MINUTES OF MEETING
CORAL SPRINGS IMPROVEMENT DISTRICT
regular meeting of the Board of Supervisors of the Coral Springs Improvement
District was held
††††††††††† Present and constituting a quorum were:
††††††††††† Robert Fennell††††††††††††††††††††††††††††††††††††† President
††††††††††† William Eissler††††††††††††††††††††††††††††††††††††† Secretary
††††††††††† Karl Miller††††††††††††††††††††††††††††††††††††††††††††† Vice President
††††††††††† Also present were:
††††††††††† Gary L. Moyer†††††††††††††††††††††††††††††††††††††† Manager
††††††††††† Rhonda K. Archer†††††††††††††††††††††††††††††††† Finance Director
††††††††††† Donna Holiday††††††††††††††††††††††††††††††††††††† Recording Secretary
††††††††††† Dennis Lyles††††††††††††††††††††††††††††††††††††††††† Attorney
††††††††††† John McKune††††††††††††††††††††††††††††††††††††††† Engineer
††††††††††† Bill Joyce††††††††††††††††††††††††††††††††††††††††††††††† Staff
FIRST ORDER OF BUSINESS†††††††††††† Roll Call
††††††††††† Mr. Fennell called the meeting to order at and Mr. Moyer called the roll.
SECOND ORDER OF BUSINESS†††††††† Approval of the Minutes of the July 15, 2002 Meeting
Fennell stated that each Board member had received a copy of the
††††††††††† There not being any,
††††††††††† Mr. Moyer stated I asked Lydia Kiser of Prager, McCarthy & Sealy, the Districtís investment banking firm, to be here today.† We asked them to look at the bonds that we currently have outstanding and whether there are savings we can realize because of the interest rate environment that we find ourselves in now which is about as low as we think collectively they are going to go.†
††††††††††† Ms. Kiser stated we reviewed your outstanding General Obligation Water and Sewer Revenue Bonds and found that since the system is mature you might be able to obtain a cost effective insurance policy which will allow you to achieve lower interest rate and savings from a current refunding.† The first page of the hand-out is a savings schedule and shows the proposed refunding debt service, and the total par amount will be $9,045,000.† The chart shows the existing debt service and the savings.† The savings will be a little over $60,000 annually with a total savings of $728,702.50.† On a present value basis that is $577,654.14.† As a percent of the debt refunded that is about 6.7%.† This refunding analysis assumes that your outstanding 1978 Bonds in the amount of $1.38 million will be refunded.† Currently those bonds have a coupon of 6.375%.† Only a portion of the 1992 Bonds will be refunded.† A portion of those bonds are non-callable but $7.255 million of those bonds are callable and they carry a coupon rate of 7 1/2%.† That is the debt that will be refunded for a total of $8,675,000.† The refunding debt service has an average coupon of about 3.90%.† The schedules show the sources and uses of the funds and it shows the old debt service as well.†
††††††††††† Mr. Fennell asked what is our total debt at this time?
††††††††††† Ms. Kiser responded the total outstanding under this indenture is just over $17 million.†
††††††††††† Mr. Moyer stated we are not extending maturities.† We are on the hook until 2014 and we are still going to be on the hook until 2014.† I did not want to have a proposal come to the Board to take the bonds out 20 or 30 years.† We are basically taking exactly the same amount of money that we owe in the same time frames and recasting that with much lower interest rates.†
††††††††††† Mr. Miller stated you said the present value of the savings is about $577,000?
††††††††††† Ms. Kiser responded that is correct.†
††††††††††† Mr. Fennell asked what is the cost to do this?
††††††††††† Ms. Kiser stated I have estimated the cost of issuance to be $135,000.† I assumed the cost of bond insurance to be 50 basis points of total debt service which is about $61,000 and is the purchase of the insurance that will allow us to obtain the lower interest rates.† The underwriter's discount is 1.25% of par which is estimated at $113,000.†
††††††††††† Ms. Archer stated those are included in the savings that she showed to you.† That savings is after paying these costs.† There is still $577,000 in savings.†
††††††††††† Mr. Moyer stated the cost of issuance covers such things as the payment to bond counsel, the printer and the soft costs associated with doing a bond issue.†
††††††††††† Mr. Miller asked what is the cash flow impact to us?† Will there be a need for any increased payments out of our funds?
