MINUTES OF MEETING

CORAL SPRINGS

IMPROVEMENT DISTRICT

The regular meeting of the Board of Supervisors of the Coral Springs Improvement District was held on Monday, January 9, 2006 at 4:04 p.m. at the District Office, 10300 NW 11^th Manor, Coral Springs, Florida.

Present and constituting a quorum were:

Bob Fennell President

Bill Eissler Vice President (by phone)

Glen Hanks Secretary

Also present were:

John Petty Manager

Doug Hyche District Staff

Mel Entus Severn Trent Services

Mike Acosta Severn Trent Services

Dennis Lyles Attorney

John McKune Engineer

FIRST ORDER OF BUSINESS Roll Call

Mr. Petty called the meeting to order and called the roll.

SECOND ORDER OF BUSINESS Approval of the Minutes of the December 12, 2005 Meeting

Mr. Fennell stated each Board member received a copy of the December 12, 2005 minutes and requested any additions, corrections or deletions.

Mr. Hanks stated on page three, Mr. Petty stated “a work order is prepared by an agent who reviews the situation with staff”. Are you referring to FEMA?

Mr. Petty responded FEMA or the NRCS.

Mr. Lyles stated on page 11 where I said, “there is nothing associated with this number”, the comma should be deleted. The intent was to say there is nothing associated with this number to make this a binding agreement. On page 20, in the paragraph before the motion box, the sentence “this is truly a bonus in the sense of a gift” should be “this is not truly a bonus in the sense of the gift”. The motion was in recognition for additional work and effort performed. All of the employees worked hard during Hurricane Wilma but we specified the bonus was for additional work performed by two employees.

On MOTION by Mr. Hanks seconded by Mr. Eissler with all in favor the minutes of the December 12, 2005 meeting were approved as amended.

THIRD ORDER OF BUSINESS Report from Mr. Eissler on District Accounting Procedures

This item was tabled until the next meeting.

FOURTH ORDER OF BUSINESS Consideration of Change Orders

A. Change Order No. 1 to Benson Electric, Inc. for a Lighting and Surge Protection System for a Net Decrease of $15,775.96

Mr. Fennell asked is the decrease because of work we did not want performed?

Mr. McKune responded yes. We decided there was one area around Plants C&D we did not want the contractor to work in. This is a deduction from his contract. We went back and forth with the contractor three times until we agreed on this amount.

Mr. Hanks stated there was a small addition for a requested start delay.

Mr. McKune stated this is a penalty for delaying the contractor from starting their work.

On MOTION by Mr. Eissler seconded by Mr. Hanks with all in favor Change Order No. 1 to Benson Electric, Inc. for a Lighting and Surge Protection System for a Net Decrease of $15,775.96 was approved.

B. Change Order No. 4 to Intrastate Construction Corporation for Wastewater Plants C and D Rehab for a Net Increase of $289,384.22

Mr. McKune stated if you recall, two or three months ago, we had several conversations regarding the injection well pump station. We recommended at the time obtaining a new pump to replace the three original pumps, which have been in place for 25 years. This pump was needed to provide necessary backup to the recently installed Pump Station 2. Since there was no existing contract for the pump, we decided to award the contract. The pump has been delivered and is in the manufacturer’s warehouse within the city of Coral Springs, waiting to be installed. This portion of the work, as discussed at a previous Board meeting was integral to Intrastate’s existing contract with C&G. This pump station is across from Plants C&D and its piping, operation and electrical controls are part of the work Intrastate is performing. Since we had an existing contract to which we could add a Change Order, we decided to price it before rehabilitating the pump station, which is what you have before you. We did not want to get a second contractor into the job site as they will most likely be in each other’s way.

Mr. Petty asked is this pump replacing the three older pumps?

Mr. McKune responded yes.

Mr. Petty asked is it acting as a backup to Pump Station 2, which handles most of the flow?

Mr. McKune responded yes.

Mr. Petty asked is it difficult to obtain parts for these older pumps?

Mr. McKune responded yes.

Mr. Hanks stated I understand your concerns about not having contractors stepping over each other but the cost is almost $300,000. Can we go out for bids?

