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8A Page 8 Francisco Public Utilities Commission (SFPUC). Existing water supply entitlements, rights and/or water service contracts relevant to this water supply are: 1984 Settlement Aqreement and Master Water Sales Contract between Suburban Purchasers and the Citv and Countv of San Francisco. The Master Contract primarily addresses the rate-making methodology used by San Francisco in setting wholesale water rates for its wholesale customers in addition to addressing water supply and water shortages for the regional water system. The Master Contract expires on June 30, 2009. The Master Contract provides for a 184 million gallon per day (mgd) "Supply Assurance" to the SFPUC's wholesale customers, subject to reduction in the event of drought, water shortage, earthquake, other acts of God, or rehabilitation and maintenance of the system. The Master Contract does not guarantee that San Francisco will meet peak daily or hourly customer demands when their annual usage exceeds the Supply Assurance. The SFPUC's wholesale customers have agreed to the allocation of 184 mgd Supply Assurance among themselves, with each entity's share of the Supply Assurance set forth on a schedule adopted in 1993. This Supply Assurance survives expiration of the Master Contract in 2009. Water Supplv Contract between Citv and Countv of San Francisco and the Citv of Redwood Citv (AUGust 1984). Redwood City, along with 29 other Bay Area water suppliers, signed the Settlement Agreement and Master Contract with San Francisco in 1984. The Master Contract is supplemented by an individual Water Supply Contract; Redwood City signed the individual contract in 1984 and it also expires in 2009. Redwood City's contracted Supply Assurance from the SFPUC is 12,243 af/yr. Over the past eight years (1998-2006), the City has consumed an average of 687 af/yr over the contractual amount; the City is able to purchase this additional supply from the SFPUC because other entities do not use their full contractual supply. The City and the Bay Area Water Supply and Conservation Agency (BAWSCA) are expected to renegotiate its contracts with San Francisco prior to expiration in 2009. Recycled Water Supply The Redwood City Council approved a recycled water project in 2003 with the goal of reducing demand on the Hetch Hetchy system. The recycled water system, which is currently under construction, will consist of treatment, disinfection, and pumping facilities at the South Bayside System Authority (SBSA) wastewater treatment plant in Redwood Shores, and pipeline distribution and customer retrofit facilities in the Redwood Shores, Bayfront, and Seaport areas east of the U.S. 101 freeway. The SBSA and Redwood City have entered into agreements for the production and distribution of recycled water that is treated to the California State Title 22 standards for non-potable unrestricted use. The recycled water will primarily be used for landscape irrigation, industrial applications, and other approved indoor uses such as toilet flushing in new commercial buildings. As noted above, the recycled water system is currently under construction. The treatment, disinfection, and pumping facilities at SBSA are anticipated to be completed in spring 2007. Pipeline distribution and customer retrofit facilities are anticipated to be completed in Redwood Shores by the end of 2007. Construction of recycled water facilities in the Bayfront area, within which the proposed Peninsula Park project is located, is anticipated to be completed by the end of 2008. The recycled water system has been designed to deliver up to 1,995 af/yr by 2030. The recycled water project is on target to achieve the recycled water production estimates contained in the UWMP. Page 5 of 10