††††††††††† Mr. Moyer responded no, this falls to the bottom line and will go to surplus at the end of the year.†
††††††††††† Ms. Archer stated the schedule on the first page of the printout shows your annual savings which is about $62,000.
††††††††††† Ms. Kiser stated the $577,000 just brings that amount back to today's dollars.†
††††††††††† Ms. Archer stated any savings that we experience or any surplus that we generate each year is used for renewal and replacement of our plant.
††††††††††† Mr. Moyer stated every year we come up with a new list of capital improvements but at some point in time you will be faced with the delightful issue of not wanting to generate the type of surplus we currently generate and look at what that means in terms of rate reduction.†
††††††††††† Ms. Archer stated if the Board is interested in going ahead with this, there are two things that we need to do today and that is to approve an engagement letter with our bond counsel and with Prager, McCarthy & Sealy. With the approval of these two items we can put together a bond resolution and bring back some final numbers to you.† The bond resolution will come back in October with delegation terms.† They will go into the market after that bond resolution is approved and so long as they can sell these bonds within the parameters of that resolution that you, we will have bonds at a lower interest rate.†
††††††††††† Mr. Miller asked are there any potential negatives for us or any downside to this?
††††††††††† Ms. Archer responded the worst case scenario is if interest rates go crazy in the next three months, you don't sell them.† You stay exactly where you are now.† All of the fees are contingent fees based on actually issuing the bonds.† There is no downside to going into the market now.†
††††††††††† Mr. Fennell stated we do have some bonds insured.
††††††††††† Mr. Moyer responded I believe the 1992 bonds are insured.†
††††††††††† Mr. Fennell asked how do we know that we have a good price for issuing these bonds?† We are talking about $113,000 to do this.† How do we know this is a fair price?
††††††††††† Mr. Moyer responded when the Board is asked to finally approve the bond sale, the underwriter will bring forth an analysis as to what similar districts are paying for the same underwriting services.† The one issue that these types of districts wrestle with is that this is called a negotiated sale in which you are basically hiring the underwriter at the front end to structure the transaction, go to Municipal Bond Insurance Association and talk to them and get the best rate on their premium that they can get and then package and sell that.† In this case they would sell it retail because it would be an insured deal.† What you are doing is hiring someone to act as your agent.† There isn't a district in the state that I am aware of with the exception of Reedy Creek and I don't even think in the Disney District in Orlando that they have done this but the other alternative is to do what you call a competitive sale as differentiated from a negotiated sale.† You have a financial advisor that you pay money to in order to package all of this, then you run an ad in the newspaper saying the District will accept bids for the sale of the District's bonds and then we would award to the lowest bidder.† I have been doing this for Districts around the state for 30 years and we have never done a competitive offering.† It is even a little outside my area of expertise.† Even municipalities and the State of Florida on occasion will use negotiated sales on transactions that have a lot of structuring issues without using a financial advisor, they will use their investment banker.†
††††††††††† Ms. Archer stated that requires that you pay another consultant, a financial advisor.
††††††††††† Mr. Moyer stated when you are looking at the $113,000, you can use that in financial advisory costs and you are still going to pay an underwriter.† When these bonds are retailed they are still going to be bid on by underwriters who will go into the secondary market and sell these to their purchasers.† You are still going to pay something to an underwriter.
