater buffer around schools. Consequently, the Planning Commission concurred with these concerns and unanimously agreed to recommend that the City Council exclude several geographic areas from the new combining district that would have allowed retail sales along School Street, the East Market/Mission/San Pedro, and Hillside Boulevard, respectively.

At the City Council meeting to consider the -CC combining district in March 2021, additional residents and several community organizations expressed concerns about the number of eligibility zones, especially regarding expanding the -CC combining district to School Street, Mission Street, and Skyline Plaza. After a robust discussion, the Council agreed with the Planning Commission’s above recommendations for exclusions, and that the -CC combining district should not be extended to the Bayshore neighborhood or the Crocker neighborhood along Mission Street.

Since the time of initial adoption however, the City has had the opportunity to evaluate the community impact of retail cannabis with the operation of the Megabud dispensary (temporarily closed) at 190 Skyline Plaza, the Catalyst Dispensary at 1000 King Drive, and Nectar Dispensary at 2468 Junipero Serra Boulevard, and has found such impacts to be negligible. For this reason, staff is recommending that the Planning Commission forward a recommendation to the City Council that it add into the -CC combining district parcels fronting Mission Street between Crocker Avenue and Templeton Avenue, fronting Geneva Avenue between Talbert Street and Bayshore Boulevard, and

City Council Staff Report
Rezoning Parcels to CC Commercial Cannabis Combining District Page 3 Zone Change ZC 04-24-16507 September 8, 2025

fronting Geneva Avenue between Castillo Street and Calgary Street (see Attachment C – Proposed Additional Parcels Mission Street and Geneva Avenue).

Staff feels that including these areas would not only provide additional cannabis retail opportunities in Daly City but would also provide a greater geographical distribution of such retailers as well.

The Planning Commission should be aware that the Mission Street parcels and all Geneva Avenue parcels would each provide one additional opportunity zone, so the total additional number of potential retailers would increase by two (only one in the Bayshore neighborhood).

Environmental Assessment

The proposed rezoning are exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section of 15061 - Review for Exemption. The proposed rezoning do not have the potential to cause significant effects on the environment and it can be seen with certainty that there is no possibility that the regulations would have a significant effect on the environment.

Recommendations

The Planning Commission recommends that the City Council:

1. Adopt the Findings as outlined herein;

2. Find that the proposed rezonings are exempt from the requirements of the California Environmental Quality Act (CEQA) pursuant to CEQA Guidelines Section of 15061 - Review for Exemption; and

3. Approve Zone Change ZC 04-24-16507, adding into the -CC combining district parcels fronting Mission Street between Crocker Avenue and Templeton Avenue, fronting Geneva Avenue between Talbert Street and Bayshore Boulevard, and fronting Geneva Avenue between Castillo Street and Calgary Street.

Staff is available to provide any additional information desired by the Council members.

Respectfully submitted,

Michael Van Lonkhuysen Tatum Mothershead
Planning Manager Director of Economic and Community
Development

Attachments

Attachment A – Current Retail Cannabis Eligibility Zones Map

City Council Staff Report
Rezoning Parcels to CC Commercial Cannabis Combining District Page 4 Zone Change ZC 04-24-16507 September 8, 2025

Attachment B – Initially Proposed Retail Cannabis Eligibility Zones Map Attachment C – Proposed Additional Parcels Mission Street and Geneva Avenue Attachment D – Radius Map for 6133 Mission Street

Area A (Mission Street between Crocker Avenue and Templeton Avenue)

AREA B (Geneva Avenue between Talbert Street and Bayshore Boulevard)

AREA C (Geneva Avenue between Castillo Street and Calgary Street)

ORDINANCE NO.

AN ORDINANCE OF THE CITY OF DALY CITY AMENDING THE DALY CITY ZONING MAP – ADDING EXISTING PARCELS LOCATED AT MISSION STREET

BETWEEN CROCKER AVENUE AND TEMPLETON AVENUE, GENEVA AVENUE

BETWEEN TALBERT STREET AND BAYSHORE BOULEVARD, GENEVA AVENUE BETWEEN CASTILLO STREET AND CALGARY STREET TO CHAPTER 17.56 – CC

COMMERCIAL CANNABIS COMBINING DISTRICT

BE IT ORDAINED by the City Council of the City of Daly City as follows:

SECTION 1: Findings. The City Council of the City of Daly City finds that:

A. Following a public hearing duly and regularly conducted, the Planning Commission of the City of Daly City submitted to this City Council its recommendation with respect to the zoning amendment hereinafter described, accompanied by the report of the findings and a summary of its hearing, whereupon this City Council duly and regularly set this matter for hearing.

B. Due and regular notice of such hearing has been given as required by law and such hearing was regularly held by this City Council on September 9, 2025, all interested persons were heard and any additional evidence presented was received.

C. This City Council finds and declares that the health, safety, morals and general welfare of the City of Daly City requires that the real property hereinafter described be reclassified as provided herein.

D. The City Council hereby approves the Zone Change adding the following parcels into the CC Commercial Cannabis Combining District, parcels fronting Mission Street between Crocker Avenue and Templeton Avenue, fronting Geneva Avenue between Talbert Street and Bayshore Boulevard, and fronting Geneva Avenue between Castillo Street and Calgary Street, as set forth in the Zoning Map, herein attached as Exhibit “A”.

E. This rezoning is consistent with the Daly City General Plan.

SECTION 2: Zoning Reclassification. The zoning as designated upon the “Official Zoning Map” of the City of Daly City, as adopted by Daly City Ordinance 635, and thereafter amended from time to time, is hereby changed as to the parcels identified on the attached Exhibit “A”, and that in accordance with Title 17 of the Daly City Municipal Code, the zoning for the real property hereinafter described is amended so as to amend the Zoning Map to designate the zone classification of the parcels in Exhibit “A” to be included in the overlay district property CC Commercial Cannabis Combining District.

SECTION 3: Publication. This Ordinance shall be published according to law.

SECTION 4: Environmental Determination: The City Council finds, pursuant to Title 14 of the California Code of Regulations, Section 15378, that this Ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) in that it is not a project as provided by the Act, in that it does not have a potential for resulting in a detrimental physical

change in the environment, directly or ultimately, as provided in Title 14, Section 15378(a), and that it is also exempt under the definition of "project" in Section 15378(b)(3) in that it concern general policy and procedure making.

SECTION 5: Severability. If any section, subsection or sentence of this Ordinance is found by a court of competent jurisdiction to be invalid or unlawful, the City Council finds and declares that the remainder of this Ordinance would be and is enforceable and would have been adopted notwithstanding the finding of invalidity as to any section, subsection or sentence.

Introduced this day of , 2025.

Passed and adopted as an Ordinance of the City of Daly City at a regular meeting of the City Council of the City of Daly City held on the day of 2025, by the following vote:

AYES, Councilmembers

NOES, Councilmembers
ABSENT, Councilmembers:

__________________________________________

CITY CLERK OF THE CITY OF DALY CITY
APPROVED:

MAYOR OF THE CITY OF DALY CITY

EXHIBIT "A"