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Only the assets and activities of the City's Water and Wastewater funds would be part of the JIPA. The Electric Utility Fund would remain independent of the JPA. City employees, the advisory role of the Utility Commission, and the enterprise fund identity of the Water and Wastewater funds will remain unchanged. Again, the primary purpose of the JPA is to provide a legal mechanism to help formalize the flow of funds between the General Fund and the Water and Wastewater funds, with the likely result of lower short-term and long-term customer rates. Essentially, the JPA assumes ownership of the Water and Wastewater assets by leasing them on a long-term basis from the City. An advance lease payment can be made to the City by the JPA from any surplus cash in those funds, and an annual lease payment from the JP'A to the City will be established in lieu of the existing transfers (administrative charges, franchise taxes, and unsecured in -lieu). It is anticipated that the newly structured lease payments (not to exceed an amount established by an independent appraisal) will be less than the existing transfer amounts. The expected result is lower costs and lower rates than what would otherwise occur, all other things remaining equal. It is further anticipated that new lease payments will reasonably approximate amounts commensurate with an "equitable rate of return" as determined by an independent consultant via a separate report. While it is permissible within the JPA structure for the City to use lease payments from the JPA to finance generic capital improvements benefiting activities of the City other than the Water and Wastewater funds, it is presently anticipated that the only financing activity will be limited to raising funds for the necessary "emergency" improvements associated with the Wastewater Fund. However, staff is still performing cost/benefit analyses of various financing scenarios and may present the City of Colton with alternatives in the future. The new lease arrangement between the City and the JPA will contain adequate language to assure bond coverage and the establishment of adequate operating margins for the related enterprise funds. It is also expected that the lease payments to the City will be subordinate to any future bond payments for the Water and Wastewater Systems. Aspects of the financial transactions, as a result of forming the Authority, are still being researched and investigated by staff. Final details will be presented to the City Council for approval. along with the required documents, before the Authority is officially formed. However, preliminary indications reflect that Wastewater transfers to the General Fund could be lowered by $400,000 per year. This significantly contributes to lowering the necessary wastewater rate increase from 33% to 17%. Instead of monthly residential rates rising from $18.50 to $24.50, they will only increase to $21.70. It is not presently anticipated that Water transfer amounts or rates will be lowered, as a result of forming the Authority, but staff is still exploring this possibility. The utility is completing a $7.2 million expansion of the wastewater treatment facility. This work is the result of a Cease and Desist Order issued to the City in 1995 because of a shortfidl in the reliable capacity at the plant. The construction was ftmded through a loan from the State Revolving Fund to be repaid one year after the completion of the construction. A portion of the debt service on this loan was included in a wastewater rate increase that went into effect in 1998. The balance was scheduled to be included in a rate increase in 2000, resulting in a $4 increase in monthly residential rates. During the