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 28, 2011 at 3:06 p.m. at the District Office, 10300 NW 11th Manor, Coral Springs, Florida.
Present and constituting a quorum were:
Robert Fennell President
Sharon Zich Vice President
Glenn Hanks Secretary
Also present were:
Kenneth Cassel District Manager
Dennis Lyles District Counsel
Jane Early District Engineer
Dan Daly Director of Operations
Kay Woodward District Accountant
Jan Zilmer Human Resources
Ed Stover Water Department
Randy Frederick Drainage Supervisor
Cory Johnson CH2M Hill
Pete Colussy CH2M Hill
Michael Bone Lanzo Construction
Joe D’Alessandro Lanzo Construction
William Benson Keefe, McCullough & Co.
Mark Grace Keefe, McCullough & Co.
Jill Vaspasiano ACS Phone Systems
FIRST ORDER OF BUSINESS Roll Call
Mr. Cassel called the meeting to order and called the roll.
SECOND ORDER OF BUSINESS Approval of the Minutes of the January 24, 2011 Meeting
There not being any,
SIXTH ORDER OF BUSINESS Acceptance of Financial Audit for Fiscal Year 2010
Mr. Benson stated I want to thank you for the opportunity to present the financials that represent the District. I would like to go through a few of the more meaningful statements. There are going to be things that were new or different this year and some observations we had in performing the audit. We were able to take the financials we were getting from your staff, which we think are really good. The quality of what has been going on in-house over the last couple of go arounds has been excellent. We look at that and the internal control structure. We also look at what challenges the District is facing over the next few years and what we should be telling you as financial people, that you should be aware of.
Our audit opinion appears on page two. If you read that opinion it says we are rendering an unqualified opinion, which means we are able to conduct the audit and satisfy ourselves that these financial statements accurately represent where you were at the end of the year as well as the results of the operation for that year. I am going to point out a few items. If you look at the table on page five, it shows me year over year a very condensed snapshot. If you look at the balance sheet up on the top half of the page, all the way on the top right corner, last year the total current and other assets were $12,840,263. This year they were $18,081,534. If you look at the bottom of the table, net assets at the beginning of the year were $34,809,159.
At the end of this year they were $38,858,362. If you look at the statement of activities at the bottom, the first sub-caption is total revenues of $12,761,804. This year it is at $13,626,390. If you look at the net change below it was $2,583,031 a year ago. It is $3,963,899. Then you turn the page because there are non operating items. So the total net change in assets at the top of page six; last year was $2,730,233 and this year it is $4,049,203.
Our 2007 issuance of the water and wastewater revenue bonds requires us to keep 110% of the upcoming debt service. If you look on page 27 and look at the upcoming annual debt service, why is it skewed so that it is $4,005,029, $4,007,904? It is skewed like that because we are paying off the last of the 2002 issue in the next four years. It goes from four years of $4 Million and then it drops down to $3 Million for the next 20 thereafter. I am pointing this out for a reason.
We had a rate increase as of October 1, 2010 which is not reflected here. We need to raise rates to meet the minimum that is provided for in our bond indenture. We have that rate increase coming online. Thank goodness we do have that increase coming in October 1, 2010. The last one is coming in a year from now. We need to stay after it; especially during this four year window because we have some hefty bond maturities going on. As a result, we need to show strong financial results. I wanted to point it out because it is a common thing someone might bring to your attention and you might not have thought about it in a while. The District is performing very well. I do not want to create the wrong perception, but it needs to be performing well right now based on promises we have out there.
Mr. Fennell stated the Board is well aware of this. We did not want to be in a position where we would be drawing down out of assets in order to pay off current bond expenses. $4 Million of bond repayment is a hefty amount for a $12 or $13 Million company. We wanted to make sure we could do that. Our rates will still be reasonable as compared to our surrounding areas. If we are going to be here 30 years from now, we need to pay those things off and we need to be in a strong position to do it.
Mr. Benson stated not to tell you your business, but I tend to agree with the comment. For years we were below the market so even with the rate increase, we are just coming closer up to the market. That being said, we have to be mindful, and I am not second guessing. I got that you understand the financials. I am just saying when I am looking at something, if I issue a draft and a strong accountant that works at a client brings something to my attention, I am glad they do. I do not want to work without a safety net. I take all of the good input I can. I am sure you considered this. I saw it when I was reviewing the draft this year and thought it was something I needed to comment on and emphasize.
One of the pages I think I pointed out in the past, but I like it and it is something I think is really important. If you go to page 16 in the financial statements, this gives you an overall in terms of what we did from operating cash flows. If you look, we had $11,075,700 from customers, what we paid out to employees and for different services, and what our cash was from operations, which is strong. Then if you look where we went with that; in other words, what did we use those funds on? We invested in capital assets, we paid down some bond principal, and we paid our bond interest, etcetera. It showed what the decrease was in our total overall cash from the beginning of the year to the end of the year. It is a good, strong, financial performance; especially at a time when there are districts having problems all over the place.
I wanted to make sure I mentioned there is a new pronouncement and it is reflected in your financials. That is on page 29 where it talks about post-employment benefits. At the moment we do not have anyone. A lot of governmental organizations have never really encompassed or tried to dollarize and record their post employment benefits. If they were promising employment benefits to people, they were not recording it as they went along. Even though this one is required to be recorded, it is more ephemeral. We have people in the State retirement system. The fact that they are aging every year is going to impact our rates at some point in the future. The real true effect of having those people on our books right now is more than just their payroll. When those people, and your employees did not do anything wrong, this is in every organization, you go out and get an actuary and he looks at a census of all of your work force and how many years they have been working for you and how many years they have until normal retirement and they say on the day that person retires and they go into the State retirement system, you are not going to write any direct checks. If you put 100 employees into the State retirement system, your rate would go up. As a result of that there is a cost associated with it.
This actuary report we did is small. It is $37,000 that was recorded this year for your work force as they stand right now. The actuary to the computation of the people that are there, number of years of service, and how many years they have to go until retirement. Like I said, I do not want to create the impression that you did anything wrong or that your employees did anything wrong. It is a requirement. In your case it is not a major item. In some governmental organizations it is extremely material because the promises they made are extremely expensive to fulfill. If you look at the pages that I detailed out, it starts on page 29 with a wrtitet up of what it is and then it goes all throughout page 30 and halfway down page 31. It basically says we hired an actuary who has looked at the age of your work force for your State retirement employees and did a calculation to figure out the cost associated with that. They recorded that $37,000.
Mr. Fennell stated it actually says $253,000 in actuarial accrued liability.
Mr. Benson stated I believe there is a credit against that. I think the State gives you credit for what is actually in for the people. I believe the unfunded liability at the end of this fiscal year was $37,000. That is not a significant amount of money.
Mr. Fennell stated it says Funded Status and Funding Progress, the funded status of the plan as of October 1, 2010 was as follows: actuarial accrued liability is $253,000.
Mr. Benson stated based on my understanding there is not a way for you to fund that at this point in time. You have a work force. They are doing a forward looking projection based on the work force you have. If those people enter at normal retirement age in the State retirement system, they are doing a projection of what your rates would do. As a result they are attempting to say the current cost of that and then they are saying the current year increase to that unfunded liability is $37,000 for the current year. The 253,000 is cumulative for all of the people from all of the years. I do not believe with the State retirement system, as I understand the pronouncement, there is not a way for you to mail the $253,000 if you wanted to.
Mr. Daly asked can you explain what the State retirement system is?
The recording picked up several people speaking simultaneously.
Ms. Zich stated Mr. Zilmer works with the pension plan so let him tell you.
Mr. Zilmer stated we are not with SRS.
Mr. Benson stated I am going to have to think about what they were evaluating when they turned around.
The recording picked up several people speaking simultaneously.
