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4. Roseville does use depreciation as one of the ways it helps to fund capital improvements to the water system. This is supplemented in the budgeting process in which capital improvements area also identified as budgeted improvements and rates are adjusted to cover these expenditures. The current undepreciated book value of Roseville's water system assets is 9 million dollars. Saint Paul } s retail offer does not compensate Roseville for loss of this asset. 5. The reference on page 26 of the study to the impact on other City operations is not stating that other operations are funded by water utility rates. Similar to the economy of scale claim by SPRWS in loo. 3# Roseville water operations share some of the same administration, finance and operations supervision as other City divisions. Doss of a water utility would mean costs for these services would have to be spread over fewer di visions* raising the cost of those services. we feel the loss of the water utility would have a significant impact on the City's general fund for these reasons. 6. This typographical error does not impact the study results. 7. Although board representation is a part of the retail option, it is not necessarily Roseville representation. Board representation is combined with other outside St. Paul retail customers. These customers would be given two seats on the seven member board. At this time there are five communities vying for the two suburban customer seats. If Roseville, Arden Hills, and Little Canada became retail customers, the two seats would represent eight communities. The voting impact of these two seats is questionable. 8. we have not received information indicating what Roseville system deficiencies need to be addressed to bring Roseville's system to St. Paul standards. St. Paul officials indicated in earlier meetings that the average age of their watermain distribution system is much older than Roseville's. Metering system conversion to St. Paul's metering system should be borne by all of their customers, as this relates to their revenue collection. This should not be a Roseville cost. We also need to be concerned about the impact of a change in ISO rating that the sale of our system to an operator that may not meet water system operations standards to maintain our current ISO rating. This could be a significant cost to Roseville businesses. Although the retail purchase option has a one dollar buyback clause, it would be difficult and costly to recreate a water utility if Roseville customers were not satisfied with SPRWS at some point in the future. Roseville would have to staff up for this change and would have significant costs to convert the metering and billing system in place at that time and integrate these functions into Roseville's operations. Roseville's counteroffer for the wholesale water purchase option is still on the table. The Roseville City Council specifically directed staff to pursue this option. we await your clear. response to our counter proposal. we have a genuine interest in continuing our relationship with