MINUTES OF MEETING
CORAL SPRINGS IMPROVEMENT DISTRICT
A regular meeting of the Board of Supervisors of the Coral Springs
Improvement District was held on Monday, February 23, 2009 at 3:04 p.m. at the
District Office, 10300 NW 11th Manor,
Present and constituting a quorum were:
Robert Fennell President
Sharon Zich Vice President
Glenn Hanks Secretary
Also present were:
Kenneth Cassel District Manager
Jane Early CH2M Hill
Sean Skehan CH2M Hill
Stephen Bloom Severn Trent Services
Dan Daly Director of Operations
Jim Aversa Chief Operator, Wastewater Plant
Doug Hyche Utilities Director
Randy Frederick Drainage Supervisor
Kay Woodward District Accountant
Jan Zilmer Human Resources Manager
William G. Benson, CPA Keefe, McCullough & Co., LLP
FIRST ORDER OF BUSINESS Roll Call
Mr. Cassel called the meeting to order and called the roll.
THIRD ORDER OF BUSINESS Approval of the Minutes of the January 26, 2009 Meeting
Mr. Fennell stated each Board member received a copy of the minutes of the January 26, 2009 meeting and requested any corrections, additions or deletions.
Mr. Hanks stated on page three, “dusty winds” should be “musty winds.” On page 19, I was referring to demolishing. The third line down on page eight should state “consumptive water use permit.” On the bottom of page 24, ‘rewinding’ should be ‘relining’.
THIRD ORDER OF BUSINESS Acceptance of Financial Audit for Fiscal Year 2008
Mr. Fennell stated item three is acceptance of financial audit for fiscal year 2008. Keefe, McCullough & Co., LLP is here. The financial statements were sent out to us all.
Mr. Benson stated I am a partner in the firm of Keefe, McCullough & Co., LLP. I have been here before. Without going into much accounting detail I will try to point out a few of the items, which I think are significant to you as Supervisors as well as to the District as a whole. We completed the audit for the fiscal year ending September 30, 2008.
Pages one and two of the report is our opinion, which really is what we are engaged to do; come in, do an audit and see if the books and records accurately reflect the state of what the District is financially as well as the results of its operations. We then issue a report on it saying either we were able to satisfy ourselves, in this case you have received what you received in the past which is what they call a “clean opinion” or “unqualified opinion” that the financial statements accurately represent where we were at the end of September as well as for the year which ended. I can point you to a few things you might want to look at which I think would be significant to me.
There is a narrative which appears on page three. This narrative, Management’s Discussion and Analysis, goes all the way to page seven. One of the things I will point you to is on the top of page five. If you read the two lines which start the page it says, “As noted earlier, net assets may serve over time as a useful indicator of financial position. The following table reflects the condensed government-wide statements of net assets as of September 30, 2008 and 2007.” On the top table, if you look in the bottom right corner, the total net assets for September 30, 2007 were $29,957,719. This year they are $31,628,400. We had an increase in net assets of about $1.67 Million over the past year.
I know I got myself in a bit of a wicket two years ago when I said to the Supervisors we are doing great with how much we are reducing debt and managing our working capital and what not. There were people in the District who kind of felt like, “What did he say that for?” I said, “Because we are doing great.” It is my job to tell you where we are really at. I can show you how I think the District is doing very well. This is at a time where there are a lot of districts who are not doing well. As a result, we have good liquidity.
We had a big bond issue in 2007. We spent approximately $6 Million of it last year. I know we are about to embark on a big campaign here coming up within the next month or so, which will be another $6 Million or $7 Million. Then we will have $15 Million left to be used for future refurbishment projects. I think it is going very well. It is staged very well. It looks like it is really going the way you anticipated. I am not an engineer so I do not give many engineering opinions. I am an accountant and I know how to read one of these. I do not go to the doctor and say, “My ear hurts. Can I borrow a scalpel?” He is the guy with the medical degree. Look in my ear and tell me what you think. I point out some of the things I base my opinions of where I think the District is at based on facts. My opinion is we continue to do very well.
I will point you to a few other areas in the financials. The one I think really got me in the jackpot the last time, but I am going to stick by my comment, is back on page 16. We are looking at our overall water and wastewater. If you look up top, we have net cash provided by operating activities in the amount of $2,917,389. This means almost $250,000 a month from the operation of our facility. Then you can look at what we did with it. If you look down below, we paid so much in interest; $1,095,000. We paid principal in the amount of $1,485,000. We started investing the funds from the bond issue in the amount of $6,653,709. If you look at the third to last line it says, net decrease in cash and cash equivalents in the amount of $5,082,856.
We did have a reduction in cash. We are going to have a reduction in cash in 2009. We are going to have a reduction in cash in 2010 as we continue to spend off those bond proceeds we have. I do not think that is the operative number that the cash is going down. I think we are making an investment with the plant, which will set the District up for the next 20 to 25 years by making this capital improvement. You could look at the cash decrease and panic. I would say the real thing to do is look at the cash from operations up top and then the cash we are investing from the bond proceeds is more of what I will call a scheduled expenditure. The other thing I think, other than our financial audit, we do a financial in compliance audit. I know each year I point you to these reports, but they are very important. If you look all the way back on page 33, there are two reports; on pages 33 and 34 and then pages 35 and 36.
The first one is the Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance. We do a take on take-in funds. We have to report, not only to you, but it is going to the State and other people about what our internal control structure is. We are using, as a qualified governmental agency, other people’s money. We are collecting money from the revenues of Coral Springs and they want to know that we have good internal control over it. If you look on page 34, the very top paragraph ends with “We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses.” This is an important statement.
We have had comments here in years gone by when we had things we thought raised the threshold of being mentioned in a report like this. This year there were no such items. I will make another comment about that in a minute, but that report is very significant. Sometimes I present financials to people who are not interested in talking about those reports. Those are the reports that if we told you publicly, you have a lot of things you need to address and you do not address them, the responsibility is in your court and I would want to know if you are here spending your time doing that because at a minimum it is really tight and I am not going to get myself in trouble by my participation in it.
The last report on pages 35 and 36 talks about a number of things we are obligated by the State to mention to you and talk about such as whether or not we deposited the funds in a qualified depository. I am going to point you to the second page, first paragraph and last sentence. We go through all of the different violations of laws, rules, regulations, contracts, provisions or abuses which have occurred during the year. We end the report with, “In connection with our audit, we did not have any such findings.” I would want to know that.
I heard one of the Supervisors before the report say it was a good report, I would say to you we have been here in more difficult years and in good years. I give a lot of credit to your existing staff this year. We really experienced a nice move towards having the audit run smoothly. Things were in good shape when we got here. As a matter of fact, I had a meeting with the staff this morning. A gentleman named Mr. Grace could do nothing but complement the people he interacted with; Mr. Daly, Ms. Woodward and everyone he interacted with. Without going into too much detail about the other years, I am going to say it really went well this year. It seems we had other years where it required a little more pulling and tugging to get all of the required information. This year we were in good shape and the people were a pleasure to work with. It makes my job easier. If you have questions, I would love to answer them. If not, they would like for you to act on this and see whether or not you would like to accept the report.
Ms. Zich stated I think it is great. Ms. Woodward and staff; well done. Good job this year. I usually spend time with Ms. Woodward each month going over the financials. If there is something important, I bring it up at the meeting. A lot of the little things I have questions on I spend a half an hour to an hour with Ms. Woodward each month. If she does not know right off the top of her head, she will have it for me within a day each time.
