MINUTES OF MEETING

NORTH SPRINGS IMPROVEMENT DISTRICT

The regular meeting of the Board of Supervisors of the North Springs Improvement District was held Wednesday, October 11, 2000 at 4:00 P.M. in the District Office, 10300 N. W. 11 Manor, Coral Springs, Florida.

Present and constituting a quorum were:

Bill Bell President

Thomas L. Grossjung Secretary

Matt Lauritzen Vice President

Also present were:

Rhonda K. Archer Finance Director

Dennis Lyles Attorney

Donna Holiday Recording Secretary

Roger Moore Engineer

Jane Early Gee & Jenson

Scott Davidson WCI

FIRST ORDER OF BUSINESS Roll Call

Mr. Bell called the meeting to order at 4:10 p.m. and called the roll.

SECOND ORDER OF BUSINESS Approval of the Minutes of the September 7, 2000 Meeting

Mr. Bell stated that each Board member had received a copy of the minutes of the September 7, 2000 meeting and requested any additions, corrections or deletions.

There not being any,

On MOTION by Mr. Grossjung seconded by Mr. Lauritzen with all in favor the minutes of the September 7, 2000 meeting were approved as submitted.

THIRD ORDER OF BUSINESS Public Hearing to Consider a Cap on the Sewer Charge

Moderate Density 9,875 per unit

Medium Density 7,750 per unit

Commercial 9,875 per ERC

Mr. Bell opened the public hearing to consider a cap on the sewer charge.

Ms. Archer stated the Board requested that we put together a recommendation for a cap on the sewer charge and we advertised this meeting as a public hearing to consider that recommendation. I took the average monthly consumption for the three product types listed on the agenda and added 25% to that because the average consumption is the average household usage and larger households use more water on a monthly basis. We recommend that we cap the sewer charge after we gross it up by 25% so that the usage above the cap will not be charged an additional amount for the sewer portion on the utility bill. It will cover things such as people who have a leak in their home, they pay for the water but they will not pay for the sewer above the amount of the cap. It takes into consideration people who fill their swimming pools or pressure clean their roof. We will no longer give sewer credits for that type of usage if we cap the sewer charge as recommended. It addresses several issues that the residents have had in the past and it is easily administered by putting it into our rate schedule in the computer.

Mr. Bell stated obviously there will be a reduction in revenue, are we talking about a minimal reduction in revenue?

Ms. Archer responded our budget is based upon the average usage. Since we are grossing up the cap by 25% above the average usage, we will collect 25% more than what we need to cover our budgeted expenditures. Even though the District may not be collecting as much in revenue because of the cap, it is revenue above and beyond what we need for the operations of our District. We can't count on that revenue when we prepare the budget because we don't know if there is going to be excess use, we can only count on the average, that is revenue not needed to cover the budget. Any surplus we generate flows through to the line reimbursement program. It will be a nominal amount and it may be that we pay back certain subdivision lines a year later than we would without the sewer cap.

Mr. Bell stated this is fair and equitable.

Ms. Archer responded yes and it is something that a lot of utilities have gone to in order to address residents concerns about filling their pools and things like that.

There being no comments or questions from the public, the public hearing was closed.

On MOTION by Mr. Grossjung seconded by Mr. Lauritzen with all in favor the sewer cap as outlined above was approved.

Ms. Archer stated for your information, we are proposing a cap on the sewer charge in the Coral Springs Improvement District so that our sister District is operating under the same structure. We like to keep our policies and procedures uniform.

Mr. Bell asked did we contact the gentleman who brought this to our attention?

Ms. Archer responded no but we will do that.