Mr. Lyles responded one of the reasons staff is bringing this forward as a Change Order is because this is part of a contract, which was bid. When we do a Change Order, we are holding the unit prices to the original bid prices. The expectation from staff’s point of view is if you were to put this out for bid, it would receive a lower price than when we bid this contract. The issue with the pump and having to put it out for bid is a different set of circumstances. We will still receive the sales tax exemption. The bottom line is we did this with the idea of saving money and prevent having two contractors working at the same time.

Mr. Hanks stated I understand. However, at a certain point you have to say, “we should look at the dollars”.

Mr. Hyche stated it is always kept in our minds. As Mr. Lyles said, we have unit pricing specifically for labor and the materials are on-site.

Mr. Petty stated this is a good suggestion. However, if we go out for bid, I am afraid we are going to lose the existing contractor because they will be moving off-site and will no longer be able to honor the Change Order. Therefore, we are recommending approval. Your points are well taken.

Mr. Fennell asked what needs to be done?

Mr. Petty responded as an old Operator, those systems from the 1990’s were junk in 1992 because we could not get the water down fast enough and Pump Station 2 was built in a rush. Those pumps do not exist anymore. Trying to purchase these parts is like going to Russia for vacuum tubes like you need for the old radio systems and maintaining them have been a nightmare. These are not standard pumps. They are huge high pressure, turbine pumps. The pressure when going down 3,500 feet is considerable. In addition, the controls are fairly tricky. There is much more involved than the pumps such as the piping and the concrete station underneath.

Mr. Fennell stated why are we spending $300,000 for a $36,000 pump?

Mr. McKune responded we have a concrete building with three pumps and all of the piping, controls, electrical cabinets and pressure devices. The three pumps need to be removed and the piping needs to be revamped to accommodate the new pumping arrangement. To show you how these dollars add up, the backup to this Change Order involves 13 items. Item one concerns the office overhead, which the contractor can rightfully put into the contract while items two through four deal with the demolition of the existing pumps, piping and all electrical.

Mr. Fennell asked why do they need to be demolished?

Mr. McKune responded the three pumps have not worked for quite some time and by permit, we need to demolish them.

Mr. Petty stated the problem is if one pump breaks down, we are back in emergency mode because we cannot get the water down deep enough. Therefore, for reliability purposes, your engineer is recommending a backup pump for Pump Station 1.

Mr. McKune stated this is a condition of our permit.

Mr. Petty stated it is not unusual for a pump to break down and need repair. We have time to do due diligence. Therefore, if the Board wants to put this out for bid, we have the time to do so. However, in order to comply with our permit in a timely manner, we should do this now.

Mr. Hanks asked what are the consequences for failing to comply with the permit?

Mr. McKune responded the consequence is discharge into the canal, which is in our permit as an emergency discharge location. The state would not look kindly on a discharge of this nature simply because organically, the District has the third pump. This is part of the reason for accelerating this program by installing the pump as soon as possible.

Mr. Petty stated Mr. McKune is coming to you with capital projects he feels has the most exposure at this time. He believes this is next great level of exposure.

Mr. McKune stated items five through seven deals with the addition of new piping valves and necessary tie-ins to the existing piping.

Mr. Hanks stated these items alone total $120,000.

Mr. McKune stated items eight and nine deal with the installation of the new pump and performing start up procedures.

Mr. Fennell stated the $6,000 charge for installing the pump makes sense to me. What you are saying is the pump itself is not expensive but rather everything concerning the connection of the pump and disposing of the old interconnectives.

Mr. McKune stated most of the expense is to make the system work. Item 10 is for the replacement of the steel work adjacent to and across the top of the Pump Station. It is dangerous to walk across the walkway because you have to put your feet on the side rails and there is a risk of one leg falling through. This walkway needed to be replaced for quite some time.

Mr. Petty stated in the past, part of the operating procedure was to hand carry powder chlorine to the clear well whenever there was contamination. This was a standard procedure imposed by DEP. Of course powder chlorine is going to get on the steel and if the steel was moist, it created a corrosive atmosphere.

