MINUTES OF THE MEETING
OF THE PORT OF THE
COMMUNITY IMPROVEMENT DISTRICT
The regular meeting of the Board of Supervisors of the Port of the
Islands Community Improvement District was held
Present and constituting a quorum were:
Richard
Gatti Chairman
Bernie
Wolsky Vice
Chairman
Ted Bissell Assistant
Secretary
Also
present were:
Craig
Wrathell District
Manager
Dan
Cox Attorney
Ron
Benson Engineer
Several
Residents
FIRST
ORDER OF BUSINESS Roll
Call
Mr. Gatti
called the meeting to order and Mr. Wrathell called the roll.
SECOND ORDER OF BUSINESS Approval of the Minutes
of the
Mr. Gatti stated that each member of the Board
had received a copy of the minutes of the
Mr. Wrathell stated Mr. Bissell and
I discussed one correction on the October 17th minutes.
There appears to be a lot of
comments on Page 24 attributed to Mr. Stephens, we believe were stated by Mr.
Burgeson. We will make that correction.
On
MOTION by Mr. Bissell seconded by Mr. Wolsky with all in favor the minutes of
the
THIRD ORDER OF BUSINESS Acceptance of the Audit Report for Fiscal
Year 2002
Mr. Wrathell stated at the last meeting I gave an
overview of the audit. This audit is for
the Fiscal Year 2002 concluding on
We are required to conduct and independent financial
audit. This firm has conducted an
independent financial audit and that is presented in your agenda package under
Section 3. At the last meeting we left
off with a couple of questions, which I have relayed to the auditor.
I will review those if that is acceptable to the
Board. One of the big issues was on Page
13. In Note 3 the second sentence says
the District paid only part of the special assessment bond debt that was due
The quote provided by the trustee reads, we had written
to Ms. Cerecedo of Wachovia, who is the trustee for the Port of the Islands
Community Development District for those bonds.
Staff wrote I see that no interest or principal payments were made on
the bonds. Was this due to insufficient
funds or something else?
When there are funds in the account do we make a partial
payment of interest and/or principal?
The response from Ms. Cerecedo is the issue is in default because we do
not have enough funds to make the payment.
We now take direction from the bondholder and they will
instruct us as to when and what to pay.
They said let us know if there is any additional information. This is consistent with another
District. I have reviewed this in
another District that is in a state similar to Port of the
Mr. Cox stated I am trying to get a sense of other issues
that have come up. I happened to have
looked at the acquisition and the bond indenture.
From Section 2.10 of the bond indenture, its application
of monies has been in default. Any
monies received by the trustee to pay the agent are held and then applied first
under this situation to payment of the costs and the fees incurred by the
trustee because of the event of default.
That was the litigation commenced as a result of the failure to have
funds to pay the principal and interest.
Second to payment of interest comes; to the extent funds are available,
after that payment of principal.
Mr. Wrathell stated the second point that was brought up
is on Page 26 under the management letter.
It is under finding number 2, the third paragraph down in the second
sentence.
The auditor indicated there was no rate increases for
water and sewer fees during the last three years. That is correct. Mr. Bissell discussed the increase of the
irrigation fees. Those were increased
with the intent of paying for the irrigation reuse project. They are bifurcating those two even though
the money is coming into the enterprise fund.
They are saying the irrigation fees are directly attributable to the
irrigation project that is under way.
The District water and sewer fund has right now a
negative retained earnings of $650,000.
What means, from an accounting perspective, is when they calculate the
negative retained earnings that means the system is depreciating on the books
each year, and there must be reinvestment into the system. The system has a useful life.
Each year it is depreciated a percentage of that useful
life goes away. What has happened and
the position we are in is either the funds and/or what is being invested back
into the system is less than the depreciation of the system. That is indicative of a system that is
deteriorating in the sense that we do not have funds dedicated toward upgrading
the system to the level it needs to be.
The systems have a useful life. It can be twenty or thirty years plus, but
what we need to do is put ourselves in a position to be able to fund keeping
that system operating at the necessary level.
In our, later discussions, one of the issues we will have
to deal with is GASB34, which is a government accounting requirement that needs
to be implemented this year by local governments in the State of
We now have taken this to the
next level in tracking our infrastructure's useful life and the rate at which
it deteriorates along with what funds are available and how we plan to finance
the resurfacing of roads and the fixing or refurbishing of our plant and those
types of activities.
We need to actually develop a
plan how we are going to fund that. The
important part of this is indicative of the overall situation. We are well aware of the financial situation
of the District, that there is a deteriorating infrastructure situation. We need to be in a position to prove that we
can fund the infrastructure to bring it to the level it needs to be at in order
to operate it properly, let alone keeping the service levels in the community
up.
This is indicative of a
deteriorating situation and that is what the state of financial emergency is
indicative of. It is not just being
unable to pay off our bonds. It is also
with the delinquent assessments and the inability to get the operation and
maintenance funds necessary to fully fund our renewal and replacement funds and
other such funds.