Mr. Zilmer stated we do not offer any post benefits at all.
Mr. Benson stated I will have to get you an answer, but we hired an actuary. The actuary did an evaluation of our post employment benefits and they determined the current year cost as $37,000 and the total unfunded cost for all of the years combined as $253,000.
Mr. Zich stated they are trying to figure out how that can be.
Mr. Benson stated I got that. At first I was thinking it was SRS. If you are doing ICMA individually based on your employees, then I have to think about and get you an answer on what this post employment liability is.
Mr. Grace stated it basically has nothing to do with the actual state pension or health benefits. Even if you do not provide health benefits to retired employees, there is a cost associated. If someone works for a district or a city, they might not even provide a health benefit. Because they are a government, they can still apply for governmental type benefits under the State plan that you are not paying for, but they associate a cost because it raises rates for everybody.
Mr. Benson stated let me get you a written answer so you understand it and I will also tell you whether or not there is a way you can fund it if you so desire. I do not believe you are obligated to base it on this actuary report.
Ms. Zich stated we do not understand what we would be funding.
Mr. Benson stated let me get you an answer. There may never be a day when you get an invoice to pay. I am saying it might be a calculation of the true impact of having your work force now and you are using that work force at a younger age and as that work force gets older and rates get more expensive. Does that make sense? As a result, they are trying to measure that impact. It essentially results in a liability in that earlier period. If you are using ICMA all the way, let me figure out. We hired an actuary and he did an evaluation of our benefits.
Mr. Fennell asked did he ask? It sounds like he thought we were in the SRS. Did he ask?
Mr. Daly responded yes.
Ms. Zich asked is this $37,000 on our books as a liability?
Mr. Benson responded yes.
Ms. Zich asked Ms. Woodward, do you understand it?
Ms. Woodward responded yes. Basically what you are dealing with here is the requirement that as employees retire from the District we are required to offer each of them the ability to participate in the existing health insurance plans that all of the current employees have. When we offer them the right to participate they pay their own premiums. We are not paying their premiums. They become part of your population that determines how much the rates are. Because they are retired they are an older population, which means the rates for your current employees go up as a result of that. This is an attempt to put a dollar amount to the potential increase in premiums that your current employees may have been required to pay on their behalf as a result of being asked to provide this to your retired employees.
Mr. Hanks asked why is it on today’s dollars if we are not having that cost today?
Ms. Woodward responded you are required now by GASB to make an attempt to disclose a potential liability so if this number becomes large, it is a way of making you aware of the fact there may be an un-booked liability in the past that might actually result in higher expenses. You are not going to fund this.
Mr. Fennell stated it is inherently unfair from the insurance standpoint to not spread the risk over all the population as opposed to just the population that is working. Since all of us intend to get older sooner or later, it would seem like that would be an intentional misguided way of charging insurance rates.
Mr. Benson stated that is why I made the comment that your employees did not do anything wrong. I think it is a numerical thing.
Mr. Fennell stated what you are talking about is the inherent unfairness of the current insurance system and how we are going to have to pick that up sooner or later.
The recording picked up several people speaking simultaneously.
Mr. Benson stated I think they are also attempting to measure their belief that costs will continue to go up and the costs in 2040 might be much greater than they would have been in 1990. As a result they are attempting to measure that. I am not selling the pronouncement. I am telling you the thought process behind the pronouncement. If it is a pronouncement, you are required to adhere to it. I want to point it out to you. I did a terrible job at the beginning by making the mistake of thinking about the Florida Retirement System. We will confirm Ms. Woodward’ explanation.
Mr. Fennell stated thank goodness we avoided that system because it is one of the mismanaged systems right next to the SBA. Both are amazingly mismanaged systems.
Mr. Hanks stated let us get past this thing. Are there any other issues we should be aware of? Did we come back with basically a clean report from the auditors?
Mr. Benson responded we did. If you look at pages 34 through 37, there are two reports which talk about required communications we have with you as Supervisors about the internal control over your financial reporting. In addition to that there is a second report, which is the Report to District Management. It contains the number of items that we are required to look at and see if you had any of these specific conditions about the investment of public funds. We had a clean report there.
There is one thing I want to point out about this year. I know we recently got a large new grant from FEMA. I believe that is going to require a single audit next year, which is a different animal because it is Federal funds. I think it is great that you got it, but from an audit standpoint it is going to change a few items as it relates to our testing. We have to do specific testing on just that grant.
Mr. Fennell asked what should we do for that? Should we have a bookkeeper doing nothing but keeping track of that?
Mr. Benson responded I think you want to have a mechanism in-house. I have a host of different clients that have a wide range of different methods of doing that. Some people say they are going to set up a separate bank account. I tell them they are not required to do that, but they say it is their way of tracking it. In their mind they feel they have a tracking mechanism there. What I would say to you is; keep track of it. That could be the inside of a manila folder that shows every monthly receipt or the day of the receipt and which item specifically got charged against it.
Ms. Zich stated we are not going to have any trouble doing that. It is not going to be difficult to track that.
Mr. Benson stated I do not believe so. If you want, Mr. Grace can meet with Ms. Woodward to make sure the system she is proposing will meet our requirements for the audit. Probably what Ms. Woodward has thought in her mind to keep track of it will be satisfactory. If we are accepting the money, we have to agree by those buckets delineated in the grant. As a result it will probably require us to do a testing of just those funds. I am not saying this to concern you. I am just saying it is something I saw was coming up and will be a little different in the upcoming year.
Mr. Fennell asked are we going to have a separate auditor from the Federal Government?
Ms. Woodward responded no. We have gone through single audits before. Anytime you receive grant money from the State or from the Federal Government you go through this. When we had hurricane money come in we were subject to the audit and Mr. Grace conducts them both when he is out here.
Mr. Benson stated there is a possibility the Federal Government will send someone here to check because that is their mechanism to check you and to check us. We issue reports saying we looked at the requirements of the grant, what funds came in and what expenses came out. They had a FEMA auditor after one of the hurricanes down here going around different districts and municipalities checking the work. They were spot checking people’s work to make sure what we were doing complied with the requirements. We do not have anything to hide. I would rather have discussion about it and feel comfortable with what we are doing. I want it to go right.
Mr. Fennell stated there are a couple of follow up items. We want you to talk to Ms. Woodward about what you recommend for the Federal grant. Also we want more information on what this $253,000 liability thing is.
Ms. Zich stated and the $37,000 we have to put on the books.
Mr. Benson stated I will get back to you on the GASB-45 post employment benefits and what it is attempting to measure. Secondly; we will meet with Ms. Woodward on what the plan is for the FEMA funds and what she will do to track it.
Mr. Fennell stated thank you for your presentation.
Mr. Daly asked do you have to move on this?
Mr. Lyles responded there are two significant follow up items coming your way. While you always do ultimately accept the audit, if you wanted to wait until the follow ups are in place, there is no legal requirement for you to accept the audit this month as opposed to next month after you receive the supplement information.
Ms. Zich stated that is a good idea.
Ms. Woodward stated with all of our requirements for filing with various agencies, including the State, we need to have this in by March 31, 2011.
Ms. Zich stated we are going to have a meeting in March.
Ms. Woodward yes, but I have several different places where this needs to be filed.
Ms. Zich stated the only thing we are questioning is the $37,000. We might have to adjust it for that, but I do not think it is significant. Is it?
Mr. Benson responded I think you are entitled to a full and complete explanation, but you are not going to adjust the statement.
Ms. Zich stated well it is not $37 Million.
Mr. Benson stated I know. We are recording it off of what the actuary did from a study of your plant. I am not saying that you should not wait until you have satisfactory follow up.
Mr. Lyles stated I was not recommending that. I was just saying there is an option out there. I do not think there is any legal impediment to accepting it with the presentation you heard.
