MINUTES OF SPECIAL MEETING

CORAL SPRINGS

IMPROVEMENT DISTRICT

 

A special meeting of the Board of Supervisors of the Coral Springs Improvement District was held on Thursday, March 29, 2007 at 4:00 p.m. at the District Office, 10300 NW 11th Manor, Coral Springs, Florida.

            Present and constituting a quorum were:

 

            Bob Fennell                                                President

            Glen Hanks                                                Vice President

            Sharon Zich                                                Secretary

           

            Also present were:

 

            Dan Daly                                                    Interim Manager

            Ed Goscicki                                                Co-Manager – Severn Trent Services

            Dennis Lyles                                               Attorney

            John McKune                                             Engineer

            Isabello Rodriguez                                      CH2M-Hill

            Jane Early                                                   CH2M-Hill

            Sean Skehan                                              CH2M-Hill

            Randy Fredericks                                       Field Supervisor

            Doug Hyche                                               District Staff

            Dan Daly                                                    District Staff

            Diane Manza                                              Severn Trent Services

            Mona Slaughter                                          Severn Trent Services

            Marilyn Murphy                                          Severn Trent Services

            Pamela Rower                                            Severn Trent Services

 

FIRST ORDER OF BUSINESS                         Roll Call

Mr. Goscicki called the meeting to order and called the roll. 

 

SECOND ORDER OF BUSINESS                    Review of Management Services Contract with Severn Trent Services

Mr. Fennell stated you may have received something in the mail from Mr. Daly.  I asked him to provide a report on the search routine for District Manager.

Mr. Hanks stated I have not seen it

Ms. Zich stated I have not seen anything either.

Mr. Daly stated I only sent it to the President.  I apologize.

Mr. Fennell stated Colin Baenziger & Associates is an executive recruiting firm for government personnel.  They hired a County Manager for Baker, Florida; City Manager for Cutler Bay, City Manager for Lake Worth and County Administrator for Martin County.  There is a search engine we can use.  I do not know how much they charge.  Do you know anything about this firm?

            Mr. Goscicki responded they are one of a handful of firms who specialize in government recruiting for City and County Manager type positions.  We use similar firms.  A typical fee is a percentage of the salary, usually 30 to 40%.   

            Mr. Fennell stated this is one possibility.  We can advertise for one ourselves. 

            Mr. Daly stated they interview potential candidates.  You are paying for the time involved.

            Mr. Hanks stated the first item to discuss is Severn Trent Services management contract.  We are getting ahead of ourselves.

            Mr. Fennell stated we need to talk about what services Severn Trent Services provides to us, what we need, what we want in the future and which services we want to bring in-house.  This is a planning meeting.  What are our current services?

            Mr. Goscicki responded the three basic services ST provides are the general management, finance and administration of the financial program and recording services.  The engineer services are provided by CH2M-Hill.  You have a staff accountant who provides the day to day accounting.  We provide records administration including taking the minutes and managing all the files.

            Mr. Hanks stated we need to know the present scope for management services and what we envision the scope to be. 

            Mr. Fennell stated we want personnel management.

            Mr. Hanks stated one of the duties spelled out in the contract is direction and supervision of all District employees.  What is written in our contract is the obligation to supervise and provide direction to the employees, involving the hiring and firing.

            Mr. Fennell stated another key management function is planning.  Planning and controlling are the two basic functions.

            Mr. Goscicki stated it is always difficult to itemize management services.  You can talk about planning, organizing and directing in the general management of the organization and overseeing the management of those issues.  Associated with this is the relationship with our neighbors and regulatory agencies.  The list is exhaustive and is not listed in the contract for this reason.  We also provide the financial and records administration side to make sure the District is moving smoothly.  Dealing with current and projected issues is what management is all about.

            Mr. Fennell stated planning, organizing and controlling are general functions.  The plan is either going to be carried out by engineering or supervising engineering. 

            Mr. Hanks stated you need to have someone directing the leaders in the pursuit of certain goals and identification of goals and putting them to identifiable tasks, along with evaluating the costs and benefits of different alternatives.  The engineer should be designing, providing alternatives and preparing the costs associated with it.  It should be up to management to add their own advice with the fiscal component, add the advice of legal council and present recommendations to the Board for the final decision. 

            Mr. Fennell stated we have a number of managers appointed within CSID who provide the day-to-day operational controls such as strategic and operational thinking.