Keep that in mind in the
context of discussion regarding this particular audit. I am pulling them both all in together, but
it is good to give more of an explanation.
Mr. Gatti asked are we
anywhere near capacity because that will be the next piece of this?
Mr. Benson responded we are at
25 percent of our capacity for the wastewater plant. The water plant is thirty-something
percent.
Mr. Gatti stated this is
before we have to do anything.
Mr. Benson stated that is with
the capacity issue.
Mr. Gatti asked are there
things we have to do for capacity reasons in addition to deterioration?
Mr. Benson stated at some
point in the future there is a potential we may need to do some additional
projects at the wastewater plant for capacity.
We are a long way from there.
Mr. Wrathell stated it would
probably be appropriate to continue this discussion if you are all agreeable to
approving the audit. We may come back to
this later in the meeting.
I talked to Mr. Benson and we
have been working on something. I know
Mr. Bissell wants to look at buying down the truck and the backhoe. I think I want to help paint a bit of a
financial picture of where we are and where we stand. I have an update as far as the excess funds
we have sitting around that I want to go into.
Mr. Gatti stated we will now
go to specific discussion on the audit.
Hearing none,
On
MOTION by Mr. Bissell seconded by Mr. Wolsky with all in favor the audit report
for Fiscal Year 2002 was accepted.
FOURTH ORDER OF
BUSINESS Ranking of
Audit Firms
Mr. Gatti stated next you have
taken proposals for the auditing for the year 2003. I have gone through those, ranked them and
passed them in. Have you had a chance to
do that yet?
Mr. Wolsky responded the form that is provided here calls
for us to rate the qualifications of the firm, the qualifications of the staff
of the firm, prior experience with government, not-for-profit organizations,
and prior District record experience.
That is something I am unable to address. I do not have the experience to do that. I thought that is why we hired staff.
Mr. Wrathell stated I have a suggestion. Mr. Gatti's rankings are very similar to
mine. I can verbally give you my
recommendations, based upon my rankings and if the Board is comfortable with
that, you can approve based upon my rankings, rather than yours.
Mr. Gatti stated I will be glad to share my thinking as I
reviewed these. I appreciate what you
are saying. The idea of a proposal is
for them to submit to you, the information that we ask for.
When Mr. Wrathell sends these out he asks for specific
things. He asks for those items
identified. Do we have an opportunity to
investigate each individual firm? There
is just no way that you can do that except to accept what they propose. It is a document they propose to share with
you their experience of staff. They
give you references and on and on. It is
through that proposal that you make this judgment with staff's recommendation,
based on any specific experience staff has had.
Can we hold off on this?
Mr. Wrathell responded since this is he first year I have
done this with you, as a manager, I wanted to be careful not to step on your
toes and giving you a presumptuous ranking.
At times there can be a perception that the manager wants to hire their
favorite firm and all that.
I am more than happy to share with you my summary of
rankings and my thoughts and then the Board can review this over the next month
or go upon my recommendations.
Mr. Wolsky stated I do not think that is necessary. If you make your recommendations, we would
like to accept those.
Mr. Wrathell stated I will state for the record, the
criteria we based our evaluation upon and then I will give my rankings. Qualifications of firm were zero to five
points. Qualifications of staff were up
to four points. Prior experience with
government not-for-profit was up to five points. Prior District experience was up to four
points. Current references are up to
three and evidence of CPE requirements is up to five.
Because I know these firms so well I ended up with a
three-way tie for first place. I had
Grau & Company. Their proposal was
for $20,000. I had Hoch, Frey &
Zugman, CPA's with their proposal at $9,800.
Hoyman, Dobson and Company had a proposal for $9,300.
For everybody's understanding we paid for our audit that
was just concluded for last year, $9,800 to our current firm, Hoch, Frey &
Zugman. They are proposing the exact
same fee as they have had in the past.
Mr. Bissell asked were they the ones who wanted to go to
$9,800 after this year?
Mr. Wrathell stated I do not remember exactly how much
they pumped it up. There is a CPI-type
increase you will find each year. I find
when the engagement letter comes across each year, often times the first year
is when the most efforts are spent in trying to become familiar with the
District in conducting the audit.
Subsequent years are typically less labor-intensive for them.
Often times if they want a CPI increase or anything we
can negotiate them down from that if the Board desires.
Mr. Gatti asked is the scope of work pretty well
defined? How tight is the scope of
work? How can one guy propose to do a
job for $3,500 and we have four people in the $9,500 range. How can we expect somebody to do something
for a third of the price and give us the same product? There is no way.
Mr. Wrathell stated most of the auditing proposals have a
caveat that says this is the fee we propose and if we have any difficulty
obtaining information or anything out of the ordinary there will be extra
charges and they will bill you additional fees.
