MINUTES OF MEETING
The regular meeting of the Board of Supervisors of the Coral Springs Improvement District was held on Monday, December 20, 2004 at 4:00 p.m. at the District Office, 10300 NW 11th Manor, Coral Springs, Florida.
Present and constituting a quorum were:
Robert D. Fennell President
William J. Eissler, Jr. Vice President
Glen Hanks Secretary
Also present were:
Rich Hans Assistant Superintendent
Dennis Lyles Attorney
John McKune Engineer
Dan Daly Utility Billing
George Keller Severn Trent Services
Roger Moore Severn Trent Services
Jean Rugg Severn Trent Services
FIRST ORDER OF BUSINESS Roll Call
Mr. Hans called the meeting to order and called the roll.
SECOND ORDER OF BUSINESS Approval of the Minutes of the November 15, 2004 Meeting
Mr. Fennell stated that each Board member received a copy of the minutes of the November 15, 2004 meeting and requested any additions, corrections or deletions.
On page five it should read, $8 million in cash and on page six, in the fourth line the word “to” should be removed.
THIRD ORDER OF BUSINESS Staff Reports
A. Attorney – Lake Maintenance Agreement with Lake Coral Springs Association
Mr. Lyles stated I spoke with the attorney from the Lake Coral Springs Association. They are ready to finalize the agreement. The association is questioning the numbers listed for maintenance that we are required to maintain the lake; they want to refine the numbers. It may be just a matter of defining the terms. They are concerned about the association being required to indemnify the District for any problems. I made it very clear that if they are going to use their contractor to apply chemicals to do aquatic weed control, we have to be assured that if anything gets into the water, moves into the system as a whole and we are required to resolve that problem, the District needs to be indemnified. At the very least we will need to know who they are using and have veto powers over their qualifications, insurance and bonding. We hope to have this resolved quickly.
Mr. Fennell stated this is for spraying for plants around the edges of the lake.
Mr. Lyles stated we are not sure. The District will be doing the standard level of aquatic maintenance as we do in other parts of the District. If they want to do something over and above that; they have the right to but because of the master declarations and covenants recorded they need to have an agreement with the District allowing them to do so. We are willing to allow that with some controlled conditions. The agreement will be presented to you for approval before anything takes place.
Mr. Eissler stated my concern is them using herbicides in the lake because there are several homeowners who use the lake for irrigation water.
Mr. Lyles stated we can address that during our negotiations; and they will need to hold us harmless for any damages and indemnify the District. The District needs to be protected and we will make sure you are.
Mr. Fennell stated another question is coordination control of who is performing the maintenance and when.
Mr. Lyles stated the instances of them performing a second application over and above what the District provides will be rare or not at all. They are hoping they won’t have to do any maintenance, but they want the right to do more if the level of maintenance is not up to their standards. We can put this on the list of issues to discuss.
1. Monthly Water & Sewer Charts
Mr. Eissler stated the PH of the water is over nine. Is that normal?
Mr. McKune responded it is a little high; but it is within range. The basic lime softening process raises it up to 10.5.
Mr. Eissler asked what is the PH when it comes out of the well?
Mr. McKune responded just about 7 and with treatment is raises the PH levels. This is standard.
Mr. Fennell asked can you explain the water quality parameters?
Mr. Moore responded ignore the green line on billed. It is not on this chart. We are experimenting with placing this in the charts in the future.
Mr. Fennel stated it will be nice to understand how our income and expenses varies with the water flow. I am glad you are looking into doing this.
Mr. Moore stated the wastewater brought back into the system is typically 70% to 80% in a tight system; North Springs averages 73%. [For every 100 gallons sold, 73 gallons is brought back to be shipped to the county for processing.] Coral Springs is at 102% and we are looking at ways to correct that.
Mr. Fennel stated we also didn’t get the monthly P&L Statement this month. We need to track the expenses, especially since we are talking about refurbishing the plant and making upgrades.
Mr. Hanks asked have you looked at these charts for the infiltration over the last year? Each month changes, and you have been doing improvements and lining certain sections and we cannot make a good comparison.
Mr. Moore responded we evaluated the savings three months ago. Since you have a sewer treatment plant; we can handle treatment at a much lower cost.
At the last meeting we discussed the catch basins, and the city has given us their written procedures for the catch basin program.
Mr. Fennell stated we need to find out if there is a catch basin out there that is better than what is being used now.
Mr. Hanks stated you can install pollutant retardant baffles, but that makes it harder to clean and holds water back.
Mr. Moore stated the city is putting out literature that if you see the basin in front of your home filling up; to rake the leaves out.
