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, July 24, 2006 at 4:05 p.m. at the District Office, 10300 NW 11^th Manor, Coral Springs, Florida.

 

            Present and constituting a quorum were:

 

            Bob Fennell                                                President

            Glen Hanks                                                Secretary

           

            Also present were:

 

            John Petty                                                  Manager

            Dennis Lyles                                               Attorney

            John McKune                                             Engineer

            Ilana Rabone                                              Severn Trent Services

            Janice Moen Larned                                   Severn Trent Services

            Randy Fredericks                                       Severn Trent Services

            John Sutton                                                Sutton Consulting Arborist

FIRST ORDER OF BUSINESS                         Roll Call

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

 

SECOND ORDER OF BUSINESS                    Organizational Matters

A.                 Acceptance of Resignation of Mr. Eissler

B.                 Appointment of Supervisor to Fill the Unexpired Term of Office (6/2007)

C.                 Oath of Office of Newly Appointed Supervisor

D.                Election of Officers

            Mr. Petty stated the only item we would like to take action on is item A. 

            Mr. Fennell stated at the end of the last meeting, Mr. Eissler resigned.  He served this Board well and I will miss his contributions.  One of his parting comments was we need to diversify the Board more away from our strong engineering backgrounds.  Perhaps we need a Board member with a financing background.  This is a good idea.  We see this as a corporate structure with a variety of different talents. 

            Mr. Petty stated we need the Board to approve Mr. Eissler’s resignation.  If the Board does not approve it, Mr. Eissler will still be in the seat, whether he shows or not.

 

 

            Mr. Fennell stated Mr. Hanks and I need to find someone to serve in Mr. Eissler’s unexpired term.

            Mr. Hanks stated I have been putting out feelers and have been approached by someone who applied for a seat.  Do we have a list of interested parties from the last General Election?

            Mr. Petty responded no.

            Mr. Lyles stated I have a copy of the list.

            Mr. Fennell stated we need to solicit some resumes.  I would be interested in having someone with a financial and accounting background serve on the Board.

 

THIRD ORDER OF BUSINESS                       Approval of the Minutes of the June 27, 2006 Meeting

            Mr. Fennell stated each Board member received a copy of the June 27, 2006 minutes and requested any additions, corrections or deletions.

            Mr. Fennell stated on page 22, Mr. DaSilva said the elevation was 17.5 for a 100 year storm event.  I believe he said 18.5.

            Mr. McKune stated I do not recall.

            Mr. Hanks stated this can change depending on whether you are looking at the original permit.

            Mr. Fennell stated on page 24, where Mr. Fennell stated, “No one at the city has information like this”, what I meant was “No one at the SFWMD has information like this.”

            Mr. Hanks stated if I recall, SFWMD did not have any information on the height of the water within CSID for the 10 or 100 year storm.

            Mr. Fennell stated this is what I am referring to; not the pipes but the fact SFWMD does not have a study within our area.  They do not know what happens within a particular zone.

            On page 29, where it says, “Our current policy is all trees are okay”, this is not our current policy.  The statement I made was the homeowners were responsible for maintenance of the trees down to the water’s edge.

            On page 33, where I said, “This decision is not one you can hold in abeyance,” the next sentence should say, “Do you also believe…”

 

 

FOURTH ORDER OF BUSINESS                    Public Hearing to Consider the Adoption of the General Fund Budget for Fiscal Year 2007 (Resolution 2006-3) and Levy of Non Ad Valorem Assessments (Resolution 2006-4)

            Mr. Fennell opened the public hearing.

            Mr. Petty stated the budget stands as is with assessments increasing from $82 to $158 per unit per year.  Last year the assessment was $91.38.  Most of the assessment is going towards reimbursing the Reserve Fund so we can get the $1,000,000 reserve in our drainage funds as soon as possible.  As you recall, we are spending this money and then some in this year’s contract with Arbor Tree in the tree removal process, which has been completed. 

            Mr. Hanks stated I was looking at the check register for this month and saw we have $250,000 for engineering services we paid for.  We are budgeting $50,000 for the General Fund.  What are we paying for management fees?  Knowing we are going through a major upgrade, our engineering fees should not be $50,000.  What are they and where do these other engineering fees come into play in our budget?