FOURTH ORDER OF BUSINESS Consideration of Agreement with Stephenson Engineering Group, Inc. to Perform Peer Review of Water and Wastewater Facilities

Ms. Archer stated we have talked in the past about peer review of some of our engineering plans and specifications and design of our facilities. In response to that, we talked to a firm that was recommended to us and his proposal is included in your agenda package. Mr. Moore met with him and outlined the proposed scope of services that we were looking for and asked him to give us a proposal to provide these services. Gee & Jenson will continue to be our consulting engineers and design engineers on the water plant, transmission lines and distribution system. The Stephenson Group will take a look at what has been constructed so far, what is under construction and what is being proposed for construction in the future and give any value engineering type comments on what they find that might save the District some money. There is always another way to do some things and there is new technology coming out all of the time such as going from gas to a liquid chlorine system for the water plant. There are a lot of benefits related to safety in doing that. When you are in the process of designing a plant expansion you may want to look at liquid chlorine rather than a gas system. It will give us another perspective on our facilities.

Mr. Lauritzen asked is this like a second opinion?

Ms. Archer responded yes.

Mr. Moore stated it is value engineering.

Ms. Archer stated it is becoming a common practice. This firm was recommended to me by an engineering firm I work with on a project in the City of Miramar who are also the design engineers for the City of West Palm Beach. The Stephenson Group works as the value engineers for West Palm Beach. They are not design engineers or consulting engineers. They are value engineers. They would not come in with the ulterior motive of criticizing our consulting engineers to try to replace them. They will come in to add to our engineer's expertise and perhaps make suggestions to try to save us money in construction costs or give us ideas on alternative ways to proceed to do things. That is what they specialize in. Mr. Moore has met with them and outlined the different tasks that are listed in the proposal that he felt would be beneficial to the District. The first task in summary is an analysis of what we already have. As an example if we build a 1 MGD water treatment plant and our engineer certifies to that, Stephenson will review the operations of that water treatment plant and tell us in reality if it is really capable of running at 1 MGD or if because of the pump sizes or distribution or whatever, it will never be at 1 MGD or maybe it could be upgraded to 1.25 MGD with some modification. We felt that it could benefit the District to have this type of service. There is an engineer who sits on the C.S.I.D. Board who felt that value engineering would benefit that District and they are almost built out. North Springs is a growing District and we felt Stephenson had a lot to offer in our situation through value engineering and peer review.

Mr. Lauritzen stated I think it is smart to have this done. It is better to catch something early on rather than later.

Ms. Archer stated this same type of review is done in different areas. We do all of the accounting for the District but the State requires an independent audit every year and there is a good reason for that. It means that someone on the outside is looking at the numbers and making sure that everything is being done according to contracts, agreements, State Statutes and things like that. It is an extra set of eyes.

Mr. Lauritzen stated the price seems reasonable.

Mr. Bell asked is this a common practice?

Ms. Early responded it is becoming more and more common. It is a new set of eyes. The more people who look at it the better it is. A lot of time I send plans that we prepare in our office to another one of our offices just to have someone else look at it.

Mr. Grossjung asked what is the time line for this?

Mr. Moore responded we haven't worked out a schedule yet. We have a lot of areas to expand in the District and I think it is important to have Task 1 and 3 done to find out the ultimate capacity. In the near future Ms. Archer is going to have to negotiate with the County for additional capacity and I think it is important to have someone else look at those numbers to make sure our projections are the best that they can be at this time.

Mr. Lauritzen stated that will be helpful to the underwriters of the bonds.

Ms. Archer stated it is very likely in the future that we will be working with more than one developer in North Springs. Lennar has options on property and when you have to get information from two different developer to size the system and the amount of capacity you need to reserve at the County, it starts to get complicated.

Mr. Moore stated I think it would be in our best interest to have someone look at and fine tune these numbers. The County is building the final stages of their sewer treatment plant. If we need extra capacity, now is the time to let them know. This report will help management determine those needs. As to the timing, I think it is flexible. After the initial review I believe they will have a recommendation for the next expansion.

Ms. Archer stated I believe Mr. Moore is referring to Task 2 . They will start immediately on the capacity and audit of what is currently existing. I think we will receive a report from them within 30 to 60 days and it is up to us to tell them which project we want them to review prior to awarding contracts. The fee is $7,500 per project and the project may have three or four different components to it such as the expansion of the water treatment plant, the design of the distribution system to connect to the plant and Wells 8, 9, and 10. Even though that might be bid as three different projects, we can define that as one project that we want them to look at.

