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Finance Director Ramchandani presented the staff report and described the history of the multiplier and the base differential water rates for the areas outside the City limits. Director Ramchandani explained that in 1974 a multiplier was used instead of a differential to cover the energy costs of pumping water to the Emerald Lake Hills Area, but that today energy costs have stabilized and what drives water rate hikes is the cost of water from San Francisco. In response to Councilman Murray's questions, Finance Director Ramchandani described recommendations of meeting with the Council Water Committee and Emerald Lake Home Owners Association: 1) Use predrought multiplier of 1.9 to establish a dual water rate, one for Redwood City and one for Emerald Hills (there would be an additional rate established for Canada College). The present base rates are $1.21 for the City and $2.30 for Emerald Hills. 2) Future rate increases will be passed on to the 3 basic rates (Redwood City, Emerald Hills, and Canada College) on an equal basis. 3) Recommend an increase to the connection fees in the Emerald Hills area to the Council Water Committee in January or February. 4) Recommend two new steps in the City's rate this year and recommend a multiple step rate to the City Council water subcommittee prior to July of 1993. In response to Councilman Murray's questions, Finance Director Ramchandani advised that normal operating costs are included in the current rate structure. Councilman Greenalch, chairman of the Council Water Committee, advised that these recommendations do not preclude taking another look at the program if significant capital costs should be required in the Emerald Lake service area. Councilman Greenalch explained the proposed per unit cost approach and advised it was not the intention of the recommendations to have the whole water system pay for significant capital projects in the Emerald Lake Hills service area and that the proposed new water connection fees would serve to put more money into the system. Curt Nehring, Lakeview Way, representing the Emerald Lake Home Owners Association spoke in favor of the subject recommendations, thanked City Manager Everett and the Council Water Committee Members Buchan, Bury and Greenalch for their efforts, and thanked the Council and staff for keeping separate books for the Emerald Lake water service area. C.A. Pena, Lakeview Way, asked Council and staff how the 1.9 multiplier funds were spent and if there were any funds available for use now. Councilman Claire explained that those funds were used to keep water rates artificially low over the years, and they were used to cover distribution and administrative costs. Regular Meeting Minutes MINUTE BOOK NO. 51 August 17, 1992 Page 9 Page No. 172