MINUTES OF THE MEETING
OF THE PORT OF THE
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
John Robinson Supervisor
Ted Bissell Assistant
Secretary (By Phone)
Also present were:
Craig Wrathell District
Manager
Dan Cox Attorney
Ron Benson Engineer
Tim Stephens Operations Manager
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 May 16, 2003
Meeting
Mr.
Gatti stated that each member of the Board had received a copy of the minutes
of the
On
MOTION by Mr. Bissell seconded by Mr. Robinson with all in favor the minutes of
the
THIRD ORDER OF BUSINESS Consideration of Resolution 2003-07
Designating Rich Hans as Assistant Secretary
Mr.
Gatti stated Resolution 2003-07 is a resolution designating Mr. Hans as
Assistant Secretary.
Mr.
Wrathell stated with the departure of Ms. Archer and Mr. Mossing we have been
shuffling through who is the Assistant Secretary and Secretary for past month
couple of months. Mr. Hans is the
gentleman who does the preparation of the tax roll for the District, so this
allows him to sign off on the District when submitting those packages.
On
MOTION by Mr. Wolsky seconded by Mr. Robinson with all in favor Resolution
2003-07 designating Mr. Hans as Assistant Secretary was adopted.
FOURTH ORDER OF BUSINESS Discussion of Proposed Budget for Fiscal Year
2004
Mr. Wrathell stated after the last meeting I had some
detailed questions from some of the Board members. I thought it would be beneficial for us to go
through the budget so that everybody understands the details of what is in the
budget. I put together a packet that was
distributed.
The first item you will see is the budget as it was
presented at the May meeting. The one in
yellow is the proposed budget that was passed by the Board at the May
meeting. So everybody understands, that
was very much a proposed or draft budget.
It is a pretty solid budget but there are still a few items that need to
be fine-tuned. I put that budget
together for you and also worked with Mr. Tim Stephens and made several
adjustments. Some of them were related
to personnel costs. That was mostly
related to the personnel side of it. One
of our staff members is moving on and that will have an impact on the
budget. From a financial perspective, we
will probably bring in someone cheaper than the person who we had before,
because they will not be at that experience level.
We have the budget with my
revisions from the May meeting on normal white paper; which I want to discuss
in detail today. Within the budget,
there are three funds. You have your
general fund, your water and sewer fund and the debt service fund. I will not go into the debt service fund in
detail but with regards to the general fund; I did a breakdown of the monthly
expenses through this current fiscal year.
It only runs through April, but it gives you a six-month time frame so
you can see the cost per month. For each
line item of the budget you can see the actual physical cost per month that we
have incurred. That gives you a much
clearer understanding of what our expenses are.
The expense breakdown is
entitled Port of the Islands Community
Improvement District Statement of Revenues and Expenditures per Month. The first sheet is the general fund. It runs from
Your debt service fund is the
portion that you will pay for your long-term debt. Those numbers are set. They stay the same throughout the bond issue
unless there is any particular issue that would result in a revision of how the
assessments are calculated; which would be done through a revised assessment
methodology. The real focus is on the
O & M general fund and the water and sewer fund. As we go through the budget, I brought back
the sheet I handed out in February or March.
This does apply to debt service.
When we get to the debt service portion of the budget, I will review
that briefly. This tells you how we
derive the debt service and the methodology.
The first budget in yellow, I
will set it aside and you can look at that along with the following budget in
white for comparison. The only costs
that have been changed are the personnel costs.
You will see that under the maintenance side. The first page of the general fund is the
administrative expenses and when you flip the page you will see maintenance and
personnel and you will see total expenses for the two and the revisions made to
the proposed May budget. On the water
and sewer you will also see the adjusted numbers for maintenance and
personnel.
I will begin with the white
budget on page one. I will break down
starting with the revenues. On page one
we have the total revenues and maintenance assessment. Across the top there is the adopted budget
for Fiscal Year 2003, which is what we are working under today. That runs from
The two big items are the
first line, showing the adopted budget for Fiscal Year 2003 and then you go to
the last line, which is proposed budget for Fiscal Year 2004. That is what we are discussing today. The far right line is the budget we are
discussing. You can compare that to last
year’s budget to see the differences.
After the budget has been massaged a bit, we are looking at an
approximate difference of $9,000.
As you flip on page two, I
will get the revenues completed. If you
go to the bottom of page two, you will see how we derive our assessments and
what we use on an annual basis. We said
here are our expected expenses. What are
the revenues we need to make to pay off those expenses for the fiscal year? You can see along the bottom a line that says
net assessment and the amounts for each year.
The net assessment is the actual money we need to collect to match the
expenses in the budget. That does not
include the property appraiser and tax collector fees and the four percent
discount. That is included in your tax
bill. If you pay early you get the full
four percent discount. If you pay each
month later, through the end of March, then you do not receive the discount.
The next line is the discount
and commission at six percent. We
factored that in. That is the property
appraiser and tax collector. This is
actually the tax collector and the four percent discount. We show the property appraiser as an expense,
which I will address later. Then there
is the gross assessment. We grossed up
the number to include the discount and the fees.
The number of units within the
District that we are assessing is shown.
What you do is take the gross assessments and divide that by the number
of units to calculate the assessment per unit.
You can see Fiscal Years 2001-2003 are shown. If the budget were to remain the same as what
I have in here today, you can see the assessment per unit for O & M would
be. The amounts per year are shown so
you can see the difference. That would
be $366.94 for last year and $376.49 for this year as proposed.
