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purchase the additional entitlements that we need. If the enti~ements are all purchased, there is a net gain for M & I, not a loss. Mayor Tarver asked if this money is being given back because the State is going to give back the money it would normally put in a holding fund to build projects and then they will bond it when it comes time to pay the bill. He asked if there is a greater risk of not getting the facility through bonding as to having this giant pot of money. Mr. Dixon did not think there was a danger of that because the State has the ability to issue revenue bonds to finance projects. Instead of the money going back or returned to the agriculture agencies, it will be put into the rate stabilization fund, so that when they have a severe cut back, they will have that money to pay their fixed costs when they are not farming. Agricultural interests have always been opposed to building additional projects because they can't afford it. If they are built with revenue bonds, those revenue bonds will have the backing of an M&I agency as opposed to an agriculture agency. The bonds would not be as risky, so the rates would be good. It may end up with a way for us to proceed with constructing facilities that will only produce water for the municipal agencies like us. Agriculture wouldn't participate and wouldn't get the benefits either. Ms. Michelotti commented the need will occur in the future, but all along Zone 7 will be buying and increasing enti~ements because of the 75 % ratio that exists. It appears possible that in the future water could be bought at lower costs and that Zone 7 could buy under those circumstances and store water in the ground basin to have it available in the future. Mr. Dixon agreed with those statements. The master plan indicates that an additional 10,000 feet is needed on the total mount of state enti~ements, assuming it gets 100% of its entitlements. There is a connection fee program that assumes that it will only get 75 %, so that the cost of acquiring the enti~ements will not come from the rate payers but from the connection fees. Zone 7 is also looking at water recycling and is promoting conservation. Long range plans include the enlargement of the Del Valle Reservoir, which is not very feasible, but also assisting the State in finishing the State Water Project. Ms. Michelotti asked if there is a difference in the way that agriculture must use water vs. urban users. Is it true that agriculture misuses water or are there certain conservation procedures they can take. Mr. Dixon stated that in this area, the water for agricultural purposes is very expensive because it has to be pumped up over the Altamont. The vineyards now have drip irrigation which has reduced by 2/3 what it originally used and in the central valley the agriculture conservation is much higher than it has been in the past. One of the reasons is the cost. If you buy State water and paying $50 an acre foot for your entitlement but only getting half of it, you end up paying double and one is cautious with the water use. He indicated the number of orchards on I-~ because that is a high yielding crop that can afford to pay the cost of the water. 11/14/95 -8-