Mr. Fennell stated I think there is a provision for depreciation. I guess it is becoming a stronger factor as we try to become more business like. Generally speaking, what that means to a firm is it is not a taxable item so they love that kind of thing. Of course, we do not pay taxes. What is really left to do is to build up the depreciated funds to be spending as you go.
Mr. Benson stated in what I call ancient times where I come from, years ago when you had capital outlay like that it went through the operating statement at the time. Then there was a big move, I think we had a discussion about this a couple of years ago, when they implemented a statement called GASB-34. I think it was about four years ago. In order to give government financials more of a look and feel like a for profit entity, they took all the infrastructure records, put it on the books and then they depreciated it.
If you are going to go out and spend $30 Million on a bond issue to do a $30 Million improvement, rather than to write it off over one year, we might write the plant off over 30 years so we are going to match the income which comes in from the operation of the plant with recovering the cost. We are going to write off $1 Million a year for 30 years so those expenses are matched with the benefit period of when we are going to be using the plant. In my mind I always do a calculation like you are a net income. If you add back depreciation, then you also have to subtract debt payments. Debt payments do not really go through your P&L either. They retire liabilities. If you were breaking even cash flow wise, if you took your bottom line and added back depreciation and you were at zero, I would say you are going to have a hard time because you need to have principal which does not go through your P&L.
In this case we have a bottom line this year and then we paid $1.5 Million worth of principal back. When you take your bottom line and add back your depreciation because it is non cash, you then have to take off of that your future $1.5 Million a year in bond principal. When you do that calculation in your head you are going to be able to come very close to what I call your event cash flow for the year. I think you are really close. When I was looking at the statement on page 16, I was looking at your cash from operation up top, then your cash items, then your principal payments on your debt, I am trying to do that calculation to figure out where you are really going from cash in and cash out. The depreciation is non cash. The only thing I would say to you to further modify your thought is to take off your $120,000 a month if you wanted to look at it that way or $1.5 Million a year in bond principal and now you are right where you need to be.
Mr. Hanks stated that is $1.5 Million we are paying the bondholder.
Mr. Benson stated there is a very detailed schedule in the back. Go back to page 28. One of the things I will tell you is we did a 2007 bond issue. The 2002 issue was the best. If you look at the rates we got on that one, it was a grand slam. We did really well in the 2007 issue as well. If you look at the previous page, the interest rates range between 3.75% and 4.75%. If most business could borrow at 3.75% to 4.75%, they would take all the money they could get. That is some pretty attractive borrowing. When you look at the schedule on page 28, I am looking at the first column, $1,560,000, $1,655,000, $1,750,000, $1,815,000, $1,880,000 and then it looks like there is a big jump, but that is a five year period. You really have to take $6,725,000 and divide it by five. It is less than $1.5 Million a year. Then you have $7,205,000 for a five year period. That too is less than $1.5 Million a year.
They did a good job of spreading the maturities on all three of your outstanding bond issues so you will be in the situation where, you are almost at maximum debt service right now. It goes up to $1,880,000 and then it starts to go back down. You did $1.5 Million already this year. I am not a psychic so I do not know how many hurricanes are going to swing through South Florida in the next five years. I do not know what impact they will have on this District versus a district which is 10 miles away. What I am saying is, as you sit today governing this District, this District is in good shape. It is going to have all of the same business challenges that every other business has out there, but right now after doing the 2007 bond issue, looking at how we are doing with spending those proceeds and looking at the expansion project we are about to embark on, we are in good shape. Barring any unforeseen events which may come; so far so good.
Mr. Fennell stated I think the other issue we have been wrestling with is; is our money safe? Even though we have a bunch of state provisions, which pretty much pushed us into having the SBA, we low and behold found out the state does not back that account. They do not have any insurance.
Mr. Benson asked the government investment pool?
Mr. Fennell responded yes.
Mr. Benson stated as you know we do quite a bit of municipal work. They can have some pretty high balances as well. They invest in the same pool you do. There are some things I have learned in the last few months which I really never wanted to learn. In other words, I have gotten the accountant’s laymen’s PHD in securing your money. There were people buying T-Bills at losses and saying, “We do not care about the return, we just want to make sure we get our principal back.” There are some things I learned from people who have higher balances. For instance I learned, and it is something your legal counsel can maybe check out if it is something you want to pursue, if you invest money with an FDIC insured bank such as Wachovia or Bank of America, if you have what they call a deposit account that you do not make any withdrawals from, there is no FDIC limit on it. If you put $10 Million in an account and you do not deposit any money or transact any money in that account, it is a deposit account where you make a deposit and you do not touch it again. My understanding is there are no FDIC limits on it.
Ms. Zich asked is this in writing some place?
Mr. Benson responded yes. This is why I am saying you might want to check it out through legal channels. I believe the FDIC limits of $100,000, $200,000 and $500,000 do not apply. This is what I am being told by several municipal clients. I have not done it myself. I am saying you might want to discuss it with either your bank or have your outside legal counsel look at it. You are very limited in terms of where you can put your money because of the type of entity you are. You are limited in terms of where you can park deposits in the first place. You cannot go too far off the beat and path. People have gone to T-Bills and anything which is a US Government instrument. When the banks are struggling the way they are struggling now, if you park some money with them and you promise you are not going to transact any business with it, they will be glad to take your money. There is some provision. I will be happy to talk to Mr. Lyles offline about it.
I have an individual who I know well, which used to be the president of SunTrust in the State of Florida. I called him about this deposit account and asked him if it was legitimate because I never heard of anything like it. He said it was not one of the provisions they advertise to people, but there is a provision where the FDIC limit cap is waived for a certain type of account which gets parked at the bank. Amongst other things you should look at you may want to consider looking at this as well. It does not matter to me. I am not selling it or getting anything from the banks for it. I am just saying it is something I have learned in the past 60 to 90 days. You always had the premise that Bank of America, Wachovia or Citibank would be there. It is a challenging market out there right now. I do not think anyone was projecting this and if they were, they were probably predicting it for the last 25 years. They are the doom projectors. It is a very challenging market out there right now. There are a number of municipalities and other quasi governmental entities. If you think about it, it is a lot more entities than you think. There are a lot of entities which operate in this quasi governmental state and in many cases they are holding millions of dollars of funds. For a lot of those people, their objectives have turned to just return of their principal. The concept of a return has almost become secondary. They are very concerned.
Mr. Fennell stated we have withdrawn as much of our money from the state as they will let us. We looked at CDs. I do not think we have heard about this. I have not heard about this.
Mr. Benson stated you probably talked about going through a security at one time. There was a time, I do not even know where they are now, but 60 days ago we had people paying $1,005 to buy a $1,000 T-Bill. They were buying them as fast as you could buy them and the prices were going higher. I am not saying it is the right strategy. I am saying it is really choppy times out there. People were trying to get to high ground before the flood. That place became really popular. I do not make it my business to doom and gloom people because I do not know what the future holds. I am just saying I am not convinced at all this shakedown is over. I still see a lot of people who are concerned about the news and everything getting announced each day. Institutions you thought were secure, we are learning more and more about. I see individual clients doing crazy things; what I perceive as being unusual measures such as buying gold or taking their money home. This is why I am saying you are limited in terms of what you can do within your investment policy because of the type of organization you are in. The security part of it, the return and the principal, is probably the paramount part right now.
Mr. Fennell stated we are about to have another Treasurer and Assistant Treasure, but it is not so much that. Our current structure is we have Ms. Woodward doing yeoman work for everything. Then we have another structure above that, which is essentially Severn Trent Services looking upon our structure. I guess you are familiar with this. Is it sufficient? Is there a better way to do this?
