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 held Friday, May 17, 2002 at 10:00 A.M. at Egret Room, 25000 Tamiami Trail, Naples, Florida.

Present and constituting a quorum were:

Richard Gatti Supervisor

Bernard Wolsky Supervisor

John Robinson Supervisor

Ted Bissell Supervisor

Also present was:

Darrin S. Mossing Assistant Manager

Daniel Cox Attorney

Ron Benson Engineer

Tim Stephens Field Manager

FIRST ORDER OF BUSINESS Roll Call

Mr. Gatti called the meeting to order. Mr. Mossing stated that all Supervisors were present at roll call, except Mr. Burgeson.

SECOND ORDER OF BUSINESS Approval of the Minutes of the April 19, 2002 Meeting

Mr. Gatti stated that a copy of the minutes of the April 19, 2002 meeting are enclosed in the agenda package and requested any additions, corrections, comments, or deletions.

ON MOTION by Mr. Wolsky, seconded by Mr. Bissell with all in favor, the minutes of the April 19, 2002 meeting were approved.

THIRD ORDER OF BUSINESS Distribution of Proposed Budget for Fiscal Year 2003 and Consideration of Resolution 2002-1 Approving Budget and Setting a Public Hearing

Mr. Mossing stated this is the beginning of our budget process. As a refresher for the board of supervisors, our budget process is a process of not less than 60 days. What we do is hand out the preliminary budget at this meeting and asks the board to adopt a resolution approving the preliminary budget as opposed to adopting it. We will adopt this at a public hearing in July, as stated on the resolution. What we would ask the board to do is just take the next 30 days to review this document and we would place this for discussion on your June agenda, make any changes to that document at that point that the board deemed necessary, if any, and issue a revised budget for consideration at your public hearing in July.

Mr. Gatti asked are there any issues we should know about specifically?

Mr. Mossing responded it is in a similar format to what you have seen in the past.

Mr. Gatti asked how are we doing on revenues?

Mr. Mossing responded I did incorporate into the general fund something that we have not seen in the past, which is a bad debt dollar figure. In our general operating fund, we have had some excess revenues that we have been able to carry forward from year to year and what we have actually utilized those funds for is to help supplement the water and sewer fund in their shortfalls in their operating revenues. However, collections are not anticipated to be as good as they have been in the past so we have been dwindling down those excess funds in the general fund to the level now where I think we need to start to incorporate the bad debt. So, in the general fund that is a new item to consider and, hopefully, we can eliminate that and things will change in the next 60 days and the board will need to consider that.

Mr. Gatti stated with the continuous growth out here, I would have anticipated our water and sewer revenue to increase. Has it?

Mr. Mossing responded no. A large part of the water and sewer revenues are the standby fees that are assessed on all the properties. But again, those collections are down along with our maintenance assessments in the general fund. Our water and sewer revenues are slightly below what we budgeted in terms of what people are actually using at their meter. Those are a little bit below budget. I am not sure exactly why there is a little bit of a decrease in flows. We should talk to the hotel in terms of what they foresee in the future in terms of flows and how those flows are in comparison to their prior years. But the revenues are slightly down. Tim, have you seen that in the plant and the flows?

Mr. Stephens responded no, not really. Actually our water flow has probably increased in the last couple of months. Probably a lot of it is just from watering.

Mr. Robinson stated the hotel had a few activities that raised a little bit also.

Mr. Gatti stated the only reason I ask, even though it is apples and oranges, the city revenues are way down this year in a whole series of categories that we do not have. But the fact remains that revenues are way down and it is hard to explain.

Mr. Mossing stated our revenues are down a little bit, but we have reserves in both of those funds. Not that it is good, but I think it is a reality for this district. We are paying our operating expenditures; we are just not funding our reserves to the levels, which are recommended. For example, by the engineer for the water and sewer.

Mr. Wolsky asked has the city attributed this decline to anything specific? I am thinking specifically of the I.N.S. and their plans to re-evaluate or tighten up on the immigration business. A lot of people, for example, from Germany will come over here and stay for six months without any problem and then go back. My understanding is that it is not going to be allowed now and this has caused some concern to the Germans specifically and led them not to invest in buying houses over here, etc. etc. etc.