The first I ranked as the top three, one is the $20,000
firm I based my high ranking purely on qualifications, but they are overpriced
compare to the other bidders. The other
two firms, Hoch, Frey and Hoyman, Dobson are very familiar with Community
Development Districts. I would not be
surprised at all if they have gotten copies of the audit and have looked at it
and are very familiar with the issues of this District.
I can tell you with certainty that Grau & Company is
very familiar with the issues you have here and that is why you see a $20,000
proposal. That is at least three times
what I have ever seen them give a proposal for.
Keefe, McCullough & Company also does a number of
C.D.D.'s and they seem to do a good job.
That was my number two-ranked firm.
I had two number two ranked firms.
Rachlin, Cohen & Holtz, $4,600 was their proposal. That is very cheap. I am familiar with that firm. We have done business with them on the
municipal side before. They want to get
into doing audits for Community Development Districts. They have done a few. For the price it is great, but is that $4,600
a realistic number?
The number three I picked was Rodriguez, Trouba &
Company. I don't know exactly who they
are. I am just going off of what their
proposal indicates. For Bray, Beck &
Coter, I gave them my fourth ranking and then Millwood & Company, CPA's
were my fifth ranked firm.
I would feel comfortable if you were to say in my
three-way tie for number, I would throw out Grau & Company due to
price. Hoch, Frey & Zugman, your
current auditors at $9,800 or Hoyman, Dobson at $9,300. If you want to go with what you are
comfortable with, Hoch, Frey is fine.
If you want to save $500 Hoyman, Dobson would be my
recommendation. If you are looking
purely on price, I would say the only firm that is on the cheap end that I feel
comfortable with is Rachlin, Cohen & Holtz.
Because of their desire to get in and do more District audits, they may
not really stick you on that $4,600.
Mr. Gatti asked are you ready to make a decision today?
Mr. Bissell responded yes. You may be thinking like my wife. If she pays $200 for a dress, it is a heck of
a lot better than the $50 dress. The
firms recommended number one are the ones that had the fancy covers on the
proposals.
Mr. Gatti stated this is the sort of stuff I have dealt
with all my life. I have submitted proposals
rather than receiving them, but essentially I am very familiar with what goes
into this. I looked at this and saw
$20,000. First of all there were eight
bids. Five of them are within $300 of
each other. There are five people saying
this job is about $9,000. One guy says I
want $20,000 to do it. I did not even
look any further. I just said he's
out. Then I looked at the next two. One was at $3,500 and one at $4,600.
I said I have five guys here that say the job is worth
$9,000, now all of a sudden I have two guys who say they can do it for this
kind of money. I did not even look at
those. That saved me from looking at
three of the proposals.
Then I looked at the critical mass that said the job was
worth about $9,500 and that is the credentials that I looked at. Whether we save $300 or $500, that doesn't
make any difference in the overall scheme of things, so I just zeroed in on
those five firms that were about $9,500.
I then looked at the firm that is now doing our work.
What is the advantage there? They are totally familiar with our
system. They are totally familiar with
what we do and the staff they have to work with. They have that much of an edge that the other
firms have to get to. They are that much
ahead of everybody else before they even start work.
Just looking at this, in addition to their staff and
their credentials, they are way ahead of everybody else. They are ten steps out of the block before
they even start. That is where I am
coming from. Everything being equal we would
get the best bang for our dollar with people who would hit the ground
running. That was my thinking.
Mr. Bissell stated as a school administrator for many
years, having been on the City Council and Mayor, hiring many auditing firms,
there is not much difference. They all
do the job. The State requires certain
things and they meet those things. I do
not know if price has much to do with it.
That is a good point about Hoch, Frey & Zugman
already knowing, but is that really a good thing if they know the ins and outs,
what they can do and what they do not need to do to get by. I do not know.
Mr. Wolsky stated picking auditing firms in the wake of
the Arthur Anderson case is sort of difficult.
Here is one of the top ranked in the Country and it turns out they are
corrupt. Does price have anything to do
with that? I doubt it. I think the devil that you know is better
than the devil you do not know. I would
also nominate we continue with Hoch, Frey & Zugman.
Mr. Gatti asked can I second that?
Mr. Wrathell responded Mr. Bissell has a motion on the
floor.
Mr. Bissell asked has that died for lack of a second?
Mr. Gatti responded it died for lack of second.
On
MOTION by Mr. Wolsky seconded by Mr. Gatti with two voting Aye and Mr. Bissell
Nay the firm of Hoch, Frey & Zugman was ranked number one and chosen as
District auditor.
FIFTH ORDER OF BUSINESS Acceptance
of Resolution 2004-01 Amending the Debt Service Fund Budget for Fiscal Year
2003
Mr. Wrathell stated we are getting ready for the next
audit session, making adjustments for the fiscal year that just concluded on
September 30, 2003. This was for the
year that ran from October 1, 2002 through September 30, 2003.
On the backside of Resolution 2004-01 there are some
adjustments made. On the revenue side
there is some interest income that was not previously budgeted. This was in the debt service fund. We added $3,564 and some prepayments that
were made of $32,952.