Mr. Benson responded it is probably more oversight than most districts have. By the same token this is a larger and more sophisticated District than most districts out there. I believe it is sufficient if everyone is doing their job within this, which I believe they are. You have a good dedicated staff doing a lot of things. Then you have a larger national company with sophisticated District Managers overseeing. I think it is plenty. We are also coming in and I am not saying we are the authority, but we audit many districts. We do governmental and quasi governmental organizations. Our staff is a governmental staff and we too look at that to see if it is sufficient. I think you have good oversight over the transactions, making sure things get paid from the right funding source and that this statement really does reflect what you are looking at in the end of the year. I think it is going pretty well. I do not know where it goes from there. I do not know if some day you will need a junior or another clerk to do some of this other type of work. I imagine you will have to talk to Mr. Cassel and Mr. Daly to figure out if you are at the right staffing level or if you need to add somebody based on the transactions. It seems like it is really getting done properly. I have seen other periods where transactions were not getting recorded in the bank records and no one was reviewing the bank records. It really seems like it is going well now. They are getting the monthly statements reviewed and you have a Supervisor working with her. I think that is great. If all districts had that many active people, it seems to me like it is running pretty well.
Mr. Hanks stated I have a couple of more questions. On page 24 of your report you reference interest rate risk and custodial credit risk. What are those?
Mr. Benson responded interest rate risk means if you were to buy an instrument, for instance, for a fixed amount or you borrow for a certain amount, you can find yourself behind the market. I will give you an extreme example. There were people who bought 30 year municipal bonds at 2.5% back in the 1970s thinking they could never fall behind. Well you are okay, but with inflation at 3% or 4% you are losing a little ground. In this example you are losing purchasing power each period of time. That is interest rate risk. Interest rate risk can also be subject to; you go out and float a set of bonds at 9% and then you turn around and the market is down at 2% or 3%. By it being a 6% to 9% bond you have interest rate risk as opposed to if you had variable rate bonds. When the market goes down seven points, you go down seven points. That is interest rate risk.
Mr. Hanks asked what does custodial credit risk translate into?
Mr. Benson responded that is Mr. Fennell’s earlier question. We thought we were good with, I do not want to use the name. We always assumed ‘this’ entity would be good. They are the custodian of the assets. They were holding our funds and we always thought they were the Rock of Gibraltar. Now we find out they are a lot less than that. As a matter of fact, there is a concern we might not even get our money back from them. That is what custodial risk is.
Mr. Hanks stated so you are saying none of the District’s investments are subject to custodial credit risk. Is this still true?
Mr. Benson responded I believe that is true. I believe where your funds are now is not subject to custodial risk. I am saying this because the biggest chunk of your funds is the proceeds of a bond issue, which is a separately segregated escrow account funded out of the proceeds when the bonds were sold. They are not really subject to depository risk like you would have in a regular savings and loan or commercial bank.
Mr. Lyles stated they are held in a trust account to be used for limited purposes subject to disbursement only upon presentation of a requisition which is spelled out in the trust instruments. They are not the same as the SBA or a regular S&L type of account.
Mr. Fennell asked are there any other comments as we go through, look at the assets and things like it? The only thing I read, and he listed well in there, is one which keeps worrying me. Well there are two things. We have this huge investment in pipes in the city, which I worry someday we will have to replace them all. This is one issue I have. I do not know if we placed that as high, since we are now talking about assets declining in value of a certain period of time. The other one we really have not put in there is how much money it took us to build all of the canals, which is also an asset. We paid for it with basically 25 years of bond issues. If I look at what is happening in NSID, they are still building canals. There are huge amounts of money going to that. It seems to me if we had to dig those canals today, we would probably pay $25 Million or more.
Mr. Benson stated I will point you to an area of the financials you can look at regarding that and then I am going to defer to the engineers. Most municipalities and other people we see are not replacing their pipes. They are doing all kinds of other innovative things. I do not know if it would be an out and out tear out and reinstall or if it would be modifying what we have in some way. I am going to point you to a table which is on page 25 of the statements. About four lines down it says Business-Type Activities. It talks about the capital assets and it has construction in progress. That went from $6 Million to $10 Million over the year by the additions we had. If you look at the next category it says capital assets being depreciated; infrastructure, buildings, machinery and equipment. We have $74 Million worth of stuff. It is every penny we ever spent since the District was established. In that part of it we took out of CIP and into fixed assets another $2.4 Million so at the end of the year we are at $76, 900,000. Against that, over the life of those infrastructure assets, the next category down we stated $49 Million worth of depreciation. If you get all the way to the bottom right of that table, it has $38,788,170.
If you come forward to page 14 in the report, we are now looking at our entire enterprise system; all of our business assets. If you look at the last asset, right above the first subcategory, it has capital assets (net) in the amount of $38,788,170. That table we were just looking at on page 25 gives you a tremendous amount of detail about that one number in the financials. It is just like when you buy a house. When you buy a house everything is brand new and you do not have to do anything for a while. When the house becomes 15 or 20 years old, you have to start making a commitment towards it. I think you have done this. You identified it and did the bond issue. You requested some money for specific projects and some money for to be named items. I think we are trying to build into our current cost of operation the fact we need to have a reserve fund because the District is not new anymore. We are into it a little bit. This is the reality and I am not sure I have an answer of how you get around it. Once it is 25 years old, it is 25 years old. The engineers will probably tell you what the solutions are in terms of the aging of those assets and how to refurbish them.
Mr. Hanks asked how do you depreciate something which has a life expectancy of 100 years or more?
Mr. Benson responded the accounting pronouncements give us guides on that. Things such as pipes are like 40 and 50 year life cycles. They do have long lives. We are $47 Million into a 75 year life.
Mr. Hanks asked do we get about two thirds of the depreciation?
Mr. Benson responded yes. We are trying to spread and recover the cost over a 40 to 50 year life on things like lift stations and transmission pipes. Where we are taking the computers over five years or furniture over seven years, we have a much longer life on those infrastructure assets. I do not believe it is ever going to be what they call a forklift renovation where you are refurbishing by picking it up and throwing it away. I think with those infrastructure assets it tends to be there are new great procedures and techniques.
Mr. Fennell stated there does come a time when you have to do this. Atlanta is doing it. The county has to be prepared for it. The engineers have to work out how to do it. What I think of as a Supervisor is how do we end up getting the money?
Ms. Zich asked do we get a bond issue?
Mr. Fennell responded we could do that or we could save the money. In a business you actually have capital. We once had $74 Million worth of assets. We now have $29 Million. Where did the $47 Million go? In reality what happened to this amount of money is with lower rates, we have essentially returned the money to our stockholders, which are people, but the money is not there. There is going to come a time when you are going to have to spend the money again. You either save the money instead of returning it to them or you are going to be borrowing it.
Mr. Benson stated I think you are right on. If you can get to that point, you will be by far and away, ahead of most municipalities. If you could literally fund for your reserves like that, so like with your house, for example, when it is 20 or 40 years old you have saved enough to essentially have the next house in your hand. Without getting too much into it, I would argue the residents at the time would say they helped pay for it by paying off the first set of bonds. They might say, “I paid for the first system, but in addition to that you collected cash from me for the next system. I paid twice because you did not really use all of my money in the first place.” You floated bonds the first time around. That is the way most places do it. They go and say, “We paid off the system and now it is caput.” The next system, the second system or the digging up of the pipes and the replacement of the transmission pipes we do not have the money for. We are going to have to go out and float another set of bonds for $74 Million. Then we are going to have to collect from the residents over the next 20 or 25 years. I think if you can get to the point where you have funded reserves, it is a wonderful concept. It is a really great concept. I am in favor of it.