We also had several odor complaints over the last month. They started right after Thanksgiving; and it was attributed to the four day weekend. We usually process the sludge for five days and off for three. We will have to change the work schedules of staff to operate certain equipment to keep with the processing schedule of 5 days on and three days off.
Mr. Fennell asked what are we doing to correct the situation before the residents call?
Mr. Moore responded when the odor occurs we start responding internally to try to fix it. We had foaming at some of the plants that we thought was part of the problem; the second situation was the four day weekend for the Thanksgiving holiday.
Mr. Eissler asked what about our deodorizing system?
Mr. Moore responded most of the odor comes from the belt press, and we added a spray nozzle to the belt press to eliminate the odors.
Mr. Eissler asked are there county fines involved if this is persistent?
Mr. Fennell responded yes. We were fined a long time ago.
Mr. Moore stated it has been over five years. The county will work with us if there is an issue.
Mr. Fennell stated we need to have a faster response time and a vigorous way of handling these problems. Is there a better procedure than we already have? We need a definite written set of procedures. We are surrounded by homes, and we have to respond quicker and faster for total quality control.
Mr. Moore stated basic procedures
are we need to first determine where the smell is coming from.
2. Update on Construction Analysis and Capital Improvement Plan for Next Five Years
Mr. McKune stated over the next five years we have spread out the projects for the water and wastewater system totaling $17,504,132. Some projects are larger than others. We have taken the water plant expansion and spread the components over the five year period, and we are confident we can do this staggered construction. Other components need to be addressed immediately and will largely solve the odor problem we just discussed. We have $8 million in cash and $1 million has been put into a renewal and replacement program. As an option, a revenue funding bond can be issued for the additional $11 million at a 4.5% interest rate for 30 years resulting in an interest payment in 2006 of $557,145 with 29 annual payments of $772,755.
Mr. Eissler stated we will need to confirm the cash on hand; and our revenues generated, and the financial impact. These numbers are rounded. You are forecasting some pretty big numbers.
Mr. McKune stated some are +/-35% and others are +/-10%.
Mr. Fennell asked on the second page do those numbers include the current amounts also?
Mr. McKune responded when you get down to the bottom line.
Mr. Eissler stated I would like to digest this over the next 30 days and discuss this next month.
Mr. Hans stated certainly.
Mr. Hanks stated we also have to look at a payment of $772,755 over the next 30 years for a five year capital improvement project. We need to start thinking about saving for years six through 10 when we have to redo the sewer pipes.
Mr. Fennell stated we will also be paying off some of our old bond issues too.
Mr. McKune stated the 2005 model for the rates based on the bond issue is to build out. On page two are the water and sewer rates. To make the system financially work for the new debt and operating costs over the years, the numbers have been changed starting in 2006 from 3,000 free gallons to 1,500 free gallons for an increase of approximately $5 per month.
Mr. Eissler asked when was the last rate increase?
Mr. Daly responded 13 years ago.
Mr. Eissler stated if we do this people will be asking why we didn’t increase the rates over the last 13 years slowing instead of hitting them with a 16% rate increase.
Mr. Fennell stated irrigation is something we have discouraged over the years.
Mr. McKune stated it is at a higher rate and they don’t get the first 3,000 gallons free.
Mr. Eissler stated we may be built out in land, but the potential of more units being built [such as high-rises] where there are currently duplexes in there. That should be figured into the mix.
Mr. McKune stated the numbers “Average Demands Gal/Month” is an analysis of the billing records and the actual usage rates. You have a premium revenue on those at Step 3 and above for the water side.
Mr. Fennell asked is there a lot of units at the higher density where we just sell them at a certain water rate?
Mr. Daly responded there are some. There are equivalent residential connections that get the first 3,000 gallons free for each unit; then the next 4,500 gallons is at the lowest price per tier which is $1.90 per thousand. There is a fixed minimum fee of $21 for services which includes the 3,000 gallons of free water.
Mr. McKune stated the initial fix minimum fee of $10 covered the majority of the fixed charge for the District which was the debt service. Since that time the fixed charge has increased to $21, but the fixed revenue has not in 12 years.
Mr. Daly stated in Coral Springs the minimum charge is $25 plus change. In North Springs they pay $22.51 plus the 3,000 gallons at $1.34 so they end up paying $30.
Mr. Moore stated the county has been increasing rates at 5.3% per year to its users.
Mr. Eissler stated instead of a $5 increase in year one, we can increase it slowly every year to achieve our goals that way.
Mr. Lyles stated the renovations and improvements that need to be done have not been budgeted for the future, and now we have a history of keeping the rates level. We have not made the necessary investments into our plants to plan for wear and tear. We need to start thinking not only of the next five years, but what we need to do into the future.
