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in the industry, such as people investing in low -flow plumbing fixtures. That is great from an environmental standpoint, but if you're in the business of selling water it's not so good. But it is the world that we live in, so that is one of the things we have to contest with in dealing with the operations. We've got some contraction in our revenues. At the same time, the next line item there I think is relatively important. Those numbers reflect the day -to -day operating costs of the business of running the water utility. You can see that there's been some cost controls that have been implemented over the last several years. That's a reflection of a couple of things. One (1), I think this department is always looking for better ways to deliver service, to do more with less. But it also shows that as things are getting tight, you don't spend in areas like preventive maintenance, predictive maintenance, which would return benefits in the long -run but in the short-term cost you money. So, when I see those numbers contracted, that's the conclusion that we're seeing. The bottom line is, on a net asset position, you've seen steady material decline over the last three (3) years. That line is a little different than cash, because it includes depreciation. I don't want to go too far in the accounting weeds with you, but depreciation is a non -cash expenditure. But it is important to think of how you fund that. Mr. Julien continued his breakdown, stating, The message there is that you are losing financial strength. It's not a surprise. It's been ten (10) years since you've adjusted rates, and you can do as much as you can in terms of controlling costs, but the business that you're running today is more expensive than the business you were running ten (10) years ago. If you don't have revenues to offset that through growth, then you're just going to have a declining financial position. Committeemember Dr. David Varner asked Mr. Julien to address the PILOT tax. Mr. Julien responded, Oh yes. In this analysis is recognized a revenue requirement that is the payment from the utility to the City in the form of payment in lieu of taxes. The utility itself is not a tax- paying entity, obviously. It's owned by the City, so it doesn't pay a tax bill. The theory is that although it doesn't pay a tax bill, it does receive benefit from the City's services that are supported by property taxes. To provide service, they have to drive on City streets. Their assets are protected by the Police Department and the Fire Department. So, there are benefits that are being received, and this is a way of compensating the City for that. There are statutory guidelines on how that can be calculated. It sets a ceiling. There's no statutory mandate that a payment be made, but historically a payment has been part of the operating budget for the utility. Committeemember Dr. Varner stated, Actually, that's recent history. It's probably less than ten (10) years, Eric. Al, you would know it. The PILOT tax —it's been less than ten (10) years? Or has it been longer than that? I know since I've been around, it's been established. I'm thinking it's about ten (10) years. You say "historically," but it's recent history we're establishing. Another thing: is this calculated based on net asset value of some sort? Mr. Julien responded, Yes, book value. Committeemember Dr. Varner stated, There's no ordinance. This is an assessment that's made without any ordinance guidance. It's strictly done administratively, as I understand it. We ran