Mr. Lauritzen asked what do you expect to get from them? Is it a written report?

Ms. Archer responded it will be a written report with recommendations. They also indicated the cost savings they have managed to realize for their clients. I think they will bring back to you in dollars and cents savings comparable to their fee.

Mr. Grossjung asked if you authorize Task 1, do you wait until you get their report or do you give them all three tasks at once.

Mr. Moore responded Task 1 and 3 can be given simultaneously. The most critical issue is to get a review of the projected population and from that they want to check to see if we have enough well capacity which is critical and if the plant has enough capacity. The analysis of the capacity of the plant and future projections of the size we need to expand are defined in these three tasks. All three tasks can probably be done at the same time. We will work that out but the most important item is to do the future projections and everything associated with it.

Ms. Archer stated Task 1 and 3 are similar. One is for water and the other is for wastewater and that is the capacity analysis. Task 2 is new construction and the design.

On MOTION by Mr. Lauritzen seconded by Mr. Grossjung with all in favor the agreement with Stephenson Engineering Group, Inc. to perform the peer review of water and wastewater facilities was approved.

FIFTH ORDER OF BUSINESS Consideration of Award of Contract for Heron Bay South Water Distribution and Wastewater Collection

A. Construction Financing Agreement

B. Construction Trust Fund Agreement

Ms. Early stated on September 21, we received bids for the paving drainage, water and sewer for Heron Bay South. Six bids were received and the lowest, responsive bid was submitted by Sonic Engineering, Inc. with a total base bid of $1,533,750.75. The engineer's estimate for this work was $1,592,690.50. We recommend the project be awarded to Sonic Engineering subject to funding being made available which is what the funding agreement covers.

Ms. Archer stated the funding agreement is our standard agreement with WCI.

Ms. Early stated the District's portion of the contract will be included in the funding agreement and is roughly $375,000. The District's portion of the contract is for the water and sewer. WCI pays for the paving and drainage.

On MOTION by Mr. Grossjung seconded by Mr. Lauritzen with all in favor the contract was awarded to Sonic Engineering, Inc. in the amount of their low bid of $1,533,750.75 subject to financing and the Construction Financing Agreement and the Construction Trust Fund Agreement were approved.

Ms. Early stated I have an item that is not on the agenda that I would like the Board to consider and that is a surface water management permit for Heron Bay South. It is a typical surface water management permit request with three outfalls into the District's C-2 Canal.

On MOTION by Mr. Grossjung seconded by Mr. Bell with all in favor the permit for Heron Bay South surface water management and three outfalls was approved subject to the conditions listed in Gee & Jenson's review letter of September 6, 2000.

SIXTH ORDER OF BUSINESS Grant of Easement to FP&L

Ms. Early pointed out the location of the easement on the map and stated FP&L needs to run an overhead transmission line over our canal to get to their substation site.

Mr. Lyles stated it is actually an easement that the District is conveying to FP&L for the installation of the transmission line. The problem has been coming to terms with FP&L of what will and will not be conveyed to them in this easement. The initial and subsequent take on this was they wanted to have complete rights to do anything they wanted to and then the District in essence would have been prevented from using what remains in that area for District purposes and that was not satisfactory. That is why this matter was continued. This is the most negotiation that I have seen the District undertake for an easement since I have been the attorney for the District. As of this morning the engineer representing FP&L has agreed on the phone to the terms that we proposed to them. I don't have an original document today for execution but the easement they have agreed to, will allow the District to do all of the things the District might want to do such as widening the canal, installing landscaping, installing, maintaining and relocating water and wastewater lines, anything we feel that we may want to do with that property, we retain the right to do. They have agreed to be limited in their use of the property so that they can own and install above ground transmission lines. The engineers were concerned that no underground fixtures or lines be installed in this easement property. With those extra strings attached to the proposed easement I can recommend to you now that you approve the easement from the District to FP&L and if that passes I will prepare the document for execution.