            Mr. Petty responded in the General Fund.  For discussion purposes, we were going to discuss this matter under the Water and Sewer Fund budget discussion but it is applicable here as well.

            Mr. Hanks stated I would also like to discuss the tree removal and how we are going to proceed.  Is it appropriate to put a line item in our General Fund budget for a Sinking Fund for hurricane cleanup?

            Mr. Petty responded we considered it.  We assessed our engineering arrangement with CH2M-Hill, previously Gee & Jensen.  As discussed in past meetings, the engineering services we have been receiving from Mr. McKune and Ms. Early are exceptional but the management concepts have been a challenge for us.  I have been reviewing the bills for six months and asked the engineering firm of CH2M-Hill to provide me with a tally sheet.  Of course, I had my own staff go through project by project what we have spent.  At this time, we are not enamored with the percentages.  We spoke with counsel who brought to management’s attention the fact our contract is not based on a percentage basis, but on an hourly basis.  While it is true performance measures, which are part of my responsibility of oversight, are based on the industry standards and evaluating what they turn out to be, I am of the opinion administratively CH2M-Hill is slightly overpriced from the industry average. 

            In the Water and Sewer Fund Budget, we are recommending a new line item called “Capital Improvement Coordinator”.  The reason why it is not in the budget is there is no real cost to drainage.  The cost is going to be on a project by project basis from capital projects, which typically is not part of the budget but outside being paid from those funds.  Those engineering fees run 14% of the contract construction price, 7% for design and 6% for contract administration.  I consider this to be a retail price.  It is not in the budget because it is covered by the Capital Improvement Program and its funding source.  This is why the concept is not in the General Fund.  It is our intent to propose to the Board we create a new line item, which will be funded from existing monies spent on-site for engineering and from future capital improvement funds on a per hour basis.  We spoke with counsel and any such recommendation or appointment would be through the CCNA process.  We are prepared to put this out for bid with the intent of obtaining the best possible resource we can.  We believe we will have the value added on-site engineering to work with entities such as CH2M-Hill and making sure what the District is charged is better than retail.  It is certainly better than what we currently have.  This addresses the issue to some degree.

            Mr. Hanks stated I was looking at the Work Authorization for the wastewater plant and discovered we were paying for contract administration, construction observation services during construction and shop drawing review.  The not to exceed amount was $400,559.  For this price, we can hire three full-time engineers and have them available to take on any asset we have.

            Mr. Fennell stated at one time you suggested having our own engineer to oversee the projects.  This is what Mr. Petty is talking about.

            Mr. Petty stated staff can look over the money.  We can look over the applicable issues as far as other entities and their percentages.  I am not comfortable with management being in a confrontation with a professional engineering firm such as CH2M-Hill.  I would rather have another engineer be there with the same traits.  I am comfortable with Mr. McKune’s experience in this regard and it would be his experience better than we hope to receive from this bidding process.  It would give us the coordinator, administrator and value added engineer we are looking for.

            Mr. Hanks stated there are other tasks we can put them to use on.   When the bid plans are completed, they can do some type of quality control and value engineering.  Maybe this position could pay for itself ideally.

            Mr. Petty stated we believe from our analysis, it would not cause any increase in the current budget in comparison to last year’s budget.  As a matter of fact, I think the District will do better in its dollar value.

            Mr. Fennell stated good point. 

            Mr. Petty stated I suggest you use a Sinking Fund for emergencies such as hurricane preparedness.  In the past, the Board found it in its best interest to hold $1,000,000 in reserve in the General Fund for such emergencies.  As we just saw from Hurricane Wilma, $1,000,000 was adequate.  The District has additional resources including interfund transfers.  There is also quite a bit of commercial paper available to us on short notice.

            Mr. Hanks stated I kept hearing from the Water Utility Districts along the gulf coast there was difficulty acquiring loans because their customers and infrastructure were wiped out from Katrina.  They did not have customers to provide the revenue to back up the loans.  Is this our concern?

            Mr. Petty responded not to us because if there is no one here to serve, we do not want to tax the existing residents to re-build Coral Springs.  This would be an undue financial burden on the existing taxpayers.  If there is no one here to serve, we would look to the re-growth of the city to justify what we would or could do.  In the event of a catastrophic event where all of the homes are destroyed and there are no users, we are back to our cattle ranching days.  Money is available to us.  We had money available to us when the District was dirt and had cows and this is how we built this facility.