Mr. Fennell asked will you be back next month with an explanation if we accept this?
Mr. Benson responded yes.
Mr. Hanks asked is there a problem with accepting a revised report next month?
Mr. Lyles responded no.
Ms. Zich stated we can always amend the $37,000 we put on the books next year.
Mr. Benson stated I am pretty confident it is going to be staying there. I may not be doing the best job of explaining it, but I am pretty confident it is there correctly.
Ms. Zich stated if it was $37 Million I would be more concerned, but with $37,000 we will accept it with the thought there might be an adjustment.
SEVENTH ORDER OF BUSINESS Representative from Windstream
Mr. Daly stated I would like to introduce Ms. Vaspasiano. She is with Advanced Communications Solutions. She also writes phone programs for Windstream as well as others, including AT&T. Because I did not do such a good job last month in peppering the conversation with all the great things Windstream does and the fact that Mr. Hanks knows someone who had an experience with Windstream, I thought we would have Ms. Vaspasiano come in and answer some questions regarding their service. We are currently paying $2,200 a month just in phone service here. This does not count long distance.
Mr. Fennell asked is the total price $757.59 that we talked about?
Mr. Daly responded we have to nail down how many copper lines we are going to have coming in the building. I am not going to say that is iron clad because we have 11 copper lines coming in to the campus right now and I think we could probably go down to six.
Ms. Vaspasiano stated it is exactly what you have right now. We are talking about replacing your current services by only replacing the carrier. Your carrier right now is AT&T. Windstream resells to you AT&T products. The only thing you are going to experience is our technician will come from ACS and will do another cross connect in your phone room. You will not notice downtime with the simple phones around the campus. It will simply be a central office change and a billing change. All of the services are going to come in on AT&T’s copper. They own the last mile. When I started in the business some time ago it took me a while to understand that phone services are wholesaled. That is basically what it is. Windstream buys it at a discounted price and resells it to the public the FCC says you have to be competitive. This is why we can offer the rates we do.
Mr. Fennell stated so you are getting a wholesale price, which you are not marking up as much as AT&T and selling it to us.
Ms. Vaspasiano stated that is correct. AT&T manages all of the copper. Windstream does not have all of the overhead that comes along with Verizon, SBC or AT&T because they do not maintain the copper in the ground. AT&T does.
Mr. Fennell asked if something goes wrong, a line goes down, who do we call?
Ms. Vaspasiano responded you call Windstream or me, ACS. We have 24/7 service at our office.
Mr. Fennell asked what kind of service organization do you have to come out and do something like this?
Ms. Vaspasiano responded we get in touch with Windstream. They will do some testing to find out if it is their equipment, which would only be on the phone system that is here and not any of the copper lines that are around the campus. If it is not their equipment, they call AT&T.
Mr. Fennell asked do we own the copper lines that are on campus and they have to take care of it?
Ms. Vaspasiano responded no. AT&T owns the copper lines. It will just be a billing change for you. It is amazing. If you do not have dial tone or services at any of the remote sites on campus, the first call should be to ACS. We will take it from there.
Mr. Fennell stated a T1 line is a big pipe. I asked last time and online data does not go through there.
Mr. Daly stated that is correct.
Mr. Fennell stated we are going through something else.
Ms. Vaspasiano stated you have basically created a redundant environment where your internet access is going to be cable modem from Advance Cable and your dial tone is coming in on different facilities, which is the copper from AT&T.
Mr. Fennell asked could we if we wanted to?
Mr. Daly responded of course. She wanted to sell us that service, but I am against it. If there is a problem with AT&T, we have no cable, no internet access and we have no telephone service. We are out of luck. To dissect it the way I have, we will always be able to get out an email even if the phone lines are down, or vice versa.
Mr. Fennell asked is it additional money if we want to put data over this T1 line?
Ms. Vaspasiano responded this is particularly a voice product. It is exactly what you have. It is an ICN circuit. It will only carry voice. You do not want to put data on it. If you wanted to do data, you would have to bond two T1’s together; part of it for voice and part of it for data. If it goes down, you do not have any data for your internet access and you have no voice.
Mr. Daly stated Mr. Silva actually put our phone system together. He took a couple channels off of the point to point from our building and the NSID building so we are able to do phone as well as data out there because they did not have any way to get internet to that particular building at the time. There are ways to do it. My recommendation is to not marry the two and put ourselves in a corner so if something happens on the AT&T network, we would still be able to communicate with the world via email or the internet. It is important because people pay their bills here online.
Ms. Vaspasiano stated a T1 environment is an expensive environment. It would be more expensive for you to add another T1 than it would be to maintain the cable access. If you are going need to have someone come in and reprogram all of your IP addresses, every computer and your whole network, it is a big expense to change your carrier. If it is not broken, do not try to fix it. It is fine. Just take what you can and save some money. That is basically what we did. We have references in there. You will see the City of Orlando has Windstream. There were some concerns about the size of Windstream. Seminole County Schools have 500 stations. That is a lot.
Mr. Hanks asked do we need to give you authorization to enter into an agreement with Windstream?
Mr. Lyles responded an authorization to execute an agreement.
THIRD ORDER OF BUSINESS Supervisors’ Requests and Audience Comments
Mr. Bone stated as you can see there is semblance of a roof up there. We got the electrical rooms done in the RO plant.
Ms. Zich asked is it dried in now?
Mr. Bone responded it is dried in over the electrical room and then they have 46% on the material as of Saturday. It should be done this week. The electrician is working in there. It is getting painted. We had to work through a few issues. I have not platted the last schedule. I know we are probably going to have to move some panels down.
As far as Plant F, we were over there doing some radiographs on the welds that need to be replaced. We have to submit a weld procedure so we need to know specifically which welds need to replaced. We are going to work on the remaining air header welds on Wednesday. We have plans in place to replace them twice. We have to get in position where we can defend it against other foes we might have such as subcontractors that perform welds.
As far as the grout, we were scheduled to start demolishing the interior next week. I understand CH2M Hill wants to come and take a couple of samples. We may move that. I do not think it will impact the end date of it.
Mr. Hanks asked when are we looking for Plant F to get on line?
Mr. Bone responded I think three and half to four months.
Mr. Fennell asked what have we agreed upon and what do we need to agree on?
Mr. Bone asked as far as Plant F?
Mr. Fennell responded yes. The water plant we see is slower than we wanted, but it is proceeding. Where is Plant F?
Mr. Bone responded everywhere I turn I hit another wall, but it is going forward. I have not gotten a written response from Mr. Cassel on our remediation. I have two things about that; one is stability of the plants for CSID and the other one is to protect Lanzo’s rights, which I have done. It was not my intention to upset anybody. I have to do that. Hopefully everything will get hammered out to everyone’s satisfaction. I think we are in this alone. I know you all sat out here in June of last year and said: what is the contractor going to do? Can he afford to pay for this? Is it going to be $1 Million? What is the bonding company? Is it an insurance company? It is assured? You are going to get it done.
Mr. Fennell stated those questions are still going through my mind.
Mr. Bone stated we are standing here alone doing this. We feel we are not culpable for everything; especially with the array of characters that have been in our past, subcontractors and such. We are standing here alone to get it done and we intend on doing it. If we have to work a few things out to get it done, we will. We intend on getting it done.
Mr. Fennell asked are you guys in a position to get this done? I am worried about you guys running out of money.
Mr. D’Alessandro responded we are. We need some more money.
Mr. Fennell stated you see our hesitancy because you are here today to see if we release some money. We are hesitant to do that when we have not gotten what we wanted. How do we resolve that issue?
Mr. D’Alessandro responded you need to understand the position we work within also. Everything to do with Plant F is self absorbed and we fire the extensive corrective measures which need to be done. I took the position to hire Mr. Bone, come here, kick the other guy out and take over the job. He has been mitigating with Mr. Cassel and the engineer. I met with Mr. Cassel two weeks ago and gave him my commitment this job will get done. We will do what we have to do to get the job done. This is why I am here in person.