Mr. Gatti stated I cannot tell you the amount and quantify the amount, but that is a significant impact because both tourism and those dollars coming in from Europe are drastically reduced. I did not realize what the impact was or what caused it, but that could be it. I have heard a number of developers say that the German market has practically disappeared. Is there anything else that we should be looking at?

Mr. Mossing responded no I think that is it specifically on the budget, but I would like to add one thing to that. The board approved the contract to install the irrigation system. I believe the board knows that contract was for approximately $180,000. We have funds available of approximately $75,000 in our construction fund; with the matching grant, it is $150,000. We are short some $30,000 on that contract. I think that there should be another item under the agenda to consider increasing our irrigation rates to fund that deficit over the next year to two years.

Mr. Gatti asked $30,000 couldn’t be much of an increase though, can it?

Mr. Mossing responded in looking at the flows on the irrigation system, percentage-wise it is significant but dollar-wise it is not. The current rate for irrigation is 52 cents per thousand gallons, which I think, Ron would tell you, is probably very reasonable.

Mr. Gatti asked what is the water -- $2.30, $2.40? Just an approximate amount, just a rough number. About 2.40?

Mr. Mossing responded the sewer is $4.77 and the water is $2.33.

Mr. Gatti asked per thousand?

Mr. Mossing responded per thousand. And the irrigation is 52 cents. In looking at quick estimates of the flows on the irrigation, a 48-cent increase per thousand gallons would generate about $2,000 excess revenue per month.

Mr. Gatti asked can you tell us what the average household’s increase would be? Just generally.

Mr. Mossing responded no. I just have total flows on my chart. I can get that information.

A. Resident stated that means it is going to double.

Mr. Gatti stated the question is are we paying $5.00 a month in irrigation or are we paying $50.00 a month. What is going to double?

A Resident stated mine runs about $20.00.

Mr. Mossing asked for your total bill or for your irrigation?

A Resident responded for my irrigation.

Mr. Mossing stated that seems high at 52 cents per thousand gallons. That would be 44,000 gallons of irrigation.

Mr. Stephens stated a lot of the homeowners are using 40,000 gallons.

Mr. Benson asked is that per month or every two months?

Mr. Mossing responded that is monthly. We bill monthly.

Mr. Gatti asked what is the board’s pleasure?

Mr. Mossing stated the action that I would look for is authorization to notice a public hearing. We have to increase our rates by public hearing. You have not taken any action other than to consider it at a future date.

Mr. Benson stated that last time we had a rate increase, I provided Darrin with some information on some other utilities in the area, like Collier County’s rates, and what a typical customer here pays versus Collier County. Currently, the way I recall, in the Port of the Islands you pay less than a typical Collier County customer for water and sewer. The county just had a significant rate increase, so I am going to guess that you will be in the same ballpark. I will bring similar calculations for Mr. Mossing and pass it out at the next meeting.

Mr. Bissell asked when you pay for irrigation, you do not pay for sewer though. Right?

Mr. Benson responded no. That is a separate meter.

Mr. Gatti asked $7.10 per thousand for sewer and water? Let me step back because what I have in my mind is $2.50 per thousand, but that is water. This is sewer and water. So, the $2.33 is a little low. You are right.

Mr. Cox stated I have Collier County. Mine went up from $12.00 minimum a month to $30.00.

Mr. Mossing stated so we will advertise. If I can meet the advertising deadline for June, we will have a public hearing in the June meeting. If not, we will schedule it for the July meeting.

Mr. Gatti asked when are we going to actually start working on the details of the budget? The next meeting?

Mr. Mossing responded yes. We will have it for discussion. And if you have any questions, feel free to contact me or Tim.

Mr. Gatti stated at the next meeting, things are going to be pretty thin around here.

Mr. Bissell stated I will be here for the next one. That will be the most important one, the next one in June?

Mr. Mossing responded no. That will be just a discussion. Any changes, any amendments will be considered at the June meeting. We can still make changes at the public hearing.