Mr. Fennell stated we also worked towards the extra capacity of the plants in case we had to take one down, and we have been on the spending side than on the restriction side. That is why we do these plans. One way of getting more money is to raise rates; another way is to cut expenses; a third is to sell more water to other facilities [such as the city] or through irrigation.
Mr. McKune stated SFWMD allows us to take so much water out of the wells, and we have to justify and permit for the capacity. As far as irrigation a certain minimal amount is acceptable. We don’t want excessive irrigation. It is a small component of the plant.
Mr. Fennell stated the water we can produce per day is 4.32 and 5.89 million gallons per day. What is the actual capacity of the plant?
Mr. McKune responded it is rated at 7.2 million gallons per day.
Mr. Moore stated this is also a move to be conservative in irrigation use to keep the water in the canals.
Mr. Fennell stated this all comes down to money.
Mr. McKune stated on page two are the rates. The rates remain level until 2009 starting with step 3 and irrigation; then with the residential rates increasing in 2010.
Mr. Eissler stated the life of a new plant is 25 years, which can be extended depending on upkeep. I assume our electrical systems need to be replaced.
Mr. Moore stated they will need to be done within the next 18 months. Once the redundancy plants are built for both water and sewer, as we take the plants down every six months to clean the lines, and do a heavy cleaning every three years they can be extended over the 25 years.
Mr. Fennell stated under administrative cost we have plant and field operations, we have operating income of $3.1 million, refunding of $416 and we pay of approximately $2 million in bonds. We have a net surplus this year of $500,000 [not $914,507 as listed].
Mr. McKune stated the previous parity bonds expire in 2010; and we have a $2 million payment in 2011 on the 2002 refunding bonds.
Mr. Eissler stated we will want an outside firm to guide us as to the most responsible way to do this as a second opinion. There may be other ways we are not familiar with. If we can forecast generating enough cash for the debt service, there is nothing wrong with doing it that way. We are not here to make money and have a big bank account.
Mr. McKune stated it might be helpful to bring down the investment bankers the District uses. The District is stable and the investors love this District.
Mr. Eissler stated once we digest what is going on, we can have them come down in February or March.
Mr. Fennell stated the operating expenses go from 4.9 million to 8 million. That is a big difference. The debt service goes from $2 million to $2.7 million. I know there is a 5% increase per year for administration expenses. Those two lines tell me we are talking about an $800,000 increase in debt, but $3 million in expenses.
Mr. McKune stated that is due to material and inflation. You reached a point where you need a 4% rate increase every year to match inflation, power and oil, etc.
Mr. Fennell stated I look to reduce expenses and we are talking a $3 million increase to year 2011. Why are my costs going up, and we are not selling more water?
Mr. Hans responded the cost of doing business.
Mr. Fennell stated the major cost increase is in operations not in capital.
Mr. McKune stated over the last 11 years we have been reducing the surplus; and for a lot of the 11 years we had a surplus of $1 million to $2 million per year.
Mr. Fennell stated this is an excellent start. It shows the areas we need to concentrate on. We also will need a history on our expenses over the last four to five years.
Mr. Hans stated we can give you the administration expenses over the last 10 years.
Mr. Hans stated I have an analysis of costs for plant expenses [salaries, pension, health insurance and operations] for this fiscal year and the pie chart shows you where things are going.
Mr. Fennell asked are we low on the pension, and are we fully funded?
Mr. Hans responded we are at 6% which goes into a defined contribution fund they can take with them, some cities are up to 15%.
Mr. McKune stated there are a couple of projects that are necessary, the solid waste handling, and the water plant redundancy issue.
Mr. Eissler stated we will need to prioritize the projects.
Mr. Fennell stated also if the money will need to be borrowed all at one time.
C. Superintendent – Status of Newsletter
Mr. Hans stated the current newsletter was designed by Mr. John Petty with Severn Trent, and the print will be black and not white. This is a draft.
Mr. Fennell requested working our emblem into the front of the newsletter, increase the CSID imprint, put it in light blue rather than green if possible, and include “Improvement District” on the back page. We need to differentiate ourselves from the City of Coral Springs.
There not being any, the next item followed.
FOURTH ORDER OF BUSINESS Supervisor’s Requests and Audience Comments
There not being any, the next item followed.
FIFTH ORDER OF BUSINESS Approval of Invoices
Mr. Eissler asked what did we do with the $1 million for Wachovia?
Mr. Hans responded it is with the trustee and I will find out the percentage for you.
SIXTH ORDER OF BUSINESS Adjournment
There being no further business,
Glen Hanks Robert Fennell