Mr. Fennell stated if you try to think in terms of long term of a viable city function, which I think we are supposed to do, then I believe you have to think in those terms. Not all of us are here to sell our house every three years. I have had mine for 29 years. I intend to be here for another 10 to 15 years. The question is if there is a smart way to do this. We will try all kinds of other things to save the system.
Mr. Benson stated we may have to go back to the market at the time and we are in a better position then we were day one with the District. We will still have some good equity, etcetera, but that project may be way beyond what I will call our existing capital reserve at that point. We may have to go to the market, borrow at the then market conditions and say our goal will be to pay this off over the expected future life of the new plant and what not. The more you can save now, I agree with you, it is going to lower the amount you have to borrow at that point and time.
Mr. Fennell stated what I do not want to see is a community which declines over a 30 to 35 year period and essentially has to be knocked down at the end of that period. You are showing us from a financial standpoint the amount of money of the net worth of our assets is declining.
Mr. Benson stated they are. That is not the end of the world. It is a way to look at it and as a result we are doing pretty well. Every time you have more than one person in an organization, if you ever want to see this at its epitome go to a condominium meeting, you go to a condominium meeting with 300 people who operate their personal finances 300 different ways and try to get some commonality on anything, that is the epitome of where you are going to have personal philosophy. You are taking a responsible hard look at the finances. Some people would say our job is to offer the service at the lowest possible cost. I am saying you have to balance those agendas. It is good to have low rates and it is good to be fiscally sound. I think you have done a pretty good job of balancing both of those agendas so far. Some of the big things are about what the future holds such as mother nature, which we do not control. It never hurts when operating a business to have a little bit of good luck on your side as well.
Mr. Cassel stated I would like to make a follow up comment on the audit. Mr. Benson did make the comment to Ms. Woodward and other staff. I also want to follow up that with Ms. Dvorshak, Ms. Michaels, Mr. Hyche, Mr. Aversa, Mr. Stover and the rest of them, with the things we put in over the last six to eight months looking at it to make sure people are signing off, I think it makes Ms. Woodward’s job easier, it makes Mr. Daly’s job easier and it makes my job easier. I want to compliment the entire staff for stepping up and making sure we are tracking the internal issues in a good way.
Mr. Fennell stated it looks again like we are in a strong financial position. I think we have had some help. We had the bond issue two years ago.
Mr. Hanks stated the other advantage of putting away the money and saving it is you can defer going out for bonds, worrying about interest rates and if your environment for issuing bonds is favorable.
Mr. Fennell stated we are also in a strong financial position during a hurricane. We actually have the money to go out and pay for things rather than wait for a check. We will continue to go with this. I think it also places us in a good position. We have a strong financial base, good structure and we can take on some of the things like additional interlocal agreements. It makes us a responsible member of the greater society.
FOURTH ORDER OF BUSINESS Consideration of Resolutions
A. Resolution 2009-2, Designating Stephen Bloom and Kenneth Cassel as Signatories
B. Resolution 2009-3, Appointment of Treasurer/Assistant Treasurer
Ms. Zich stated before we get to this, I did not know we had an agreement with Severn Trent Services at the time. I thought they were coming back with a signed contract before we put additional Severn Trent Services employees on it. Do we have a signed contract now with Severn Trent Services?
Mr. Fennell responded I think we do. I think it is a yearly review.
Mr. Lyles stated I do not think it expires every year, but I will take a look.
Ms. Zich asked do we have a signed contract?
Mr. Lyles responded we do. The District manager has a copy of it with him. It was approved by the Board subject to some final tweaking of some issues.
Ms. Zich stated right. I thought it was coming back so I was surprised when I heard it was signed. When was it signed?
Mr. Cassel responded the final signature was January 28, 2008.
Ms. Zich stated a whole year ago.
Mr. Cassel stated it was initially approved by a motion made by Mr. Hanks, seconded by Ms. Zich, to execute the amended management agreement with Severn Trent Services with modified scope of services, a new compensation structure, authorizing Mr. Goscicki and Mr. Lyles to review the contract and authorizing Mr. Fennell to execute upon final review.
Ms. Zich stated oh. I have been waiting and wondering why we were not getting a contract and now I find out we have one. I did not even know it. I never knew it. I was surprised because I saw the names here and I thought that would be pretty awful.
Mr. Fennell asked when did you come on board?
Mr. Cassel responded I came on board in April of 2008.
Ms. Zich stated and this was signed in January of 2008 before you came on board. All this time I was wondering why we did not have it signed. It has never been in the package. I never saw it.
Mr. Fennell stated okay. Well, apparently we voted on it a year ago.
Ms. Zich stated I thought everything was going to be redone and then it was going to come back to us.
Mr. Cassel stated when I came on board, if I remember, my first or second meeting on the issue was some insurance issues and some indemnification that Mr. Lyles was working out with Severn Trent Services to make sure the District was covered and all the rest of the issues were nailed down and the language was tight.
Ms. Zich stated well as long as Mr. Fennell was aware of it because I was not.
Mr. Hanks asked were there some small issues which were supposed to be addressed?
Mr. Lyles responded it was almost totally down to insurance indemnification. We went back and forth on the language. It is tricky when you have a public entity. They want to be indemnified. We do not want to indemnify them. That insurance type provision was the final legal review which was referred to in the motion approved authorizing you as President to sign the agreement. We worked those things out and proceeded at that point.
Ms. Zich stated I just wanted to see something and then when this came up because we are adding Severn Trent Services employees, I am thinking to myself that I do not remember having a final agreement.
Mr. Fennell stated we had to extend to the list.
Mr. Cassel stated we changed people out. We took Mr. Goscicki off and put me on as the District Manager. I was also put on as a signatory on the accounts with Ms. Rower as Treasurer. All we are doing is changing people.
Ms. Zich asked are the checks fine now with Mr. Cassel’s signature? .
Mr. Cassel responded we changed it after I came on board with Ms. Rower’s signature and mine. It now needs to be changed from Ms. Rower’s signature to my signature and Mr. Bloom’s signature because he is also local. He is the accounting manager for the District. He will be doing the reviews.
Ms. Zich asked are you in Coral Springs or in the surrounding area?
Mr. Bloom responded I am here in Coral Springs and I am actually a resident as well.
Ms. Zich stated I thought it would be nice to have a copy of the agreement since I never saw it.
Mr. Fennell stated alright. I think it is a good request.
Ms. Zich stated I just figured it would be in an agenda book at a certain time and I did not realize it was signed. I have been wondering why it was not signed.
Mr. Fennell stated it was signed, but I think we were going to have a yearly review anyway. It was one of our goals.
Mr. Lyles stated it does not expire annually; however, you can terminate the contract at any time without cause by giving 90 day notice.
Mr. Fennell stated it is February. In March let us put it on the agenda as a yearly review of the contract and of our current management structure to see how everything is working out. We had made a lot of changes between Mr. Daly and Mr. Cassel. Severn Trent came in with a different salary amount. They were $200,000 and they are $177,000 now.
Mr. Cassel stated we restructured some of the fees and things like it.
Mr. Fennell stated okay. Let us put it on the agenda for next month.
Ms. Zich asked who is Mr. Koncar, is he local and why is there not a member of the Board who is a signer in the event of a hurricane? Who is Mr. Koncar?
Mr. Cassel responded Mr. Koncar is the General Manager of Severn Trent Services for Florida.
Ms. Zich asked does he live in the area?
Mr. Cassel responded he is out of our St. Augustine office.
Ms. Zich asked then why would we put him on our account?
Mr. Cassel responded he is the Assistant Treasurer in 70% of our districts.
Ms. Zich stated he is in St. Augustine.