            Mr. Fennell stated the money came from Westinghouse.

            Mr. Petty stated AllState Insurance Company invested the money from a mutual fund.

            Mr. Fennell stated the landowners took out loans.

            Mr. Petty stated Special Districts put out bonds equal to $4,500,000,000 on dirt to install utilities, drainage and canals.  I suspect it is still available.  However, I do not recommend you keep a reserve capable of re-building the system.  I would consider this to be a harsh financial burden on existing users.  Keeping a reserve capable of getting you though a workable emergency is what we built into the system after Hurricane Wilma.  If all of the people leave, could we rebuild this utility as a means of getting people to come back?  I do not think it could be done.  I do not think we could find operators to service a utility in a ghost town nor do I think we could get supplies or maintain it operationally for any length of time.  In a Katrina type situation, you are looking at decades before it comes back.  How could you possibly rebuild a utility and have it open its door at 8 million gallon a day and say, “Now we are waiting for you to come back”?  Could you do it in small increments by saying, “We are the utility and we will start out at 100,000 gallons a day?  Yes.  This is the reserve we currently have available to us.  The $1,000,000 would give us a start.

            Mr. Fennell stated you bring up a good point as to what happens in catastrophic events and whether it is possible to rebuild.

            Mr. Hanks stated it gets you into a “what if” scenario when you are balancing your risk.  What I was questioning was related to a Wilma type event.  I did some research and according to the National Hurricane Center there is a 10% chance of a Wilma type event occurring in any given year.  There is also a two percent chance in any given year of a Hurricane Andrew type event.  What level of catastrophe or emergency do we want to have internal funding for where we have funds available rather than at the last minute when we are trying to get things taken care of?

            Mr. Fennell responded there are also issues where you would spend your money after the catastrophe and the amount of money you have to raise.  On the other hand, if you have a category three canal system and decide to rebuild the canal systems in preparation, you may actually be able to raise the money, get it up to a category four and at least test the canals.  There is then the question of when the appropriate time is to spend the money, before or after.

            Mr. Hanks stated it may not be a question of spending the money but acquiring it so we have the ability to make selected improvements to the systems.

            Mr. Fennell stated good point.  If you are going to spend money over time, rebuilding New Orleans is the wrong way to go because you are spending a catastrophic amount of money.  It actually destroyed an entire city.  On the other hand, you can spend ten or hundreds of millions of dollars in preventing it.

            Mr. Hanks asked do you say to the 25% of the population who stayed, “You still have your homes but our utilities are destroyed.  Sorry we are not going to serve you.”

            Mr. Petty stated if there are still jobs and homes, we are still in business.  We can rebuild in a flash.  I will have semis in here with water purification systems that Mr. McKune specs out for me.  We will get them from the Army.  Katrina took away all businesses and homes.  When I say New Orleans is not coming back any time soon it is because even if people came back to their homes and were given money to rebuild, they took the money and left.  Even if they rebuilt their homes, there was no place to work.  The same thing is going to happen here.  This same situation occurred in Biloxi.  The gambling ships came back but they cannot open up all of their systems because their employees had to leave.  The people dealing the cards, cleaning up the place and handling the food could not wait a week for a paycheck as they were living paycheck to paycheck.  It is going to be awhile before it all comes back.

            Mr. Hanks stated we should be putting away $150,000 every year for some type of reserve.

            Ms. Larned stated we are currently in good shape for a similar event because we have credit worthiness from the banks.  We have been communicating with them.  This is a case of where you will have to be in a partnership between public and private, not unlike where we obtained our roots from.  A great deal will be headed up by the feds but they do not want to put the money on the table.  They are going to want to determine the buildability, which is when you will get the insurance companies in.

            Mr. Hanks stated we have been in a period of historically low interest rates.  If we go to a period where we are looking at 10 to 12 percent interest rates as opposed to the five percent we are currently at or lower, the cost of borrowing the money becomes more of an issue or burden.  Whereas if we store money away, we have purchasing power.