††††††††††† Ms. Archer stated it is a little easier for municipalities to do a competitive bid rather than a negotiated sale because everyone understands what a city is but for our special districts you have to be able to tell the story of what the district is in order to be able to get buyers to buy the bonds and understand who we are and what we are doing and what the security is.† Because you have to be able to tell that story, you need to lean toward the negotiated sale so that you have someone representing you to tell the story.† Prager, McCarthy & Sealy has been our underwriter since the beginning.† Doug Sealy was with Goldman Sachs in 1970 when we sold our first bonds.† There isn't anyone better to tell our story than Mr. Sealy because of his history with the District.†
††††††††††† Mr. Lyles stated I have listened to the comments by management and I can echo all of them.† The only additional information I can offer is that I have been involved in bond transactions with other underwriters in other districts as well as the City of Fort Lauderdale.† Prager, McCarthy & Sealy is the big player in the special district business and therefore, when they are telling the story they come to the market with a certain amount of substance and credibility that not everyone has.† Different people are trying to get into this market around the State of Florida but they are in some cases new at it and feeling their way.† As to the competitive versus negotiated sale, in the case of the City of Fort Lauderdale which has entered into some substantial financings, they have occasionally tried a competitive sale just to test what is going on and make sure the numbers they usually are getting are within tolerable limits and they have mostly done negotiated sales.† The competitive sale is not something that the City of Fort Lauderdale does on a regular basis.† The numbers and the proposition all seem to be well within the normal limits of transactions of this nature that I have seen.†
††††††††††† Ms. Kiser stated I distributed a copy of the engagement letter to you.
††††††††††† Mr. Miller stated the letter from Ruden McClosky mentions a $40,000 fee.
††††††††††† Mr. Moyer stated the range goes anywhere from $35,000 to $60,000 for bond counsel.† This is within range.† They are a local firm.
††††††††††† Ms. Kiser stated the $40,000 fee is included in the cost of issuance.† All of our expenses are included in that figure.† The $113,000 is 1.25% of par.† We pay for our own counsel to prepare an offering document.† We are responsible for communicating with the bond insurers and all of our costs associated with that we pay for.†
††††††††††† Mr. Moyer stated Mr. Lyles will have some expenses related to giving opinions relative to the status of the District.† That is in the cost of issuance.
††††††††††† Ms. Archer stated the Trustee and Trustee Counsel is in there, the printing costs, and the rating agency fees.
††††††††††† Mr. Fennell stated it looks like there is about $350,000 in costs; cost of issuance, bond insurance, rating agency, discount.† We will get back $577,000.† There are no out of pocket costs to us.
††††††††††† Ms. Kiser stated all the costs are incorporated into the par amount of bonds.† None of those fees get paid unless we come back to you with a structure and deal that you approve.
††††††††††† Mr. Lyles stated I am sure they have used a standard figure for District Counsel in the cost of issuance as well so it really wouldn't be out of pocket in terms of the extra work that District Counsel will have to do to issue opinions, sign off on all the documents and do everything that has to be done to have a bond refinancing.†
††††††††††† Ms. Kiser stated it includes everything.†
††††††††††† Mr. Miller asked how does Ruden McClosky get involved in this?
††††††††††† Mr. Lyles stated bond counsel is a requirement.† It is up to the Board to select them.† I believe they have given you a proposed engagement letter that Prager worked up having worked directly with them on other issues but that is not a requirement of the transaction.† That is the suggestion of Prager and they have apparently already looked into it and have some involvement in it.†
††††††††††† Mr. Miller asked is it something that we have to do a competitive bid on?
††††††††††† Mr. Lyles responded no.
††††††††††† Ms. Archer stated in the past we have used a firm out of New York and the attorney we worked with is no longer with that firm.† Because of that we selected a firm that is local in order to save money and we have worked with Ruden McClosky before on other districts and we know them to be competitive and to understand the district concept.† There are other firms in the State.† This is probably the most local firm that does that type of work.† There are firms out of Tampa who could do it, Tallahassee and Miami.† We just brought to you the firm that we felt could do the job that was local and could get it done.†
††††††††††† Ms. Kiser stated we had to do some research in doing our refunding analysis and Denise Ganz of Ruden McClosky has spent a good bit of time reviewing all of the old resolutions to make sure that we have the authority to do another refinancing.† She has actually spent time working on this transaction.† We have worked with her and her firm a number of times.