Mr. Fennell stated Ms. Woodward writes up all the checks. Who signs them?
Mr. Hanks asked what is your concern Ms. Zich?
Ms. Zich responded my concern is in the event we have to get a check signed soon or if we really needed to have a signature for some reason, he is in St. Augustine and not here.
Mr. Fennell stated well Mr. Bloom is here.
Mr. Hanks stated and Mr. Cassel is here.
Ms. Zich stated I just did not understand why we have him on it.
Mr. Cassel stated part of the philosophy of putting Mr. Koncar as the Assistant Treasurer is we are starting to double up on individuals. As an example; if something has to be executed and Mr. Bloom is in the hospital or something occurs with him, immediately there are certain things which have to be executed by the Treasurer. Mr. Koncar is the Assistant Treasurer. He can sign it immediately and it is out the door. Otherwise you have to come back to get someone else appointed.
Mr. Hanks asked do you need two signatures on many documents?
Mr. Cassel responded you need a Treasurer on many documents. You need a Treasurer and Secretary or Treasurer and Assistant Secretary to sign different things such as reports. Part of what we are trying to do is in the event A is not available, B is there so the smoothness of the operation continues to make sure the District is covered and protected.
Mr. Hanks stated so if Mr. Bloom goes on a vacation to the Caribbean, a hurricane swings up from Jamaica and decides to go after us, you are here and have the availability.
Ms. Zich stated I can understand Mr. Cassel on it. I can understand Mr. Bloom because he is here. I just do not understand someone who is not here.
Mr. Fennell asked how many signatures have to go out on a check?
Mr. Cassel responded two signatures.
Mr. Fennell asked who are those signatures normally?
Mr. Cassel responded as of your prior resolution it was Ms. Rower and I. This is why the first resolution, Resolution 2009-2 is Mr. Bloom and I as signatories. You require two signatures on a check. Some districts do not require two signatures.
Mr. Cassel stated the attorney sent a revised Resolution 2009-3. Initially it was prepared under Chapter 190 rules versus our operating rules. This is why you have a revised resolution.
Mr. Lyles stated in a CDD when you change or add officers due to a vacancy you typically elect all the officers again. Since we are a special act of Florida Legislature we have particular rules we follow. One of those particular rules is we do not elect the Treasurer. We designate a Treasurer and Assistant Treasurer. We do not have them as part of the election process. Only the three of you hold those elected offices which are outlined in your agenda package. The resolution which is on the table in front of you correctly reflects the fact we are designating treasurers and not electing officers for the entire slate of officers for the District. You will not have an election of officers required until you have your next landowners’ election. The Treasurer is something which can change more frequently.
FIFTH ORDER OF BUSINESS Staff Reports
· CH2M Hill Customer Service
Mr. Cassel stated the first item is an update on the projects such as the filtration plant, the plant application, the well plant, Monitoring Well #3 and the integrity testing project coming up. Mr. Hyche, Mr. Daly and I met with CH2M Hill. We are fine tuning the communications flow. I believe it will continue to improve. You will see Ms. Early, Mr. Johnson who is the lead on the filtration plant and Plant F, you will see Mr. Bulman on the well drilling and I do not know who is doing the MIT yet. It will probably be Mr. Skehan. You will see them in here from time to time. They may or may not be depending on what is necessary to report and give status updates on. We narrowed down the line of communications to help streamline the process and continue to have things move forward.
Mr. Hanks are you doing a balance between producing staff presence with the ability and knowledge of specific fields to provide information to us so we are not stretching it out for a month before action?
Mr. Cassel responded yes. It is a positive tweak we have been working on lately.
· Discussion of Interlocal Agreement between Coral Springs Improvement District and Pine Tree Water Control District
Mr. Cassel stated the next item is the proposed Interlocal Agreement with PTWCD, which is modeled after the Interlocal Agreement with SWCD. I will be presenting it to the PTWCD Board. It formalizes the relationship between CSID and PTWCD on the services CSID performs for them. It is presently not formalized. We are trying to clean up the communications to make sure everyone is on board with exactly what is supposed to be performed and what is not. This is just an informational item.
Mr. Hanks asked has this been conceptually agreed to by the management of PTWCD?
Mr. Cassel responded I have not taken it to the Board yet, but since I manage PTWCD as well I have been looking at it to make sure both sides are happy.
Mr. Hanks asked this is not a unilateral push on somebody?
Mr. Cassel responded no. It protects both sets of entities. We will later come back with one for NSID because there are certain interrelational things which need to be squared away as well.
Mr. Hanks asked do we open up any risks by entering into this agreement?
Mr. Cassel responded actually it is going to protect us more than what we have been doing.
Mr. Lyles stated what we have been doing is like an informal handshake agreement in accounting for the dollars back and forth. This takes what we have been doing, lays it out in writing, requires signatures, provides for insurance and indemnification, which is something we had not provided for in the past. We prepared this agreement so we are comfortable that CSID is protected. We do not represent PTWCD. Their counsel will have to review it. Their counsel is Mr. Doody from Goren, Cherof, Doody & Ezrol, PA.
Mr. Hanks asked do you need a motion to approve?
Mr. Cassel responded no. It is just for informational purposes at this time. It will be brought back to you after PTWCD reviews it and approves it. In case there are any changes, it is an information item at this time to let you know it is coming back in the future.
· Canal Bank
Mr. Fennell asked what did you find out?
Ms. Early responded we just received some information late on Friday. I have not had a chance to look at it. Mr. Hanks, Mr. Cassel and I have been looking at the cross section. We just need a little time to evaluate. I do not think there is enough information yet.
Mr. Cassel stated it is one of those items, which through the years as it goes on and you go back to look at what is going on, why it is going on and how it is, it requires a lot more research. When you first open it up it is like you are modeling a house. You start, you open it up and then you open that up, then you open up the next one until you finally find how it is supposed to be.
Mr. Hanks stated it is a Russian doll.
Mr. Cassel stated exactly. This is where we are at.
Mr. Fennell stated please call the lady. Tell her we are continuing to work on the problem. Keep her informed of the fact we are responding.
Mr. Cassel stated we will do that.
Mr. Fennell stated Mr. Daly received a comment from a homeowner and a group of people regarding a canal near 16th Street and 42nd Avenue.
Mr. Daly stated 85th.
Mr. Fennell stated it is kind of a dead end canal there. They are having a lot of issues and problems with drainage. They actually tried to clear the area themselves. They took the stuff out to the end of the swale for the city to pick it up. The city would not pick the stuff up. I am not sure what is going on there.
Mr. Hanks asked is this in Ramblewood?
Mr. Fennell responded yes.
Mr. Frederick stated there were three plastic bags there and 150 coconuts.
Ms. Zich asked 150 coconuts?
Mr. Frederick responded between 150 and 200 coconuts from the trees there.
Mr. Fennell asked whose property are the trees on?
Mr. Frederick responded all of the homes in the area have coconut trees.
Mr. Fennell stated when I had coconut trees I had people see coconuts in my backyard and actually knock on my door offering to take them off my tree, give me a quarter of them and they would take the rest of them to the SWAP shop to sell them. Anyway, thank you for taking care of that.
Mr. Daly stated thank you Mr. Frederick.
Mr. Fennell stated so we are going to get more information on the canal bank next time. If there is anything we can do, do not wait on this.
Mr. Cassel stated understood, but at the same time we are trying to make sure we do not commit the District to something the Board does not want to be committed to.
· Monthly Water Charts
Mr. Fennell stated you all went out and tried to do a correlation. I was not quite sure how to read it all.
Mr. Hanks stated my sense of color is not that good.
Mr. Hyche stated your top line is your wastewater.