            Ms. Larned stated there is an issue called “intergenerational parity” where you put in today what may not be drawn on for a catastrophic event like a Katrina.  We could be building up reserves for 20 to 25 years to the point where people putting money into the fund will not receive benefit from it.  Therefore they would have some resistance from it.  If in fact we had enough money in a reserve allowing us to maintain our credit worthiness, if in fact there is a plan to rebuild, then you can borrow but we will be subject to interest rate risk.  However, depending on what the market would bear, we will also be in a tax exempt status so we could go in and get the benefit of lower rates but we will structure it so it will be affordable to whatever the plan would call for over a period of a year.  This way, the people who are receiving the benefit are paying for it.

            Mr. Hanks stated if we put away $150,000, which equates to $13 per household per unit per year, then in 10 years we will have acquired enough money to redo another $1.4 million cleanup effort.

            Mr. Fennell stated we will have more money than that.

            Mr. Petty stated a 58% increase is projected.  I agree because we budgeted $850,000 for reserves for this year

            Mr. Hanks stated it is not currently in our reserves.  It is what we are putting into reserves.

            Mr. Petty stated this is what we are charging the residents.  Since we have an offsetting revenue for carry forward of $251,000, you can subtract this amount from the $850,000 to get the amount we are charging for a Reserve Fund this year.  This is what we currently have in the budget.  Our intent was to stop once we reached $1,000,000.  However what I am hearing from the Board is they want to keep going until they tell us to stop and will decide each year what is appropriate based on the threat.

            Mr. Hanks stated there will be other items we will be taking a look at.  As far as the General Fund, there are going to be some monies allocated for the pumps.  There are going to be other issues where we need to have funds.

            Mr. Petty stated you are correct.  We are seeing those come up as we speak.

            Mr. Fennell stated I agree.  The study we performed shows what we can do such as laying new canals or other things making sense as far as possible flooding.  We do not have to put all of the money into reserves.  We are in a nice position where we have paid off our canals and are therefore in good financial shape.  What was the original amount of the canals?

            Mr. Hanks responded $15,000,000 to $18,000,000.

            Mr. Fennell stated they are probably worth $35,000,000 to $40,000,000.  We are in good shape but going forward we are going to have strong reserves.   We were in good shape before the storm.  Have we received any FEMA funds?

            Mr. Petty responded no.

            Mr. Fennell asked from the state?

            Mr. Petty responded no.

            Mr. Fennell asked from the city?

            Mr. Petty responded no, but it is a nice thought.

            Mr. Fennell stated there are huge reserves through the city.

            Mr. Petty stated they spoke about spending $38,000,000 on the storm and we were able to get $30,000,000 of it back.

            Mr. Fennell stated we are raising our rates, getting some money back and building strong reserves.  The Hydraulic Study was one of the best things we have done in a long time.  From this study we are going to come up with a capital improvement project list for drainage.  I do not think the list has been prepared yet.

            Mr. Petty stated it was not in this year’s budget as coming from capital improvement funds.  Typically you would have a separate five year budget category, which has its own source of funds, whether it be a reserve category or from loans.

            Mr. Hanks asked do you have any items to bring to our attention?

            Mr. Petty responded we feel $158.50 is a good number considering the costs.  This was because the District was in a good position before Wilma.  At one of the first meetings I attended, there was a group who wanted to do only piece of the work for $10,000,000.  I think we were able to minimize the financial impacts of the District by letting the engineer get involved.

            Mr. Fennell stated although it was not quite as expeditious as we wanted, by going out for bid, we probably saved ourselves $500,000 to $1,000,000.

            Mr. Petty stated we recommend the Board consider adopting Resolution 2006-3.

            Mr. Hanks stated Mr. Lyles legal fees have doubled.

            Mr. Petty stated this was done at his request due to the legal issues now and in the future.

            Mr. Lyles stated this year we are under budget but staff projected next year was going to be a busy year.  My fees have not increased but they are anticipating a great deal of activity in the coming year.

            Mr. Hanks stated likewise with Engineering and Special Consulting.

            Mr. Petty stated part of the engineering is the consolidation we just discussed. 

            Mr. Hanks asked what went under Capital Purchases?

            Mr. Petty responded this was due to the theory we would be budgeting items. 

 

 

 

            Mr. Petty stated the blanks in the resolution will be filled in according to the budget you just approved. 

            Mr. Hanks stated the costs of operation are $158.50 and there are 1,113 taxable units according to page two of the budget.