            Mr. Hanks stated your operational management oversees the lower and middle managers, which are Mr. Frederick and Mr. Hyche.  They make sure we have enough Sodium Chloride on hand and determine how the Lime Softening looks today.  The internal managers oversee numerous employees who perform defined tasks.  They report to your middle level managers who provide recommendations to the manager.

            Mr. Fennell stated in the past we had a breakdown between the operation and strategic levels.  I want to see more on-site operational management.  I do not think you are a good operational manager.

            Mr. Hanks asked are you saying in the overall picture and function of the plant, we need to be doing more or less or are we doing the right thing?

            Mr. Fennell responded this is what I call the strategic vision, which the Board participates in.

            Mr. Hanks stated if the bill currently floated through the legislature gets approved, there will be changes to the competitive bidding thresholds.  The decisions we make in terms going out for competitive bid, will be handled internally by staff.  Those decisions will be taken on by the Board in order to focus more on bigger issues.

            Mr. Fennell stated the Board has to vote on short amounts of money.  In many ways operational items are almost always voted on by the Board. 

            Mr. Goscicki stated the Board can address this through a procurement procedure delegating certain levels of authority to the manager.  The manager through the same process could delegate certain authorities to other key staff.  This is well within the current ability of the Board.  We do this in districts with sizeable operations by formulating the procurement code and putting together a report for the Board’s approval.

            Mr. Lyles stated the problem is this Board has a cap on this type of purchase.  As Mr. Hanks mentioned, our special act is pending before the legislature, which will put us in line with other local government districts like CDD’s.  Within the authority of our special act, you can establish procurement code methodologies.  You are not required to spend the full $150,000 but you may want to establish levels well below but they have to come to the Board and meet certain criteria.

            Mr. Hanks stated we need someone to handle the operational side, which are the day to day operations.  I want to make sure we are not focusing on one aspect of our District at the detriment or neglect of other components. 

            Mr. Fennell stated the way this Board is set up, it is not a one man operation.  The Board actually takes an active part in this.  We only meet once a month.

            Mr. Hanks stated our normal meetings last anywhere from an hour to an hour and a half. 

            Mr. Fennell stated our goal is to set the general direction of where we want to see the Board go.  There should be operational, management and strategic viewpoints.  We need an architect to figure out where it is going to go.

            Mr. Hanks stated we are the ones providing the direction.

            Mr. Fennell stated we are providing the approval and there is a general feeling we want to convey. 

Mr. Hanks stated keep in mind; all of our seats are coming up for election in three months.  Who knows what will happen.  Direction should be given by the manager.

Mr. Fennell stated we need to think about the right way to form this business so it is an ongoing business and can survive by having a different manager in a period of 24 months.  The Board is the stabilizing factor.

Mr. Hanks stated that is scary.

            Mr. Fennell stated I know.  We can be voted out every three to four years.  We need to form a continuing structure going forward to withstand the business structure of the organization.

            Mr. Goscicki stated what you are discussing is no different than any local government, with an elected body such as a Board of County Commissioners or City Council providing policy direction to a City or County Manager.  The stability in those organizations is in the business systems you establish and put into play to assure the day-to-day business keeps going, the bills get paid and the Water Treatment Plant continues to operate.  You have accounting and financial systems in place.  Managers will come and go.  The average tenure for a City or County Manager is four years or less.  This is your continuity in terms of meeting the day to day requirements; assuring the wastewater gets treated and getting rid of the stormwater during floods.  These should be taken care of in the business systems you set up.  The manager should be working with you to make sure the business systems are running sufficiently, working with the Board on upcoming and strategic issues coming up in the near future and bringing those policy directions to the Board for consideration, approval and modification.

            You are seeing more and more of this shift in local government.  Twenty years ago, County Administrators were administrators.  You are seeing the term change from County Administrators to County Managers because their job is not just administering policy to the Board but taking an active management role, bringing those issues to the Board and helping the Board set the direction ole.  This is how we see our role as manager in providing this input and looking forward to where you are going, what issues you will be facing and how to implement programs to insure continuity of service.

            Mr. Hanks stated it is an active rather than passive role.

            Mr. Goscicki stated absolutely.

            Mr. Hanks stated you will be a manager rather than an administrator.