Ms. Zich stated we wish it was already done. I see a lot of work out there yet to be done. Have we not paid you everything up to date?
Mr. Bone responded you have paid up to date, but there is an extensive amount of retainage. I took an extensive amount of money from my company to put into the project. I need some of the retainages given to me to go along with paying suppliers to get the work done.
Ms. Zich stated I have worked in a lot of construction and 10% is generally given when it is complete. That is why the retention is there.
Mr. D’Alessandro stated it is generally given on projects of this magnitude.
The recording picked up several people speaking simultaneously.
Mr. D’Alessandro stated you have verbiage in the contract which allows for it.
Ms. Zich stated we also have verbiage in the contract on when it was supposed to be finished. All we really want is to have it completed. That is our main objective. We do not want to be not giving you money you think you need. We are just concerned that we want to have it finished.
Mr. D’Alessandro stated I just took control of the project 100% five months ago. We were also relying on a major subcontractor to handle most of this project. By the time I found out he was in trouble it was a little bit too late. We have a three and a half month delay on the roof alone. We had extensive problems with the design of the roof.
Mr. Fennell stated that we understand. It has been close to 10 months since we started to see issues arise. What are you going to do with the money from the retainage?
Mr. D’Alessandro responded I am going to pay some of the subcontractors and other bills on this project.
Mr. Fennell asked what is holding up Plant F as far as the subcontractors?
Mr. D’Alessandro responded he is in the process of securing everything now.
Mr. Bone stated I submitted the subcontractors that we were going to use with the remediation team. The only thing holding them up is their scope of work. They want to come in here and get it done. I have to say to them; you are going to do every one of these verticals and you are going to do from here to here on the horizontals. That is what I have to give to them. I have to give you a procedure detailing that and I have to base this on something. We are getting the results right away from the radiographs. We will have everyone we want completed by Wednesday. The longest thing out here is the air head because it is going to take two months to fabricate it out. We are having it outsourced.
Ms. Zich stated it says you want to reduce the retainage 5%. I would prefer a figure versus 5%.
Mr. Fennell asked retainage for what; this one particular project in Plant F or the entire project?
Mr. Bone responded the whole project. Right now it is at 10% and that is not a contractual amount and then 5% is the requirement by Florida Statute.
Mr. Hanks stated let us hear what our manager has to say.
Mr. Cassel stated as with every construction project when you have one that has issues and as you try to work through it, the contractor has the ability to request a reduction in retainage. There is a fine line of, shall we say, choking the contractor and working with the contractor to get the project completed. This is where we find ourselves at this point. If we reduce retainage, how do we reduce it so that the vendors impacted get their retainage and yet we still maintain leverage with making sure the project gets completed in a timely fashion?
Mr. Hanks asked is the idea of the retainage to hold back funds so if there is an issue, there are funds for us to take care of it.
Mr. Cassel responded it is a combination of funds to do that, but you also have on this project a performance bond from the main contractor as well as from his subcontractors. You go after the bonding company to step up to make it right. What you end up doing is using the retainage to help fund the fight to get the bonding company to do what they have to do. Is that a correct assumption?
Mr. Lyles responded it could be. It is not necessarily the case here.
Mr. Hanks asked Mr. Johnson, what are your thoughts on this?
Mr. Johnson responded several months back Mr. Bone sent a letter to CH2M Hill asking for the retainage to be reduced to 5%. In researching Florida Statutes we looked to see if this was something we needed to do, have to do or if it was even advisable. What you find out is that under a typical construction project you would reduce it from 10% to 5%. When you have amounts of money that are subject to a bad faith dispute…
Mr. Lyles stated excuse me. This is important. It is a good faith dispute. The statute provides an out if there is a good faith dispute between the contractor and the owner over the work and what is going to be done to correct it. That is a threshold that has to be met. I did not want to interrupt you, but I wanted the record to be clear that is what the statute calls for.
Mr. Johnson stated we looked at the cost of finding issues with Plant F, the amount of letters from suppliers claiming they have not been paid, as well as the overall schedule of the project. At that time we responded there were a handful of things that need to happen in order for us to recommend to the District to reduce the retainage. I agree with Mr. Cassel in there is a fine line between hindering the contractor, and also projecting your own interest in the matter. My recommendation is to not turn it loose. That is based solely on all the issues we have in hand.
Mr. Hanks asked what is the dollar amount we are faced with?
Mr. Johnson responded I think it is $750,000. The contract is $18,155,000. Some of that is not subjected to the 10% retainage. There are allowances so it is $17.5 Million and 10% of that is $1.7 Million. I think we are currently 60% or 70% spent. That would be probably close to $600,000 to $700,000.
Mr. Fennell stated here is what I suggest; we release 2.5% right now with the condition that it go to the contractors you have to pay for Plant F. Once Plant F is working we will go down another 2.5%.
Mr. D’Alessandro stated from what I understand you have $400,000 to $500,000 in contract money you have to pay out. I paid all of the subcontractors that had all the work to do and they went away on me. They do not exist today. I am stepping up to the plate having to mitigate all of this bad work. It has come to be $300,000 to $400,000. I paid everybody. If you give me 2.5%, it will be about $350,000 to $400,000. That will be enough to pay for Plant F deficiency. I am not going to be able to pay the subcontractors. I still have to take $300,000 to $400,000 out of my pocket, which I plan to do for Plant F. I cannot take that amount out of my pocket plus another $400,000 to pay subcontractors. The money is in the contract. I need to start getting access to something. We were told a couple of months back that if we showed progress and we started mitigating solutions for Plant F, they would recommend it.
Mr. Fennell stated Plant F has not changed in six months. Where is my lever here that I need?
Mr. D’Alessandro responded you will still have $1 Million left.
Mr. Hanks asked what has changed in Plant F physically in terms of a construction that is up and standing? What has changed out there in the last six months? Have we gotten any closer, physically speaking? I know a lot of this has been discussions as to what the acceptable condition was and what needed to change. Physically speaking; what has gone on out there in the past six months?
Mr. D’Alessandro responded I had someone else managing this project six months ago. Mr. Bone was not working here. When they discovered all of the problems with Plant F, that person was fired. It has taken Mr. Bone three months to figure out whether these problems are really problems. It has taken a few months for him to come to the conclusion that some of it is real and some of it is not. You made me pay the subcontractor and you made me give waivers for our subcontractors. Now you come back and say you took another look at it and you do not like the levels, you do not like this, you do not like that.
Mr. Fennell stated you are actually making my argument for me as to why I should not give you anymore money.
Mr. Hanks stated so what you are saying is you had pay requests. They were approved. You got paid. You paid the subcontractors and then the sequence of events is it got re-inspected and there were issues on it.
Ms. Zich stated not only did we do that, but we had our engineers out there on the project to make sure everything was going right.
Mr. D’Alessandro stated that is what I say.
Mr. Cassel stated right now there is a total retainage of $1.36 Million on the entire project. Of that $271,000 is retainage on plant F. The other $1,089,000 is retainage on the nano plant. There is $466,000 left in Plant F to reach the contract price of Plant F. Right now with the retainage and what is left to pay on Plant F, there is about $700,000 sitting there.
Mr. Bone stated there are a few things outside of the tank that is part of Plant F. There is paving, the guard rail and other things.
