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Page 4 will be able to tell you whether the city has good contracts or bad contracts. Barry Sarma, Consulting Engineer with Freese & Nichols, Inc., appeared before the Committee, telling them he has gone through the city's three water rights permits, one at Pat Mayse which is a Federal Reservoir, that the city has total rights of 55 MGD, Lake Crook which is approximately 1200 acre feet a year making a total of 65 MGD. Currently the city is using 12 million gallons of water a day which means you are using about 20% of the water rights. Mr. Sarma said the city has 80% of their water in storage for future use, and someone has to pay for it. Mr. Sarma said under the city's contract with Lamar County Water Supply District they have a guarantee of 16.7 MGD of water, and they are not paying for that storage. Mr. Sarma discussed the fact that the city has Lake Crook right next to the water treatment plant which would cost less to pump and transmit, that this might something for the city to look at. Mr. Sarma said he has looked at the projected population for the City of Paris, and in the past few years Paris has not grown, but the consumption of water has increased and explained that population is not the only way to increase consumption. Mr. Sarma told the Committee that the planning process is very important to any city, they have to look beyond the current year or two, and the system the city of Paris currently has, and the raw water that is available the city would have 30 to 40 years of growth. Mr. Sarma stated the third problem the city has is with the violations as for as infiltration - inflow problems, and expressed the seriousness of these violations, the EPA which you have two administrative orders, and one letter from the Texas Water Commission regarding this matter. Mr. Sarma said the city has to look at the system and how to improve it in order to meet the requirements of the permits. Mr. Sarma expressed the need to start paying for the water rights at Pat Mayse before someone steps in and requested the water rights to Pay Mayse. The City of Paris needs to protect their water rights by starting to pay for that right, and as for as the rate goes, we need your input as to how financing may be achieved and future upgrading for the system. Mr. Stowe discussed the issuance of bonds - stating that in the City's bond covenant, if the City issues Revenue Bonds, you have to go to a 1.25 coverage, or your revenue minus your operating expenses will have to equal that operating income 1.25 times the total interest cost of your new and existing debt, if it does not reach that point prior to issuing bonds, you can not issue bonds. Mr. Stowe said this is what happened in 1984, the city had to issue Certificate of Obligation Bonds which is backed by Ad Valorem tax because in 1983 the city did not have 1.25 coverage. Mr. Stowe said they will be coming to you as to when we can look toward a bond issue, when do you have to have your coverage