            Mr. Goscicki stated exactly.  You have an excellent Operations Manager with Mr. Doug Hyche.  When I was not here, I relied completely on Mr. Hyche to manage the day-to-day operations and he provided feedback to me in conference calls as far as any issues and concerns.  The District Manager we provided does not perform those operations.  They insure the samples are being taken for the discharge monitoring but making sure we have the systems in place to make sure the permits are being met, completing the Wastewater Treatment Plant expansions and making sure we have the right engineering firms on board to keep all of the permits on file.

            Mr. Fennell stated part of the problem we had in the past was too much of this system did not look like CSID; it was more set up to Gary Moyer/Severn Trent Services standards.  The identity of the firm and the business entity lost its flavor. 

            Mr. Fennell stated he started off this way and then grew the business.  He had over 200 districts before selling to Severn Trent Services.  There was a question from the employees over who they were working for whether it was NSID, CSID, Naples, etc.  Mr. Moyer, through his personnel and leadership, tied it all together.

            Mr. Goscicki stated a few years ago, I gave a presentation showing the mix we have.  We have CSID employees, shared employees and ST employees.  Over the past year we have done an excellent job of bringing all of those employees in.

            Mr. Hanks stated there are no clear management structures in place or hierarchy.

            Mr. Fennell stated at the time, one of the solutions presented to us was to have everyone report to Severn Trent Services.  One good solution came about afterwards, which was for CSID to take on the responsibility of the employees.  The sharing of services with other entities will continue but there will be a clear line of authority to the home District, which is CSID.  We are currently trying to figure out what new services we want and what our organization should be going forward.  I still think there is an issue in American businesses for the proper alignment of services.  The key strength of American business is the one man/one rule principle; unfortunately you are limited to what one person can do, how good he is and how good your firm is.  This is the problem with General Electric.  They try to get around those problems.  They are one of the few firms who can actually produce more than one product.  Most US firms cannot produce more than one type of product at a time and because of the one man/one rule approach, they have a hard time when someone leaves the company or gets promoted.  I want to see us set up a similar type system.

            Mr. Hanks stated like balancing out the quickest way to get the most short-term results versus the long-term.  We need to determine whether we want to get our results quickly or have long-term results.  It may take us longer or more investment to get there.

            Mr. Fennell stated we are a utility.  Are we going to be here 20 years from now?  I think so.  We better be here for the foreseeable future.

 

            Mr. Hanks stated we plan to be.  We should also be planning for natural disasters.  We have to live like today is our last day but plan to live to 100.

            Mr. Fennell stated we issue long-term bonds.  People buy our bonds because they believe we will be here 30 years from now.

            Ms. Zich stated our chance of not being here is so minute.  Someone is going to be here in 20 years.

            Mr. Fennell stated we need long-term structures and to take management changes or people getting promoted and going other places.  Not only do these things happen but sometimes people purchase the company.  It happened with Mr. Moyer.

            Mr. Hanks stated you have the same uncertainty with an individual or direct hire.  There are so many different opportunities out there.  You say you are going to be here and I am going to be around but you never know what is going to happen.  There is no certainty in a person.  It is within the structures set up.  Let’s think about those structures and the best way to structure it. 

            Mr. Fennell stated we should split what we are doing from operations.  We need an operational side of the management of the employees and a strategic side.  The question will be whether one needs to report to the other.  I spent a great deal of time in Japan where the corporations are structured entirely differently.  Marketing and sales were actually enforced and not controlled by management.  They came up with what they needed to in order to please their customers.  Management did not control as much money as they do in the US.  Management in the US makes all the decisions on investment, product selection and people selection within the corporation.  All of these things are tightly controlled.  There are other cases where these operations are not tightly controlled. 

            The criticism of the Japanese operations has been they are slow making decisions because they have to get consensus from everyone to figure out what they are going to do.  Proposals actually start from working groups, engineering groups and marketing.  It can take them a long time to make decisions and everyone has to work together.  The management is not so much the decider as a consensus maker.  They make good decisions in the long-term but are slow on making them.  Toyota for example, has a much idealized concept of what the quality should be and how many cars they will sell per year.  They will have a 20 year plan to do something.  You do not see many Japanese companies getting bought out.  You see Japanese companies buying other people out.

            Mr. Hanks stated there is a difference in the corporate philosophy by the Plant Operators all the way up to the manager.  There is another business philosophy where there is a disconnected relationship between management and the corporation.  You will see this in all types of companies.