Mr. D’Alessandro stated we are trying to deal with the bonding company for the contractor who went away to help come up with some of the cost for Plant F. We are running into resistance as of Friday. That is going to be my battle that has nothing to do with you. This is why you saw me out there earlier walking. I want to see what has to be done. I am going to have to step up to the plate and fix this. I am going to have to fight with someone. It is going to be the bonding company. It might be CH2M Hill. I realize I have that coming. If you want to help me help you get it done, once you told me there was about $400,000 still available for Plant F, there are not more bills for Plant F, I paid them all, but that $400,000 is probably enough to make the repairs. I need the other retainage reduction for the rest of the project; to tighten up some of the other bills. I am not going to keep a nickel of it. I am taking money out of my pocket. I will have all of the bills paid off if you give me the retainage. You can keep the other 5% until we are all done. I will never be in this room asking you for another nickel.
Mr. Hanks asked counsel; what is your take? Help shed some light on this because I understand some of Mr. D’Alessandro’s issues. I hope he also understands our position and our issues on this.
Mr. D’Alessandro stated I understand you are there trying to make a decision.
Mr. Hanks stated we are trying to make sure we reach a decision that is responsible. At the end of the day we want to get Plant F up and running. We do not want to shoot ourselves in the foot or step on our own toes with whatever acronym you want to use on this that would cause things to slow. By the same token we have to help make sure our interests are protected because just as you have trouble with some of your subcontractors, and I am not suggesting you are in that position, but it is possible that we go ahead, release those funds and then; where is Mr. D’Alessandro?
Mr. D’Alessandro responded we have been in business for 45 years and we plan to be around another 45 years. I have 45 years and never defaulted on a project. We do 100% municipal projects.
Mr. Fennell asked what is Intrastate doing now? Are they out of business?
Mr. D’Alessandro responded I hired whatever people they had left because they had knowledge of the project. I hired a manager. I took over all of their equipment. I absorbed them and the project.
Mr. Cassel stated in your statement you said all of the subcontractors for Plant F have already been paid up to date; you have nothing outstanding or any claims on Plant F. So what you are really looking for is assistance to get out of the hole that Intrastate dug you into on the nano plant. That is where most of the vendors are still out there.
Mr. Lyles stated it is as if you have two separate requests for reduction in retainage from 10% to 5%. The two projects are in entirely different postures in terms of your tolerance for analyzing such request, I think. You have one that is relatively clean in terms of payment, substance suppliers and you are at the point where contractually you could be favorably considering a reduction of 5%.
Mr. Cassel stated that would be based upon the turnaround that has occurred on that with Mr. D’Alessandro bringing Mr. Bone in and taking over the project. The nano plant has turned around considerably from where we were at before, but he has that hole he is still trying to catch up and dig out of.
Mr. Lyles stated then you have Plant F and we are not aware of any suppliers or subcontractors out there that need to get paid. They have been paid. You have a good faith dispute on the job, how to resolve it and whether the remediation plan is going to be implemented since it has been signed off on. We will provide something that can be inspected and final by CH2M Hill at the end.
Mr. D’Alessandro stated what I am proposing on Plant F and whatever contract dollars are left there are to possibly to take a schedule out of the repairs we are going to do. As we make the repairs, release those funds so I can pay for those repairs. Plant F will take care of itself as we start making the repairs.
Mr. Lyles stated one small complication on all of this is on Friday I was made aware of a request for mediation had been filed by counsel hired to represent Lanzo. Now we have a 30 day period to digest this and another 30 days or so after that to have a mediation between Lanzo and the District, which is a step towards resolving claims and avoiding litigation or it is pre-litigation and a way to get cheap discovery and find out where parties really are on both sides before you file a lawsuit. Sometimes it is one, sometimes it is the other and we cannot tell you for sure which way this is ultimately going to go. You do have something new in this mix, which is geared toward the litigation route initiated by Lanzo. Backing some of this up would be some responses to some opinion correspondence indicating we will do this for mediation element, but it is going to take us an extra ‘X’ months and it is going to require extra payments to be calculated. It is not that all of the details regarding Lanzo stepping up and doing the remediation at its expense have been conceded or agreed to. These things are still up in the air to a certain extent.
Mr. Bone stated we had to file that within 30 days of getting the written remediation from Mr. Cassel. There were some outstanding issues. I tried to describe exactly what we were doing. They were not really significant as far as what we were identifying. I have to protect our rights. There are so many timely notices in this contract that if I did not do it, I would not be doing my job.
Mr. Lyles stated by the same token; if I do not relay to the Board that I work for that these other things are happening now and that attached to these notices are time increments on the order of four months for each of the things you responded to, it is part of trying to make sure you have the whole picture. In terms of calculating the amount that is the one the manager and the engineer can live with on the retainage; I do not know that we have done that yet.
Mr. Cassel stated we have not calculated an amount.
Mr. Lyles stated I am worried you would be comfortable with a binding process being signed off on by the contractor for getting payment from this reduction in retainage to the remediation efforts you described you are going to have to sub out. That is a mechanism you probably want to explore. It helps us get from here to there quicker using the funds that are there to pay. That kind of thinking is what I think you have been looking for from everybody working on this project, including your staff.
Mr. Hanks stated to recap here you mentioned we have two projects and two retainage reduction requests.
Mr. Lyles stated we have one request overall. What I am saying is it makes more sense to treat it as two.
Mr. Hanks stated I think the rest of the Board would agree that we are looking at this as two separate projects. You mentioned a couple of different conditions and that one is more complete than the other and the other you are trying to dig out of a hole. Which one do you have concerns about reducing from 10% to 5%?
Mr. Cassel responded overall there are some concerns; however, in trying to get the project accomplished with the subcontractors that are out there and have been out there, Mr. D’Alessandro found himself behind the eight ball trying to dig out and keep the project moving. I do not think I would have on the nano plant as much issue of reducing the retainage from 10% to 5% providing that the dollars as they went out were potentially two party to the vendors so we can make sure whoever is out there gets paid. Either that or a legal agreement stating that every dollar will go to these following people. Part of the concern of getting the project done is if the contractor keeping the subcontractors going, the subcontractors are not going to perform in a timely manner, which just drags your project out. That is part of my concern with getting the nano plant going as fast as we can. We know Plant F has been sitting stagnant for eight or nine months. We know, potentially, how to get it fixed. We still have money to pay for that and we still have retainage on that. I am in favor of lowering the retainage on the nano plant portion to the 5% with an agreement from the contractor that it is going to these subcontractors in these amounts of money. This way he can cut the check, he can get a release and that gets the people off our backs. It brings him up to date and gives him some breathing room to proceed and push the project harder.
Mr. Fennell asked are there other payments we are making as we go along?
Mr. Cassel responded we just cycled them out last week.
Ms. Zich stated we have been paying for everything as we went so we are not behind.
Mr. Cassel stated the most recent payment went out February 16, 2011. It is the January payout. The February payout has the proposed reduction in it.
Mr. Lyles stated so the recommendation would be to leave the Plant F retainage as is where we have this long standing project. In order to get the whole thing moving and keep the subcontractors, suppliers and vendors interested in performing on schedule, I believe the manager’s recommendation with the retainage going straight to vendors, subcontractors and suppliers is to reduce that one to 5% and leave Plant F at 10%.
Mr. Cassel stated that is correct.
Mr. Fennell stated you are looking at it as one project versus another, but I think the same pocket for him is paying for both projects. I do not know how that works for him.
Mr. D’Alessandro stated it would be close enough as long as you would consider taking the remaining contract dollars on Plant F and let us schedule the repairs so as I do them I can pay for the repairs. Then I am ready to fight with whomever I have to in order to get my money back; whether it is the bonding company or Mr. Johnson. It has nothing to do with the Board.
Mr. Fennell stated we went too long trying to come to an agreement on Plant F. I say nothing happens until you guys sit down and nail it; you know exactly what you are going to do and what is going to happen. Then we con move forward. I have to see that first. We still have too little things happening here. There are still some things we have not figured out.
