MINUTES OF MEETING
CORAL SPRINGS IMPROVEMENT DISTRICT
The recessed meeting of September 18, 2000 of the Board of Supervisors of the Coral Springs Improvement District was reconvened, September 27, 2000 at 5:30 p.m. at the District Offices, 10300 N. W. 11 Manor, Coral Springs, Florida 33071.
Present and constituting a quorum were:
Robert Fennell President
Karl Miller Vice President
Clint Churchill Secretary
Also present were:
Rhonda K. Archer Finance Director
Dennis Lyles Attorney
John McKune Gee & Jenson
Roger Moore Engineer
FIRST ORDER OF BUSINESS Roll Call
Mr. Fennell called the meeting to order at 5:30 p.m. and stated the purpose of this reconvened meeting is to consider the adoption of the water and wastewater budget.
SECOND ORDER OF BUSINESS Public Hearing to Consider the Adoption of the Water and Wastewater Budget for Fiscal Year 2001
Ms. Archer stated there was a revision made to page 1 under the 1992 Series Interest Payment. The amount was $1,981,225 and that included the principal payment of $900,000. We revised that number to be $1,081,225. When I prepare the budget for the coming fiscal year, I look at the flows we experienced over the last year, chemicals used and the electric used because those are the big ticket numbers outside of personnel costs and then run some models and analysis to try to determine the cost per 1,000 gallons to produce water. We extrapolate what we anticipate based upon new connections coming in over the next year, what production we will have in water over the next year and take those numbers and extrapolate what our costs will be based upon our historical use and the current cost for chlorine, lime, coagulant, and electric and that is what was done for the proposed budget. Similarly on the revenue side we look at what the connections are going to be and calculate the meter fees and connection fees based upon those projected absorptions and determine how many units we will have on line throughout the year on an average basis each month and we know the average usage per household and we are able to determine the average water bill per household and multiply that and come up with our revenue projections for the next year. Each year it seems to be very close and that is what I have done for this budget.
We anticipate an increase in revenue from $7.8 million this year to approximately $8.1 million next year.
Mr. Fennell stated I was a little surprised that the facility connection charge is going up. I thought we were just about built out.
Ms. Archer responded there is a multi family project anticipated to come on line which will bring in a lot of connection fees which is good because we have connection fee debt we need to pay off with that money. Even though we do not anticipate more than 60 houses coming on line, the multi family project coming on line will be a good revenue source during the next year.
Our debt service is designed to be fairly level and is projected to be approximately $2.5 million next year. It was $2.533 million this year. Those are fixed based upon the amortization schedules we have on the bond issues. Administrative costs are anticipated to go up. The highest increase in this line item relate to legal fees because of the extra time our attorney is spending on litigation matters and engineering fees based on the different items the engineers have been working on such as the capital program, continuing maintenance program and items like that.
Mr. Fennell asked is that the additional amount of money we are talking about for outside engineering?
Ms. Archer responded no, that is under a different line item called "special engineering". I looked at the engineering fees that we incurred so far this year and we do have a set of current financial statements in the back of the budget that show we are over budget on legal fees and I have an analysis of those costs and it looks like that will continue to increase this year so I increased the budget.
Mr. Lyles stated if you will look at the budget in 1998/99 it was actually higher than this year. The increase is due primarily to the Centex litigation and the Manager is anticipating extra fees and there will be. They are claiming almost $2 million in damages and we are taking that very seriously and there will be some legal expenses incurred. It has to be defended because you have no basis for making any kind of payment because I don't believe the claim merits it and at this point there is not even a basis to try to settle it. They want the full amount. At some point later on if they start to change their tune, that will be reported to you and you will have to make another decision.
Ms. Archer stated the financials show that we have spent through June, $16,000 in legal fees. I raised that line item to cover the litigation costs for next year.
Mr. Churchill stated there is a large amount for postage. Is something unusual happening?
