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"I . . Page Four Minutes #683 April 14, 1999 The Finance Director explained that a 10-year projection was built, using some assumptions on tap sales and capital expenditures and, without rate increases, the District would be $35 million in debt. With this rate increase, using some conservative assumptions, it will result in being approximately $15 million in debt. The Finance Committee recommended that staff review the rates annually and board committees review them every two years to determine ifrates need to change. Mr. Jackson asked what percentage of the rate increase is attributed to tap fees vs. usage. Mr. Burkhalter indicated it was 70% usage, 30% taps. The Manager, in answer to an earlier question requesting an example of the new rates, reported that a feed lot in the lower valley had a billing in March of $377. If this was figured on the new rat~ schedule, the bill would be $529 on residential rates, and $406 on commercial rates. Mr. Jackson asked why residential rates should be more than commercial rates? The Manager stated that the theory used was that most commercial operations cannot control their water use. The progressively increasing rates would penalize commercial operations more. The residential homeowner, however, can control his water use to a degree. Mr. Ricks reported that the average residential customer in 1998 used 7,000 gallons/month. Rita Crumpton, speaking as a Ute Water customer, stated that residential customers will feel that they are subsidizing commercial operations. The board needs to be clear on the strategy and criteria used to create this rate increase in order to be able to answer constituent questions. This proposed rate increase (Exhibit #2) does not encourage commercial users to practice water conservation, in her opinion. Mr. Ricks pointed out that most single family residences don't use more than 10,000-12,000 gallons so, a rate increase will not affect them more than any commercial operation. If, however, those residences were to irrigate with domestic water, they would definitely pay more. This increase will raise approximately $14.5 million over ten years and the tap fee increase will raise approximately $10 million. The Superintendent of Treatment & Source of Supply reported that the proposed rate increase is in line with the District's Master Conservation Plan, however, in his opinion, there are ways in which commercial operations can conserve water. A second ascending block could encourage that conservation. Following extensive discussion, the Manager then presented Exhibit #3, which reflected a second ascending block for commercial operations (copy attached and made a part of these minutes.) This proposal should encourage commercial as well as residential conservation.