Mr. D’Alessandro stated the remediation process started last November. We had our first meeting a couple of weeks before Thanksgiving. I made a presentation on December 3, 2010. The big question was whether or not the 5/16 plate was required for the construction of that tank. Until that was determined we could not go forward with anything. It would have been futile. We only got the written response on February 2, 2011 and we had a meeting. The letter was dated January 28, 2011. I do not remember exactly when the meeting was. We could not do anything until we got that back.
Mr. Cassel stated I received Wednesday from them what they are going to do with the clarifier grout, what they are going to do with the stainless steel and what they are going to do with the steel tank shelf. The only thing that has not been hashed out in any formal written part is the issue about the curbing at the bottom with the exterior wind, which is the wind girder situation. That detail has to be worked out as to how it will be handled. Mr. Johnson; in the contract with the things that are left to do, is there anything that could be reassigned? Could they rework their schedule values?
Mr. Johnson responded that is a good question. I have to go back and talk to some people.
Mr. Hanks stated or we can run afoul of the bonding people.
Mr. Johnson stated the bigger issue is we are taking $400,000, which is withheld for some reason.
Mr. Cassel stated the retainage on Plant F is $271,000. The $466,000 is the amount left against the Plant F lump sum.
Mr. D’Alessandro stated there is $53,000 worth of costs that we have outside of the remediation that I have identified we would have to do.
The recording picked up several people speaking simultaneously.
Mr. Cassel stated I misspoke on the $466,000. It does include the retainage. There is $270 retainage and about $270,000 of work left.
Mr. Hanks asked do we have any idea in terms of magnitude costs what it would run to do the repairs?
Mr. Johnson responded we put together an internal estimate at CH2M Hill. We came up with an estimate of $1 Million or more. They are proposing to try to repair the welds in place. That will be less than $1 Million. What it is going to cost them to do the re-welding and replace the grout as well as the other things involved in that, it would be irresponsible of me to throw out a number. I know it will be less than $1 Million.
Mr. Hanks stated let me ask Mr. D’Alessandro or Mr. Bone. What do you think it is going to be?
Mr. Bone responded it is $137,000 to replace the air header. It is $60,000 to do the grout, which is $22,500 to demolish and take the dirt out. I have quotes from a subcontractor for $14,000 to do concrete, grout work and the remainder is divided. I have a price from HMT to do all of the verticals and all of the horizontals for the tank walls for $177,000. I have a quote from Surface Painting for $80,000 to re-blast the paint on the wells and re-coat. The grand total is probably around $430,000.
Mr. Daly stated all of that added up to $480,000.
Mr. Bone stated I do not know the exact amount of the general conditions, which we put on there to have a superintendent out there and a project manager out there.
Mr. Hanks asked do you have a concern when it gets released? Are there any concerns about operating in that matter? What can we do internally to help facilitate them moving forward with Plant F?
Mr. Cassel responded I think in order to get the project done, for that work to get done, is a segregated draw scenario. I do not think it would be an outrageous request or an outrageous way to do it in such that it continues to get the job done and get us to the point where we have a plant that is operating and everyone has been paid. The other issues; we sit down at the table and work them out after that.
Mr Hanks stated and that would be a situation that we would be faced with regardless of whether or not we had a 5% retainage or 10% retainage.
Mr. Cassel stated you still have the delay issues and all the other component pieces in the contract that you have to work your way through.
Mr. Fennell asked did we get a recommendation from our staff?
Mr. Hanks responded I believe Mr. Cassel was supportive of reducing retainage on the nano plant from 10% to 5%.
Mr. Cassel stated that is correct.
Mr. Lyles stated the only note I want to circle back to is there was some discussion that there is a condition attached to that, which is assurances of where the money is going to. There has been some discussion about an agreement. I think the original thought was a two party check.
Mr. Cassel stated either an agreement or a two party check.
Mr. Lyles stated when you have an agreement you end up with a dispute over what the agreement means or whether there was performance. If it is a two party check, then you know where the money went.
Mr. D’Alessandro stated a two party check sends bad signals out there. I am always going to pay the bills on this project. I will give you consent from my surety company. I would rather have it that way.
Mr. Lyles stated they are looking on a recommendation from staff on that one. If you are comfortable with that, then we will make it work.
Mr. Cassel stated the surety is ultimately responsible to us. SO if anything does not go right and the surety has already guaranteed it upfront in writing that all of this money went to these individuals and it does not, then the surety is upfront acknowledging something that they are on the hook for more than they are normally on the hook for.
Mr. Hanks stated Lanzo has come in. They have not been the cause of all the problems. They have inherited some from their subcontractors. At the end of the day we want to keep things moving.
Mr. Fennell asked I understand, but what are we getting?
Mr. D’Alessandro responded you are getting the ability from me to push the subcontractors and suppliers to hurry up and get it finished fast.
Mr. Hanks stated we are helping them have the means to go ahead and get the ball rolling on not only the nano plant, but also Plant F.
Ms. Zich stated I am having a hard time with this. Have I not been pushing from the very beginning? Nothing has been going well. I wish they were both up and running right now, but that is not going to make it happen.
Mr. D’Alessandro stated I sympathize with you and wish the same thing, but I cannot change the past. I can change the future if you give me the opportunity.
Ms. Zich asked how far behind are we on the nano plant? Is everyone paid up to date on the nano plant?
Mr. Cassel responded no.
Ms. Zich asked how far behind is it?
Mr. Cassel responded that is what part of this reduction is.
Mr. D’Alessandro this reduction will put me in the position to catch up on all of this.
Ms. Zich asked how far behind are we on the nano plant? We paid you for it, but you have not paid the subcontractors?
Mr. D’Alessandro responded you have held retainage on me. You do not understand. When we hit the $8 Million mark, which was $5 Million ago, we would have had retainage reduction and I would not owe anybody. Because of the issues we had we were not supported in the retainage reduction so I was not able to pay everybody.
Mr. Bone stated a large part of this is that Lanzo was paying Intrastate. Intrastate’s inability to utilize the money to pay their subcontracts prompted notices from their suppliers, which prompted us to get involved. When we got involved we were further behind than we could have imagined.
The recording picked up several people speaking simultaneously.
Mr. Hanks asked do we need a motion on Plant F and I am looking for some guidance on how to word it as per the direction with Mr. Cassel working with Lanzo on the pay requests for the remedial work on Plant F?
Mr. Lyles responded I do not think you need a motion. Staff has heard the discussion today. I think it is a matter of administration that it be implemented along the baselines for the motion you just passed. If you want to be clear on the record that you are not approving the request for retainage to be reduced from 10% to 5% as to Plant F, than that motion can be made.
Mr. Lyles stated and as to the request for retainage to be reduced with respect to Plant F; you have approved the nano plant retainage reduction. The request is still before you and you do not want to consider that favorably.
Ms. Zich asked how long until Plant F is functional?
Mr. Bone responded about three and half to four months.
Ms. Zich asked both of them?
Mr. Bone responded I thought you said Plant F.
Ms. Zich stated I did, but I wrote down before you said the plant would be ready in three and a half to four months.
Mr. Bone stated I do not think it will be final. We are still mowing through the root of the programming and controls out there. We are looking at being able to do the start up process in late May. I do not know that I would get Mr. Johnson to concur with that, but that is where we have it scheduled. We will not be able to process water, but we will be able to fire the plant up in late May or early June.
Mr. Fennell stated we understand you had some issues here. We actually bailed you out so go make us whole.
Ms. Early asked when you pay them this retainage; on the next pay estimate should they bring in a release from everybody saying they are all caught up?
Mr. Cassel responded that is one of the things Mr. Johnson and I will discuss after the fact. We are going to drop from 60 days to 30 days for a release.
FOURTH ORDER OF BUSINESS Discussion of Reduction of Retainage on the WTP and WWTF Project
The above item was discussed under the third order of business.