If you have more detailed
questions, I have a breakdown of every single vendor we have written checks to
for each line item category. I do not
feel we need to go to that level of detail, but if we get stuck, I have that for
reference so we can see what type of expenses are being classified in this
particular are.
The first item under
administrative expenses is the supervisor fees.
By statute the Supervisors of the C.I.D. Board are allowed to receive a
fee of $200 per meeting. Of that $200
per meeting for Supervisors, $100 is put in the general fund and $100 of that
is put into the water and sewer fund, which you will see later. We have split some costs between the two
funds.
Engineering fees are the fees
for the general day-to-day operations of our District performed by Mr. Benson’s
group, Hole Montes. You can see the
engineering fees have increased quite a bit over the last year or so because we
have a lot of activities going on right now.
We have the D.E.P. and E.P.A. who have a lot of regulatory requirements
that we now have to meet with regard to reuse, so we have incurred additional
engineering costs above what we typically would have budgeted. This is a lot of responsibility above and
beyond what we had typically anticipated.
Mr. Benson can give you more detail.
We may have to revise that number.
The $12,000 number seems to be very low considering the numerous
activities we have going on in the District at this point. These are more special projects than the
usual day-to-day engineering responsibilities.
We may have to look at that number.
Through the end of March we
have incurred about $10,345 in expenses for the engineering category. My detail sheet shows we have actually gone
up to $15,650. My strong recommendation
is to consider increasing the engineering fees from that $12,000 annual expense
and bumping that up to $15,000 for this particular fund. That would be my initial recommendation.
Depending on activities we may incur throughout the year,
there is a strong possibility we may go over that. This is by no means indicative of Mr.
Benson’s firm or whether they are charging too much. Engineers get paid on an hourly basis for
what we ask them to do. When unforeseen
issues pop up, we have to utilize our District engineer for those services. My recommendation would be consideration of
increasing that number from $12,000 to $15,000 for the general fund.
Mr. Gatti asked do you want to do this on a per item
basis?
Mr. Wrathell responded I would like to do that. If we start jumping around, between
satisfying audience comments and everything else, I am concerned that this may
be confusing and things may get out of order.
We can go through each line item.
A lot of these are pretty quick.
When all is said and done the residents should be on the same page as
the Board and staff as far as where we stand on the budget. For most of these items, we have taken the
historical expenses for the last six months, sometimes look back a year or two
and we project it out for a year. Most
of these expenses, I am comfortable with what they are budgeted for at this
point.
We will address some questions the Board has regarding
some relatively big numbers like capital outlay.
Mr. Gatti stated we will not know the overall impact
until we go through each item. If you
tell us there are not very many recommendations that will exceed what you have
shown here, that is one thing. If there
are more additions, perhaps we should wait to the end. I agree with you.
Mr. Wrathell stated I can advise you on this line item
under the engineering fees and on the next page, is your capital outlay number
of $40,000. I am comfortable with the
breakdown of personnel expenses. My
recommendation is the two big numbers are capital outlay and the general fund
budget, the personnel costs, which I can go over and the engineering fees. The rest can be reviewed quickly.
Mr. Gatti asked do we have the revenues to cover the
increases you foresee?
Mr. Wrathell responded the second page reflects our
maintenance expenses. At the bottom of
the maintenance expenses category, there is a line item for capital outlay and
a line item for bad debt. We have
collection problems and I see those as line items as a cushion to assume for
bad debt. We discussed last time
possibly reducing the $40,000 capital outlay.
I would caution against that.
Almost all of the expenses you will see on here are expenses you will
pretty much expect to incur.
As we progress throughout the year if we continue our
historical revenue collections for these O & M funds I would say that
$87,000 between bad debt and your capital outlay ends up being what is in
essence your bad debt. If collections
pick up as we keep selling units, you will see that the capital outlay
component will be one that will be funded throughout the year. My recommendation would be as we progress
through the fiscal year, that we do not put any expenses to capital outlay
until we saw what revenues are coming in like.
Then, we will see if there are any major capital purchases in the general
fund. We still have the renewal and
replacement and we have some monies in the water and sewer fund. Those are the ones for which I see the real
capital outlay expenditures. This ends
up being almost a cushion.
Mr. Gatti asked what is that bad debt?
Mr. Wrathell responded the bad debt is when the auditors
audit the books they require us to put this line item as the bad debt. I do not see that as problematic because I
can easily assume that coming into the next fiscal year we will have at least $47,700
that we will not collect on these assessments.
Mr. Gatti asked does this money come from the taxes? That $300 plus dollars is added to the tax?
Mr. Wrathell responded yes.
Mr. Gatti stated if somebody does not pay his or her
water bill that is bad debt. This also
could be someone that is not paying his or her taxes.
Mr. Wolsky asked have we been carrying that up until now
as a cash flow problem?
Mr. Wrathell stated I think we introduced this line item
into the budget last year.
Mr. Gatti stated I have no problem with that. When I first looked at that I thought
somebody was not paying their water and sewer bill, but this is the general
fund. This money comes from taxes and it
is not like we have vendors or somebody else that owes us money. It is just that somebody is not paying his or
her taxes.
Mr. Wrathell stated there are three properties that the
tax certificates have stopped selling on, so we don’t receive any income from
the seller of those tax certificates.
Mr. Gatti stated please proceed on that basis. We can do that per unit, fine, but if we just
have three units, we can look at the whole thing and go over that.