Ms. Archer responded under postage we have a large increase this year because we did a couple of special mailings. We do our annual letter and we did a letter calling for water conservation and that is in addition to the utility bills that we send out. At the last meeting I indicated that we are sending out a lot more delinquent notices because people are not paying their bills by the due date and that increased our postage. We just received notice this week from the South Florida Water Management District that they are calling for voluntary cutbacks on water usage because they are in a serious water shortage. Right now it is voluntary but they anticipate they will have to go to mandatory conservation in the near future because they are not getting the rainfall over Lake Okeechobee that we are getting in South Florida. If that happens that is another mailing we will have to do. The current letter we have out to the residents is to ask them to continue their conservation efforts but there could be a mandatory letter to go out in the near future. We budgeted extra money for that purpose.
Under telephone, the minimum monthly cost has gone up and we did an analysis of that and it is not so much in long distance because we keep a tight handle on that, it looks like it is the minimum monthly charge. There is an analysis in the budget on the phone lines and some of it is for telemonitoring on the plants. If certain things occur in the water plant it automatically dials the operators at home to call them in to handle emergency situations. We did some changes during the year on our emergency service and that may have impacted the monthly charges.
Mr. Fennell asked do you anticipate any travel? I always thought we ought to attend conventions that other water districts may have.
Ms. Archer stated there used to be an annual conference for special districts that was changed to take place on an as needed basis. They usually talk about bond issues and things like that and if we receive notification of one, we will let you know about it.
Mr. Miller asked what organization sponsors that?
Ms. Archer responded that is usually put on by the Department of Community Affairs. They used to have to hold an annual conference of special districts to educate them but that has changed and they now do it as needed which seems to be every couple of years. We also get notices about American Water Works Association conferences that you may be interested in.
Mr. Fennell stated I feel the Board should take an interest on their own but also keep ourselves up to date.
Ms. Archer stated the A.W.W.A. is more water related and the special district conference is more administrative such as bond financing and things like that.
Under plant operations we have increased the electric which is based on the projected flows and what we paid during this past year. We have had an increase in maintenance. Each department gave me a list of things they need to work on this year under their annual replacement program and the details of that are provided in the body of the budget. We are projecting an increase from $2.4 million to $2.553 million next year which is approximately 6%.
The field operations have gone down a little bit over the prior year and a lot of that has to do with meter costs, not as many connections coming on line next year for single family. The multi family and commercial connections pay for their own meters because they are larger meters and it is a wash. There is capital outlay and the meter replacement program that we budget every year trying to replace meters every 7 to 8 years by subdivision. As they become old, they stop running accurately and we lose revenue because it is not calibrating the right amount of water going through the meter.
Under lab operations, percentage wise it is a large increase but it is a small amount of money compared to the other departments. It is all related to equipment that we need to purchase to do lab tests that are new to us. We can either contract them out or we can do the tests ourselves and we find that if we buy the equipment, amortize it over a couple of years, it is cost effective to do our own tests, since we have our own certified lab.
Two years ago we deleted the engineering department and that brings the total expenditures of all departments to $6.741 million which is approximately 4% over the prior year. We are projecting surplus funds similar to this current year of approximately $1.362 million with debt coverage of $1.54 million and the required debt coverage ratio under the bond documents is 1.1. The additional funds are designed to pay subordinate lien debt which totals $179,494 for the Series 1989 B Bonds leaving net surplus funds of just under $1 million that we set aside each year for renewal and replacement.
Page 6 is a recap of our subdivision line program. It is a separate self balancing budget. We have a bond issue secured solely by connection fees and it shows the anticipated connection fees as compared to the debt service payments. We set aside any surplus funds that we collect, to call bonds. That bond issue will be paid off in 2002. About the time we are completely built out is about the time we should be paying off the bonds. It represents the subdivision lines that we have installed. Whether we install them or a developer installs them and loans us the money to do it and then we take that debt out with a bond issue, it is making growth pay for growth so that the extension of lines in a new subdivision are paid by connection fees collected from that subdivision. Connection fees are paid prior to connection to the system. The people who live in the District through their user rates do not pay to put in new subdivision lines. The people buying a house in a new subdivision pay the connection fees for that new house and that is pledged to the bond issue to pay for the subdivision lines that went into that house. You as a resident do not pay through your water bill for growth.