            Mr. Fennell stated I think we have great operational leadership and abilities within CSID, better than anyone outside of us.

            Mr. Hanks asked is it the people who make it better or the structure?  Mr. Frederick has 32 years experience and Mr. Hyche has 15 years experience.  You have pluses and minuses on both sides.  The plus side is between them, they have 50 years experience in the District.  The downside is one of them can choose to retire.  They can retire next year or in five years.  Is the reason we like how this business being run because of Mr. Hyche and Mr. Frederick or because of the structure?  Can someone come in and fill either Mr. Hyche or Mr. Frederick’s place and still please us with their results?

            Mr. Fennell responded maybe so but we have enough design to where we can promote people within the organization.  We should be doing this.  This is one of the advantages we have.  When we cooperate with other districts, we have the ability to expand.  Some people have actually made the leap from the operational side to the strategic side.  We need an operational side and operational management within CSID.  There is still a strategic element above and beyond the normal operations occurring every day.  Issuing bonds and raising money are issues you do not normally get into with the Water Treatment Plant.  We have other types of consulting services.  I think we need a dual role.  We should have an Operational Manager who we will call a District Manager who all employees report to.  Maybe Mr. Daly can fill this role.  The question is who is in charge?

            Mr. Goscicki responded I think you are 90% there already.  You have an Operations Manager who is your employee overseeing all of the operations.  All of your day to day field operations are made up of CSID employees who get strategic direction and support from Severn Trent Services through our abilities to deal with those utility issues and the expertise we can bring.  The only other aspects are on the financial side with the accountant you have on board.  We provide the financial strategic side in terms of providing oversight and direction on how a financing plan can be put together.  I am not pleased with where we are right now and we have some issues, which we will discuss under other business.  We have the process in place.  The IT side is 100% under your control.  You have taken it over and separated it from Severn Trent Services whereas before it was a shared operation.  It is your employee, your software and your customer service representatives.  It is similar to the field operations side and specific to your operations.  We currently have a structure in place where Severn Trent Services as your manager deals with the fiscal oversight and planning.  The one day to day activity we continue to provide for you is records administration and management. 

            Mr. Fennell stated we had problems with records administration and asset allocation.  We are having problems keeping track of everything we own and where they are located.

            Mr. Goscicki stated issues came out of GASB-34, which required certain records keeping in terms of identifying fixed assets.  I always thought we should also include within our service, the complete financial service and not bifurcate the fiscal planning from the accounting.  We had the bifurcation of responsibilities where some things were getting done and some were not.  From what I understand from our meeting yesterday, we are currently caught up.  This is the first part of a true asset management program in terms of not only identifying the value but getting a complete description of the asset and where it is located.  If it is an ongoing asset, you start getting into the replacement value aspects as the condition and capacity of the equipment plus the overall quality.  This is something we routinely do for our clients on the operating services side.  We do an asset inventory of the physical assets, rate the equipment, come up with a replacement valuation on the equipment and create a schedule for doing the replacement.

            Mr. Fennell stated I can certainly see most of the management structure is within CSID.  For decisions on policies or financial issues, we can hire outside people.  I do not know if there is any one manager who can do bond issues.  We usually hire Bond Counsel.

            Mr. Lyles stated you have Bond Counsel.  You also have an Underwriter who supports Bond Counsel.  They serve significant roles.  You need to have someone within the organization, either as an employee or as a consultant to maximize your benefit and make sure everything is done correctly.  You will need to have someone on the management side with significant bond experience; whether you have a full-time governmental management expert or a consulting arrangement with someone who has experience with the District and its finances, otherwise you run the risk of wasting time and money.  The District Engineer also plays a significant role.

            Mr. Hanks asked is this something our present District Engineer has experience with or is it outside of their expertise?

            Mr. Skehan responded working with you on your rate structure and doing the rate analysis, we have plenty of experience.  At present, the limit of what we have been doing is narrow.

            Mr. Hanks stated I know it is not within your project scope but CH2M-Hill is a large company.

            Mr. Skehan stated we can certainly help with bond issues.  This is certainly a feature we can offer.