Mr. Wrathell stated the expense categories match up
almost identically to what you see on the expense sheet, so you can look at the
two lines and see how we made these assumptions. I will go through attorney’s fees. Historically, with the numbers we have had, I
feel comfortable with the $12,000 we have on those. The annual audit is for the independent
auditors to audit your books on an annual basis. The $4,900 is reasonable, particularly with
the issues we have had, the Court issues and the bad debt issues we have.
The management fees are the fees for our firm for the
general fund portion. The accounting fee
of $5,430 is for the accounting services our firm provides for the District;
recording secretaries are also with our firm.
They prepare the agendas and the minutes and all that for the public
record.
Computer fees comprise a portion of the fees we charge
for computerized research and utilization for the District. Record storage is a charge of $50. The Rebate calculations line item is actually
related to your bond issue; which you have as a requirement for these
tax-exempt municipal bonds that the District has taken on. There is a requirement to maintain that tax
exempt status, through arbitrage calculations, an independent group that will
generate an arbitrage report. There is
an investment of the excess funds we have.
There is a requirement if the interest income is greater than the
interest rate we are paying on the debt; we would have to pay an arbitrage
rebate. We cannot make more money on
invested bond proceeds then we are paying on our debt. We have authorized that firm to do that for
us on an annual basis so we can continue to keep that tax-exempt municipal bond
financing status.
Trustee fees are another debt service expense the
District is responsible for. There is a
trustee as a requirement of the bonds.
The trustee is the middleman or woman between the District and the
bondholder, which is Allstate. When we
collect the assessments we make payments to the Trustee and the trustee will
pay the bondholder to make sure we do everything in line with the bond
covenants.
The reason you are showing the property appraiser as an
expense, which we typically would not do, is in this County they send us a
separate bill versus including the property appraiser fees in the tax
bill. We show that as an expense in this
particular item. That is for using the
property appraiser’s services when we do compile the assessment roll submittal
to the tax collector to be included on the tax bill.
The assessment roll is a service our firm provides. It is everything from preparing the
assessments rolls to issuing estoppel letters.
With the Court case going on, we are working closely with the attorneys
in providing updated information. The
bondholders often want information on tax certificate sales and where the money
is being collected and that type of thing.
Travel & per diem; I don’t know that we are going to use that. There may be an instance whereby a Board
member wants to attend a conference, which is why we have that. Telephone and postage are
self-explanatory. For rentals and leases
this is a cost our firm charges for utilizing office space for the staff for
the District. This expense is split between the general fund and the water and
sewer fund. The insurance in this
instance is your general liability, plus automobile and property and also some
contingency money in case they raise the rates.
Those insurances are mostly through the Florida League of Cities.
Printing and binding is for
costs associated with putting together the agenda booklets and then we have
legal advertising and other current charges, which are miscellaneous expenses
that have been allocated to this particular category and then we have office
supplies. Under dues and licenses, the
$175 you see is our annual filing we are required to do with the Department of
Community Affairs. Capital outlay of
$500 is for minor expenses that may come up.
Mr. Bissell asked was the only
thing that changed on that page, the engineering fees?
Mr. Wrathell responded the
ones that have seen changes are the annual audit, which we estimated at $200
higher than last year. Often times the
auditors will come in line with last year’s number. Our management fees were increased from last
year. That is contained in our
contract. The same was done with the
accounting and the recording secretary.
That is a CPI.
Mr. Bissell stated that is
fine. I was wondering if I understood
you correctly that you went to $18,000 for engineer.
Mr. Wrathell stated at this
point we are at $15,000.
Mr. Bissell asked did someone
ask about the expenses for that large item of approximately $7,800 for the
fence or what it was and then the $5,000 for that Stella Maris culvert?
Mr. Wrathell responded the
fence is for security for the water and sewer plant. That will be in the water and sewer fund and
the cost for Stella Maris, I will let Mr. Stephens answer.
Mr. Bissell asked is it on
here as an expense? It is not on here
unless you put it under capital outlay.
Mr. Wrathell responded part of
the problem is the expense breakdown sheet.
We are ahead of the game as far as the financials for next month. Unfortunately, our expenditure breakdown
sheet only goes through the end of April and the expense for that is somewhere
around May.
The second page, the
maintenance expenditures, this is the personnel cost. You will see from the last meeting, we made a
significant reduction and I would like the Board’s direction on this. On our personnel side, the first number of
$50,110 is for two people. That is for
Mr. Stephens, our utilities
director and operations manager. That is
half of his expense on salary. Also, one
of our long time District employees is moving on to another opportunity and we
budgeted $34,000 for hiring a replacement for him. Mr. Stephens feels we may be able to hire
someone around the $32,000 range. If
they work out we may bump them up to the $34,000 range. I have $34,000 budgeted and a five percent
raise budgeted for Mr. Stephens.
The next item is part time
labor. Instead of lumping this all in
with our overall personnel cost, we are looking on bringing a new person on full
time and I would like to cut out the overtime expense because it has become
very difficult to chart. I want to
create a new item exclusively for part time labor. Mr. Stephens has ideas on who to hire for
part time labor or whether this can even be multiple people, depending on the
particular job.
Mr. Bissell asked when you
interview for a new operator would it be possible to advise him that there may
be a possibility of a shift from
Mr. Wrathell responded
certainly.
Mr. Bissell stated it might
not be a day shift as a possibility.
Mr. Wrathell stated since Mr.