Mr. McKune stated item 11 deals with the changes to the electrical and instrumentation and is paid directly to the Electrical Sub-Contractor. Item 12 concerns some miscellaneous work and item 13 deals with the overhead, markup and sales tax; at the percentages stated in the contract price. All of these items total $289,384.22.

Mr. Hanks stated a good portion this Change Order is for valves.

Mr. McKune stated valves are very expensive. One 24 inch valve can range from $15,000 to $18,000.

Mr. Petty asked is the standard pressure 130 psi?

Mr. McKune responded the standard back pressure is 35 psi. These are high volume pressure pumps.

Mr. Petty asked was Pump Station 1 giving us all of the back pressure?

Mr. McKune responded it was about the same.

Mr. Hanks asked is this part of the capital improvement program?

Mr. McKune responded yes.

On MOTION by Mr. Hanks seconded by Mr. Eissler with all in favor Change Order No. 4 to Intrastate Construction Corporation for Wastewater Plants C and D Rehab for a Net Increase of $289,384.22 was approved.

Mr. Fennell asked do you have any further information on the audit?

Mr. Petty responded we have several calls into our auditor who the Board authorized to do an in-house special audit not to exceed $10,000. Ms. Janice Larned is currently working on this since we are having trouble getting a hold of the party responsible for defining the work from the auditor. If we do not have anything in the next day or two, we will go over to his office.

Mr. Fennell stated please call me if by the end of the week the audit has not occurred.

Mr. Hanks asked when did we direct him to do this audit?

Mr. Petty responded at the November meeting. Part of the reason is the change in management from Mr. Pete Witschen to me. I take the blame for the delay. Mr. Eissler is supposed to work with the auditor when he begins to define those services.

FIFTH ORDER OF BUSINESS Staff Reports

A. Attorney

Mr. Lyles stated I have no report.

Mr. Hanks asked is there anything new on Lake Coral Springs?

Mr. Lyles responded everything is moving along smoothly.

Mr. Fennell asked do we have any information from our lobbyist on legislative issues concerning the District.

Mr. Lyles responded I will contact our lobbyist and discuss the current legislative agenda on any matters affecting the District.

B. Engineer

1. Monthly Water & Sewer Charts

Mr. Petty stated the charts and work orders were presented to the Board today as we were working on the design of the graphs. We will send a package to Mr. Eissler after the meeting.

Mr. Eissler asked what is the color of the water?

Mr. Entus responded the color on the discharge system water is between 10 and 12.

Mr. Eissler asked what about the hardness?

Mr. Entus responded the hardness is 80 to 90.

Mr. Hyche stated the average is 80

Mr. Fennell stated we received two new charts, one for wastewater plant infiltration chart and the other for water line loss.

Mr. Petty stated these charts were part of a single chart the Board used to receive showing water and wastewater treatment flows and rainfall. Over the years the chart became so complex to the point where I could not understand it and I was the one who started this in the early 1990’s. The intent of graphing this was to determine the water line loss and the infiltration to the wastewater treatment plant. We separated the information and compared it to each other. We feel this is a more comparable format so you can see exactly what we are trying to see. The good news is the water line loss is at 4.1%, which is considered excellent in the industry. Water line loss of less than 5% is considered excellent while less than 10% is considered average for the processed water, which is passed through the meter. This is considered to be what we refer to as a water audit and a very fine evaluation. We are very proud to show you this number.

Mr. Fennell stated it looks like there is a discrepancy on the line chart compared to the infiltration chart. If I do a quick comparison of wastewater treated water for Pump 7, it looks like the water billed is 120 mg while the wastewater treated is 150 mg, for a difference of 30 mg.

Mr. Hyche stated one line is water to water and the other is water to sewer.

Mr. Petty stated the graph with the single blocks is analyzed because billing dates can be every 20 days or 40 days, according to DEP regulations. Instead of showing you lines crisscrossing for no apparent reason other than the billing dates not matching, we analyzed it and put in a whole year’s flow.

Mr. Acosta stated it may be 20% one day and nothing the next day or 5% day in and day out.

