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year 2005 there will be a reduction to Zone 7 of about $221,000. That is because from the original amount being paid the state, there is a portion set aside in a revolving fund to build the rest of the project. The State has determined it is easier and cheaper to do that through revenue bonds issued by the State rather than these long term water bonds. The State has used some of this money for projects we think are inappropriate for use of these funds and this represents a way to remove those funds from DWR and takes it out of sight of the Legislature. Mayor Tarver asked staff if there was some way to simulate the last seven year drought with the Monterey principles in tact? If the Monterey Agreement was signed, what would our flow of water have been over the last seven year drought? He felt that this has been a mediated negotiation, not a public process dealing with State water rights and water allocation. It is nm by the big water people, not all the public's interests are at the table and Council knew absolutely nothing about the agreement. Zone 7 referred to urban water users, and Pleasanton is an urban water user, as being satisfied with this agreement. Mr. Tarver could not say that, because the agreement is extremely complicated. Mr. Tarvex was upset that 75 % of the water users were deciding what Pleasanton would get. The State is doing the same thing in the water business that they are doing in the fiscal business. The State can't balance the budget, it can't provide the services with the money it is collecting and it is playing games. The people in Kern County have asked for twice as much water as they need. Mr. Tarvex believed they are going to sell the entitlements like a commodity to people that need the water. They'll take 130,000 -- acre feet and sell it for $1,000 an acre foot just for the right to buy it. There will be $130 million at stake for enti~ements for water that doesn't exist. 25% of the State contract en~~ements don't exist. The State can deliver only 75% of its entiremerits. So we will take 130,000 acre feet of those enti~ements that may or not be there and sell the right to have somebody buy it when it is there. That will have a rate impact on the customers that have to pay the premium to have the right to buy the water that may or may not exist. It locks in agricultural levels like they were equal to urban levels, so when there is a drought we all share the pain. Right now when there is a drought, agricultural loses. If there is another real long drought, agricultural loses more. In effect, the way the water is allocated right now, it is preferential to urban users because they may not have the same kind of options. People say 85 % of the water goes to agricultural users and they are not concerned about conservation. They use the same principles they have used for years and are getting all the water. If agricultural doesn't have to feel the pain of water loss, they don't have to change the way they use it. The urban users have put in low flow shower heads, toilets, the way landscaping is watered and the agricultural users are trying to preserve the way they have done business for years. They're asking for more water than they need and now they will mal~ money on this. There should be a reasonable and logical way to divide up the water allocations. Mr. Tarvex did not believe the people of this state are being well served by this process. Mr. Dixon responded to the issue of entitlements and indicated the issue is much different for urban than for agricultural. While urban entitlemerits look to the future, in essence we are looking at greater entitlements than we really use at this time. Otherwise there would be no development. Regarding the comments about selling the water, the real issue is with the federal system. The subsidy that is afforded the state water project has been the fact that the bonds are 11/14/95 -6-