            Mr. Lyles stated Ms. Early and Mr. McKune with CH2M-Hill have been involved in a number of bond transactions for CSID and NSID.  I am not referring to the engineering role as much as the role the manager plays.  For example, if these bonds are going to be pledging assessments, we need to have the appropriate notices and assessment hearings.  Part of this is my job but the other part is the manager relying on previous experience.  The Board will be pledging rates showing the need for increases, which will be the method of paying back and amortizing the bonds.  This is a role the Board needs to be comfortable with the manager and financial consultant filling for you. 

            Mr. Goscicki stated the Underwriters, Bond Counsel and Investment Bankers will all tell you that you need this function.  They look for someone to create bridges between their expertise and their specialty to make sure all of the pieces come together.  They want to know your advocate is also looking at this.  Everyone has their own vested interest in this process.  It gives everyone comfort when your manager is a key player in the process and saying, “I looked at this and it is a good deal”.  No one is taking advantage of the process for their single benefit.

            Mr. Hanks stated this is the role you want your manager to take, whether for legal counsel or engineering services. 

            Mr. Lyles stated there is a specific section in the Offering Memorandum stating who serves as District Manager and their duties.  Investors for bonds we or any other district issue reviews this document to determine whether or not they want to invest in our bonds.  It affects the rate we pay.  Whoever fills this role will have to provide a certificate or sign off on certain documents as District Manager as part of the closing process for the sale of the bonds.

            Mr. Hanks asked are there any qualifications or designations for District Managers?  There are a variety of trades out there. 

            Mr. Goscicki responded there is no certification for District Managers.  There is an Association of District Managers but they are more involved in Fire Districts.  The association is pushing an agenda to create some type of certification.  A City Manager belongs to an Association of City and County Managers but they do not receive a certification qualifying them as a City Manager.  You can look at the credentials and experience a person brings to the table and decide what is needed.

            Mr. Hanks stated in some ways, it is like looking for a CEO.  You can hire someone who does not have a business degree who dropped out of college and formed their own company.  We are looking at the actions of this person.

            Mr. Fennell stated obviously they should have some kind of training.  This is not so much an operation because we have people who provide operations.  The experience has to be in leading, organization, strategy, finance and how to tie this to our customers.  Severn Trent Services is more inclined to have a person who goes up to Tallahassee and is a lobbyist.

            Mr. Goscicki stated we are not lobbyists but part of our business is certainly intergovernmental relationships.  It is not in the nature of our company to lobby when we are not lobbyists and is not part of our expertise.  However, we are working with the City of Coral Springs, NSID and SFWMD on a program advancing the agenda of this Board.  It is certainly part of the skills we bring and what we see as our management responsibilities. 

            Mr. Hanks stated you mentioned the person who is assigned as the manager of these bond issues may have the potential to affect the rate.  Is this so much of an issue when it is an appropriation?

            Mr. Lyles responded I am not sure I understand the question.  Typically what you see is a corporate entity involved in the issuance of these bonds, irrespective of the type of Special District.  They are not a named individual.  They are typically a management company.  Obviously in a larger district having its own staff, they will identify the District Manager by name. 

            Mr. Hanks stated maybe this is different with SFWMD as they are a state agency.  They have a board and a manager as opposed to a management company.

            Mr. Lyles stated correct.  It is a different order of magnitude.

            Mr. Hanks stated Mr. Pat O’Quinn is affiliated with the Plantation W.C.D.  He is their employee and their manager.

            Mr. Lyles stated correct, unless you needed to have a corporation as your manager.  In NSID, Turtle Run and other Special Districts, there is a section in the Offering Documents pertaining to who manages the project and makes sure things are done correctly now and in the future.  Investors are interested in the quality and security but also whether or not the community is going to continue to be properly run and maintained and whether it is more or less likely they might have to foreclose one day.  If the community is properly maintained, it is virtually impossible for the investors to look at something as drastic as foreclosure.

            Mr. Hanks stated if Mr. Mike Levinson resigned or retired, at the point of transition where you are bringing in a new manager, depending on what level of experience he has, you could see a chance in how this is received in terms of the rating.

            Mr. Lyles stated probably not in something like the City of Coral Springs.  You are talking about rated bonds, which are rated by the rating agencies of New York and is a different type of security.  Districts like these have unrated bonds.  They are actually considered to be junk bonds and are typically without insurance.  They are more risky than other types of investments.  This is where it is necessary to have something the investment community can look at.  You should probably be hearing this from either Bond Counsel or the Underwriter.  However, I can tell you my exposure to it.  There are requirements information relating to the manager are put out through an Offering Memorandum the investment community reviews and the SEC controls before investors purchase the bonds.  It is one of many factors in regards to what is and is not needed.

