Folsom Water Supply Service Area for Aerojet Properties ( Aerojet-Industrial, Westborough & Easton Place/Glenborough Areas) June 26, 2007

Pre-1914 Water CVPIA and Pre Water Existing Diversion Point No.1 (Folsom Reservoir) 1. Folsom Service Area : Folsom Service Area West Folsom Service Area East Aerojet Properties (including Easton) 2. Ashland Service Area : Ashland Area Note: American River Canyon served by San Juan Water District Folsom Manages Two Water Service Areas

Three Main Drivers for Re-Negotiations of Folsom-Aerojet Agreement 1. Folsom Water Forum & Dry-year Planning Folsom-Aerojet Contract  Changes in Aerojet-Industrial water demands  Proposed Changed Land-uses for Aerojet Properties 3. Potential Shortfall of Water Supply in Folsom Service Area (excluding East Area)

Water Forum & Dry-Year Planning

Full Water Rights & Entitlements Dry-Year Reductions Drive Need to Pursue Water Management Dry-Year Cutbacks Flow in Folsom Lake

1986 Folsom-Aerojet Contract  Changes in Aerojet-Industrial water demands  Proposed Changed Land-uses for Aerojet Properties

Folsom is currently obligated to serve Aerojet Area  Decision No of the California Public Utilities Commission (1967) City authorized the City to provide water service within the Aerojet Property City authorized the City to provide water service within the Aerojet Property Part of City’s acquisition for certain water facilities and water supplies from Southern California Water Company Part of City’s acquisition for certain water facilities and water supplies from Southern California Water Company

Terms of 1986 City-Aerojet Contract (“2036 Agreement”)  1986 Contract between Folsom and Aerojet Folsom continues to serve Aerojet properties Folsom continues to serve Aerojet properties  Folsom obligates (reserves) 5,600 acre-feet per year of water supply to Aerojet Taken from City’s 22,000 acre-feet of Pre-1914 water rights from 1967 Agreement Taken from City’s 22,000 acre-feet of Pre-1914 water rights from 1967 Agreement  Folsom provides up to 3,360 acre-feet/year of treated water, if available Through Folsom South Assessment District & Natoma Assessment District Through Folsom South Assessment District & Natoma Assessment District  Contract expires in 2036

3,360 afy 5,600 afy Summary of 2036 Agreement “Reserved” Water Supply

Potential Water Supply Shortfall in Folsom Service Area

Within the Folsom Service Area, Water Supplies are Assigned to two distinct areas

City currently faces slight shortfall under “2036 Agreement” Obligations Potential cost to Ratepayers = $3M to $4M

Proposed Folsom-GenCorp Agreement

Proposed Agreement Revises Folsom Service Area Boundaries Revised Folsom Service Area Boundaries (Blue)

Proposed Agreement Eliminates Need for Short-term Water Supply Purchase & Allows City to Plan for Dry-Year Scenarios Estimated Value of $4M to $5M

Summary: Progress of Negotiations Agreed Terms  Parties agree to relinquish the Agreement Folsom commits to serve Glenborough Folsom commits to serve Glenborough GSWC serves Westborough GSWC serves Westborough Additional area would be subject to future negotiation. Additional area would be subject to future negotiation.  GET-water as non-potable supply Aerojet-Industrial areas (in lieu of City water) Aerojet-Industrial areas (in lieu of City water) Backup plan to Aerojet – GenCorp would identify and secure a new water supply for “Aerojet-Industrial”Backup plan to Aerojet – GenCorp would identify and secure a new water supply for “Aerojet-Industrial”  Folsom's obligation potable water demands are limited “Aerojet-Offices” “Aerojet-Offices”  Agreed on water demand forecasts for water demands in Glenborough, Aerojet-Offices, and Aerojet-Industrial Based on current land-use map (in SacCounty development application) Based on current land-use map (in SacCounty development application) Aerojet/GenCorp Obligations  No requests to serve beyond Westborough  Address “reliability” of the GET water deliveries Secure for industrial water supply City’s option to receive title to water  Aerojet actions for GET water made available to Folsom 1. Regulatory permitting 2. Secure Addendum to SCWA Agreement  Compensation 1. $550,000 from GSWC 2. Release obligation for 2036 Water 1.Avoided costs to ratepayers for limited-term water supply shortfall (est. value = $3.5M) 2.Obtain non-GET water supply (Option to City)  “Hazel Avenue” extension is service boundary  SB610 Letter to serve Easton Place/Glenborough

Summary: Progress of Negotiations Agreed Terms  Parties agree to relinquish the Agreement Folsom commits to serve Glenborough Folsom commits to serve Glenborough GSWC serves Westborough GSWC serves Westborough Additional area would be subject to future negotiation. Additional area would be subject to future negotiation.  GET-water as non-potable supply Aerojet-Industrial areas (in lieu of City water) Aerojet-Industrial areas (in lieu of City water) Backup plan to Aerojet – GenCorp would identify and secure a new water supply for “Aerojet-Industrial”Backup plan to Aerojet – GenCorp would identify and secure a new water supply for “Aerojet-Industrial”  Folsom's obligation potable water demands are limited “Aerojet-Offices” “Aerojet-Offices”  Agreed on water demand forecasts for water demands in Glenborough, Aerojet-Offices, and Aerojet-Industrial Based on current land-use map (in SacCounty development application) Based on current land-use map (in SacCounty development application) Aerojet/GenCorp Obligations  No requests to serve beyond Westborough  Address “reliability” of the GET water deliveries Secure for industrial water supply City’s option to receive title to water  Aerojet actions for GET water made available to Folsom 1. Regulatory permitting 2. Secure Addendum to SCWA Agreement  Compensation 1. $550,000 from GSWC 2. Release obligation for 2036 Water 1.Avoided costs to ratepayers for limited-term water supply shortfall (est. value = $3.5M) 2.Obtain non-GET water supply (Option to City)  “Hazel Avenue” extension is service boundary  SB610 Letter to serve Easton Place/Glenborough

Folsom Water Supply Service Area for Aerojet Properties ( Aerojet-Industrial, Westborough & Easton Place/Glenborough Areas)