Mr. Petty stated this will be a rolling, annual graph.

Mr. Fennell asked why is one outgoing as opposed to incoming?

Mr. Hyche responded you need to focus on the red line which is the incoming line.

Mr. Petty stated the number has improved over time as the repair efforts have brought it down. You still have infiltration in the sewer system. What this graph shows is rainfall you are now getting a column of water along the line break or wherever the infiltration is occurring, causing a great deal of infiltration. In December, January and February we can have very low rainfall amounts and you will still see infiltration. This proves the water is coming from the groundwater table and not so much from a rainfall event. We have lateral pipe issues because of the camera inspections. Our engineer and Mr. Hyche have a great deal of history. This is starting to get to a manageable percentage as we are starting to get the lines closer together. This is well within industry tolerances.

Mr. Fennell stated we had a 4% loss.

Mr. Petty stated it is considered to be excellent.

Mr. Fennell asked what would a 4% loss be attributable to?

Mr. Petty responded fire hydrant use, flushing of lines, small diameter leaks coming through the joint fittings, sweating of the pipe, unmetered sources we do not know about or illegal taps.

Mr. Acosta stated when new projects go in; we are required to test the lines. We are not required to achieve zero leakage, but a set amount per inch. You do not have a water tight system.

Mr. Fennell stated we have two choices; we can either increase the size of our processing plant for wastewater to the point where we are getting comfortable or relay all of the lines. It sounds like we are in good shape and it is not worth our time to do any more work to these pipes.

Mr. Acosta stated we can refocus some of our efforts on producing infiltration and change in tap, relining the pipes or installing rain guards on some low lying manholes.

Mr. Petty stated the program we have done from year to year, which is to fix whatever lines we see, has been showing an improvement. You keep doing this because you have the workers, the equipment and it is in the budget. You have a program for fixing laterals, which are broken from being mowed over so many times. I do not know whether or not you need a new program. Mr. McKune has focused on two key issues, which is to refurbish Plants A & B. The effectiveness of treating this small percentage difference of infiltration is going to be much cheaper than trying to replace the line.

Mr. Acosta stated we have a permitted tank capacity and fixed number of gallons per day at the amount of plant capacity we have to run. We have the ability to take plants off line while still having the ability to keep these plants running 24/7 regardless of the flow. Does it make a difference in our operating costs to reduce the infiltration any further if you have the plant capacity?

Mr. Petty responded under certain conditions, as an operator, Mr. Hyche has a few options available to him such as doing a quick start of the plant by dumping digester material. Is he going to receive premium treatment at the time? No, but he will meet the regulations. We are talking about instances where a Tropical Storm dumps 10 inches of rain in a 24 hour period and people start popping manholes in the street in order to get the street drainage down. We get a great deal of water and Mr. Hyche would do what I just described or something similar. The plant’s carrying capacity and the tankage itself gives you many options for not only repairs and maintenance but also surge conditions. Repairing the lines is something we should stick to. We have taken care of all of the easy items over the last 15 years and you are now trying to do the tough items where for every dollar spent, you do not get a dollars worth of savings.

2. Utility Billing Work Orders

Mr. Fennell stated we received the utility billing work orders and there is nothing unusual other than having many mis-reads in November. Is this because of the hurricane?

Mr. Petty responded these were the corrections we authorized for damages caused by trees pulling lines out of the ground.

Mr. McKune stated I provided to the Board a letter I sent to Mr. Petty, which reads as follows:

“Enclosed is the request from Intrastate Construction Corporation for payment in the amount of $154,819.15, representing work performed on an emergency basis to clear downed vegetation and trees from the CSID Utility Plant site. This work was approved as eligible for reimbursement by Mr. Dimitri Ousakalides, the FEMA representative.

Based upon recent information regarding the FEMA and NRCS reimbursements, it may be quite some time until reimbursement monies are made available to CSID. Consequently, I feel that the District should favorably consider making payment to the contractor prior to finalization of the federal reimbursement process.

Intrastate utilized a subcontractor to help with some of the removal process so that the work could be accomplished rapidly. He understandably expects to be paid within a reasonable amount of time.