FIFTH ORDER OF BUSINESS Plant F Update
The above item was discussed under the third order of business.
EIGHTH ORDER OF BUSINESS Consideration of Piggybacking from Florida Sheriff’s Association for a 4X4 Loader
Mr. Cassel stated originally in the agenda package was an agreement based on a bid from the Florida Sheriff’s Association. In looking at it and having discussions with Mr. Lyles we need to get it from a municipality versus a Florida Sheriff. It is on state bid as well. All we need is the approval and we can get the actual contract documents of how the State bid it. Typically the State bid is the generally accepted process.
NINTH ORDER OF BUSINESS Consideration of Work Authorization #60 for Phase I Stormwater Culvert Improvement in the Amount of $285,000
Mr. Fennell stated this is a lot of money. What are you going to do with it?
Ms. Early responded it is going to be a difficult culvert. There are monitoring wells, a lot of utilities and existing storm drains we are going to have to relocate. I have to get the easements from the property owners. We were originally thinking of going on the residents’ side, but we do not think it is a good idea. We think it is better to go behind the strip center. That is where the monitoring wells are.
Mr. Hanks asked have we pulled the plats for all the affected properties?
Mr. Cassel responded we have the surveyor surveying both of them and looking for all the easements. I engaged Brewer and Associates three or four weeks ago. He is waiting on the easement search at this point. We looked at our internal drawings. I have also been in contact with both property owners. One of them sent me a breakout of their utilities onsite. It appears it will be a complicated task to get through there because they have their own gravity. The shopping center with Sam’s Club has its own lift station. We are probably going to have to look at a different path. The question is separations and if we can get it down their parking lot or in the area. That is going to be the tricky point. Having said that; some of that should have been looked at when the initial grant recommendation was made.
Mr. Hanks stated we should not be looking at where we are going to put this pipe now.
Mr. Cassel stated I understand that.
Ms. Zich stated I am also concerned about the date. I asked Ms. Woodward for a copy of the contract.
Mr. Cassel stated that is in front of you with all of the end dates and timeframes that were in the proposal.
Ms. Zich stated when I asked Ms. Woodward when the contract was executed she said she does not have an executed contract.
Mr. Cassel stated we do not. The state is executing the contract and is supposed to send me back a copy.
Ms. Zich stated we signed it in October. The only reason I am concerned about this is; how long is this going to take once we start the work because the contract states the agreement shall begin on the date of execution and shall end October 31, 2012. That does not give us much leeway and we do not have anything that seems to be going in a normal pattern. Everything is later. Are we definitely sure we can do this by October 31, 2012?
Ms. Early responded I feel we can. I did talk to FEMA about that because of the timeframe and not getting the signatures. They told me that 90 days prior to the deadline, if there is a hold up for some reason, we can contact them and they will give us an extension.
Mr. Cassel asked can we request an extension now since they have not executed and it took them three and a half months just to get us the executed document?
Ms. Zich stated I am concerned by the time we get whatever we have to get done with engineering, by the time we get the people who are going to do it, you are talking about October 31, 2012. We are now in March of 2011.
Ms. Early stated I do not think that is unreasonable simply because of the signatures. They backdated it when we sent it in. We do not have a signed contract. I do not think it is unreasonable to ask for an extension.
Ms. Zich stated after what has been going on since I have been here with construction I am getting freaked out about a deadline that we have to have this done by. We can go to them 90 days before for an extension and they decline us.
Ms. Early stated I also contacted him with regard to anytime Ms. Woodward or Mr. Cassel spend time on this project documenting or filing for the payments or they need me out in the field and we attend meetings; if all of that is documented by the District, it can go towards the District’s 25% you have to kick in. In other words if there is $100,000 and CSID has to pay $25,000, but $15,000 they can show they used labor, that is the $15,000. I will send the email I have from them to Mr. Cassel where they agree to this.
Mr. Cassel asked did you do the level of effort I requested?
Ms. Early responded yes. I have it.
Mr. Fennell asked do you actually have a new proposal?
Ms. Early responded no. We walked it. We think we can get it in there. We are going to have to put in a couple of manholes and maneuver it a little bit. That culvert was identified as the most beneficial location. That is how we came up with the location. Any location in the District is going to be difficult because everything is built. That is why I put so much money in for construction because I figured there was going to be a lot of utility relocation.
Mr. Hanks stated this $285,000 is just for design and permit. Is that correct?
Ms. Early responded design and specifications, any utility relocation plans, the headwall design, getting the easements and working with the property owners.
Mr. Fennell asked is this $285,000 for engineering?
Ms. Early responded this is for engineering. The other engineering that was separated because Mr. Cassel did not want to do was permitting. We might find the permitting is not going to be that difficult. Maybe that will be incidental. I do not know.
Mr. Fennell asked is $285,000 the total for engineering services for the entire project?
Ms. Early responded no. It is not for inspection services. We are doing the preliminary permitting. I am going to show you what I got approved.
Ms. Zich asked once we dig the first shovel, how long does it typically take to do this?
Ms. Early responded we are hoping they will do it in 60 days because we have companies that we do not want to be out of business. We have to get across Ramblewood Drive quickly. We cannot put that out of service.
Ms. Zich asked so the whole project will be 60 days?
Mr. Hanks responded it depends on what you are really dealing with in terms of the route. You might go into an area where you have roots from trees.
Ms. Early stated this is why I brought Mr. Colussy. He did the removal and I think they actually had to relocate a tree.
Mr. Hanks stated that is 60 to 90 days right there.
Mr. Fennell stated so you are thinking the construction is going to be $2.2 Million and the total $2.75 Million. That will be about $540,000 for engineering.
Ms. Early stated that is correct, but we are not going to use that. I put that in as a high number in case something unforeseen comes up. If it costs more for the construction and we do not use the money for the engineering, they will still include it. It is a total cost. The engineering that was approved is $412,000 just for the design. The $285,000 is for the design specifications and preliminary permitting.
Mr. Hanks stated I understand three quarters of this is going to come from Federal Funds, but I still have a hard time understanding $285,000, even though it is a ground field development or redo, to run it down a shopping center parking lot, identify the crossings and the conflicts and get it permitted. I think it is seriously out of the range that is reasonable for that.
Ms. Early stated I had five other people look at this in my company. I did not do this by myself. We started at $310,000. Mr. Cassel and I went through it and took some things out. We negotiated and got it down to $285,000. That includes getting the easements, working with the surveyor and there are several monitoring wells. I think we are going to have to do some drainage calculations along Ramblewood Drive on the Sam’s Club side
Mr. Hanks stated I just looked at this and there is over nine months for a design period. We have 12 to 18 months of total time from your authorization until it has to be done and have the paperwork to FEMA. Three months are going to be for construction. One month towards the end is going to be for finalizing the paperwork. From 18 months we are down to 14 months. You are going have a big push to collect the information for the existing utilities. You are going to have a big push to get the design done. There are no hydraulic calculations that you need to do.
Ms. Early stated I do not know. I am concerned about the drainage on the south side of Ramblewood Drive.
Mr. Hanks stated if we look at the drainage on the south side of Ramblewood Drive, it is a volume metric count. That is an hour or two of a professional’s time. We are not talking days. We are not talking weeks. We are not talking months. Seeing the price on this I am absolutely shocked. Are tree removals and replacement included in this lump sum, in terms of permitting? What other components are falling outside of your scope of services?
Ms. Early responded the only things not covered under this are inspections services and final permitting. This is a lot of money. We might find out permitting is not going to be anything and I will not come back to ask for additional permitting. If there is a fiber optic cable or something we require with the monitoring wells that will take some additional time, then I will come back. Otherwise, I am hoping we can get this designed and ready to go to bid, and not in nine months. We want to fast track this.