Mr. Hanks asked is it wastewater infiltration or influence?
Mr. Hyche responded influence. The bottom smaller blue line is inches of rain. The next line is your gallons discharged from pump stations.
Mr. Hanks asked how is it measured, inches per day or inches per period?
Mr. Hyche responded monthly averages.
Mr. Fennell stated inches per month. Is the top line wastewater into the plant?
Mr. Hyche responded yes.
Mr. Fennell asked what is the second line? The gold line?
Mr. Hyche responded it is your lift station run hours.
Mr. Hanks asked what is the blue line?
Mr. Hyche responded that is pumping gallons from the pump stations. It is what was discharged into the SFWMD. It is a correlation between lift station hours, rain, pumping rates, gallons discharged from the pump stations and the influence into the plant. This was one area in Ramblewood South. Is that correct Mr. Frederick?
Mr. Frederick responded yes, over by Riverside Drive and Royal Palm Boulevard, east of Riverside Drive and north of Shadow Wood Boulevard by the church.
Mr. Hyche stated this is the worst area where we have the infiltration.
Mr. Hanks asked do we know how many miles of piping and the diameter we have?
Mr. Hyche responded not yet. I can get the information.
Mr. Fennell stated I believe the scales are not right here. What I see is the lift station running in the period from January, February, March and April. I did not correlate it to your wastewater input.
Mr. Hyche stated we do not have a master lift station. The pumping into the plant will not be the same. You will see the same scale.
Mr. Fennell asked if I read this correctly, is the left side millions of gallons?
Mr. Hyche responded yes.
Mr. Fennell asked does this one lift station correlate?
Mr. Hyche responded no. This is three lift stations. We combined three lift stations.
Mr. Fennell stated what I do not see is a strong correlation to rain, which is amazing.
Mr. Hyche stated in that month there was 20 inches of rain.
Ms. Zich asked in August?
Mr. Hyche responded in August.
Mr. Fennell stated I am looking at January, February, March and April. There is this hump.
Mr. Hyche asked which one?
Mr. Fennell responded this one right here.
Mr. Hyche stated that is not rain. It is lift station hours.
Mr. Fennell stated there is a strong correlation between that and wastewater influence into the plant. I am looking to see what caused all of this. I would expect to see a great onslaught of rain and it is not there. I do see a small provision in gallons discharged. Is canal elevation just your average elevation you have? Do gallons mean so many gallons above average being pumped out?
Mr. Hyche responded no. That is inches of rain.
Mr. Fennell asked this line?
Mr. Hyche responded that is gallons pumped.
Mr. Hanks asked is that your gallons pumped from the east basin to the C-14?
Mr. Hyche responded yes.
Mr. Fennell stated maybe the problem is you have too many charts on top of one another. The rain chart needs to be converted.
Mr. Hyche stated if you go to the next chart on the next page, you will see distribution. You will see in months our distribution was high, in the same period, our lift station was high.
Mr. Hanks stated on our lift station run hours you have a combination of kids coming back for spring break along with snow birds or whatever else you have there. This is why there is a peak. I guess another peak in the summer is partly due to infiltration and partly due to college kids coming home.
Mr. Fennell stated it is correlated to July, August, September and October when we have a lot of rain coming in. We are talking about a lot of water. I think what is of interest is how much we had in the January, February, March and April period; how much additional wastewater we had to process, but not lots of rain. We are trying to keep the water in the system. It looks like the rain after March really dropped down into April. We really did not get much there.
Mr. Hanks stated I think we are going to have to take a close look at one month; like May or April coming up when we start to have the transition from dry season into wet season. Track it to see where we are and how it relates. The other item which will come in handy is to know how many miles of pipe we have in that section, feeding those lift stations.
Mr. Fennell asked who did this data?
Mr. Hyche responded I did the charts and the data was selected by Mr. Frederick.
Mr. Fennell stated maybe we can have engineering give you a hand here. There is a program called correlation data. You can take data and they can actually do an analysis of which one is correlated to another and which one is not. It is hard to see from this draft.
Mr. Hanks stated I am wondering if a month period is just too big of a period to pick up what the relation is.
Mr. Fennell stated I think the data might be in here some place. There is a correlation between ground level water and leaking it into the system. We are trying to prove or disapprove this.
Mr. Hanks stated the other one is surface runoff.
Mr. Fennell stated yes. This really does have some good data here because we are seeing two different cases here. One is a real high pumping out of water, which is during our rain season. There is a strong correlation back here where we are frankly processing a lot of water and there was not much rain. We cannot see enough of the chart to understand whether or not it is because we are just holding the level.
Mr. Hyche stated because we had little rain, I think it is mostly distribution out of the plant we are processing. If you look, our distribution levels are higher in those months as well.
Mr. Fennell asked does water loss mean water we put out and did not bill?
Mr. Hyche responded it is un-metered water. What you see is an anomaly for billing dates when we collect our data in advance. Over a running average we are below 6% on water loss. Our system is tight.
Mr. Fennell stated I still think there is something which can be done with the data collected. I am thinking we can have someone from engineering help us out. Do you know what I am saying?
Mr. Skehan responded absolutely. I think you are right. A lot of the information here is good information, we just need to modify the way it looks and go from there.
Mr. Fennell asked are you saying those three lift stations have captured most of the well up here?
Mr. Hyche responded yes.
Mr. Fennell stated I guess you can prove that from the numbers because you have a variation.
· Utility Billing Work Orders
Mr. Daly stated it is status quo.
Ms. Zich stated that is really good.
Mr. Daly stated a lot of it has to do with the fact that before we let the bill get to the customer we have been working hard to make sure they go up and say, “Listen, I just printed out this bill and I am about to send it out. Let us really check it.” It turns out we either had a mistake or something else, but it never reaches the customer; or it turns out they do have a $500 water bill, we send it out, have the notes in the file after making sure we double checked it and do not have to do anything other than send it out again.
Mr. Fennell stated you can see you are taking preemptive measures.
Ms. Zich stated right. Look at January 2009 compared to 2008 and 2007 and look at how much it has improved.
Mr. Daly stated it may also have something to do with the fact our residents are watching their pennies and not over watering. The bills are not so high and they do not call. We will see if we can do it again next month.
Mr. Lyles stated I have one quick follow up from the previous meeting. You had asked me about and I indicated to you I would report to you on the agreement between the District and the SBA as to whether they complied with those terms and conditions and whether we might have a cause of action. We have done a lot of research in the intervening 30 days. We have reviewed their online materials provided by Ms. Woodward. We have confirmed their asset guidelines, their fiduciary requirements, their incorporation for instance of ERISA, Federal standards for fiduciaries under ERISA, which they imposed upon themselves. What we have not been able to get our hands on quite yet is what they refer to in the statutes as a trust agreement between every local government entity and the SBA. They are only supposed to accept funds after an appropriate resolution has been passed and trust agreement has been signed and submitted. We are still looking for it. We do not have it yet so the task is not complete. I can tell you, at least in looking over what their asset guidelines are and what their fiduciary statements are, it does not appear there is anything there. I do have to look at the agreement and its terms and conditions before I can complete my report to you. Interestingly, what is readily apparent is the comparison between the pre 2008 and post 2008 rules, guidelines and priorities for their activities. For instance, they previously stressed earning the highest interest rate possible within the parameters of their fiduciary responsibility. They now make it their third priority after preservation of capital and some other things. They have reshaped the program statutorily in terms of their regulations. They also brought in an investment advisor. People are running it now, which were not running it before. I believe I learned in a news report I tracked down that the fund is a Moonies Triple A fund where as before it was troubled, to say the least. We will hopefully have the trust agreement for the next meeting in order to finalize the report. We cannot get our hands on it right now, but it has to be there because technically they are not supposed to accept our money if they do not have it. We will continue to work to finish this review on your behalf and finalize the report at the next meeting.