I recommend CSID make payment to Intrastate Construction Corporation in the amount of $154,819.15. Please give me a call if you have any questions.”

This represents the work performed during the month of November. Without doing this, there was a good possibility the canal on the south side of the plant site would have overflowed into the plant. We also had a leak on one of the well water line crossings, which we were concerned about and we needed to clear fallen trees in order to get access to the line. We also needed to provide access for all chemical deliveries of the sludge removal trucks to keep this plant operating. In my opinion, this work helped us to provide water to the City of Coral Springs.

Mr. Petty stated I looked over the bill and spoke with Mr. McKune regarding this matter. It is my opinion, while the number is high for the time the services were applied; it is a reasonable number and was needed to keep the plant running during Hurricane Wilma. This is a contractor who kept his equipment and manpower onsite stabilizing the situation so our guys could stay.

Mr. Fennell stated there is one bill for $69,070.65 and another for $85,748.50.

Mr. McKune stated one was for the subcontractor and the other was for the main contractor.

Mr. Petty stated the subcontractor concentrated mainly on landscape removal onsite with all of the damaged trees. They performed in groups of six or eight, picking up the tree limbs.

Mr. Hanks asked how many trees fell down?

Mr. McKune responded hundreds.

Mr. Petty stated they were not our trees as much as trees from across the canal, which fell onto our property.

Mr. McKune stated we removed some Australian Pines lying on top of the large storage tank. There are sufficient surplus monies in the account to cover this request.

Mr. Petty stated the FEMA application is for facility cleanup.

Mr. McKune stated there are two federal programs; one for the repairs and cleanup necessary within the plant site and the other for canal debris cleanup.

Mr. Fennell asked when are we getting money from FEMA?

Mr. Petty responded we should be seeing the money within 60 days. In the meantime, we have sufficient funds to cover the request. When we first discussed this matter with them, the expectation was for receipt of the money in two or three weeks.

Mr. Eissler asked when how do they bill us?

Mr. McKune responded this was billed on man-hours worked and equipment used on a typical time and material basis.

Mr. Eissler asked have you looked over this request?

Mr. McKune responded yes. The contractor has a summary sheet indicating approximately 1,300 man-hours worked.

Mr. Fennell stated they have numbers for what they are charging. What you do not know is how many hours they worked.

Mr. Petty stated at the time of the work being done, it met the FEMA levels and did not exceed them. The work was performed expeditiously so the plant could stay up and running. I think we did well by having a local contractor.

Mr. Eissler asked who follows up with FEMA?

Mr. McKune responded I will and so will Mr. Petty.

Mr. Fennell stated at the last meeting, we were discussing having someone follow this money. Who is this person?

Mr. Petty responded I am doing this as the manger with Mr. McKune. Mr. Hyche has been doing all of the work and the rest of us are worrying.

Mr. Fennell asked do you have someone from the Accounting Department tracking this money?

Mr. Petty responded not until we start receiving monies. Until this happens, we have our engineer who is an expert in quantities in cost as our compliance officer.

Mr. McKune stated the remainder of the canal cleaning work, which will take some time, will be bid on a lump sum project basis. FEMA will pay based on time and materials but only during the initial emergency. Time and materials by and large over a large program is hard to control and it is very easy to let it get out of hand unless you are there monitoring the activity of every piece of equipment and individual on the job. We know the prices for doing this type of work and FEMA and the NRCS are in agreement with us. We will find precise areas where the work needs to be done to end up with one lump sum. Therefore, we will not need the District Accountant to track this because it is simply a monthly draw against the percent to complete. It should be much easier to control.

Mr. Fennell asked other than the work done onsite, have you started the canal work?

Mr. McKune responded no.

Mr. Petty stated other than staff using pickup trucks and chain saws.

Mr. Fennell stated in four months we will be into the next hurricane season. I do not think we are moving along quick enough.

Mr. Petty stated we can move along quicker by spending more.

Mr. Fennell stated we authorized you to go out for bid a couple of months ago.