What we are recommending is on the opposite side of the
resolution. Carry forward surplus, we
budgeted for $398,325 and are actually going to reduce that number $85,443 so
there is an overall reduction on the revenue side. We have a principal expense that we budgeted
at $380,000.
We are recommending reducing that to $285,000. To familiarize the Board and the public, you
have an amortization schedule on your bonds, which you try to meet on an annual
basis. Since we are in a state of
financial emergency we have not been meeting those debt service requirements,
but you do have your annual interest and principal payments. Reality is different than what we have tried
to do to meet that amortization schedule, so we have to make these reductions
from what we budgeted.
Then you have other debt service costs. We have budgeted $15,000. There has been an increase of $298,873, which
brings us to $313,873. A large portion
of that is attributable to legal expenses.
Mr. Bissell stated on this carry forward is that the
$85,000 as recommended by the auditor?
If I recall correctly the debt service fund was
underfunded. That actually would show
more cash coming in that would actually be going out. It would not be a negative. It would be more positive. The water and sewer fund and the general fund
owed the debt service fund money.
On
MOTION by Mr. Bissell seconded by Mr. Wolsky with all in favor Resolution
2004-01 was adopted.
SIXTH ORDER OF BUSINESS Staff
Reports
A. Attorney
- Swale Maintenance Responsibility
Mr. Gatti stated one of the assignments Mr. Cox had from
the special meeting was the swale maintenance responsibility. Before we get to that, should we be updated
on what happened in Court the other day?
Mr. Cox responded nothing has really happened. You do need to make some decisions and we
need some updates. We have a lot to talk
about, so that would be the best place to start. As you know, we negotiated for a proposal
with the debtor in the bankruptcy proceedings.
The balance of the lands out there with portions of it
would be sold to Collier County for a contribution of cash from the tax
collector. There is other funding that
will come into play with the goal of reaching approximately $2 million in
funding. It is about $1,950,000. This would allow the bondholder to be paid
off the same proportion as the tax certificate holders.
The District would receive some cash and the available
ERCs that were attributed to the property that the tax collector is going to
require, with the expectation that at some time in the future we may be able to
sell those ERCs to recoup some of the assets we would have received if it were
fully funded to pay us the same proportion in cash.
Mr. Gatti stated this is one of my critical
concerns. Mr. Benson, do you have a map
of the entire Port of the Islands?
Mr. Benson stated there is one in the office.
Mr. Gatti stated first, I want to be sure everybody
understands what properties we are talking about. Let me repeat what he said and make sure I
understand it. We are going to assume
the ERCs attributable to that property which will go over to the County.
Mr. Wolsky asked how many ERCs is that?
Mr. Benson responded there are 143 ERCs and 146
maintenance units.
Mr. Gatti stated my main concern is if the County takes
over that property we lose control of what happens there. The County may want to do something that is
not in our best interest. I am not
talking about a park or something like that.
Maybe they want to put low-income housing back there. That would be of major concern, but if we
control the ERCs then we, in a sense, control what is going to happen to that
property. None of those ERCs are
divorced from that property.
Mr. Cox responded right, they would be divorced from that
property.
Mr. Gatti stated so we would not be in control of that
property, except that we are in control of the water.
Mr. Cox stated the County does not want any capacity
allocations or any assessment responsibility.
They are saying we are not going to use this property for
development. It is going to stay in this
state to an extent. In exchange for that
we do not want assessments.
Mr. Gatti stated in a round about way you are answering
my question. My main concern is if the
County takes over that property what is it going to be used for? That is my main concern.
Mr. Cox stated my understanding if it is used for
anything at all is that it is going to be used for access to the canal for
recreational purposes.
Mr. Gatti stated I am just giving you my personal
opinion. That does not bother me. What would bother me is some sort of usage of
that land that would not be in the best interest of the rest of the Port.
Mr. Wrathell asked hypothetically, I understand if we say
the land is there and the ERCs are separated from that land and the District
now has the ERCs and that land is no longer allocated those ERCs. That would protect us from not being
developed in some way like affordable housing.
If someone wanted to do an affordable housing
development, would they legally be allowed to apply for their own package
treatment plant to support that project?
Mr. Cox responded no.
Mr. Gatti stated I believe we control the water
allocation.
Mr. Cox stated this is not a common thing. This is kind of unique. We have a few Districts that have our own
utilities that we represent. The
Community Development District does not have any land use. You cannot deny capacity based on potential
land use of the property. You can deny
capacity because we do not have capacity.
It looks like you are trying to exercise land use
authority by control of these ERCs and that is not permitted.
Mr. Gatti stated I want the Port of the Islands Community
to have control what happens to that land.
If we agree to give that land over to the County and they put up $1
million in round numbers maybe it is worth that to us and maybe it is not. If they are talking about some of the
development that I see happening on the east trail, I would hate to see that in
this area.
Ms. Marchand stated we are involved in this. My perception and understanding in talking
about property that is abutting my property, so legally I would like to have a
say in what will happen to it.