††††††††††† Ms. Archer stated the reason for that is that some of these bond issues are so old and dated, the laws have changed and they have to be updated and bring everything current.† She has been very helpful in getting us to where we are today so that we can bring you this presentation.†
††††††††††† Mr. Eissler stated it appears to be a win/win situation.
††††††††††† Mr. Fennell stated I have been waiting for this to happen for some time because of the low interest rates.
††††††††††† Ms. Archer stated it wasn't until we made a payment on May 1 of this year that we could do this.† There was a call protection up to May 1, 2002 on the bonds that we are suggesting be refunded.† It wasn't until then that we had an opportunity to bring this back to you.† We have been working on the numbers.
††††††††††† Mr. Fennell stated I think it is a good thing to do.† I can't tell if it is good value as to whether we are paying too much or not.† I assume since management deals with other groups they know if these fees are usual and customary.†
††††††††††† Ms. Archer stated if this were a new bond issue in a new district, you would be paying $2.00 rather than the $1.25 per thousand of bonds.
††††††††††† Mr. Moyer stated 2% is the normal underwriters fee.†
††††††††††† Ms. Archer stated it is a good rate for a refunding for us.†
THIRD ORDER OF BUSINESS††††††††††† Consideration of Award of Contracts
††††††††† A.††† Underwater Diving Services
††††††††††† Mr. Moyer stated there was an issue that Mr. Moore raised last month about whether the low bidder understood that he was only going to get the C.S.I.D. proposal.† The way the bid documents were written it was clear that that was the case and we recommend that we award this contract to the low bidder.†
††††††††††† Mr. Fennell asked did we talk to them and they understand it?
††††††††††† Ms. Archer responded yes.
††††††††††† Mr. Moyer stated included in your agenda package is a memo from Mr. Moore outlining that we received three proposals and the lowest, responsive bid was from Cliff Berry, Inc. in the amount of $3,440.00.
††††††††††† Mr. Fennell asked what tanks are we talking about?
††††††††††† Mr. McKune responded the tanks located on the plant site, the water and wastewater.
††††††††††† Mr. Fennell asked have we done something like this for the emergency pumps?
††††††††††† Mr. Moyer stated those are LP tanks and they are checked annually by the fuel supplier.
††††††††††† Ms. Archer stated they are actually owned by the fuel supplier.† If they become deteriorated, they bring out a new tank and replace them.
††††††††††† Mr. Fennell stated given that we are going to have more pumps, are we going to need bigger fuel tanks?
††††††††††† Mr. McKune responded we are having a new generator put in as part of the wastewater plant and it will have its own above grade double walled fuel tank with a generator and engine sitting on top of the tank, all enclosed and soundproofed.
††††††††††† Mr. Miller stated in the bids there is a range of prices for additives.
††††††††††† Mr. McKune stated sometimes that is how the contractor spreads out his profit.†
††††††††††† Mr. Fennell asked have you worked with this firm before?
††††††††††† Mr. McKune responded I personally have not.† This is normally a District function.
††††††††††† Ms. Archer stated Mr. Moore put this out for bid and he checked the qualifications of the bidders and he put in the memo that they all attended the prebid meeting and he believes they are all qualified.
††††††††††† Mr. Lyles stated I am aware of some substantial work that the Cliff Berry firm has done in the eastern part of the county over a long period of time.† He is a well known contractor in this field.† He has worked for a number of private and public entities.
††††††††† C.††† Update on Award of Contract for Rehabilitation of Three Water Treatment Units
††††††††††† Mr. Moyer stated as you will recall last month we asked the Board to give us permission to receive bids.† We had put on the street a notice that we wanted to refurbish the three water treatment plants.† Our concern was that we wanted to get that work done during the rainy season because that is when our water demand is the lowest.† You authorized us to proceed with that if the bids came in that were not out of line and under the $150,000 that Mr. Moore estimated.† That was done and the bid tab is in your agenda package.† We were able to get that done for $147,743.00.†
††††††††††† Ms. Archer stated that is also the on-site contractor so he doesn't have to mobilize in order to do that work and that usually results in a cost savings to the District.