            Mr. Petty stated we will apply those numbers to the resolution.

            Mr. Fennell asked what are the rates for NSID?

            Mr. Petty responded between $400 and $800 per household, just for the drainage.  Since this District has additional powers, there are some landscaping, recreational facilities and mitigation areas.

            Mr. Fennell stated with this increase compared to the city and NSID, we are in good shape.

            Mr. Petty stated since you paid off your debt service, you are in a good position.  This is an enviable position everyone would like to be in.

 

 

FIFTH ORDER OF BUSINESS                         Distribution of Proposed Water and Sewer Fund Budget for Fiscal Year 2007 and Consideration of Resolution 2006-5 Approving the Budget and Setting the Public Hearing

            Mr. Petty stated this is a similar process to the adoption of the General Fund Budget.  This is not going on the roll.

            Mr. Fennell stated obviously we are in good shape.  Can we use the ad valorem assessments for the Water and Sewer Fund?

            Mr. Petty responded yes, within the limits allowed, whether you are a Water Control District or a CDD.  There is a process we have to go through.  Most people find this process to be not as beneficial as the special assessment based revenue source.  The concept of using tax money to offset fixed costs for a utility have been pushed aside in the last 20 years by most governments as being a poor way of apportioning the costs and the burden of the utility.  The utility should be self sustaining.  I only know of a handful in the state.  The only one worth mentioning is the City of Naples, which pays 30% of its utility base out of its ad valorem taxes.  Everyone else collects by a commodity capacity fee, which is what we use.

            Mr. Fennell stated pay as you go.  I can understand where this could be an issue.  Mr. Hanks was talking about a catastrophic event where in order to keep operating; you need a capital infusion to raise capital.  It sounds like we still have the power to do this.  If you think about it, this is a strength private businesses do not have and it makes you financially strong.  If you have to, you can get the money somehow as long as there are people around.

            Mr. Petty stated if the land has value, we have a way of providing interest earnings.  Before you is similar to what you had in prior years.  Ms. Larned and I went through different budgeting practices and changed a couple of items.  The first page lists the expenditures.  We are not looking at any increases in the revenues over and above our projection of water and sewer, which is projected at the same level as last year.  Last year we had over $8,100,000 in revenues and this year we are projecting $8,600,000.  Most of the difference is coming back to you in contract personnel services.  As explained when discussing the General Fund Budget, CSID owns all positions versus other Districts utilizing our personnel.  We call this “shared personnel”.

            Mr. Fennell asked have we made the change where everyone is now working for CSID?

            Mr. Petty responded the switch is effective on October 1^st. 

            Mr. Hanks asked is this why we also have the increase in operating expenditures?

            Mr. Petty responded yes. 

            Mr. Fennell stated I think this will solve a big administration problem for us.  In some ways, the jobs are remaining the same.

            Mr. Petty stated I think the job performance just got better.  In the past, the people who were shared tended to have superiority about their position.  Now they must compete with the business entity because the service is being purchased rather than being owned.

            Mr. Hanks stated there is one person who has a better chain of accountability.

            Mr. Fennell stated this is a good idea, not that they were not doing a good job before.  It actually puts you as the manager responsible for how well the employee performs in another district because we are selling those services, which is a good idea to do. 

            Mr. Petty stated I will compare those to the industry.

            Mr. Fennell stated this is good news.

            Mr. Petty stated there were some corrections in the Severn Trent contract and in your position with the on-site computer system.  There is no more computer time because it is the intent of CSID to upgrade the computer system through a purchase program and upgrade the software.  This brings everything on-site and under your ownership so you do not have to lease any time or space from Severn Trent. 

            Mr. Hanks stated Computer Time and Project Management Services were zeroed out.

            Mr. Petty stated the Project Management Services line item was dedicated to Mr. Roger Moore and Mr. Mel Entus.  We are moving those dollars over to your new Capital Projects Coordinator to handle the projects we have been pushing over to CH2M-Hill on a regular basis.  It is $55,000 this year versus $15,000 last year.

            Mr. Fennell stated Project Management Services is down to zero, which almost cancels out the engineering fees.

            Mr. Petty stated it was for legitimate work we were getting charged per hour for.  We prefer to have Mr. McKune’s brain power behind it versus Mr. Entus.  As good as Mr. Entus was, I would put Mr. McKune’s experience way beyond this level but at the same cost.

