MINUTES OF MEETING

PORT OF THE ISLANDS

COMMUNITY IMPROVEMENT DISTRICT

The regular meeting of the Board of Supervisors of the Port of the Islands Community Improvement District was held Thursday, April 19, 2001 at 4:00 P.M. at the Egret Room, 25000 Tamiami Trail, Naples, Florida.

Present and constituting a quorum were:

Richard Gatti Chairman

Leonard Gross Supervisor

Richard Burgeson Supervisor

Ted Bissell Supervisor

Also present were:

Darrin Mossing Manager

Dan Cox Young Van Assenderp

Ron Benson Hole, Montes

Tim Stephens District Staff

various residents

FIRST ORDER OF BUSINESS Roll Call and Oath of Office for Supervisor Gross

Mr. Gatti called the meeting to order and stated that all Supervisors were present at roll call with the exception of Supervisor Wolsky.

Mr. Mossing administered the Oath of Office to Supervisor Gross.

SECOND ORDER OF BUSINESS Approval of Minutes of the March 15, 2001 Meeting

Mr. Gatti stated enclosed in your agenda package is a copy of the minutes of the February 15, 2001 meeting. Are there any corrections, additions or deletions?

There not being any,

On MOTION by Mr. Bissell, seconded by Mr. Burgeson, with all in favor, the minutes of the March 15, 2001 meeting were approved as presented.

THIRD ORDER OF BUSINESS Analysis of Replacement Cost and Life Expectancy for Water, Wastewater and Irrigation Utility

Mr. Mossing stated a few months ago we discussed the fact that the District does not have a reserve fund established for the replacement of the plant. Dr. Benson prepared a report outlining all of the improvements related to the District’s utility system. He established the annual funding requirement necessary to meet those obligations. This report is included in the agenda only for informational purposes at this point. Next month we will begin our budget process. Staff recommends that the Board consider funding a reserve fund at that time.

Mr. Gatti asked are there any questions?

Mr. Gross asked what is the additional assessment?

Mr. Mossing responded about $90 per ERC annually. The two revenue sources to the utility are the user fees and the standby fees. We could fund the reserve through consumption since there are vacant properties that are not utilizing the system and therefore would not be contributing. The other alternative would be the assessment processed but as the Board is aware, we have a collection problem on approximately 35% of the property within the District.

Mr. Gross asked are the life expectancies to date?

Mr. Mossing responded Dr. Benson would have to answer that question.

FOURTH ORDER OF BUSINESS Discussion of Notice of Chapter 11 Bankruptcy Case Filed by Olde Florida Investments, Ltd.

Mr. Cox stated we have been having discussions with Mr. Bloom of Nabors, Giblin & Nickerson. His firm represents Allstate, the bondholder.

Mr. Gatti asked should this discussion be held in a closed session?

Mr. Cox responded most of what we will be discussing will have to be in a closed session. The Sunshine Law requires that meetings be noticed, on exception is found in Section 286.011, Florida Statutes, which provides that the District can have a closed session when the District needs to discuss with its attorney litigation strategies or matter that pertain to settlement of litigation. I recommend that the Board give staff the authority to notice a public hearing that will go into a closed session hearing. We must advertise the subject matter of the meeting, who will be attending and a brief summary of what we will be discussing. The entire session must be recorded by a certified court reporter. That person will transcribe the meeting and those records are sealed until the litigation is concluded. At that time it may become a public record.

Mr. Gatti asked when should we have that closed session?

Mr. Cox responded there is only a seven-day advertising requirement. We should have it fairly quickly. A Chapter 11 proceeding is a re-organization for a debtor. It is governed by the Rules of Bankruptcy of the United States. It is an attempt by the debtor to propose a plan for reorganization, which will allow them to satisfy their debts. Within a Chapter 11 proceeding there can be an adversarial motion filed to determine various matters. Those matters can include the validity of assessment against property. I have seen a draft of the adversarial motion that has been filed in this proceeding. The District has not yet been served although it has been sent via certified mail a few days ago. Upon receipt we have 30 days to file our response to that motion. We need authorization to pursue certain strategies and draft a response to the motion. Mr. Bloom will want to attend the meeting.