Stephens is the operations and utility director I will let him figure out the
scheduling. Mr. Stephens will figure out
a way for this gentleman to keep his schedule open. Mr. Stephens can decide how the shift
goes. I tried to set up the budget to
put Mr. Stephens in a place where he can manage his resources, meaning himself,
this new person hired, the part time labor expense, for which there is an
amount that matches in the water and sewer fund. He can manage his resources, which in this
case is the money to hire part time labor in whatever manner he needs to in
order to get the job done well and stay within budget. That is why this has been broken out in this
particular way.
Mr. Stephens has a strong
track record. I am trying to set this up
from a budget perspective so the Board will feel comfortable with where the
expenses are and the concept of setting it up in this manner.
The third line item that I am
recommending to the Board is the consideration of some money as a bonus pay for
employees who have done an excellent job throughout the year and have gone
above and beyond expectations. It also
provides a bit of flexibility for employees to remain competitive with other
opportunities out there. This District
is remote in nature. It is difficult to
get the good employees we like and want to keep, so we definitely want to
reward excellent work. I defer to the
Board on that recommendation.
The next category is FICA expenses,
which applies to the full time employees.
Health Insurance is an estimate for the insurance as to how it is
projecting over the year. These expenses
seem to be escalating on an ongoing basis.
We try to stay relatively in line with our numbers from last year.
Pension is for the full time
employees at seven percent. Workman’s
compensation is required for us to carry for employees. For landscape maintenance we have an
agreement with Big Cypress Landscape Company.
As you go down on the first page, of the expense breakdown sheet, you
will see landscape maintenance. As you
move along you will see $3,752 in the month of December and $3,752 in January
and the same in February, then you see a bigger number in March. We will pay $4,169 a month for that service,
but we actually have a ten percent retainage.
We hold back ten percent of what we pay them and if we are pleased, we
will return that ten percent to them later.
It is a protection on behalf of the District. If service is not at the level we would like,
we hold back that retainage as a normal practice.
That works out to $50,028
based upon the $4,169 per month. We then
have an additional $9,972 for miscellaneous landscape expenses. I would like to point out that there is a detailed
explanation behind each one of these.
Street lighting is the next
category and we area looking to stay the same on that. We use the
The last two items are Capital
outlay and bad debt. We hope to get to
the point where we are collecting enough assessment to fully fund the capital
outlay. I recommend we wait until around
April of next year before we look to allocating anything to that line item, so
we know what our collections are and do not go over budget.
You will see the total
maintenance costs and the total administrative costs add up to $375,976. With the recommended change on engineering
fees, that will be a $3,000 increase, so you would add $3,000 to that at
present. You take the same amount with
$3,000 on top and divide it by the existing number of units. That is the general fund and it may be
appropriate to take questions from the Board and then I can go over the water
and sewer fund.
Mr. Gatti stated I thought the
engineering fees were low to begin with, considering even the $15,000. Increasing the engineering budget is
reasonable considering everything we are doing.
Is that it?
Mr. Wrathell responded as long
as you are comfortable with the modifications I made on the personnel side.
Mr. Gatti stated when you go
into capital outlay and bad debt, before you spend that, I suggest you bring it
before the Board.
Mr. Robinson asked a few years
ago the Board made an authorized increase in the budget to put money aside for
road resurfacing in the future and I believe that is where a lot of the capital
outlay money is eventually supposed to go.
That is the only place I see it.
Mr. Wrathell stated there are
two different sides. I look at the
business side of operating the District and from that perspective I agree that
is the purpose. When the District
becomes financially healthier and we can count on that level, we can separate
out those expenses and reserve them for that purpose. You will be able to see on page two of the
general fund budget, you have total maintenance and those numbers, then you go
to total expenditures, then you see excess revenues, then you see beginning and
ending fund balance. As you can see,
what we are projecting at the end of this fiscal year is to have approximately
$250,000 in surplus. If we have those
types of resurfacing projects, the intent at this point is those funds, that
reserve can build up for those purposes.
If we have a project that
needs to be done we can amend the budget or put it in capital outlay. Other than road resurfacing programs and
those bigger projects, I will bring those to the Board. From an operations manager’s perspective I do
not want to purchase a new, shiny backhoe and put it into that category until
we now where we really are. That would
be my recommendations. That is more what
I was focusing on.
Mr. Wolsky stated we had a
problem in the past of now putting aside an escrow fund for road
maintenance. We decided as a Board that
we would put $5,000 away.
Mr. Robinson stated it was
more like $40,000.
Mr. Wolsky asked that was to
be escrow that we would allocate in the budget and if it wasn’t spent this year
it would be carried over as a reserve fund to next year; is that correct?
Mr. Robinson responded that is
my recollection. That $256,000 is the
fund balance overall, so there has been some money building up.
Mr. Wrathell stated there are
two ways we can do this. One is we could
physically show it as your fund balance and separate out as your road
reserve. The only thing I am telling you
is I do not know how that road reserve fund will wind up being funded by the
end of the year. From a business sense,
we can approach it with the $250,000, which can be used by the Board to fund
the road projects. That is my
recommendation at this point. I do not
know if we are specifically holding it and creating a separate road fund
reserve.
Mr. Gatti stated if we do not
have a disaster involving a huge expense, we have accumulated a reserve of
about $250,000. If toward the end of the
year we have no major problems we can use that for whatever purpose we decide. If it is roadways, that will work.
Mr. Wrathell stated when
looking at these numbers you may want to report how much you are physically
expecting. When we do our audit we will
know how much money is really there.
Mr. Bissell asked does that
mean we will have no problem coming up with the $15,000 for that filter they
want us to put into the canal?
