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artificially low in the past "by raising general taxes and transferring those funds into the water fund to supplement the water funds losses." Proposition 13 stopped that operation as it required government entities to run enterprise funds without profit but with reasonable reserves. In response to Councilman Leipzig's questions regarding Options I and 3, Director Ingram described Attachment 8, a spread sheet showing revenues and amounts going into the emergency reserves through the second year, for Options I and 3, and the goal of$2 million at the end of year 2. Option 3 would take 3 years to reach the $2 million. Director Ingram said that Option 3 "is basically the status quo." In response to questions regarding the utility users tax, Director Ingram said that "the in-lieu charge that is assessed against enterprise funds is a common practice....It is a way to essentially make the general fund good for revenues it would receive if we were actually a private utiIity....The basis for our own in-lieu is, we assess on a formula basis each year on estimated revenues put into place in the budget and essentially....what would be a 5% utility user tax and a guestimated 4% franchise fee." He added that the foundation for that process was set in Proposition 13 language. Director Ingram said the utility users tax "has nothing to do with this." In response to Vice Mayor Howard's questions, Director Ingram said that Option 3 "would not help the lower users and would not encourage the high users to save....LifeIine would stay at $ .89." Vice Mayor Howard said Option No.1 was prudent and fair. Councilman Ruskin said he supported Option No. I for two reasons: It will enhance conservation; and it prepares the City for the increases that will come in two years. a) MIS: CLAIREIHOWARD TITLE READ. RESOLUTION NO. 12797 AMENDING SECTION 3 OF THE RULES AND REGULATIONS OF THE REDWOOD CITY WATER DEPARTMENT (PUBLIC WORKS SERVICES DEPARTMENT) RELATING TO WATER RATES; AND RESCINDING RESOLUTION NO. 12209 (OPTION NO.1) ADOPTED BY THE FOLLOWING ROLL CALL VOTE: AYES: COUNCIL MEMBERS BUCHAN, CLAIRE, HOWARD, LA BERGE, RUSKIN AND MAYOR HARTNETT NOES: COUNCILMAN LEIPZIG b) MIS: BUCHAN/LA BERGE. TITLE READ. FIRST READING. ORDINANCE AMENDING SECTIONS 38.5 AND 38.14 OF CHAPTER 38 OF THE CODE OF THE CITY OF REDWOOD CITY TO REVISE WATER SERVICE CHARGES AND THE DESIGNATION OF DEPARTMENTAL AUTHORITY, RESPECTIVELY MINUTE BOOK NO. 54 Page No. 274 MINUTES JUNE 10, 1996 REGULAR MEETING PAGE 10