            Mr. Hanks asked do we have a month to digest this?

            Mr. Petty responded yes.  We are requesting you consider this budget for discussion purposes.  This is not the final budget.  Those were the highlights.  The rest of the items are their percentage equivalent of the General Fund.

            Mr. Fennell stated I like that the Interest Revenue is up.  How did we do last year?

            Ms. Larned responded better than estimated.

            Mr. Hanks stated as far as the rates, electric increased by $2,000.

            Mr. Petty stated it is projected at the new rates as we know them.  Our operator did this calculation based on his experience.

            Mr. Fennell stated I see interest rates of two and three percent.  Are we doing better than these rates?  The money market rates are currently 4.5 percent.

            Ms. Larned responded yes.  We try to match it to when we need it when our bills come in.  Some of the overnight sweeps are still down one percent.

            Mr. Fennell asked who is managing it?

            Ms. Larned responded we have a State Board Administration Account, which is a state sponsored pool investment program.  We also have a sweep account at the bank generating one percent.  We try to shift the funds over to the State Board Account.  We do not have active investments.  It is more of a matching strategy.  This will get us three to five percent interest depending on how the market is.

            Mr. Fennell stated in the past we have not received what I think we should have.

            Ms. Larned stated some of these interest earnings are in our bond debt service reserves.  We can always do the longer term financing but the money has to flow back in to retire the debt.  This is where we get our five percent working capital.

            Mr. Petty stated the District is somewhat limited in this regard after Orange County, California went bankrupt after it invested in derivatives.  We now have a policy in the State of Florida whereby we will either follow the state investment program or come up with our own and have total accountability.  I cannot tell you of one government who tried to develop something outside of the State’s approved guidelines.  This makes us safe but not the best interest receiving body in the world.

            Mr. Fennell stated my goal is to get at least what a T-Bill gets.

            Mr. Petty stated we have a good Money Manager watching over our system making sure we are as tight as we can.

            Mr. Hanks asked do we have anything going into the Renewal and Replacement line item this year?

            Mr. Petty responded $50,000 was budgeted.  We had a long discussion with Ms. Larned.  I will have her tell you what the difference is between Repairs and Maintenance and Renewal and Replacement.

            Ms. Larned stated Repairs and Maintenance is for ongoing annual expenditures.  It does not extend the life of the asset.  Renewal and Replacement extends the life of the asset.  If you do not spend the funds for the year, it carries over into an item to be replaced in the future.  For accounting sense, it has to do with whether or not it is depreciable. 

            Mr. Hanks stated we have a decrease in our projected surplus.

            Mr. Fennell asked does depreciation mean anything to us?

            Ms. Larned responded no, it is strictly an accounting issue.  The only time depreciation comes into play is if you are a full profit organization.  It gives you tax benefit.  However, this all has to do with what we went through the last few years with GASB-34.  For the General Fund, we would have to do this as well.  We always ran the Water and Sewer Fund like a business so we could track the aging process of the equipment but you do not hold the cash.  You only have to make accounting entries so you know what you are striving for.

            Mr. Fennell stated the reason for doing this is because we need to put away funds for the replacement of items.

            Mr. Petty stated of course you should always look at the lifespan of a piece of equipment and towards rebuilding, but if I have a 50 year lifespan in front of me at a utility plant and a resident is paying for it with bonds and you want to charge them again for the next 50 years, they are going to say, “That is great but I do not think I am going to be around”.  Part of this is why we changed the budget process from what Mr. Moore started because he had lifespans but he had 25 plus years.  I do not want to be held accountable to the existing rate payers because I cannot show they are going to get benefit in 25 years from re-building.  The other reason why I do not like it is because renewal and replacement is not included in the depreciation schedule.  No accountant understands the lifespan of this utility for sure.   They certainly do not understand the concept of renewal and replacement.  I am out there every year making sure this system is running in as new condition and replacing worn out material.  While they are saying, “You purchased it here and it has a 10 year lifespan which means in 10 years you are done”, I am going to tell you in 10 years it may be as good as new in many cases. 

            Mr. Hanks stated in 10 years the motor is going to go.