Mr. Wrathell responded that
will be classified under the water and sewer.
Mr. Gatti stated that is the
other fund that we deal with. The bottom
line is, given no disasters; we have accumulated about $250,000 in
reserve. A couple of years ago we were
in the negative, so we are doing okay.
Mr. Wrathell stated the
condition of the District is improving dramatically. Those commercial parcels, which were the most
problematic, are being dealt with by the bondholder via expected foreclosure
proceedings and the court case. . Each
year we are selling residential unit, we are getting in better shape. When you move to page nine, this is the debt
service fund. Before I go to the water
and sewer fund I will explain that to you.
The debt service fund is for all those capital improvements the District
has constructed in the past.
If you go to the long
spreadsheet, there are really two components to debt service. There is the debt service that goes toward paying
for the roads and that type of infrastructure and then there are the water and
sewer items. There was a methodology
created back when the bonds were taken out to allocate that debt. This is semi-unique in the sense that
usually, whether it is Districts, Cities or Counties, when you have a
wastewater utility system, you typically pay a connection fee when you hook
into the system and then you pay a monthly facility or capacity fee. That would typically be funded through rates,
fees and charges.
In this instance the expense
for building the plan utility system was funded through the special assessment
process, so you have the actual plant facilities and the distribution and
collection system and also the roadway system and all that. If you see on your tax bill a breakdown
between operations and maintenance and water and sewer fund and then there will
be the debt service portion of the debt you will pay. That is how that is broken out. We have it calculated based upon ERC’s and
equivalent residential connections and those types of formulas.
Moving on to page ten, this is
the water and sewer fund, this operates in the same manner as the general fund
except for one thing. The operation and
maintenance of the water and sewer fund is funded via the user rates and
charges so as we go through this there are actually two components. The first line is revenue. There will be standby fees/special
assessments. The special assessment is
hard to explain. These are the revenues
that are coming in on your tax bill.
This is your debt service portion for the water and sewer. Then you have sewer and water revenue, which
are user charges.
Mr. Benson stated the standby
fees do not pay the debt service. That
is a separate assessment. I may have
misunderstood you.
Mr. Wrathell stated the sewer;
water and irrigation revenues are derived for user rates. Dependent on the water usage times the rate,
that is what you will pay on your water bill every month. Meter fees are when a person for instance
will move into a new home and are required to purchase a meter to account for
water usage or there is an old meter that needs replacing or that type of
thing. Then there is interest
income.
As we move down to
administrative expenses, the Supervisor fees are at $200 per Supervisor per
month. That is split between the general
fund and the water and sewer fund. For
the engineering fees, we make the same recommendation as the general fund, that
we increase that $12,000 up to $15,000.
Legal fees look fine at last
year’s level. The same goes for the
audit fees. We take the audit and break
it down between the general fund and the water and sewer fund. We do the same 50/50 split for the management
and accounting fees along with the recording secretary fees, computer services and
records storage. The trustee fees are
allocated here. The property appraiser
fees match up. This is the percentage we
are required to pay of the fees for this category. Arbitrage calculations are the same as the
last but the general fund is the other 50% of the cost to pay for the
arbitrage. Utility billing is a service
that our firm provides. If there are any
issues with the bills you can talk to our staff and we will work through those
issues. That number is the same as last
year. Travel & per diem is the same,
telephone, postage, rentals and leases and insurance are all split between the
two funds.
Mr. Gatti stated move to bad
debt because this is repetition.
Mr. Wrathell stated the bad
debt is a similar issue as we have with the general fund. It is the repayment of bad debt. This is a capital cost component that we are
paying for.
The user rates are
different. You get your bill and people
pay it on a monthly basis.
Mr. Benson asked when you are
talking about the bad debt, is that when people are not paying their standby
fee? It is not capital cost? It is the fixed annual cost associated with
standby fees that are not being paid.
Mr. Gatti stated in that
regard, take us back to the long sheet to see if we understand what we are
looking at. It would appear the
maintenance and standby is where we lose money.
Mr. Wrathell stated we have
been billing this first group off roll.
There are three components to that off roll assessment. One would be maintenance, which would be the
O & M portion. In both cases it is
the general fund portion. Then you have
the debt service, which is your capital to pay off your debt, then you have
your water and sewer standby.
Mr. Gatti stated what comes
out of our sewer and water budget are pieces of maintenance and standby, is it
not?
Mr. Wrathell responded your
standby fees, meter fees, and water user fees are what fund your water and
sewer budget.
Mr. Gatti stated if we do not
get those fees that are a negative. If
people do not pay their standby fees and their assessments that is where we
lose. This is the portion of it that we
lose, what looks like $181,000 and $192,000.
That also assumes that everybody on here does not pay that.
Mr. Wrathell stated these are
the ones that were the most problematic that ended up being off roll. There will still be other cases out there in
addition to that, except the one payment.
Mr. Gatti asked have we been
making up these losses in any place? We
can discuss those details afterward.
Mr. Cox stated for instance,
with the development of the multi-family we have collected several back years
when they came in and paid all the back certificates and a couple that were
strictly to the County, so we are picking up.
Mr. Gatti stated as those
funds come in, they offset the negatives.
Mr. Wrathell stated the water
and sewer fund is considered an enterprise, a proprietary fund. It is almost like a business. The expenses are this much. You hope to set up your revenues so that when
you establish your rates and standby fees you are set up for two things. You have your day-to-day operations and your
renewal and replacement. Mr. Benson has
put together an engineer’s report showing each year we need to start accruing
this much to pay for these facilities which have a life expectancy of a certain
period of time. That is what the renewal
and replacement fund will continue to be generated for.