Mr. Petty stated we had to build the specification, in the hope of piggy backing the City of Coral Springs but the city did not have enough detail to handle the removal of trees from canals. Their removal was from a roadway system. The specification could not be piggy backed in our opinion. It has to go out for bid, which requires specifications, which Mr. McKune has prepared with the help of FEMA and the NRCS. It is ready to go out and we hope to send it out any day with an award in the first or second week of February. This is as much as we can do for Phase 1. We can do Phase 2 but will end up having to increase the scope of Phase 1 in order to make an impact to the removal. Phase 1 is for the removal trees being an immediate threat to the drainage system, not those apparent on the canals. Because of the scope we wanted to be as economical as possible because the District’s impact of a $4,000,000 project is much more than a $600,000 project. By taking due diligence, the prices and expectations have come down but we have not considered taking Phase 2 into Phase 1. If you wish to speed this up, we can do so but our costs will increase substantially.

Mr. Hanks asked when we were looking at piggy backing the city’s contract, should we have reviewed the specifications before we gave the approval to piggy back onto the contract?

Mr. Petty responded we had hoped to piggy back their contract.

Mr. Hanks stated it should have been done and we should have made sure the contract was sufficiently detailed. We lost the chance of taking care of the trees because the city’s contract did not cover enough detail. It only covered particular line items. Is this correct?

Mr. Petty responded yes.

Mr. Fennell asked what does it take to obtain specs for Phase 2?

Mr. McKune responded the specification would require the addition of root removal and repairs of the canal banks. It would take a week to put those specifications together but two weeks to identify each of these locations where work needs to be done. I still need to prepare a set of plans indemnifying the scope of the work. To the Phase 1 map, we would add quite a few thousand feet of Phase 2 canal bank restoration. Phase 1 removes the trees and roots. There are some trees blocking the flow and to get to them, we need to remove 2,000 feet of trees from across the canal.

Mr. Fennell asked how much money are we talking about?

Mr. McKune responded we have an estimate for Sunshine from the NRCS, which can be used for CSID. For Phase 1, the cost is $460,000. Because Sunshine has more trees than CSID, their total estimate from the NRCS is $4,200,000. Based on your criteria, the total amount for all of Phase 1 and Phase 2 within CSID is $3,000,000.

Mr. Fennell stated we need to proceed with Phase 1 and the specifications for Phase 2 need to go out as soon as possible. Please let your staff know we are interested in expediting this.

Mr. McKune stated this is underway as we speak.

Mr. Petty stated in regards to how we will pay for it, we have prepared a financial plan and are waiting for the bid numbers. We plan to have all of this before the next meeting and will present a cashflow presentation with the cost, options and recommendations from staff.

Mr. Fennell stated we definitely need to know the cashflow because we spent $154,000 and have not received any money from FEMA. For a small company like us, spending money from our pockets presents some problems.

Mr. Petty stated you also have engineering costs, which we are incurring. Staff has already worked the overtime.

Mr. Fennell asked when do you plan to go out for bid on Phase 1?

Mr. McKune responded hopefully next week.

Mr. Fennell asked when will Phase 2 go out for bid?

Mr. McKune responded we need further definition from NRCS.

Mr. Petty stated the Phase 2 specifications should be available for your review, acceptance and authorization at the next meeting.

Mr. Fennell stated we cannot wait this long. We need to shoot for two weeks. We already authorized you to go out for bid a couple of meetings ago. We will not hold you up. What will hold you up will be your own efforts.

Mr. Petty stated we will go out for bids on Phase 2 as soon as the specifications are prepared. Mr. McKune plans to have those specifications completed in the next 10 to 14 days.

Mr. McKune stated I recommend structuring the bid so Phase 1 is identifiable and Phase 2 is an additional item.

Mr. Petty stated good point. This would give the Board two options.

Mr. McKune stated we can do Phase 1 definitely and Phase 2 as an alternate, which can be included into the bid 90 days prior to award. This gives us the most flexibility.

Mr. Petty stated this gives you the ability to act fairly quickly.

Mr. Fennell stated do it the way you want to but do it quickly. I would like to have a call in two weeks from Mr. Petty informing me everything was sent out.

