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Mr. Lure indicated the tiered structure is still a recent change and there has not been enough time to see its effects. There is an indication that the large lot users are conserving, but it is not clear if that is due to the tiers or because of social conscience. Mr. Lum agreed that there is a problem in that when consumption goes down, the price goes up. But that cannot be changed. In the long term, conservation is good, because as the community uses less water, the costs of water won't be as great. Staff has considered water audits for residential customers, but wanted to focus resources on the large irrigation customers to start with and see how it works. The program could be expanded later. Mr. Pico indicated that while there are increases in rates, the tiered structure does support conservation. The cost of not conserving is that we may be forced to use recycled water. Ms. Michelotti referred to the letter from Jack Hovingh regarding his desire for an elevation surcharge. She discussed this with staff and it had determined it was not cost effective. Ms. Acosta pointed out that if Council decided to adopt a uniform rate, there will be increases in the lower rates. Mr. Tarver believed the problems go back to the State not planning an adequate capability of delivering water as needed. He was concerned that conservation merely leads the State to allocate water elsewhere. He believed the State ought to state how much it can deliver on a sustainable basis and allow the jurisdictions to plan accordingly. The State must realistically plan for ways to provide the capital costs for infrastructure to handle the projected population increase. Officials at the local level are planning by insuring that new growth has to pay for its impacts. It is not appropriate to penalize existing residents for bad planning. Ms. Dennis supported the tiering system because it encourages conservation, but she did not want it more complex than necessary. Regarding elevation charges, she has heard comments that it is divisive to the community and she believed if it is really too costly to pump water somewhere, the City can decide not to do it. She agreed with Ms. Michelotti on the auditing issue and suggested that information on water consumption for various planting materials could be provided to new homeowners. Ms. Mohr asked if the provisions for separate irrigation meters would work for Mr. Romero's large lot situation. Mr. Lum believed it would. Mr. Romero would have to determine if it were cost effective by comparing water usage for regular residential rates and a segregation of residential and irrigation rate structures. Staff would need to consult with Zone 7 regarding the connection fee. 02/21/95 18-