Over time we want to set the
rates and assessments to make sure we cover day to day operations of the water
and sewer services and also generate an accrual of renewal and replacement
funds so that ten years from now our facilities are still operational and we
have money for repairs.
Mr. Wolsky asked are we ever
going to collect any of that $90,000 in bad debt, or is that gone forever?
Mr. Cox responded a lot of
that is going to depend on how things play out over the next few months. If someone were to come in to acquire that
property and develop it, before they could initiate any kind of site
development plan they would have to pay all existing tax certificates. If that were done, we will recoup the monies
that we had with that debt because of non-sale of the tax certificates as the
related to the north side property, which is a substantial portion of what we
have to classify as bad debt each year.
Under that scenario, we would collect our money. If we take it through to foreclosure, the
foreclosure sale will occur and whatever the property sells for there are two
ways it could go. There will be a pro
rata distribution and we would get a portion, but not all of it.
Mr. Wolsky asked did we send a
letter to
Mr. Cox responded the way a
foreclosure works, the Court will probably determine that all the tax
certificate holders in the bond debt have equal dignity as to the priority for
payment. Take the hotel, for
instance. There is a mortgage on that also
in addition to our tax lien. That
mortgage would be junior in dignity to us.
It would be extinguished by our foreclosure to the extent that there was
no money. We have some pretty good
numbers here.
On the North Hotel, there is
$143,000 in off roll assessments. In the
last three years there is probably $500,000 more in debt that will be
accelerated by the foreclosure. Since
that $650,000 in bond debt is against the property still, for the overall
assessment on the North Hotel, there is about $65,000 that we have not
collected. There are two or three tax
certificates out on that property also.
Their annual assessment is about $100,000 each, so we have a total of
about $1 million in debt out there.
$650,000 of that is represented by bonds and $600,000 is being
represented by bonds and $60,000 by unsold tax certificates that the tax
collector is holding and $300,000 by tax certificates that have sold and we
have received our money. Say the
property sold for $500,000 at the foreclosure sale, everybody is going to get
half of what they have in lien against it and that is it. We would get some of our money back, but not
all of it. The best case is that
somebody comes in and buys out all that property and pays out all those tax
certificates. That is the least likely
scenario, but not outside the realm of possibility.
Mr. Gatti asked are you
recommending that we increase the engineering budget by $3,000 and we are
looking at bad debt as a cushion.
Mr. Wrathell stated from a
business perspective, if we did not account for that bad debt and you lower
everybody’s assessment; everybody would be happy but unfortunately the District
wouldn’t have any money to run for the last quarter of the year. We have to show that expense in order to have
the revenue at an appropriate level where we will actually have money to run
the District, moving through the entire fiscal year. That is what that number does for us.
Those were the administrative
expenses and then on the next page is the same breakdown for the maintenance
expenses. The personnel costs are the
other 50% of the ones you saw on the general fund side of it.
Mr. Gatti asked could you take
us through the numbers on operating supplies and renewal and replacement,
please?
Mr. Wrathell responded for
renewal and replacement is the number we are trying to match the engineer’s
report that says we fail to keep up with the facility degradation ahead of
time.
Mr. Benson stated I did a
report a few years ago and came up with an analysis that said we needed $95,000
per year to maintain our equipment. Some
of the equipment may have a ten-year life span, some may have a twenty-year
life span and some may have a five-year life span on the average. In order to maintain all the equipment we
need to spend approximately $95,000 a year.
We have not been spending that much so there is some equipment that
could use replacement or upgrade in the near future that we are contemplating.
Mr. Gatti asked from your
standpoint, is there any kind of urgency out there?
Mr. Stephens responded we do
have a lot of things we will need to do.
Mr. Benson stated this is
about the time of year we usually issue the engineers report. Monday we are having the inspection of
facilities. I will be here on Monday
with Mr. Stephens and we will come up with a list of anything that may be
urgent, so you will be hearing about that over the next month or so. We will confirm if that $95,000 seems to be a
good number for the future and give specific recommendations each year of what
needs to be done.
Mr. Gatti stated operating
supplies cannot be going down. The City
is going crazy with the chemicals.
Mr. Stephens stated our
chemical costs have gone up.
Mr. Gatti asked is the $75,000
okay, because we are looking at almost $97,000 for the year? What is going to change there?
Mr. Wrathell asked do you have
particular times of the year when you might go buy the chemicals?
Mr. Stephens responded there
is the mosquito control of course and we use more chemicals in the winter than
we do in the summer.
Mr. Gatti asked are you going
to have some carry over from the $96,000?
Is that what you are asking?
Mr. Benson responded he
probably will not spend the full $96,000.
He spent more during the winter and projected on a per month basis. You are saying that you need $96,000.
Mr. Gatti asked you cannot
store a lot of chemicals, can you?
Mr. Stephens responded we do
not have a place for it, so we do not store much at all.
Mr. Wrathell stated you do not
need as much detail on this page. The
big issue on the last page was the bump up of the engineering fees and the
explanation of the personnel cost change, which is the same as the general
fund. As long as the Board is
comfortable, that is fine.
Mr. Gatti asked are you
comfortable, Mr. Bissell with the budget as proposed with the $6,000 increase
in the engineering fee? $3,000 will be
in the general fund and $3,000 will be in the water and sewer fund.
Mr. Bissell responded I have
no problems with that.
