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There was extended discussion of Victoria's high water usage. City Engineer Cara Geheren said that the trigger for considering another well or water tower was a population point of 15,000 to 17,000. Victoria is currently at 7,500. "But we've really been having high water usage," she said. "We've structured things so that people pay more the more water they use."

Councilmember Tom Strigel recognized the irony. "More water use is more revenue for the city, but now we have a concern for capacity."

Asked Councilmember Jim Crowley, "What is our capacity compared to other cities? What is their pumping capacity? I'd like information to back it up."

Replied Cara, "We are in the process of producing data. People are irrigating more."

"We are surrounded by communities that have run out of capacity ... Chanhassen and Eden Prairie, too, I think," commented City Councilmember Kim Roden.

Said Councilmember Tom O'Connor, "Our record indicates we haven't done very well in conserving water."

Cara said that cities are required to obtain a permit from the DNR in order to increase their capacity. "We'll have a harder time to get the permit if our usage is trending upward rather than downward," she said. "At the end of the day, we don't want to be building another water treatment facility. There's a pretty big need for education for our public. With our clay soils, a lawn doesn't take (hold) that much water."

Councilmember Crowley added, "I want to make sure we are metering accurately." Director of Public Works Ann Mahnke said her department is continually repairing and replacing water meters in the city, averaging about 35 meters per quarter.

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A major consideration in projecting the revenues in the city budget is the number of anticipated new homes to be constructed. New home construction brings in revenues from pulling building permits and from homeowners paying property taxes.

Before the economic downturn in the nation, Victoria was trying to cap annual new home construction at 150 in order to keep up with infrastructure costs, transportation needs, and even school capacity.

The projected 2013 budget is being based on 55 new homes, with 35 new homes in 2014, and 30 new homes in 2015. As of November 2012, there have been 69 new home permits pulled in Victoria (51 single family and 18 townhomes). The 2012 budget was based on 55 new permits.

Said Mayor Mary Thun, "Once again we're being very conservative on the housing permits. Why is that?"

Replied Administrator Don Uram, "I'm looking at what we've done historically. Our lowest point was in 2008 with 43 permits. Our concern is land availability. I am conservative, but I'm a little more positive about our growth opportunity. Yes, we have had greater numbers than anticipated."

Asked Mayor Thun, "Where will that extra money go?"

Replied Mr. Uram, "We do have a lot of issues going on in the city. We have many future expenditures to plan for." He mentioned, in particular, the proposed new Public Works Facility and a new City Hall, also the possibility of major road improvements to Aster Trail.

"Maybe it [the extra money] should be placed in a reserve fund to lower the tax rate," said Mayor Thun, "or put it into some kind of fund so we can track it."

Said Councilmember Roden, "I'm intrigued that we have fewer permits than the City of Edina, where people are tearing down and rebuilding at an astounding rate. They're our competition. I'm in favor of being conservative. I think it could be dangerous by being overly aggressive."

Said Councilmember Strigel, "Certainly, reducing taxes is high on my list, but even higher is reducing debt. Our amount of debt per capita is on the high end."

Mr. Uram had an additional perspective. "Our per capita income is also very high, and our per capita value is very high." He said that Standard and Poor's Ratings Service has assigned its AA+ longterm rating to Victoria.

That rating, according to Mr. Uram, reflects S&P's view of Victoria's participation in the diverse economy of the Minneapolis and St. Paul metropolitan area. It reflects Victoria's maintenance of "very strong financial reserves and good management oversight. It reflects Victoria's strong wealth and income levels."

"We can certainly afford the amount of debt that we have," he added. "Given the city's need to finance infrastructure development with debt, Victoria's debt service carrying charges have historically been high ... We have brand new streets. Not many cities do. We are conservative on expenditures. We run a tight ship. We're doing what we need to do. We're in a solid standing."

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Drs. Dungey, Menser & Associates

Victoria and Waconia. 952-443-2816