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rates and fixed costs as a way to begin creating an adjustment or some mechanism to manage the increase. We can't just throw this on the back of seniors who are living on fixed incomes. The committee is sensitive to that. It is a very difficult challenge to do both, but we need to find a way to achieve" it. In response to Mr. MiKibbon's questions regarding the use of the Utility Tax, City Manager Everett said it could be used for any capital improvement projects, and it would be up to the Council to decide which priorities it wished to fund through that tax. CONSENSUS: Mayor Howard determined that it was the consensus of the Council to accept the report from the Utilities Committee and support its recommendations. MINUTE ORDER NO. 98-112 Mayor Howard commended the Committee and staff on the Report and the work they did on this very difficult issue. Director Ingram advised that the staff would "bring back pieces that are in the front end of that coordinator and CIP recommendations for short term items. We'll make sure that in the operating budget there is a request for supporting the rate study.... You'll see them again in the CIP budget review and the final operating budget reviews in June." 3) Water Enterprise Fund Review Water Enterprise Guiding Principles Rates and Service Charges Scenarios for FY 1998/99 Proposed 5-Year Capital Improvement Program Budget Public Works Services Department Budget Request - Significant Change Requests Joint Recommendation - Utilities Committee and Staff Director Ingram said, "The Water Enterprise Fund is separate from all the other activities, like the Sewer Fund. This part is actually fairly straightforward.... The unanimous recommendation from the Utilities Committee is Scenario 1B (Report on file in the City Clerk Department.)... Basically there are two things going on that are important in terms of the water bills in Redwood City. One is... the wholesale rate." Director Ingram described why that rate will fluctuate wildly over the next couple of years due to contractual constraints and inflexibility of the supplier, San Francisco Water. He said the recommendation is for Redwood City not to follow suit, but to keep the lifeline rate stable over two years, and at that time begin to marry the lifeline rate to the wholesale rate. Director Ingram said the City's internal costs, the operation, and the maintenance of the system drive the other piece of the water bill. He said the average cost increase was about 3.5% distributed over a four-year period. Director Ingram said the Committee strongly recommended approving the four year projection and building the cost of living increase into that number eventually stabilizing it. He referred to the report that showed the Study Session MINUTE BOOK NO. 56 May 4,1998 Minutes Page No. 448 Page 17