Mr. Fennell asked have they changed their rules yet so they have the full faith as far as any of their insurance?
Mr. Lyles responded no.
Mr. Fennell stated so their rules for themselves are less than anybody else.
Mr. Lyles stated they are authorized to get a surety. To my knowledge, they have not done so.
Mr. Fennell asked did we ever get a response from our local representatives on this?
Mr. Cassel responded I do not remember seeing anything.
Mr. Lyles stated I do not recall how that ended.
Mr. Fennell stated I know we sent a letter. I signed it, but we never heard anything back. We will see what happens. We could try to write a letter to our local representative saying the state has to put the full faith and credit behind the money or they have to have some kind of insurance; one of the two. It is what they require from everyone else. Is it not negligent to invest because they are telling me how I should invest with someone who has some kind of bond, but if I invest with them I do not?
Mr. Lyles responded I do not have the answer to that question. I think, just speculating the limited nature of the range of investment vehicles that they had previously authorized for local governments, if you are going to directly invest money whether they impose upon themselves if you place your funds with them, I imagine in their view they do away with the need for an expensive surety for the policy of insurance.
Mr. Fennell stated I am looking for full faith and credit of Florida or what they ask me to look for in any other institution. So far you are telling me you cannot see that there yet.
Mr. Lyles stated it is not there. I am sure it will not be forthcoming. For instance, the bonds we issue at CSID we do not pledge the full faith and credit of CSID to pay those bonds. We pledge we will levy assessments sufficient to pay the principal and interest over the amortization period, but governments, other than those who print money, generally do not pledge their full faith and credit.
Mr. Fennell stated our depositories have to be a part of the statewide insurance for governments in order for us to invest in them. This is why we can get away with more than $250,000, because there is another insurance policy out there. Why the state is not part of this, I do not know.
Mr. Hanks stated last month you mentioned there were some issues with Arbor Tree.
Mr. Lyles stated there were some issues with Arbor Tree. They had submitted a claim and the District engineer has responded in writing to them indicating why the claim does not appear to be warranted for additional payment and inviting them to show us where the claim is based and why further payments would be warranted and they have not yet responded. We put the ball in their court and they have not written or contacted us. It does not mean they will not, but they have not as of now.
· Project Status Report
Ø Monitor Well 3
Ø RP Plant
Ø Time Line
Mr. Fennell stated I see there is something out there ready to break some ground. Is this true?
Mr. Skehan responded we are very close to breaking ground. We already started to break ground out here. The monitor well project is in the process of being started right now. The contractor is mobilizing to the site. There is some work taking place in the swales to clean it out. Looking at the sound barrier which is going up there is a steel pad being constructed out there. The preliminary stages of the drilling project are proceeding right now. The construction project out here in the front for the plant work, we are still trying to square up the understanding of builder’s risk from the insurance standpoint. They had inadequately said what the replacement value was for builder’s risk. This is a significant component of what the value of the project is. Builder’s risk is supposed to be able to replace the entire value of the project. We are still doing due diligence to bring it to closure right now. They have moved trailers out there. We are ready to get submittals. We had a preconstruction meeting. We are dotting the I’s and crossing the T’s in other places. Some of the formalities and introductions of the people who are going to be involved have already taken place. We are trying to get this insurance issue resolved.
Mr. Fennell asked how does this get resolved?
Mr. Skehan responded by making sure they have the right amount quoted in the builder’s risk policy.
Mr. Hanks asked is this the policy the contractor provides?
Mr. Skehan responded yes.
Mr. Hanks asked are you not letting them start until they produce it?
Mr. Cassel responded we are holding the notice to proceed until those documents are closed out.
Mr. Skehan stated that is the lone item. Everything else is ready to go.
Ms. Zich asked were they surprised that was coming up? It is one of the things they need to produce.
Mr. Skehan responded I think it is a very expensive policy to provide. Initially the provider who was creating the policy had not done this before so they went to another provider who was very familiar with this. That is the status of those projects.
Mr. Fennell asked how did it go with the city with the preview? Did it help or hurt us?
Mr. Cassel responded working with the city upfront has helped considerably. We received their comments back. We have another meeting being scheduled to go over those comments because there is some conflicting interpretation of what was said at two different meetings as to how to approach it. We are going to go back with them to get it nailed down so we do not have misinterpretations as we get started in the project. It is working well with them. They have been willing to work with us, meet with us and take care of these kinds of items.
Mr. Skehan stated there is a list of review comments which has come from the city staff. We have been working to go through the list to make sure we have a comfort level with the response we are going to provide to the city on some of those items. There is some concern as to the interpretation of those questions. Between us, the contractor and the District manager, we want to make sure we have all of those squared up as we sit down to have this discussion. I talked to the people at the city last week and relayed to them we wanted to have this meeting. Many people were out last week because of the holiday.
Mr. Fennell asked are we getting problems out of the way before they actually become problems?
Mr. Cassel responded yes. It is going a long way to improve and expand upon the work in relationship between CSID, the city, the contractor and the engineer to make it so the problems can be solved before they become a stopper or the inspection gets pulled or delayed. For example you cannot do it because you have to go and redo the sequence because someone put a sequence check in the wrong process. We are working through those to make sure when the contractor goes he can move rapidly ahead.
Ms. Early stated I spoke with Mr. Jose Lopez at the SFWMD regarding the grant money and apparently there is no grant money now because of the stimulus package. Everyone is supposed to go after that money, but in order to get that money there are a lot of stipulations. You have to be shovel ready. You have to have money set aside for the project already.
Mr. Fennell stated I still think it is a good thing for us to look at. We do know we want to interconnect the canals in our area.
Ms. Early stated we definitely need to look at it because it is very beneficial for the stormwater system. It is just that some of the projects are expensive. We need to find out where we can come up with the money.
Mr. Fennell stated I think we are as shovel ready as anyone gets around here.
Ms. Early stated the one culvert project is shovel ready. The plans are in for permitting and you have money specifically set aside which says culvert installation at such and such location, which at this point I do not think we have.
Mr. Fennell stated no we do not, but you really need to find out what shovel ready means here. So are you saying we should try to get our money back?
Ms. Early responded yes.
Mr. Fennell stated well we are looking.
Ms. Early stated we are going to continue to look.
Mr. Fennell asked what else can we do?
Mr. Cassel responded we will be going out to bid for the mechanical integrity testing contractor. The package is ready. I have reviewed it and Mr. Hyche has reviewed it. It will be on your next agenda. This is for the two injection wells. We have the deadline to meet from the state making sure they are tested at a certain period in time.
Mr. Skehan stated the last time this took place was five years ago. It is a five year program which comes up according to DEP regulations. The last thing from a construction and engineering standpoint is we want to give Ms. Zich her own hard hat. It is difficult to find a pink one so we wanted to make sure we made a formal dedication.
Ms. Zich stated now I am ready to go out and look.
Mr. Skehan stated your invitation is formally extended. You cannot show up onsite without your pink hard hat.
Ms. Zich stated thank you.
Mr. Skehan stated you are welcome.
SIXTH ORDER OF BUSINESS Approval of Financials and Check Registers
· Summary of Cash Transactions
· Projected Cash Flows – Operating
· Projected Cash Flows - CIP
Mr. Fennell stated had a lot of financials today, but I see we can now look at the month and get a good idea of what the business was this month. Is that correct?