ON MOTION by Mr. Bissell, seconded by Mr. Wolsky, with all in favor, the board approved Resolution 2002-1 approving the budget and setting a public hearing for July 19, 2002.

FOURTH ORDER OF BUSINESS Staff Reports

A. Attorney

Mr. Cox stated I have no report.

Mr. Gatti stated just out of curiosity, what happened at the last meeting up at the courthouse? For those that were not there, very briefly – two sentences.

Mr. Cox responded the judge said that we are going to have a hearing on July 25 at 3 o’clock and we are going to argue all motions that are outstanding at that time, which would include any motions that we are going to file for summary judgment. Nobody has filed any motions yet. We are going to have a conference call this afternoon with all the attorneys for both sides to talk about when we are going to take depositions and when they want to come and look through our files and when we can look through their files and get the stuff that we want out of them. So, in the next three weeks we will be pretty busy getting all of our fact information together and then filing the motion for summary judgment. Hopefully, by the end of June we will have those filed to give the other side time to file their response and then we file a response to their motion. The session of July 25 should be very interesting and may resolve a lot of the issues at that point. It could be that the whole thing will go away.

Mr. Gatti stated again out of curiosity, but is somebody going to look at Sam’s total revenues?

Mr. Cox responded yes. We will look at the business reports and activities and all of the information. We will know everything that there is to know.

Mr. Wolsky asked the last court hearing up in Fort Myers was called a case management meeting. Correct?

Mr. Cox responded right.

Mr. Wolsky asked what is the next one going to be called?

Mr. Cox responded it is probably just going to be called the same thing.

B. Engineer

Mr. Benson stated just very briefly, the contractor is getting ready to start construction of the extension of the irrigation line from just east of the entrance on the north side and up toward the wastewater plant. At this point, we are still talking with D.E.P. about finalizing the permit but D.E.P. has told us that we can build it as an extension of the fire and irrigation system. They do not do permits for that type of a system because it does not require it. When we get the permit for the wastewater plant, then we can make the tie-in.

Mr. Gatti asked you can start work any day?

Mr. Benson responded we can start working.

Mr. Gatti stated there was concern about him cutting a roadway. There is no need for that?

Mr. Benson responded the pipe, when it was built a number of years ago, was stubbed out on the east side of that road. He just has to dig down to that plug and take the plug off.

C. Manager

Mr. Mossing stated I have no special report other than I am going to leave extra copies of the budget with Tim in case anyone inquires about the budget. The copies will be available at his office.

D. Field Manager

Mr. Gatti stated we are going to get you a new 2-by-4 to kill mosquitoes.

Mr. Stephens responded we sprayed this morning. They are starting to hatch out a little bit.

Mr. Gatti asked what else is going on?

Mr. Stephens responded I have this consumers’ confidence report that has been put out and posted. I will leave copies here for everybody and you can pick it up if you want. It is what D.E.P. requires for the community to put out for the water. It tells a little bit about the water system.

FIFTH ORDER OF BUSINESS Supervisor’s Requests and Audience Comments

Mr. Gatti stated we owe you some money on the use of the room. I have had those bills for quite a while.

Mr. Mossing stated I will make sure they get paid.

Mr. Gatti stated the hotel was gracious enough to host us, so let us at least pay our bills.

SIXTH ORDER OF BUSINESS Financial Statements and Approval of Invoices

Mr. Bissel asked Darrin, on this financial report should there have been a balance due brought over?

Mr. Mossing responded yes, we can do that. Yes.

Mr. Gatti stated we have to pay the bills.

ON MOTION by Mr. Bissell, seconded by Mr. Wolsky, with all in favor, the board approved the invoices included in the agenda package.

SEVENTH ORDER OF BUSINESS Adjournment

On MOTION by Mr. Wolsky seconded by Mr. Robinson, with all in favor, the board adjourned the meeting at 10:25 a.m.

Secretary / Assistant Secretary Chairman / Vice Chairman

NOTES:

DM - Irrigation rate increase.

DM - pay hotel bills and bring monthly meeting

DM - Bill hotel for $1,088

Change address for John Robinson. Call for zip code.