            Mr. Petty stated this should be the only thing you should care about.  Yet on his depreciation schedule, I should have already taken money for 10 years and have it rebuilt.  There are certain items you have a fund for but not in total.

            Mr. Fennell stated revenues are going to increase slightly due to the fact we are going to charge out services and our expenses are going to increase.  On the other hand, we are going from administrative costs of $800,000 a year to $1,100,000, which is an increase of $210,000.

            Mr. Hanks asked is this for the computer?

            Mr. Fennell responded no, $188,000 is for salaries and wages.

            Mr. Petty stated there is $40,000 budget for two new systems; Transaction Overlay and Electronic Document Storage.  There are small increases in the personnel area associated with benefits.

            Mr. Lyles stated if this is something the Board decides to proceed with, there are going to be some costs associated with it.  If the Board decides not to proceed, those fees will increase.  It is not reflective of an increase this year but of an anticipated level of activity next year, which may or may not occur.

            Mr. Fennell stated Management Fees remain the same.

            Mr. Petty stated our total revenues decrease because Mr. Entus is gone.

            Mr. Fennell asked what is our total revenue to Severn Trent?

            Mr. Petty responded I have not added it up but I can do that.  It is based on the management fee, transaction overlay, electronic document storage and other cost recovery items such as printing and binding and rentals and office supplies.  Whatever we spend we bill.

            Mr. Hanks asked do we need to take any action other than setting the date of the public hearing?

            Mr. Petty responded we would like for you to approve the budget for consideration and set the public hearing.

            Mr. Fennell stated $300,000 is budgeted for wages and salaries.  We discussed the pension program.

            Mr. Petty stated the Board asked staff for an example of such a program.  We prepared something for you.

            Mr. Hanks stated electric is the big issue.

            Mr. Fennell asked what will it cost to run our machines per kilowatt hour versus buying electricity?

            Mr. Petty responded we will see if there are any savings.

            Mr. Fennell stated normally you do not get ahead.

            Mr. Petty stated I agree it should be looked into.  This is an issue in Miami with co-ops.  A co-op has issues with meeting peak hours and utilities running for longer periods.

            Mr. Hanks asked does it make sense to use methane in certain Wastewater Treatment Plants?

            Mr. Petty responded you are bringing up old ghosts.  I am a huge believer in propane and the diesel fuel system we have.  I think the system in the ground has some potential for being competitive and putting us in a very good position.  It is the most easily accessible fuel source we have.  We should do this evaluation and give you a good picture of what is going on.  As FP&L raises prices over the next couple of years, which we think they will, we will be able to have a better understanding of where the breakpoint is for us.

 

 

            Mr. Hanks asked does this meet our noticing requirements?

            Mr. Lyles responded yes.

            Mr. Hanks stated our normal meeting date is the third Monday.  This is the second Monday.

            Mr. Petty stated if you want to meet a week later, I am available.

            Mr. Lyles stated on my annual schedule, August 14^th is listed as the regular meeting in August.  I do not know whether there was a holiday.

            Mr. Hanks stated I am available.

            Mr. Petty stated there could have been a problem with one of the Board members who wanted to change the date.

            Mr. Fennell stated it is a moot point now.

            Mr. Hanks stated we can always change it.

            Mr. Fennell stated it is fine with me because August 21^st is more of a problem.  We will keep it on August 14^th.

            Mr. Lyles stated we have enough time to advertise for the public hearing.

            Mr. Fennell stated Mr. Petty and I met earlier this week with the Vice Mayor, Mr. Roy Gold to discuss the engineering study and how it impacted our canals and drainage.  Mr. Gold had some concerns about the trees and that we have a good canopy.  Our second concern was we do our job and make sure everyone is safe.  Mr. Gold thought we should make sure we are doing the job we need to do in order to keep the residents and property safe.  He was willing to work with us.  We found out they were not aware of some of our concerns.  One of the issues we pointed out was my street flooding because of a drain pipe getting buried or crushed.  It is actually not the direct responsibility of CSID but the responsibility of the city.  I pointed out if you flood in 100 small areas across the city, you have flooded the city.  There is a co-responsibility of the city to insure the drainage areas are clear.  They were very receptive to this.  I do not know whether or not they had the information we had.  When the city took over the roads, they also took over the permits for drainage.  We are going to supply them with a list of permits they are responsible for.