Mr. Hanks stated when we draft the specifications; we should make sure there are time constraints to perform the specifications.

Mr. McKune stated we will specify the time of performance in the specifications.

Mr. Fennell stated our goal is to complete this by June. Please tie in your PR with the bids. Before you send out the PR, please provide it to me for review.

Mr. Petty stated we will provide it to the Board for comments.

Mr. Fennell stated the plan is within two weeks; we will get the bids out and have a written PR statement.

Mr. Petty stated at this time, we need Board approval of the request from Intrastate Construction Corporation.

Mr. Hanks stated they requested $36 an hour for a chain saw and $60 an hour for a Crew Foreman.

Mr. Petty stated it all seems so reasonable within 48 hours of the storm.

Mr. Hanks stated it was not within 48 hours. The work was performed on October 31^st, which was a week after the storm.

Mr. Fennell stated I do not think we have any choice. We would feel better about the bill if we saw some money coming from FEMA. When I applied to FEMA, I received my funds within a week. They actually wire transferred the money to my account.

Mr. Acosta stated we have the paperwork for the facility portion. We just need the invoices so we can submit to FEMA.

Mr. Hanks asked do we have sufficient funds to cover this request?

Mr. Petty responded in the water and sewer utilities, you have over $7,000,000 in your account aimed for capital improvements. We should be able to handle it.

Mr. Hanks stated it is better to have the funds taken from the Utility Budget rather than the Stormwater Budget.

Mr. Fennell stated it is fair since most of the expenses are utility related.

On MOTION by Mr. Hanks seconded by Mr. Eissler with all in favor the request from Intrastate Construction Corporation in the amount of $154,819.15 for work performed on an emergency basis to clear downed vegetation and trees from the CSID Utility Plant site was approved.

Mr. McKune stated I provided Work Authorization 28 to the Board for CH2M-Hill to proceed with the canal cleanup efforts, which we have been doing. Up until now, we have been charging our time to the engineering line item of the budget. It is rather unidentifiable doing it this way. Approval of this Work Authorization allows us and the Board to keep track of the dollars associated with the cleanup.

Mr. Petty stated it is also quantified for FEMA reimbursement as well.

Mr. Eissler stated it seems reasonable.

Mr. Fennell asked is the cost $25,000 a month?

Mr. McKune responded up to $25,000.

Mr. Petty stated we are asking the engineer to perform the contract onsite for FEMA, which required actions such as taking photographs of every tree and verifying GPS locations. We can have as many as four employees onsite during working hours.

Mr. Fennell asked do you have the man-power?

Mr. McKune responded we have 200 man-hours.

Mr. Fennell stated we are probably talking about $1,000,000 to $3,000,000 worth of submittals and we have to make sure it is done correctly.

Mr. Petty stated some contractors are saying they will get it done in 30 days, while others are talking about 60 to 90 days.

Mr. Fennell asked where will the funds be taken from?

Mr. Petty responded the General Fund where you have $1,083,106 in reserves for fiscal year 2006. We are very confident we should get through this without any difficulties. At the next meeting, we are going to bring several options before the Board, all of which project a fairly flat cashflow issue.

On MOTION by Mr. Hanks seconded by Mr. Eissler with all in favor Work Authorization #28 with CH2M-Hill in the amount of $25,000 for post-hurricane water management system rehabilitation was approved.

Mr. Hanks asked how are we looking overall? The estimate of $1,000,000 was quoted at the last meeting.

Mr. Petty responded this was the first estimate from Arbor Tree.

Mr. Hanks stated I am disappointed for not having more estimates.

Mr. Petty responded I had not prepared the book yet because I wanted the specific numbers. However, I can speak to the financial theory and policies.

Mr. Hanks asked can you bring forth some generalities?

Mr. Petty responded yes.

Mr. McKune stated some of the work has already been done. We hired contractors, which we thought were efficient than we thought or NRCS thought they were. Arbor Tree has their own contractor with SFWMD to do this type of work and equipment specifically for this purpose. They can move fairly quickly as long as they have access to the trees.

Mr. Fennell stated there must be competition with every other group in South Florida.