Because of the fact that you would have the ERCs and they
do not have truly any development rights, has in my assurance that the property
will remain pristine as is.
Mr. Gatti stated that is where I was coming from. If we control the water and get the ERCs, we
are set, but I think Mr. Cox is saying we do not have that.
Mr. Cox stated Ms. Marchand is saying the same thing I
am. The intention of the County in separating
the ERCs from the property is to make that property undevelopable. We can propose a couple of things. The County may acquire this property. We could propose they deed it to the District
for the District to use as open space with a caveat. These are things we would have to propose.
The whole purpose of this is to flush out what issues are
involved and how we might address it.
Mr. Gatti asked why is the County interested in paying
this $1 million approximately for land they cannot develop?
Mr. Cox responded it is not exactly a land
acquisition-driven motive. The tax
collector is concerned that the negative impact of the tax certificate is not
receiving at least their principal back and the impact they may have on some of
these institutional investors purchase large dollar value tax certificates in
the future in Collier County.
Mr. Gatti stated that is a motive I can understand.
Mr. Cox stated it is not just for the land. The land has a determinable value and there
is an obligation to repay everything in excess of that determined value that
the County is acquiring. It is not all
just a straight land transaction deal.
Mr. Wrathell stated this is probably not a direct
concern, however, the County has a comprehensive plan where they are required
to provide "X" amount of recreational green space, et cetera.
Purchases of properties kind of fit under the broader
umbrella with the Department of Community Affairs in Florida so you are in
compliance with your comprehensive plan.
Acquisitions of certain properties like this are things they look at if
they use of for those purposes.
Affordable housing would also be one of the criteria they would also try
to keep to.
Mr. Gatti stated I understand that, but am talking to a
man who has worked for the City for a long time.
A resident asked if this land is given back to the C.I.D.
and all the obligations to the C.I.D. as to usage are met, is the C.I.D. then
responsible for real estate taxes in the future on that piece of land?
Mr. Cox responded we are a government entity. If we hold property for a public purpose that
property is not subject to taxes.
Mr. Gatti asked would you show us what specific
properties we are talking about?
Mr. Cox responded 11C is the RV Park and the gun
club. If you think about how the gun
club is oriented and where the shooting comes from, the County originally
wanted all of this access up here, but at the 11th hour, as we were getting our
permits for the water discharge into the wetlands' DEP, some day somebody is going
to look out there and think about all that lead on that land.
There are some rumblings within the DEP that they may be
doing that now. We have not heard
anything official yet. We do not want
that. They are looking at everything
where the shot does fall down to the North Hotel which coincidentally that is
zoned residential tourist, which would allow for sixteen units per acre in its
current zoning designation.
We have land that could be developed at somewhere in the
neighborhood of 380 multi-family units if we had the capacity in our system to
support it. It has zoning capacity for
380 units. It also has the uplands and
the more valuable portion of that property.
Roughly everything from here to here is what the County would be
acquiring from the tax collector.
Mr. Gatti asked what about that Section 12A?
Mr. Cox responded 12A is our wetland discharge area and
that would not be acquired by the County.
Mr. Gatti asked who owns that now, the District?
Mr. Cox responded no, we have not used it.
Mr. Gatti asked who owns it then?
Mr. Cox responded it is owned by the Florida Investments.
Mr. Ganz stated it is the land trust.
Mr. Cox stated the disposition of that portion of
property has not quite been worked out.
The gun club is currently operating and it cannot ever be
developed. As far as whether there is
going to be a long-term lease or a sale of the gun club, that has not been
determined.
Mr. Gatti asked who owns the fee simple?
Mr. Cox responded Old Florida Investments, Limited
Partnership.
Mr. Benson stated that is 100% jurisdictional wetlands.
Mr. Gatti stated nobody can touch it one-way or the
other.
Mr. Cox stated nothing can happen. North of about halfway through our sewer
treatment plant, nothing can ever really happen there. You have zoning density for maybe five
single-family units there.
Mr. Gatti asked how about liability and responsibility
for the land?
Mr. Cox responded we have an easement for discharging
effluent from our sewage treatment on there.
As long as it cannot be shown that the lead came from our effluent, we
have no liability. We do not want
ownership of the property either.
Mr. Gatti stated we would not be relieved the cost of
remediation for something like that.
Mr. Cox stated that is the other point. You have one side of the DEP that says we
have to get the lead out and the other side says you have a functional wetland
there. Are you going to tell me you are
going to dredge the top two feet of this and destroy it? I do not know.
Mr. Gatti stated this accentuates my concern between the
south end of it, the gun club, and the back of the hotel.
Mr. Bissell asked there is no access to the canal, is
there?
Mr. Cox responded no.
The original proposal included there would be an easement across the RV
parklands and right in here, but I do not know that we are talking about that.
Mr. Gatti stated I will ask a question and suggest
direction from the Board. Am I the only
one concerned about what happens to that land with reference to the County or
are we all on the same page?