Ms. Early stated they will not have the actual power poles in our right of way, it is a matter of their overhead line crossing our right of way. Their power poles are either on their easements that they had previously or on their property within the FP&L substation.

Mr. Lyles stated normally to keep expenses as low as possible for the District, with WCI as an example, we have them prepare the easement document and submit it for my review and then it goes before the Board. We followed that normal procedure with FP&L but what they wanted in the document was not acceptable. That is why this particular easement has taken more time and trouble than others.

Ms. Early stated it is crossing the dike which is different because our criteria states that the line has to be 40 feet above existing ground. I wanted it noted that existing ground on either side of the dike is different than on top of the dike and I wanted it 40 feet from the top of the dike. We had them change some of their drawings as well.

On MOTION by Mr. Grossjung seconded by Mr. Lauritzen with all in favor Mr. Lyles was authorized to prepare an easement for FP&L for the overhead power lines as outlined above and the President was authorized to sign same.

SEVENTH ORDER OF BUSINESS Staff Reports

A. Attorney

There not being any, the next item followed.

B. Engineer

Mr. Moore stated next to the FP&L site is the location of the ground storage tanks and they will be finished this week with a final coat of concrete around them and we will finish the site within the next 30 days. Two wells are completed.

C. Superintendent

Ms. Archer stated I wanted to report two insurance related items. The first is related to your Public Officials and Employees Liability Insurance renewal that came up October 1. The insurer, Coregis, is no longer offering the same policy that we currently have. The expiring policy is what Coregis calls their indemnity 95 form and under this form the insured must hire and pay their own defense counsel and Coregis indemnifies the insured for these costs up to the retention and the retention currently is $2,500. That is our deductible. They are increasing that retention for this coverage to $15,000. We can either stay with the indemnity 95 form and agree to the increased retention from $2,500 to $15,000 or they offered an alternate form which they call their duty to defend 95 form. That will keep the retention at $2,500 but the premium will increase from $5,648 to $6,657. Under this form Coregis will hire and pay the defense counsel and through our experience with legal fees arising out of liability claims that we have been involved in with other Districts, we found this is a nice form to have, the form where they hire defense counsel. That keeps our attorney's fees down, they pay for it, it is not subject to the retention. The expense is in addition to the limit of liability which means that if we have $1 million liability on top of that they will also pay for legal defense. Because this policy was coming up for October 1, I told them to change to the alternate form which is the duty to defend 95 form and that we would pay the additional premium, keeping our retention down and have the duty to defend coverage and I wanted to make sure you are aware of that. I thought that was the best we could do for the District.

Mr. Bell asked were they going to lower the other premium and raise the retention?

Ms. Archer responded no. They were not going to lower the premium. The second item dealing with insurance is the rating of our current general liability carrier for our commercial package which is Reliance, has been decreased and is no longer an acceptable rating for the type of coverage we require. Marsh USA, Inc. is the company we use to advise us on what best business practices are that the District should observe on these insurance policies. They advised us that the rating fell below what the general standards are for this type of operation and that it was no longer acceptable and they started contacting other insurers on our behalf to find someone to pick up the coverage. Travelers has been out and inspected our facilities and three or four other companies have been contacted by Marsh on our behalf. There is a small number of companies who will insure government agencies and Mr. Lyles can relate to you that on another district he is associated with that we do not manage, had a problem in getting insurance.

Mr. Lauritzen asked why did they drop the rating?

Ms. Archer responded they wanted to get out of the business of insuring utilities and they are not doing what they need to do to keep the rating up anymore. Marsh advised me that they are talking to Travelers, St. Paul and Coregis, Coregis being our public officials carrier. We are waiting to get quotes back from them. Because Travelers and some of the others wanted to make site inspections they couldn't get that done before October 1, we told Marsh to extend the Reliance coverage for 30 days. We will probably bring to your next meeting, bids for the general liability insurance.