            Mr. Hanks stated as well as the permit renewals.

            Mr. Fennell stated this is our way of upgrading and making sure they drain.  We are going to have another meeting this week with their engineering group.

            Mr. Petty stated the meeting is next Monday.  The Public Works Director was supposed to meet with a representative of CH2M-Hill. 

            Mr. Fennell stated the bottom line is first the city is concerned drainage occurs and it is primarily our responsibility.  We walked away knowing it was more of a joint responsibility than they realized.  We will also work as much as we can with the concern of the canopy, given the requirements for keeping the property and residents safe. 

            Mr. Petty stated we asked the Arborist to give us some expertise we may not have.  We certainly have the engineering expertise but not the expertise on the species of trees.  Based on what Mr. Fennell brought to the Board’s attention, staff would like direction from the Board to withhold the Notice to Proceed to our existing contractor for a minimum of 30 days while we discuss various options with the city and our staff.

            Mr. Fennell stated we will hold it in abeyance until we hear what Mr. Sutton says.

            Mr. Hanks stated I received phone calls from DEP and the city forester informing me there is an existing tree ordinance and we are not exempt from it. 

            Mr. Fennell asked what does this mean?

            Mr. Hanks responded my understanding is if we are going to cut down trees, we need to pull the permit through the city.  If it involves the removal of nuisance species, we need to notify them we are doing a clearing.  If it involves removal of other nuisance species, then there is a separate application as mitigation is required. 

            Mr. Fennell asked can we have counsel review the ordinance?

            Mr. Lyles responded we discussed this matter at last month’s meeting.  My reading of the ordinance is it does not provide an exemption for us or any other governmental entity.  The manager indicated in some other forums, statements made by staff tended to support the concept it was not the intent for the ordinance to restrict CSID in this way.  We discussed the necessity of having it in writing.  However, before we do something resulting in a Notice of Violation being issued to the District, especially if we are talking about some relatively expensive mitigation efforts, we are going to make sure as your staff we have these details worked out.  This is one of the reasons why Mr. Petty is indicating he would like sufficient time to work with city staff and his own staff before issuing a Notice to Proceed under this contract to start the removal process.

            Mr. Fennell asked could we proceed with the nuisance trees and then come back to the other trees?

            Mr. Petty responded I will defer to the attorney because the word “nuisance” has a certain amount of concern for me.

            Mr. Lyles stated there is a list in the ordinance.  It is not something we would have to guess at.  There are specific trees like Australian Pines, Brazilian Peppers, etc.

            Mr. Petty stated the issue I have is not with the nuisance trees.  It would be spending drainage dollars from a Special Taxing District for nuisance tree removal.

            Mr. Lyles stated what I understand the President’s comment to be is we would be operating under the 25 foot zone you already approved.  The trees that are nuisance trees as well as being potential problems for drainage is the first group we can remove, because of the ease with which we could get permission from the city.

            Mr. Petty stated it is our priority.

            Mr. Fennell asked is our contractor comfortable with this?  This may require a pass or two.

            Mr. Petty responded he is agreeable to charging us for mobilization for each pass.  We have a letter from him, which Mr. McKune has a copy of saying he will wait for 30 days.  However, I do not know what he is going to do on mobilization.  I suspect he charges for both attempts because he will have real costs.

            Mr. Fennell stated my feeling is if someone is going to stop us from removing a tree that will be a potential problem or cause flooding, they better be very clear they will take on the responsibilities when they make us stop.  Is the city willing to take on the responsibility for drainage?  When you say, “Do not cut down the tree”, you are saying, “I am willing to take the risk”.

            Mr. Petty responded this is why we would like to have permission from the Board to continue.  In this capacity, you previously authorized the President to speak with representatives of the City Commission.  We would like to continue this as well for this very concept.  If they say, “stop”, currently what they are saying is, “You may be subject to some fines”.  For health, safety and welfare issues, this would not stop me from removing the trees so far.

            Mr. Fennell stated you are getting a feel for what our issues are.  We have two distinct issues; we want see trees on our canals beneficial to the city and environment.  On the other hand if we live in an environment which turns deadly in a second due to a hurricane, these trees can kill or flood us. 

            Mr. Hanks stated I contracted with Mr. Sutton’s firm for Arborist services in the past.