Ms. Woodward responded yes. In the water and sewer fund the prorated budget for water revenue and sewer revenue has been appropriately adjusted.
Mr. Fennell stated prorated we are supposed to be $1.3 Million and actual was $1.4 Million. This does my heart real good. You have a variance of $97,000 favorable. This means, realistically, year to date we are running with a surplus, as far as revenues, of $176,000.
Ms. Woodward stated $110,000; $97,000 and $15,000.
Mr. Fennell stated I get that with all the other kinds of things we do. On the other hand, staff has done a good job of holding back expenses. In these trying times it is a smart thing to do. Our prorated budget through the year was $454,000 and we spent $375,000. There is the audit expense which will come in there. I guess we do not have it in there yet. For the plant operations we are doing well too. We are projected at $1.4 Million and we are at $1.1 Million. Chemicals are down. Is there a good reason for this? What is going on?
Mr. Hyche responded we are using less water and producing less water. We are reducing our PHs a little bit to keep the use of lime down, which in turn helps with sodium hypochlorite.
Mr. Fennell stated our revenues are still a little bit ahead, which means the water cutback is not as much as I thought it would be. It looks like we are running right. I still want to see us do something about the electricity.
Ms. Early stated we were looking at it, but it will not pay to do it.
Mr. Fennell stated we can find a real expert and pay him $1,000 to evaluate all of the different motors we have.
Mr. Skehan stated it will cost a lot more than $1,000.
Mr. Hanks asked are you talking about $5,000 to $10,000?
Mr. Hyche responded probably more.
Mr. Skehan stated $10,000 to $15,000. They are going to look at where the efficiencies are or lack of efficiencies for the operating equipment. If there is a motor which is not operating up to specification, they are able to see with infrared what it is giving off as far as energy or stray energy and be able to measure the performance of the motors with respect to horsepower.
Mr. Fennell stated that is too detailed.
Mr. Skehan asked would you like one of our electrical engineers to give you a call?
Mr. Fennell responded yes. This is theoretically sound. Are there any other questions on this? It looks good now. I like that we can look at this now and know what we are doing from a business standpoint.
Ms. Zich asked did anyone notice the big amount we paid for commission? We are paying as of last year an additional 1% to the county because of some statute where they decided to charge us 1% of what we collect. I questioned this $19,000 and got with Ms. Woodward. We have to pay 1% of everything we collect.
Mr. Fennell asked to whom?
Ms. Zich responded to Ms. Lori Parrish.
Mr. Fennell asked for what?
Mr. Hanks responded exactly.
Mr. Lyles stated for putting it on the tax bill.
Ms. Zich stated no. This is in addition to putting it on the tax bill.
Mr. Lyles stated it is all part of the charge. They were not charging it before. They decided to start charging it now. The other counties have always charged it.
Mr. Hanks stated 2% of our tax bill gets turned over to different departments of the county.
Ms. Zich stated 3% now. It used to be 2%. Now it is 3%. I noticed it because it just stuck out here. We paid almost $19,000 on January 16, 2009. I questioned why we were repaying it if we already paid it. Ms. Woodward told me about the additional 1% we have to pay. I was not aware of it. When I looked at it I questioned it. I just thought I would bring it up.
Mr. Fennell asked what are they doing with it?
Mr. Lyles responded this is not intended to be a complete response, but essentially the overview is they take our special assessments we charge people, put it on the tax bill and it provides an advantage in terms of collectability since you cannot pay a portion of the tax bill. They put a line item on the tax bill for special assessments, they collect the money, they process it and they transmit it to us. We deal with the accounting after that.
Mr. Fennell asked is this for the general fund?
Ms. Zich responded yes.
Mr. Hanks stated we are not going to be able to do anything about it.
Ms. Zich stated no. I wonder why they do not collect it with the rest of it. Then I probably would not have noticed it.
Ms. Woodward stated because it is not being netted out before they wire us our funds, I have to show it on a separate line indicating I received a bill from them and we have to write a separate check to Ms. Parrish’s office. This is why it is on a separate line. It is just a negative number.
Mr. Fennell asked are there any other comments?
Mr. Daly responded I want to commend the Board on having such a big agenda and still getting done at 5:00 p.m.
Mr. Hanks stated I am not done yet. There is still Supervisors’ Requests.
SEVENTH ORDER OF BUSINESS Supervisors’ Requests and Audience Comments
Ms. Zich stated I would like someone to check into the deposit accounts where we can put as much money as we want into an account. Do you believe that?
Mr. Lyles responded I listened with great interest.
Ms. Zich stated I listened with great interest. I would like someone to check it out.
Mr. Lyles stated between management and legal, we will look into it and report back. One thing which stuck in my mind, especially having looked at all this SBA stuff over the past month is, the under painting for all of this money is it is all supposed to be short term operational funds which are required to be liquid. That is one of the three main criteria the SBA uses. What he is talking about is clearly something which is illiquid. It is more of a long term hold. The theory by which we have this money is we levy our assessments and we get the money in the beginning of the fiscal year, but it needs to be liquid so we can use it. It is operating money.
Mr. Hanks stated but as far as some of our reserves and replacement funds we have set up, it might be…
Ms. Woodward stated but those are trusteed at US Bank. The funds you have which are reserves for improving, renewing or replacing things on a plant, it is a requirement of the bond issue that it be segregated and trusteed. We have it with US Bank. The only thing we do have is the general fund where we have approximately $1.2 Million in designated funds as of September of 2008. Those would be the only funds which are not going to be spent currently.
Mr. Hanks asked where do we stand on the water modeling?
Mr. Skehan responded there will be a preliminary meeting with the District manager and Mr. Hyche to go over the results we have. We are in the process of scheduling a meeting with SFWMD. We wanted to have this discussion prior to meeting with SFWMD.
Mr. Cassel stated the internal meeting is set up for Thursday.
Mr. Hanks stated with regard to the canal bank issue which has surfaced, I think we may need to bring in technical expertise to help us establish what is really happening and to help evaluate the information. What do we have to do to get a technical engineer on board?
Mr. Lyles asked do we have a ballpark in terms of the fee? Whether it is below or an excess of $25,000, it changes the process we have to go through if we are going to hire an independent engineer to advise the District.
Mr. Hanks asked do you think it will be less than $25,000?
Ms. Early responded I would think so.
Mr. Lyles stated then we do not have to go through CCNA for a project of this size.
Mr. Fennell asked what will a technical engineer do exactly?
Mr. Hanks responded stated the whole issue which was raised by the property owner was the stability of the back. This is a special area which requires special programs and analysis. We need to get someone who does this on a regular basis to provide guidance on this and give us different ideas. We are just trying to figure out what is going on right now.
Mr. Lyles stated if we did have to go through the CCNA, the lead time on it will push you into April. I do not know if we do have to go through CCNA with the magnitude of the task you have just given us. If it is under $25,000, we should be able to get proposal and someone the Board is comfortable with can be appointed to do this special task on a one shot basis.
Mr. Hanks asked where do we stand on the Walgreens’ permit?
Ms. Early responded they are going to do a permeability test. We had one in the area from years ago. We told them they needed to get one. As soon as I get something I will get with you.
Mr. Fennell stated I welcome Mr. Bloom to the group.
Ms. Zich asked does he do anything else other than just sign checks?
Mr. Cassel responded as the Treasurer he signs certain documents which come in from time to time, which have to be executed by the Treasurer in banking situations. Mr. Bloom and some of his staff will be doing reviews of the monthly financials for the District just as Ms. Rower was doing in the past. It is an extra set of eyes.
EIGHTH ORDER OF BUSINESS Adjournment
There being no further business,
Glen Hanks Robert D. Fennell