Mr. Petty stated there is now.

Mr. McKune stated they did not have as big of a backlog.

Mr. Fennell asked how much of the $3,000,000 can we get out of FEMA and other groups?

Mr. Petty responded we do not want to speculate. We had a prior commitment of $410,000 to $420,000, however after Mr. McCune and Mr. Hyche spoke to the NRCS, the emergency part was given back to the federal agencies. Therefore, the agreement we had you sign is no longer valid. They are now looking to expand the program to include more than just emergency cleanup and treating us similar to the municipal programs to include the roots and trees on the banks, which is enticing. The thought is we can get all of this completed in an improvement program, where we would have the entire $3,000,000 or portions applicable to collect from another agency. I am cautious.

Mr. Hyche stated the agreement from NRCS was emailed to me with the new scope.

Mr. Petty stated Mr. McKune is working on this as well. We are going to identify where the second phase of trees are.

Mr. Fennell stated we have to look at a short term loan scenario in case we have to go out and raise more money.

Mr. Petty stated we received instruction from the Board at the first meeting where we discussed this. Ms. Janice Larned who is the Treasury Officer for Severn Trent has experience beyond anything we have ever had in our company before. She is on top of this issue. We have commercial banks vying to do business with you for the short term cashflow at a rate meeting the Florida League of Cities rate. This is an unheard of precedent where we have commercial paper at the same level of what the counties have available to them in this trust.

Mr. Fennell asked how much?

Mr. Petty responded on a one to one ratio, equal to one year’s annual assessments. This is what we asked them to review and approve for cashflow purposes only. It does not mean we cannot get a two to one or three to one or four to one. This is for cashflow purposes without reapplying. They are doing the one to one in advance before receiving the exact number from the engineer.

Mr. Hanks asked at what interest rate?

Mr. Petty responded 3.9%. The cost of issuance is down to $4,500. This is a fine instrument for the bonds. The people we have worked with over the 30 years are unbelievably efficient, however, this is not the case for this District. We need short term cashflow. The deal so far with the bank is within two weeks of signing the papers, we receive the cash. It is an interest only loan until October 1^st or 365 days, whichever comes first at whatever term you deem applicable up to five years. We would roll it and fix it at that time. However, once you fix it, your one to one ratio is now free and clear for the next emergency.

Mr. Fennell asked do we have a Line of Credit?

Mr. Petty responded this is the one to one ratio we are trying to lock into, which is basically a revolving loan to be tied into your budget and becomes free again for whatever necessary items you may need. The one to one ratio is a start number. For cashflow purposes, this should be sufficient for these circumstances and gives us the opportunity to do the application for the long term in a timely fashion. This note can evolve into a longer term note with additional monies. Keep in mind, we are not just limited to the General Fund. We also have the exposure on the facility and utilities. The Utility Fund Budget would come into play as well.

Mr. Hanks asked is there a reason why we could not make an internal loan from the water and sewer to the General Fund?

Mr. Petty responded we have done the analysis and this is one option we will present to you at the next meeting. We know the short term commercial paper is the best in our perspective but you have the option of looking at financing. The drawback is it would stop some of your construction. If you take money out of reserves, your cash is gone and you never want to reduce your cash.

Mr. Fennell stated Mr. Hanks has a great point as we have money sitting in the bank, which we can loan to ourselves, depending on the rate of return.

Mr. Hanks asked what is the current rate of return on the $7,000,000 in the Construction Fund?

Mr. Petty responded I did not look it up before coming to the meeting but I am sure it will be in our cashflow analysis. It will probably not be anything exciting. If you want to do an intrafund transfer we would be glad to go over the pros and cons with you. However, we request you not make a decision at today’s meeting until you hear those pros and cons and the options available to you.

Mr. Hanks asked can we increase our water and sewer rates?

Mr. Lyles responded we can adjust our rates through a public hearing mechanism and adopt a resolution establishing a new set of rates, which could take effect immediately. You adopted a budget covering this entire fiscal year. All we need is a reconciliation to the budget and adopt an amended budget toward the end of the current fiscal year. We could impose the rates by following the process outlined in our special act.