Mr. Bissell responded I think we are all on the same
page.
Mr. Wolsky stated everybody is concerned about what
happens regarding the Community.
Mr. Cox asked would it be out of line to propose to the
County that the County accept that property with a permanent covenant against
it, restricting development to recreational passive usage only.
Mr. Gatti asked how does the community feel about that?
A resident stated I would be perfectly agreeable with
that.
Mr. Gatti stated the last thing we would like to see is
some low income housing or something of that nature go in there that would be
contrary to what we are all about.
A resident asked approximately how many acres are we
looking at here?
Mr. Cox responded about 26 to 33.
Mr. Bissell asked do you know how many acres are
contaminated with lead.
Mr. Cox responded roughly the shot pattern shows an
estimate of in the neighborhood of about 65 acres. This whole parcel is probably about 45
acres.
Mr. Bissell stated the lead cannot be contaminating from
that point all the way up to the east/west canal.
Mr. Cox stated the shot pattern goes like this and you
have a rifle range that runs down this lane.
Mr. Gatti stated we need to focus.
Mr. Bissell asked that northeast quadrant that is really
old growth trees and definite wetland, is that contaminated?
Mr. Gatti asked is that where we are? You were suggesting something.
Mr. Cox stated we propose the County accept the property
with the covenant imposed that it would only be used for passive recreational
purposes. Maybe there could be some
picnic tables and bathrooms for people using the boat launch.
Mr. Gatti stated that is one option.
Mr. Bissell stated the County would maintain that and
clean up the trash.
Mr. Wolsky asked how about the roads leading in there.
Mr. Bissell stated right; they would have to take care of
those.
Mr. Cox stated that is one of the other points. If they are not subject to assessment and
charges for ERCs and so forth, they would not be paying road maintenance, but
there would be public use of that road to access the grounds.
In at least one conversation I had with the tax
collector's attorney we touched on the idea that we would enter into some sort
of agreement with the County that they would do some of the maintenance to the
road with their crews or somehow cost share that with us. That would not be through the levy of special
assessments.
Mr. Gatti asked how does the Board feel about this? Are we going in the right direction here?
Mr. Wolsky stated the County changes its mind about what
it is going to do or not going to do. On
the next issue, the County came out here and shot everybody's swale. Then they stopped doing that. If you ask them why, they say it was a
decision.
What is to prevent them from saying in the future, we are
not going to share the cost of those roads.
Mr. Bissell asked do I understand correctly that each of
the three units would receive approximately $400,000?
Mr. Cox responded no.
Mr. Bissell asked would two of them get $400,000? I was reading this and $900,000, plus $1
million would go to the bondholder.
Mr. Cox stated the $906,000 would go to the tax
certificate holders. You then have about
$1,040,000 that is left. $875,000 of
that goes to the bondholder. You have
about $110,000 to Collier County and $685,000, which would leave something in
the neighborhood of $50,000 for the District plus the ERCs.
Mr. Bissell stated that is not what I remember.
Mr. Cox stated it has changed slightly. If the plan were fully funded to where we all
got everything and we said the ERCs are worth zero, then it would have required
about $400,000 for the District. That
cannot happen. The money is not there
for the $400,000. We can say the ERCs
have that equivalent value and we are willing to accept that if conditions A, B
and C are met.
If the land has restrictive
covenants that it cannot be used for development or whatever, there is a
sharing of cost for road maintenance to be determined by vehicle counts or use
of the road. If the County will not even
put a park on it, maybe we would prefer something else. The tax collector is putting up money, but
the tax collector does not own the property.
The tax collector is either buying it on behalf of the County or on
behalf of the C.I.D.
We would ultimately end up
with ownership, then it can be a public park that we define the use of.
Mr. Gatti asked what is the
negative of our ending up with ownership to that?
Mr. Bissell responded there is
nothing negative, in my opinion, if we own it.
If the County purchased it and gave it to us, turn it over to us, but if
they are keeping it, they will be left holding the bag again.
Mr. Wrathell asked did they
say where the funds were going to come from for this? Was there a grant program they were using to
fund it?
Mr. Cox responded it is tax
collector's deeds.
Mr. Bissell stated there is a
lot of money they need to get rid of according to the paper.
Mr. Gatti asked this is very
complicated. I agree with Mr.
Bissell. I would like to see us own it
so we can determine what our future is going to be. The more control we can exert on this, not
necessarily to do something specifically, but by owning it, it seems to me we
would have better control of what happens here.
Is that a probability that we could end up with the ownership?
Mr. Cox responded I have not
bridged that subject with them.
Mr. Gatti asked is the Board's
direction then to negotiate for this piece of property? One scenario is that we proceed on this
basis, but it can be only used for certain purposes. What is the right word?
Mr. Cox responded passive
recreational purposes.
Mr. Gatti asked what is the
probability of that?
Mr. Cox responded probability
is high for that.