Mr. Lyles stated the Florida League of Cities Fund which insures cities, counties, and districts, non-renewed 30+ government agencies in the State of Florida last month. The District that Ms. Archer mentioned had to go out and look for coverage elsewhere and they had a terrible time because they had one claim that has not yet been resolved which will ultimately be resolved in their favor but the costs are high. They just couldn't get underwriting in companies to write the overage they were looking for. Finally they got coverage placed but it was a struggle.

Mr. Lauritzen asked can I assume that we will be paying higher premiums?

Mr. Lyles stated I think you can.

Ms. Archer stated I budgeted a little bit more for insurance in our budget this year and I hope it will be enough to cover a higher premium. A lot of cities self insure because the premiums become so high that it is in their best interest to self insure.

Mr. Lyles stated in a District like this one you don't have potential for big losses. You are not in a business that allows you to violate people's civil rights, the kinds of big exposure matters that governing entities typically have are absent in this District. Literally everything you have is going to fall within the sovereign immunity statute. The biggest claim you will have is $100,000 because that is the cap by State law. They don't always do enough of refined underwriting analysis to really know the exposure so we are stuck with what the companies quote.

Ms. Archer stated we are fortunate in that we don't have any outstanding claims.

Mr. Lauritzen asked by carrying a substandard insurance for the next 30 days will that effect our relationship with the banks and our bonds?

Ms. Archer responded it is because the rating has dropped and we have to get a rated insurance because the bonds require us to have that. We are doing everything that we can. This year the package policy was $40,000 not including auto which is another $25,000.

Mr. Grossjung asked should we consider self insurance or can we do that because of the bond issue?

Ms. Archer stated I think the bond issues allow you to self insure but the minimum requirements are just too high.

EIGHTH ORDER OF BUSINESS Supervisor's Requests and Audience Comments

Mr. Grossjung stated I wanted to know if Ms. Archer has followed up on the call I reported to her that I received from a Heron Bay homeowner.

Ms. Archer stated I have not done that but I will follow-up. I was supposed to call Rosa at WCI. The homeowner called Rosa at WCI and she said if he had a question on Heron Bay Commons to call Tom Grossjung because he is the President of the Board. I tried to get in touch with Rosa a couple of times to talk to her about it. The homeowner wanted to use the facility and it was reserved by WCI for a function and they refused him access.

Mr. Grossjung stated he wanted to know if WCI paid the costs associated with renting this facility and he wanted to know what it took to be on the Board. I couldn't answer his questions and referred the matter to Ms. Archer.

Mr. Davidson stated WCI pays the same fees as everybody else does.

Mr. Grossjung stated he wanted to know who was on the association board and when they meet and how you get elected because he wants to be on the homeowners board.

Mr. Davidson stated he will have to talk to Rosa about because she runs that.

Mr. Grossjung stated he was told that we approved the budget and that we control the expenses and and to call us if he wasn't satisfied with some of the items that were being passed and approved. I suggested to him that the homeowners really prepared the budget and decided what was going to take place and our job was to oversee it.

Mr. Davidson stated it is Rosa's job to answer all of those questions. If she couldn't answer the questions she should have referred the homeowner to Ms. Archer and not Mr. Grossjung. I will make sure this will not happen again. If we need anything we call Ms. Archer.

Mr. Bell stated I want to compliment the District for the manner in which they moved water during the storm. I know we didn't get the volume of water that Miami received but we did get a lot of water and everything was dry.

NINTH ORDER OF BUSINESS Approval of Invoices and Requisitions

On MOTION by Mr. Lauritzen seconded by Mr. Grossjung with all in favor the invoices and requisitions were approved.

On MOTION by Mr. Grossjung seconded by Mr. Lauritzen with all in favor the meeting adjourned at 5:10 p.m.

Thomas L. Grossjung William Bell

Secretary President