Mr. Hanks stated I am looking at you two right now and thinking if you cannot get a design together and turn this around to get it into the agencies within a month, 60 days tops, why are you in engineering? This is where I am looking at the majority of the funds going. You cannot have that many people working on the project.
Ms. Early stated that is why I gave you a list of people who are going to be working on it. I will need a structural engineer for the head rolls.
Mr. Cassel stated surveying is already underway.
Ms. Early stated I actually brought Mr. Bohorquez back from the Keys to work on this project. I am bringing him back here in a week to get started on this. We want to fast track this. We do not want to sit on this project for nine months. We want to get it in and get it done. It would be great if we could get it done before the rainy season comes.
Ms. Zich asked are we positive we are going to get the signed contract back?
Mr. Cassel responded I received an email from Mr. Williams this week saying it was executed and they were sending it back this next week.
Ms. Zich asked what if someone decides they are not going to give out any funding?
Mr. Fennell responded we are stuck.
Ms. Early stated we might get started and find out their property owners do not even want to work with us. We do not want to draw anything until we contact the utilities and the property owners.
Mr. Cassel stated I contacted the two property owners. Their initial response is they want to know where the pipe is going. They do not have a big issue with it. Once I assured them there was not going to be any cost assessed to them, they were both amenable to getting the information and taking it to the appropriate parties they have to take it to in order to make it happen. I already started that ball rolling. I do not think there will be an issue.
Mr. Hanks stated it is just the $285,000; the District could hire their own engineer, pay the insurance, pay the other stuff and have somebody here for a full year to take care of it. Granted, they are not going to have some of the specialties you guys have, but they will have someone available to take care of other issues as they come up. I just do not see this as being a complicated project; not $285,000 complicated. If we go ahead and lunge into this, as far as establish the utility location, let us start nailing that stuff down.
Mr. Fennell asked do you want to negotiate the cost of this?
Mr. Hanks responded I think $285,000 is too much.
Mr. Fennell asked do we have the time to negotiate this?
Mr. Hanks responded I do not know.
Mr. Fennell stated we can authorize a certain amount of money, like $50,000, to get this started and then you can negotiate the terms of the price. How is that?
Mr. Hanks responded I think we can work with that.
Mr. Cassel stated I received an email last week that says,”I should be able to have a scanned signature page no later than next Wednesday.” The original copy will be mailed to us.
Ms. Early asked are we going to negotiate by the next meeting?
Mr. Fennell responded yes.
Ms. Early stated we cannot invoice unless we get something signed.
Mr. Cassel stated we can authorize $50,000 against work authorization 60 with the balance to be negotiated and determined. That would give us the ability to start invoicing against the work authorization.
Ms. Woodward stated I am not sure how much of an issue this is going to be. If no work has been done on it, it will be a month before I pay my first invoice on it anyway. You will be back here for a meeting.
Mr. Hanks stated but Ms. Early is going to need something to track and charge it against.
Ms. Early stated I need a signature to do something within CH2M Hill.
Mr. Cassel stated we can give you a copy of the motion from the minutes to start the $50,000 against work authorization 60.
Mr. Daly stated make work authorization 60 for $50,000 and then have a second work authorization for the rest.
Ms. Early stated I have a question. Work Authorization 60 does say a lot of stuff for $50,000.
Mr. Hanks stated with the understanding, as a point of clarification on Work Authorization 60, that $50,000….
Ms. Early asked why do you not just authorize scope one through six for $45,000?
The record will reflect Mr. Fennell left the meeting.
TENTH ORDER OF BUSINESS Staff Reports
· Monthly Water & Sewer Chart
Mr. Cassel stated we are internally continuing to try to nail down our numbers. Mr. Stover and his crew are doing some analysis and calibration on our meters to make sure we understand what our readings really are and make sure they are correct. Again; if we do not have good data going in, we are going to get skewed lines. We are trying to nail down every gallon we have.
· Utility Billing Work Orders
Mr. Cassel stated the inquiries are running a little bit higher than last year, but the misreads and meter calibration tests are running about the same as this time last year.
Mr. Daly stated point of note regarding the calibrations and verifications; the city charges $25 and they want to make it $50. We do not charge anything so we might want to look into that in the future.
Mr. Hanks asked does that negatively impact our performance?
Mr. Daly responded no, it does not. In a lot of cases we already check the meter before the bill is sent out. We try to contact them by phone. We already tried to check it, but then they want the calibration and another check. You have a half an hour for two crew members to go out and check.
Mr. Hanks asked is their a fair amount of repeat for calibration? Do we have people who frequently utilize this?
Mr. Daly responded we do. So it is something to think about.
Ms. Zich stated as long as we do not have to go out too many times I think it is kind of nice to talk to the person every once and a while.
Mr. Hanks stated at the end of the day if we have someone go out and check things, it is another set of eyes that is out there in the area to see if there is another issue that is going on. I do not think we can assign a dollar value to that person being out there. It may be an inconvenience, but it may also send the message that we are going to identify the issue.
Mr. Cassel stated it is a lot of positive PR that we are out there being proactive.
There being nothing further to report, the next item followed.
· Monthly Aerial Photographs
· Project Status Report
Mr. Johnson stated there is still a fair amount of work to do inside. We have worked with them and gave them some leniency on installing equipment before the room is on. In talking with my inspector and construction manager, he said they are doing a good job of protecting the equipment in there. This has actually helped them in trying to mitigate further delays. A lot of the current issues are going to surround electrical. They are going to have to start setting switch gear panels and what have you, and pulling wire. There is quite a bit of wiring in there.
Ms. Zich asked when do you see that being complete?
Mr. Johnson responded to the point where we have completely turned everything over to the District and we are offsite, six to eight months; especially given the road blocks they continue to run into out there. If everything goes perfectly; maybe four to six months, but I have a tough time believing that.
Ms. Zich stated so do I.
Mr. Johnson stated I do not know that four to six months is for substantial completion or final completion because final completion is another month to two months on top of that. Another area we are helping them out with is programming. We are allotted by contract 150 days to do the programming. We actually did the programming outside of the server so we can be 90% done with the programming and then all we have to do is install it in the computers and PLCs. We still have not gotten that equipment from the contractor. This is something we are waiting on.
We are trying to work as hard as we can to help the contractor not have additional delays, but when we are waiting for equipment to show up that we need for our piece of the work, it makes it difficult. We are hoping to have the equipment here on March 7, 2011. We can drop the programming into that computer, start doing our portion and hopefully have it back to the contractors as soon as possible so they can wire it up. There is a substantial amount of work left to do.
Mr. Hanks asked is there anything else? I have a couple of items. Tuesday night was the Taste of Coral Springs. I ran into our Mayor who is making a remarkable recovery. He wanted to remind me that he is looking for the District’s help again this year on the Waterway Cleanup. That is occurring this Saturday, March 5, 2011 at Riverside Park. I just wanted to pass that along to everyone.
Mr. Cassel stated we already notified Mr. Daly and staff.
ELEVENTH ORDER OF BUSINESS Approval of January Financials and Check Registers
Ms. Zich stated I think we are looking pretty good. Our debt service is 1.6. That is great. Everything seems to be going along well.
Mr. Hanks asked are there any concerns Ms. Woodward?
Ms. Woodward responded no. We have aligned ourselves so that we will have our finances in order with the debt service coverage. That is really the overwhelming thing you have to be concerned with over the next four years. It runs just over $4 Million a year and that is for a four year period before it drops back to just over $3 Million a year. A lot of what we are going to be collecting in the way of increased utility revenue is earmarked for debt service. It is not additional money to do additional projects with. We are on target. We watch it and tackle any things that look like they will become a problem on a monthly basis.
TWELFTH ORDER OF BUSINESS Adjournment
There being no further business,
Glen Hanks Robert D. Fennell