On MOTION by Mr. Bissell, seconded by Mr. Burgeson, with all in favor the Board cancelled the regularly scheduled May 17, 2001 Board of Supervisors meeting and schedule a closed session with a preceding regular meeting to be held on May 15, 2001 at 1:00 p.m.

Mr. Cox stated Mr. Bloom’s firm is one of the largest bond counsels in the state. They have significant experience with this type of situation. They have offered to serve as co-counsel with my firm in representing the District as well as Allstate. Our interests appear to be very much the same. If at some time it became apparent that we no longer shared that interest Nabors, Giblin & Nickerson would be obligated to withdraw from representation. At that time the District could consider brining in other counsel or whether my resources were sufficient.

Mr. Gatti stated I am uncomfortable with that. Could there be a conflict regarding what Mr. Bloom’s direction would be?

Mr. Cox responded we have discussed that. The motion is directed to the bond assessment units and the ERC assessment units. Our interest is clearly stronger in the area of the ERC assessment units than it would be compared to the bonds. We have a very direct interest in the bond also because our responsibilities under the indenture are to do everything we can to collect our assessments in order to fund the repayment of the bonds.

Mr. Gatti asked is Nabors, Giblin & Nickerson going to be the lead on this?

Mr. Cox responded everything would have to be reviewed and approved by my office.

Mr. Mossing stated one of the benefits of working with Nabors, Giblin & Nickerson is that the District would not have out of pocket expenses. I believe they would draw from the bond funds.

Mr. Gatti stated if you can assure me that this is absolutely fair to all of the parties involved I will go along with it.

Mr. Cox stated it is in the best interest of the District. Mr. Bloom has presented a conflict letter that explains how his representation would work. I will get a copy of that letter to the Board before the closed session. Another item I would like to bring up is that the District is experiencing a shortfall in regard to the May 1, 2001 debt service payment. The bondholder has instructed the trustee to only pay the interest component of the bond and hold back some of the principal that would normally have been released to the District. They are going to fund the defense of this issue through the monies that are technically theirs to dispose of. That is the understanding that we have.

On MOTION by Mr. Bissell, seconded by Mr. Burgeson, with all in favor, the Board authorized Nabors, Giblin & Nickerson to serve as the District’s Special Bankruptcy Counsel.

FIFTH ORDER OF BUSINESS Staff Reports

A. Attorney

Mr. Cox stated under the current circumstances, it might take a little longer to get the expansion of the easement approved.

B. Engineer

There not being any, the next item followed,

C. Manager

There not being any, the next item followed,

D. Field Manager

Mr. Stephens stated we have had many complaints about high chlorine content. We are not really sure what the problem is. I have not had a chance to talk to Dr. Benson about it.

Mr. Gatti asked what is the chlorine content supposed to be?

Mr. Stephens responded the state requires a minimum of 0.2.

Mr. Gatti asked what are the results of the readings?

Mr. Stephens responded yesterday we got a reading of 0.38. We have been trying to keep the content down but that seems too low.

Mr. Gatti stated I have heard that there are readings of 3.0.

Mr. Stephens responded that is true. That is our desired chlorine level. We have been trying to reduce it to 1.0 to try and satisfy the residents. The Department of Environmental Protection stated that the number one problem throughout the state is that the chlorine levels are too low.

Mr. Gatti stated the reason is that the water tables are low because of the drought.

Mr. Stephens responded yes, there is a lot of bacteria in the water.

Mr. Mossing stated Mr. Stephens logs the daily chlorine level. I recommend that we chart that for the past 30 days and put together a short educational letter explaining the testing and procedures that he goes through to monitor the chlorine levels.