Mr. Gatti stated I guess if we
had our druthers, the next level would be could we somehow get ownership of
this? Is that in the cards?
Mr. Cox responded I have no
way of judging the probability of that.
Mr. Gatti stated regarding the
roadways, that is a two-edged sword. If
the roadways are developed, then there will be heavier usage there as opposed
to an undeveloped system. We have to ask
ourselves what we want to do. That
roadway thing is a two-edged sword. The
more we expect them to do the more they are going to be involved. That is why I am not pushing for them to
maintain the roads.
Mr. Cox stated we will be
talking a little bit about maintenance or probably a lot as soon as we get
through all of this.
Mr. Gatti state the roads are
a very closed scenario. They do not know
who owns it and who does not. In the
meantime, nothing happens.
Mr. Bissell asked can it be in
the negotiations that if the County puts in the $900,000 plus and after they
acquire that property they could turn it over to the C.I.D., then there is some
developable land there.
If at some time in the future
we could sell that to a developer or individual and when they then construct
housing, they take care of the road.
That is their responsibility. We
would be better off, otherwise we are getting 146 ERCs and what is that worth
to us?
Right now it is worthless
until somebody wants to construct something and we sell it to them.
Mr. Gatti stated that depends
if the ERCs are moved over to this side of the highway.
Mr. Bissell asked what are
they going to pay us for it?
Mr. Gatti responded that is a
good question.
Mr. Bissell stated we could
get $1,000 a piece or $500.
Mr. Gatti stated it would
probably be more on this side of the highway than on the other side.
Mr. Benson stated it would
have to be a lot more than $1,000.
Mr. Bissell stated right, if
they are willing to pay it. Right now we
do not know what those 146 ERCs are worth.
Mr. Cox stated also to stay on
track, I thought about the issue of what these ERCs are worth. Mr. Benson and I ran some numbers a
year-and-a-half ago playing around with what would be a probable development of
the Northport property; where they have PUD zoning for 250 units and only
enough ERCs for about 135.
Based on what we were told
they had in mind for those units, we came up with a Collier County impact fee
calculation of about $1,800.
Mr. Gatti asked is that per
ERC?
Mr. Cox responded right, and
that is per multi-family unit, so roughly $2,000 per ERC. Collier County charges you a water/sewer
hookup. We would adopt a rule after
proper procedures under the Florida Administrative Procedures Act, setting our
rates for water and sewer hookups for these available ERCs.
Some day it will happen I feel
strongly, for the further development of this parcel here, the South Hotel
parcel. From what I understood from one
of the engineers who has been involved in the preliminary planning is that it
is speculative at present as to when they would do it. You have no idea.
It may be for a long time that
we do not realize anything on this. I
have also spoken with Mr. Oliff and they are coming in with a proposal to stop
the foreclosure proceedings and develop the Northport property. It will not be the 250 units. It will be 235.
Mr. Gatti stated the value is
potentially in the future, but even more important than the value, whatever
that is, it is the control of them. That
is what I think is important, that through that mechanism, we sort of control
what happens on that property. We do not
have land use control.
Mr. Cox stated that is
essentially where we are.
Mr. Gatti stated to summarize
I am looking for everybody's agreement that we are agreeing with the County to
go with the condition that the land be controlled in terms of usage as passive
recreation. Does anyone have any problem
with that? Are we going in the right
direction here?
Hering no comment,
Mr. Gatti stated preferable to
that, would be to somehow get it dedicated for public use. We do not actually get title to that do we?
Mr. Cox responded yes.
Mr. Gatti stated we
could? Okay, that is good too. Is that your thinking?
Mr. Bissell responded yes.
Mr. Gatti stated then that
would be our preference. The next level
down is we certainly limit what that property is used for. Can we do that?
Mr. Cox stated through a
transaction we can have the County accept title to that property, subject to
our restrictive covenants and not allow the use other than for passive
recreation. I think the County would go
for that in a heartbeat.
They really do not have any
intent for this property to be developed.
Mr. Gatti stated that is
today. What happens tomorrow, God only
knows, so we want to set that in writing.
Mr. Bissell stated we want
title and the ERCs.
Mr. Gatti asked Mr. Benson, do
you see any holes in this.
A resident asked are we
currently talking about the property along the motor homes and RV's there?
Mr. Gatti responded I will
show you on the map. That is some of it,
but not all of it.
I will open this up to the
public know. Go ahead.
A resident asked when that was
settled and the County buys that property and kicks the ERCs back to the C.I.D.
are they paying off any past debt owed to the C.I.D. on that property or would
we still have the back standby fees outstanding?
Mr. Cox responded they would
not be outstanding. They would be wiped
out.
A resident asked is the C.I.D.
still responsible?
Mr. Wolsky responded we are
taking the hit for that.
Mr. Cox stated in order to
really evaluate this, let me finish going through the whole scenario. We just amended our debt service budget. If you look at that number that falls under
other expenses related to the bond it is about $298,000. That was just this fiscal year. This has been going on for a little over two
years, for about sixteen months. We have
about $450,000 legal fees incurred.