Mr. Gatti opened the meeting
to public comment and stated if you want to look at this for a while and ask
questions next month at the public hearing, that is okay too.
A resident stated we are
spending a lot of money on the mosquito control and it does not seem to be
doing much. Is there another way of
doing this?
Mr. Stephens responded if we
had a helicopter, we could do a much better job.
Mr. Gatti stated let’s keep
the context to whether spending more money will do a better job.
Mr. Stephens stated it would
help if we had a helicopter.
Mr. Gatti asked within the
realm of reality, could you get a bigger machine and increase your material supply?
A resident asked what is the
speed they tell you to go?
Mr. Stephens responded 15
miles an hour.
A resident asked what if you
went slower?
Mr. Stephens responded I would
have to cut my chemical dosage down.
A resident stated when I see
you going around in the morning; it just stays behind the truck. It is like a vacuum. A lot of air goes over the curvature. Maybe it would help if you went slower.
Mr. Stephens stated a lot of
that depends on the direction I am going.
When I come by your house it is going to do that because nine times out
of ten we have a north wind blowing and it directs it behind. If I slowed down enough it will go to the
side, but it will still blow straight back at you when the wind gets a hold of
it. It should blow over your house
anyway.
Mr. Gatti stated I recognize
that the County does it with the planes and such and we cannot get them to do
it for us. See what some other smaller
municipalities are doing that might be within our resources. When they did mosquito control ten to twelve
years ago, they would go around to the houses.
There was a young man with a backpack and chemicals going around to each
house.
Mr. Stephens stated we
eliminated that because they were going on personal property and it would not
be a good idea.
Mr. Gatti asked what if you
got permission from individuals?
Mr. Stephens responded that is
another thing, but it is up to the District.
Mr. Gatti asked would we have
the monies to do something like that?
Mr. Stephens responded that
would take a lot of manpower to walk around to each house.
Mr. Gatti stated give it some
thought.
A resident stated when we
first moved here we were told that you were not allowed to do aerial spray
because of the State laws. Secondly, if
you spray and you get a good breeze you will get mosquitoes that are flying in
from twenty miles away.
Mr. Stephens stated that is
true. You can kill every one of them and
thirty minutes later they will be back.
Mr. Wrathell stated we will
bring this budget back at the next meeting.
Mr. Gatti stated your
explanation gives everybody a good sense of the financial picture. The fact that we are accumulating units out
here at a pretty good rate indicates we seem to be getting in better condition. Thanks for a good job.
A. Attorney
Mr. Cox stated the Judge
denied the request for reconsideration of his order. The time period has started running for them
to present a plan of reorganization. I
understand some information has been requested from the District manager’s
office recently. That information is
going to be used in developing that plan.
Mr. Gatti asked what did they deny?
Mr. Cox responded when the Judge issued his order,
finding that the case was dismissed the plaintiff’s attorney filed a motion for
reconsideration or motion for rehearing in the alternative. The legitimate grounds were not presented for
that and I did not expect it to be heard, so the Judge denied that. The way this works in a Chapter 11, the
debtor comes forward with a plan saying here is how I can work out of the
situation that has gotten me into debt.
Here is how I propose to pay the debts and this gives me an opportunity
to bring my business out of the protection of the bankruptcy code.
The Judge said he was not going to require that plan to
be presented until after final adjudication on the merit of the complaint as to
whether these assessments were valid.
They had thirty days from the date of the original order finding in
favor of the District to file that reorganization plan. Under the rules of procedure if you have
certain motions pending, any deadline is held until those motions are dispensed
with and one of those was a motion for rehearing. They have twenty-four days from the date of
the Judge’s order. We are looking at
approximately twenty days before they must present their plan to the
Court.
Mr. Gatti asked do the creditors get a chance at input?
Mr. Cox responded we will have the authority to approve
or object to the plan. Three or four
weeks ago we gave them an outline of what we needed to see in the plan in order
for us to approve it.
Mr. Wolsky asked how long does the Plaintiff have to
achieve positive results once the plan is presented? I am looking for a time frame.
Mr. Cox responded I believe that all has to be paid off
within a certain time frame. I am not
sure of what that time frame is, but once that plan is presented, they have to
live by the plan from day one.
Mr. Gatti asked would that plan initiate some repayment
of the debt owed?
Mr. Cox responded yes, and it may be that some of the
debt is discounted, but it may be that it all has to get paid off. One thing it will depend on is, we have a
pending motion right now for valuation as collateral of the property they
own. That may impact whether all the
creditors get a hundred percent or somewhat less.
Mr. Gatti stated if I am reading this right, it is
$500,000 a year. It is $60,000, $210,000
and $205,000. Am I reading that right?
Mr. Cox responded the $210,000 of
Mr. Gatti stated so it is the $60,000 and the
$210,000.
Mr. Cox stated code
enforcement was driving down Highway 41 and they found some signs that are not
permitted. I asked the code enforcement
officer to be here, but I do not see her today.
She was going to explain what we need to do about this. Basically the signs are not permitted. When you are coming onto Highway 41, just as
you are coming up on the right hand side, there is a blank wall with a worn
tile roof. That is one of them.
Mr. Gatti asked is there a
sign there?
Mr. Cox stated back a couple
years ago, they told us if we painted them, they were not signs any more. Apparently now there is an issue.
Mr. Gatti stated I thought if
they were District signs there was no problem with them. If they belong to private individuals, then
there was a problem with it.
Mr. Cox stated they are saying
they would like to have these signs permitted.
