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authorized to determine the appropriate funding source for each <br />payment made for the gym and the Senior Center from the two primary <br />funding sources (the General Fund Reserve and the 1991 COP <br />proceeds). Because investment strategies can change quickly with <br />the market, it is important that the Director of Finance have the <br />authority to make immediate decisions regarding the best funding. <br />The 1991 COP documents allow the proceeds to be used for the <br />Harvest Park Gym. Furthermore, staff discussed with the Board of <br />the Public Facilities Corporation the possibility that 1991 COP <br />proceeds would be redirected to the Harvest Park Gym to the extent <br />of alternative funding being identified for the Senior Center. <br />As a result of Council approving this recommendation, the total <br />budget for the Senior Center will remain intact with only the <br />funding sources changing, the City will be able to pay $1 million <br />to the School District towards its eventual obligation of $3 <br />million for the Harvest Park Gym, and the City might receive better <br />interest earnings. <br />Water Oberatina Fund <br />The Water M & O Fund ended the year with a 5570,000 deficit of <br />revenues compared to expenditures, which is on target with <br />projections. However, after setting aside a reserve for carryovers <br />of $37,000, the ending balance is $38,000 less than expected. This <br />Fund has been incurring deficits for several years, with the <br />reserve being extremely low. In April 1991, water rates were <br />increased per the results of a two year rate program. The <br />increased rates were not reflected on water bills until June 1991, <br />thus there is little impact in Fiscal Year 1990-91. The purpose of <br />the two year rate plan is for the Fund to start showing some net <br />income in order to bring reserves to an adequate level, and to <br />begin funding long term replacement of the City's water system. <br />Because of the severity of California's continued drought, Zone 7 <br />(the City's water wholesaler) had its State water allocations <br />severely cut back, and the City had to request its customers to <br />reduce consumption by 25$. The full financial impact on water <br />revenues because of the drought and the cut back this summer won't <br />be known until early December. It is hoped that the impact is <br />minimal, as we have begun to transfer the impact of increased water <br />costs to our highest water users. <br />Staff will be undertaking a water rate review during this time to <br />access the adequacy of the rates. A rate increase has been <br />scheduled and already adopted for January 1992. However, on <br />October 16, Zone 7 announced a 40$ increase effective January 1. <br />The already adopted rate increase does not take Zone 7's increase <br />into account. Therefore, without a doubt, as part of the current <br />SR 91:448 <br />7 <br />