Mr. Fennell stated suppose there is a recession and there is no growth and no money coming in, where does the money come from to pay for the bonds.
Ms. Archer responded when we first issued these bonds, we had a developer guarantee from Coral Ridge Properties. They guaranteed to put in X number of connections per year and if they didn't then they were obligated to pay the principal and interest on the bond. When we hit a certain number of connections, that guarantee fell away and we were on our own. There were times in the last 15 years when they paid under that guarantee because they didn't put the units on line that we needed to pay the principal and interest on the bonds. That was designed not to come out of our operating funds but to come from the guarantee.
Page 7 is the renewal and replacement program for the next year. That money is already on deposit with the Trustee and the current balance in the R & R Fund is $1.5 million. Out of those funds we propose in this renewal and replacement program the total of $697,295.
Mr. Fennell stated a large part of that is for the infiltration problem.
Ms. Archer responded that is correct. It is something we are studying. The problem with that is you can identify where the problems are, which are in the clay pipes in the older subdivisions, where our lift stations are running overtime in comparison to the amount of people connected to that lift station and in direct correlation to rainfall. We can put in a camera and see where the water is coming in. We just haven't found a good solution. We talked to the City of Coral Springs and they have spent a lot of money lining pipes but they have not had a significant reduction in their infiltration problem. We are talking to different people and we have a call in to a division of Severn Trent about this situation. Severn Trent bought a company called Pitometer and they are pipe experts and we are calling on them to bring their experts in to tell us what is out there that is new and proven and what they are getting results from. We are not anxious to spend money on lining the pipes if we don't get the results that we anticipate.
Mr. Fennell stated that is good input. You are saying we have a problem but don't know the solution and that it may not be the lines.
Ms. Archer responded the City is finding out that it is not the pipes but the connections from the houses to the lines where the cracks remain and sealing all of the connections is the problem. When I looked at the numbers to repair the whole system and it is $8 million, I am saying to myself I didn't pay $8 million for those subdivisions originally. We are checking to see what alternatives are available to us.
Mr. Churchill stated if the majority of the leaks are between the line and the house, that is the responsibility of the homeowner.
Ms. Archer responded from the "Y" to the house is the homeowner and from the "Y" to the pipe is our responsibility. The problem is it is probably the whole thing that is messed up. Some of the connections are 20 years old and the clay pipes get broken sometimes by a riding mower.
Mr. Fennell stated it would be nice to know if the City has a plan to repave some streets and if that were true it makes sense for us to work with them so that if we were going to tear up the road and they were going to repave it, the work wouldn't be done twice. I have seen them repave an entire subdivision.
Ms. Archer stated I will get from the City any type of repaving program they have.
Mr. Fennell opened the public hearing and there being no comments or questions from the public the public hearing was closed.
Ms. Archer stated the only other item I have is that we have received a letter from South Florida Water Management District advising that we are under a voluntary conservation request. They have asked us to submit to them bi-weekly flows and our engineers are working on trying to figure out if they want flows out of the wells into the plants or out of the plants into the houses because there are two different flows that we work with. They are getting clarification on that.
Mr. Churchill stated it would be beneficial if the conservation letter went to each owner in a condominium instead of to the management company.
Ms. Archer responded I can identify the condominiums and get mailing labels from the Property Appraiser to accomplish that.
Mr. Fennell stated that is good but I think we need something more specific they can do such as the test tabs for toilet leaks that we used once before.
Mr. Miller stated the list from the South Florida Water Management District had concrete steps you can use.
Ms. Archer stated we have made copies of that list and have it available when people come in to pay their water bills or connect new service. Also some of the rental projects have individually metered their units and that has reduced the usage. They cannot bill the individual units more than we bill them and that prevents them from making a profit on the service.
Meeting adjourned at 6:15 p.m.
Clint Churchill Robert Fennell