We had expert witnesses and
all kinds of exhibits to prepare. That
was an expensive proposition. Allstate
feels they have the right to ask the District to levy assessments to repay
those legal fees. I told them it does
not matter what you think; the Judge will have to tell us that.
Allstate has also said that if
we agree to this proposal and just take the ERCs and let this thing go they
will not pursue the legal fees. Whether
or not they are titled to the legal fees and whether they are entitled to all
of the legal fees, you have arguments that even if you are entitled to legal
fees, you are only entitled to reasonable legal fees. We did not have to have seven lawyers at the
table. You only had to have me.
I do not know how much it will
cost me to fight that fight.
Mr. Bissell asked how much are
the expert legal fees?
Mr. Cox responded it is
roughly $425,000.
Mr. Bissell stated we would
have been just as well off if we have never fought this thing to start.
Mr. Cox stated not quite.
Mr. Bissell stated it depends
on how you look at it.
Mr. Gatti asked what other
direction do you need?
Mr. Cox stated we were better
off fighting it and I will explain that to you later. Basically, that is what you get out of Plan
A. For Plan B we want our proportionate
share in cash, then this proposed plan falls apart. The tax collector will not fund the $906,000
because he is adamant that goes directly to the tax certificate holders.
To get everybody else up
proportionately dollar for dollar would require about $475,000 more than is available
from the plan. We would get our
$475,000. Allstate may come after us for
their legal fees. That is not going to
happen. Then what happens? You have the option that the plan that was
proposed originally, that would have paid everything off on the B parcel and
the entire conservation parcel is a foreclosure.
We would probably not come out
as well on that. I could run some
numbers for you. We would come out okay,
but not as well because Allstate may try and come after their legal fees and we
would under foreclosure either lose complete control of all of the property
except for subject to our easement for discharge or we own that property and we
have a liability for the land clean up.
We can go with the plan, get
our ERCs and walk away or we have more legal fees to get through and
potentially receive ambiguous results at best.
We have no idea what we are going to be basing that on.
A resident asked was there any
contract between the C.I.D., your office and Allstate's attorney that protects
their own interests?
Mr. Cox responded it is in the
bond indenture. Yes, there is a
contract.
A resident asked how can they
come back to the C.I.D. for fees?
Mr. Cox responded what you
have is a default. I do not know the
specific provision of the indenture that they are saying gives rise to their
right to legal fees at this time.
Mr. Gatti stated let us focus
on the decision that you need from us.
The second phase again, so I can understand, that would say that we
somehow assume all the assets that are thrown in a pot and then we divvy up
what is left. Is that what is the second
part of it?
Mr. Cox responded typically
what happens is all of it goes in the pot, everybody splits it, so we would get
equal percentages of what is owed to us.
Because of the caveat that the tax collectors could come up with
$906,000 that is strictly to pay the principal and Allstate does not get any of
that. The District does not get any of
that, only the tax certificate holders.
We have to bring either more money in or realize that these ERCs are the
equivalent of the cash due to us.
A resident asked I am not
pleading anybody's case here, but my understanding of why the tax collector is
saying that the $906,000 has to go the certificate holders is protecting
legally as Mr. Cox said earlier of the tax certificate process, which is a fact
of life in Florida.
That tax certificate money,
they are only receiving the principal and no interest. When a tax certificate is issued that money
comes back to the District and to the bondholder. That is money the District has already
received. We should not lose sight of
that. The certificate holders are taking
a good hit because they are not getting any of their interest. I can see where the tax collector is going
with that.
Also part of this payoff is
full payoff of future bond debt. In
other words, the bond debt will be totally extinguished on that parcel. Your ERCs and your maintenance are totally
debt free. Mr. Cox described that as the
debt is extinguished. From their
viewpoint I can see that because you are not getting dollars up front, but the
debt will be gone of $143,000 and $146,000.
Ms. Ganz stated that amount is
outstanding aside from the payoff of the bonds.
Mr. Wolsky stated you took
this out of order. The first thing we were
going to discuss was the swale maintenance responsibilities. I think they fit in context here because if
we are going to get ERCs the value of these ERCs will, to a large extent, be
evaluated on the willingness of the C.I.D. to maintain the swales and the
runoff of the water from the roads.
Mr. Cox stated Mr. Wrathell
alluded to that earlier when talking about the negative point of balance that
we have in our water/sewer plant. That
goes to the question of what the ERCs are worth. If we have a system that is functioning and
in good condition, they are definitely worth more than if you have a system
that is falling apart.
Mr. Wolsky stated a lot
depends on whether the C.I.D. Board is going to maintain the swales.
Mr. Cox responded it is more
than just the swales. It is the roads,
the water plant, the sewer plant and the signs.
Mr. Cox stated we want to add a couple more points. What we are dealing with initially, is until you get somebody in he