††††††††††† Mr. Moyer stated I understand from Mr. McKune that the first accelator, the biggest one that we have that is the most critical, has been taken off line, cleaned and is going to be put back on line over the weekend.
FOURTH ORDER OF BUSINESS††††††† Consideration of Change Orders
††††††††† A.††† Change Order No. 3 for the Water Treatment Plant Improvements with Intrastate Construction Corporation for a New Increase of $75,708.46
††††††††††† Mr. McKune stated as you know we have had this water plant project underway for quite some time.† The original contract was $1,447,502.00.† We have existing change orders 1 and 2 in the amount of $17,087.37 with a current contract price of $1,464,589.37.† This change order is in the amount of $75,708.46 which is a number different than what is in your agenda package which is one item I added since the change order was put in the package.† On page 2 is an additional agreement that the contractor has signed that basically says that once he agrees to this particular change order on these items, he is now and forever foreclosed from coming back for any additional direct or indirect or consequential costs or damages.† This is something that Mr. Lyles was instrumental in having included in change orders.†
††††††††††† Mr. McKune outlined each line item in the change order.†
††††††††† B.††† Change Order No. 2 for Wastewater Plant Improvements Phase I with Intrastate Construction Company for a Net Increase of $74,138.64
††††††††††† Mr. McKune stated the original contract amount was $4,406,338.00.† We have one approved change order to date in the amount of $143,022.29.† The amount of this change order is $74,138.64.† We also have the disclaimer language as we have in all change orders.† We are doing some repiping.
††††††††††† Mr. Eissler asked is the area mapped well of the existing piping?
††††††††††† Mr. McKune responded we thought it was but it is not.† We knew where piping was in general but we could not go out and say dig right here.† We could say the pipe is in this area.† As we uncover piping we are locating it.† We are tying it into physical above grade features and ending up with a CADD based set of as-built drawings for all the new piping and all of the old that we can find.† Fortunately, a lot of the old piping we have removed from service.† We will come to you with different programs to give you a way to quantify the amount of repairs and replacements you should look forward to on an annual basis going forward.† The more immediate problem is going to be the 14" force main that comes in the front gate.† In the near future we are going to build a guardhouse just inside the front gate and it will be on top of the 14" force main.† We are not going to be able to do that.† Hopefully, within a week and a half we will excavate down to the force main and take plugs to see what kind of shape the pipe is in.† Hopefully, when we do that we don't collapse the top of the pipe.† To guard against that we will have some hydraulic pumps available and a pipe run down to an existing newer force main that is about 600 feet away so that if there is a rupture it will be contained within that excavation, the pump will immediately be turned on and it will be piped in the force main, it will not bubble out and fill up the pond.† This is the kind of thing we need to do with that old pipe.†
††††††††††† Mr. Fennell asked is there something more sophisticated we can do to locate these pipes?† You are doing the computerized drawing which is great but not so great if you cut into the middle of an old pipe.†
††††††††††† Mr. McKune stated we have good field measurements of good as-builts for anything outside the plant site, all the water mains, force mains and subdivision lines.† We know to the foot where everything is.† The force main I just mentioned we know exactly where that is.† Some of the process piping that was put in under lump sum contracts years ago where the as-builts are less than ideal we have hopefully eliminated with this new excavation and location process.† That takes care of the plant site.† I am not concerned about locating anything off the property.† The only remaining issue is, what kind of shape is it in.† There are sophisticated ways of finding those pipes.† For gravity sewer pipes we can continue what we have been doing and that is running a TV through checking for leakage and where feasible putting in sealing equipment which will help decrease infiltration.
††††††††††† Mr. Fennell stated I am more concerned about digging a hole and getting surprised.
††††††††††† Mr. McKune stated we will continue to get surprised not because of piping but because of electrical lines, and telephone lines.† There are a lot of lines that FP&L put out there since the plant was constructed that we don't know with any great degree of comfort what it is.