Mr. Gatti stated I do not want to second guess Mr. Stephens. He is licensed to do what he does. I would just like to correct the problem. I recommend that we authorize Dr. Benson to perform an analysis and tell us what we need to do to correct the problem.

Mr. Stephens stated I think we have the correct treatment for the water supply, it just changes frequently.

Mr. Gatti stated it is just a bad year for the water.

Dr. Benson stated the District has to maintain a minimum chlorine residual of 0.2 milligrams per liter. You also have to make sure that there isn’t any bacteria in the water. Historically the District has had plenty of chlorine in the system and has been in compliance. Here was a rule enacted by the Department of Environmental Protection that stated 4.0 milligrams per liter being the average chlorine residual.

Mr. Gatti asked what is the level maintained by the city?

Dr. Benson responded the City of Naples uses chloramines which is a different form of chlorine. The minimum limit is 0.8 and the maximum is 4.0.

Mr. Gatti asked can we switch over to chloramines?

Dr. Benson responded I would have to look into that.

Mr. Bissell asked do you get as strong an odor and taste with chloramine?

Dr. Benson responded no. Also, there was bacteria testing done on the well water and it showed no contamination. I will go out with Mr. Stephens and check the chlorine situation.

SIXTH ORDER OF BUSINESS Supervisor's Requests and Audience Comments

An audience member stated I have a few questions. Who is Olde Florida? What property are we talking about? Do we know what the impact is on the individual property owners?

Mr. Gatti responded Olde Florida is the Recreational Vehicle Park. I cannot answer your other question because I do not know what the impact is going to be.

Ms. Marchand stated I have noticed that there is air in my water.

Mr. Stephens responded we over pressurized the hydromatic tank and got air in the water. It has taken longer than normal to get it out of the system since water usage has dropped.

Ms. Marchand asked do we have funds for the fire hydrants?

Mr .Stephens responded we have replaced two fire hydrants that were not functioning properly.

Mr. Gatti stated the local fire department comes through here as part of their annual testing. Some of our hydrants did not meet the full requirements and they pointed those out to Mr. Stephens.

Mr. Bissell stated we met with Mr. Colleta regarding the defibrillator. He did not know too much about it. We discussed keeping one at the hotel.

Mr. Gatti stated we need to meet with him and make him aware of our problem. I do not know if we assume any responsibility by having a defibrillator.

An audience member asked what is the status of the grant?

Dr. Benson responded we are ready to submit the permit application. There is an application fee of $1,875.

Mr. Bissell stated Mr. Mossing stated that the budget process is coming up. What are the job descriptions of the on-site staff? What is the chain of command?

Mr. Gatti stated I think we should try and get a handle on our current problems. We can have Mr. Mossing put something together for us later on that describes what you are looking for. In order for Mr. Stephens to operate the plant, he has to be certified by the state and have certain licenses.

Mr. Bissell stated I am not looking to reprimand anyone but for example, last month there was air in the water. Is that mistake recorded and put into a file? There could be another one next month. These things add up

Mr. Gatti stated you have every right to expect a certain level of service and proficiency in the personnel that works for us but you have no right to tell Mr. Stephens or his employee what to do. What you can do is talk to the District Manager.

Mr. Bissell stated it sounds as if I am dissatisfied but I am not. There just needs to be a paper trail.

Mr. Stephens stated there is a paper trail. Everything that goes on is recorded.

Mr. Gatti asked have the water restrictions hurt us financially?

Mr. Mossing responded no.

SEVENTH ORDER OF BUSINESS Financial Statements and Approval of Check Registers

On MOTION by Mr. Burgeson, seconded by Mr. Bissell with all in favor the General Fund Check Register in the amount of $51,279.66 and the Water & Sewer Fund Check Register in the amount of $45,420.76 were approved.

EIGHTH ORDER OF BUSINESS Adjournment

On MOTION by Mr. Burgeson, seconded Mr. Bissell, with all in favor, the April 19, 2001 meeting was adjourned.

Darrin S. Mossing Richard Gatti

Assistant Secretary Chairman