That one is a blank wall with the tiles on it. There is one at the entrance of
Mr. Gatti stated it would be
nice if we could do something to indicate the marina and the hotel and our
streets down here. On the other side it
would be nice if we could do something that would indicate the trailer
park. These are District signs I am
talking about that were informational, not advertising and that type of thing. We should do something to indicate the hotel,
restaurant and that sort of thing.
Mr. Cox stated I will try to
get her to come in next month. If you
will give me direction to find out what we need to do to permit those as
informational signs, what type of content we can have, approximately what the
permitting costs would be and whether to determine whether we want some of the
folks who will put those signs on there to subsidize the cost of the
permitting.
Mr. Robinson stated the signs
at the entrance of the hotel are angled out.
One is ours and one is the C.I.D.’s. I spoke with them about that and was told we
would not get a permit to put anything on those signs except Port of the
Islands Community because of the way they are set up. They are only to be used to show a residence
or development. I cannot put a sign there
for the hotel or restaurant.
Mr. Cox stated I wonder if the
same would be true on the north side.
Mr. Stephens stated because
you have one sign there, you could probably get it permitted. If you have two signs that are set up at the
entrance of a community it has to be used for the community.
Mr. Gatti stated find out the
details and come back to us. If nothing
else, we need to know what it would cost.
B. Engineer
Mr.
Benson stated we have an item that was briefly mentioned last month regarding the
inspections of the water and wastewater facility. Mr. Stephens and I had a meeting scheduled
with the D.E.P. We met with them. There are two issues referenced in the
letters in your agenda package. The
first relates to the water system. They
identified a couple of minor things that have been corrected. Has that all been resolved?
Mr.
Stephens responded yes.
Mr.
Benson stated there was a light bulb out in the chlorine storage room and a
couple of record keeping items. Also
another one had to do with the drinking water consumer confidence report, which
I believe was sent out.
Mr.
Stephens stated that has been done.
Mr.
Gatti stated I received a threatening letter on that, so is that sent in?
Mr.
Stephens responded yes, I sent in the consumer confidence report.
Mr.
Benson stated that was the water treatment plant issue. On the inspection on the wastewater treatment
plant there were a few more items. I
will go over that real quickly. One item
we discussed for two years or so relates to our permit for the wastewater
treatment plant. We were trying to get
our permit so we could do reuse to go along with our grant from the Water
Management District and the money we were spending.
During that process we kept trying to get them to
issue the permit. It would have been a
modification of the then existing permit.
A permit is good for five years.
If anything happens before the renewal then they do a modification. We kept going back and forth and they did not
want to give us what we needed and what was reasonable. During that process we started to get into
our five-year cycle for renewal of our permit.
More than once during that process they suggested we send them a little
bit more money because the renewal fee is more.
If you stop asking for reuse we will start evaluating your five-year
renewal the way your system is.
I said that was not acceptable and told them we
need the permit modification, which we received. That allowed us to build the system we needed
to comply with our grant. During that
time period we had a six-month window.
Our permit was not expired but they want you to start applying. I did not officially get them all the
information they needed for the five-year permit renewal within the technical
time frame. We were negotiating
conditions at the same time. The permit
application was in prior to expiration, but technically we had a window within
which we where supposed to have everything in.
Technically, we were not really operating without a permit, because the
permit application is pending, but it was a timeliness issue.
They technically have something they can put on
an evaluation form. Another issue has to
do with a series of parameters that Mr. Stephens monitors for us throughout the
day and reports. One of them we report
every day is chlorine residual. We have
two requirements for chlorine. One is we
have to chlorinate the effluent to a high level to show we meet this infection
requirement and that the water is not harmful.
There is no question about that.
The question is because of the way we are discharging the water, we have
a permit condition that says when the water leaves the plant, after it has been
disinfected and proven safe, we then have to take the chlorine away from the
water. We add another chemical to do
that. There is a tank where we add air
and strip all the chlorine away. When we
measure the chlorine again it is supposed to read .01 or less.
If we report on the monthly form that any day or
any time of day we exceeded that and the water was being released through our
normal disposal, that is a permit violation.
That is a compliance issue. If
you have those types of issues, the D.E.P. does this program on behalf of the Federal
E.P.A. Periodically the E.P.A. audits
the D.E.P. to make sure they are really doing their job. Once they know something is out of compliance
they have to show that they did something about it so they meet their
conditions to keep the State program going on behalf of the E.P.A.
When they did the inspection they checked the chlorine
residual with their own equipment and found it was higher than zero. The equipment at the wastewater plant at that
time was reading just slightly higher than zero. There are now two issues. One is they documented that we were out of
compliance with their measurement device.
The second one is our device was not calibrated. Calibration of equipment is something we need
to do periodically. There are a lot of
things that can cause a piece of equipment to go out of calibration.
I do not know why it was out. It could have been a power surge. It could have been lots of different
reasons. It could be a piece of
equipment that needs to be replaced. I
do not think this needs to be replaced yet.
Eventually when it wears out we will have to do that. We spoke with D.E.P. and have an
understanding on that issue. Mr.
Stephens will have a calibration book to record when he calibrates that
equipment and the results. That way when
the D.E.P. comes in, if they were to find something like this again, they can
say it has only been out of range for a few hours or a day.
Mr. Gatti asked do we track this in some physical
way?
Mr. Benson responded there are chart recorders on
the wall that also monitor this. The
electronic device that measures the chlorine in the water is not reading
correctly.
Mr. Gatti stated if we have been in compliance
some of the time, that should show up and we should be able to show it to
him.