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Regular City Council Meeting Monday,December 05, 2011 Page 8 How the proposed amount of CIP spending was identified At the request of Mayor Roe, Finance Director Miller advised that there had no outside consultant tapped for a city-wide picture of CIP needs, but that staff had been tasked by department to look at their capital and infrastructure needs, and based on its useful life, industry experience and replacement schedule, a comprehensive CIP list had been devel- oped and later prioritized by a CIP Task Force made up of several City Councilmembers and senior several staff members. On a parallel course, Mr. Miller noted that outside consultants had been hired as part of the proposed bond issue for the City's aging fire sta- tions, and advised that this information from those multiple studies over the years had been factored into the CIP Task Force investigations as available. City Manager Malinen also noted that, as part of the public vetting or review process, the City's Public Works, Environment and Transportation Commission had reviewed the proposed utility rates coming out of the CIP Task Force process and recommended those rate levels as well. Mayor Roe noted that he and Councilmember Johnson had participated in the CIP Task Force review. Mayor Roe noted that before he came on the City Council, the City had instituted a five (5) year CIP, and in the mid-2000's that had been extended to a ten (10) year period to provide a better long-term view. As part of the Task Force's recommenda- tions received earlier in 2011, Mayor Roe noted that this projection had been expanded to twenty (20) years, even though his preference had been to go even longer to address the cyclic nature of CIP needs; however, he noted that the twenty (20) year timeframe had served to open the City Council's eyes to the magnitude of the problems faced by the City and how this shortfall had developed over the years with past City Council's only looking at needs from a five (5) year perspective and not providing a sufficiently clear long-term picture. Alternative sources of revenue for utilities and the base fee side of utility rates Mayor Roe clarified the function of the City's utility structure that base rates were used for fixed costs and infrastructure, and use fees addressed costs for water purchases from the St. Paul Regional Water Authority and sewer treatment costs of the Metropolitan Council. Finance Director Miller advised that the most viable alternative resource other than in- creasing base rates would be increasing usage rates; however, he opined that this would make the City more reliant on using water to fund its infrastructure. If the City wants to encourage water conservation, Mr. Miller advised that the situation would develop that those very conservation efforts would continually reduce the revenue source to keep the system upgraded and not providing a stable revenue source, thus shifting the burden and incenting people to use more water, specifically contrary to a conservation-based struc- ture and the philosophy of water conservation. limmiiiimimmimlimiiiillimmmiliii