††††††††††† Mr. Miller stated I presume every time they do something there are records and engineering drawings.† I know when we do something here, we have all the measurements accurately.
††††††††††† Mr. McKune stated fortunately there is a firm that will come in and identify underground piping.† You can now call FP&L and they will come in and paint the lines on the grass or asphalt and we can bring in a surveyor and locate those lines so at least today we know where they are.† Those are the main trunk feeders.† The smaller lines, we just don't know with precision.
††††††††††† Mr. Miller asked are there records that we can have someone research?
††††††††††† Mr. McKune responded they kept no records at all once they leave the transformer.† Most of the newer lines on the plant site are encased in concrete so we don't have that much of a problem with random excavations but we are at risk on the older lines.† Given the amount of work we are doing on the plant site, we are minimizing that problem going forward.†
††††††††††† Mr. Eissler stated all of this is being corrected as you go.†
††††††††††† Mr. McKune stated Mr. Moyer is distributing a letter from me regarding Well No. 4 that is located on the south side of Atlantic Boulevard, west of University Drive.
††††††††††† Mr. Moyer stated we have talked about the problem before and the Board is familiar with it.
††††††††††† Mr. McKune stated the well was experiencing bacterial contamination and we could not get the well to clear up and had a well service come in, pull the pump, put a TV down the well and they located a hole in the casing which may have contributed to getting some surface contamination down into the pumping zone of the well.† Also in looking at the wellhead on top of the well there are old, rusting components that may have allowed either surface dry contamination or liquid contamination to enter the well.† In talking with this particular service and after looking at the bid prices we had this year, we determined we would be better off totally rehabilitating this well which amounts to a reconstruction.† That is what the proposal represents.† This is based on unit prices previously established by competitive bids taken in May 2002 on a similar project for the City of Palm Bay.
††††††††††† Mr. Moyer stated from what we learned last month about awarding the bid for the four wells across the canal, $23,266.50 seems like a real deal to save a well.†
††††††††††† Mr. McKune stated these people are geared up to do the job, unfortunately they do not bid new well jobs.†
††††††††††† Mr. Eissler asked what if they are wrong on the time needed for the job?
††††††††††† Mr. McKune responded we will apply their unit prices to any underage or overage on that unit.† If it takes them an additional ten hours to develop the well, we will pay them an additional 10 hours at their unit price.
††††††††††† Mr. Eissler asked who oversees these people when it is being done?
††††††††††† Mr. McKune responded a combination of our inspectors and the District staff.† There will be additional costs involved in the overall rehabilitation of this well.† We will recommend replacement of some above ground piping and control valves and that will not be done by this contractor.† We may be doing this to other wells in the not too distant future.†
FIFTH ORDER OF BUSINESS††††††††††† Staff Reports
††††††††† A.††† Attorney
††††††††††† There not being any, the next item followed.
††††††††† B.††† Engineer
†††††††††††††††† 1.†††† Monthly Water & Sewer charts
†††††††††††††††† 2.†††† Update on Construction
††††††††††† Mr. McKune stated construction is going well.† The steel tank is just about complete.† We have a lot of major equipment on order to be delivered in about two months.† The contractor is making good progress.
††††††††††† Mr. Fennell asked when do we think that will be finished?
††††††††††† Mr. McKune responded on the wastewater plant probably January.
SIXTH ORDER OF BUSINESS††††††††††† Supervisor's Requests and Audience Comments
††††††††††† There not being any, the next item followed.
SEVENTH ORDER OF BUSINESS††††† Approval of Invoices and Requisitions
††††††††† Requisition 115 payable to CSID in the amount of $124,194.50
††††††††† Requisition 116 payable to CSID in the amount of $47,454.00
††††††††††† Meeting adjourned at 5:30 p.m.
††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† ††††††††††† ††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††
William Eissler††††††††††††††††††††††††††††††††††††††††††††††††††††††† Robert D. Fennell