            Ms. Zich stated we definitely need a consultant for the bonds as they are technical. 

            Mr. Goscicki stated you currently have a team in place with Bond Counsel who is Ms. Denise Ganz with Ruden, McClosky. 

            Mr. Lyles stated you have this now with Severn Trent Services.  They portray this management role in this and other financings around the state.  This is something they offer to you.  If you are amending or revising the management contract, this is one portion you may want to have a continuing relationship with in connection with the financings of the District.  You do not pay anything but if you need it, you have access to it.  This has not traditionally been part of what Severn Trent Services has been involved with.  It is separate.

            Mr. Fennell asked what should our structure be going forward?

            Ms. Zich responded this is the first time I realized Severn Trent Services provided these services.

            Mr. Fennell stated they are listed in their contract.  Some of them are occasional services.  We have not gone out for bonds in 15 years.  We have been paying them off.

            Mr. Goscicki stated you are getting ready to pay them off.

            Mr. Fennell stated since I have been on the Board, we probably paid off half of the bonds.  We do the accounting but Severn Trent Services does the financial reporting.

            Mr. Lyles stated there are two different contracts.  You used to have an agreement with Gary L. Moyer, P.A. and a separate agreement with District Financial Services, which was Ms. Rhonda Archer’s company.  When Severn Trent Services acquired Gary L. Moyer, P.A., it also acquired District Financial Services.  Both of those agreements were taken over by Severn Trent Services with your approval.  They merged the financial and management services when the acquisition took place. 

            Mr. Goscicki stated all of our current contracts with our clients; we have a single contract combining all of these services.

            Mr. Hanks stated I did not mean to be concerned.

            Mr. Lyles stated I do not think you need to be concerned about it.

            Mr. Hanks asked what is their order of magnitude?  Could the District Manager have an impact on the rates?

            Mr. Lyles asked are you referring to when you go out and issue new bonds and have a new manager with no credentials?

            Mr. Hanks responded yes.

            Mr. Lyles stated it would catch the investors’ attention.  The biggest and most significant factor we have and CSID has is we have all of these completed residential structures and they are sitting on South Florida real estate.  We have an impeccable track record of making timely payments on bonds issued for the past 30 years.  I am not suggesting for a second things are going to be jeopardized.  I was only trying to tell the Board there is a role the management company plays in the financing process.  You want someone who has previous experience in your corner.  Whomever you have in the role of the day-to-day manager should be part of this process benefiting from the transaction and the operations of the team required to get to a successful bond closing.

            Mr. Fennell stated we need two lists; one from an accounting standpoint and another from a business standpoint.  It is obvious whether or not we continue with Severn Trent Services; we need to rewrite this contract to reflect what we are doing today and what we think we will need in the future.  I want to have our operational managers go through this list, decide what they are comfortable doing in-house and what services they what to see.  For example, in looking at what Ms. Archer provided; we are doing the accounts payable ourselves, risk management is an insurance issue, we work on the annual budget internally but it has to meet certain specifications.  We pay Severn Trent Services for bond compliance but it may require a different viewpoint.  Why do we need special assessment services?

            Mr. Goscicki responded you need to update your assessments each year.  I do not want you to underestimate that.

            Mr. Fennell stated we are doing the utility billing management and human resource management in-house.  We should have two different types of services; financial services and the general strategic management services.  We should decide what we can do in-house.  Frankly we are more comfortable with other services.  I am not saying Severn Trent Services will be the manager but we will have those services. 

            Mr. Hanks stated we are limited on being able to discuss items.

            Mr. Fennell stated we need to have our own staff.  We will take what makes sense in-house.  Maybe we should contact other districts.  The first thing we should do is come up with a decent list of what we want in terms of services.

            Mr. Hanks stated keep in mind we are not the only district who has been affected by personnel changes at Severn Trent Services.  We supply services to two other districts and we need to think about the implications of our decisions on them.

            Ms. Zich asked can we be separate from the other districts?

            Mr. Goscicki responded we have separate contracts with each district.  One of the complicating issues is you have staff who at one time were shared employees.  They were paid half by NSID and half by CSID.  Some were paid by other districts.  You have no Interlocal Agreements tying them together.  At one point some of the employees became Severn Trent Services employees and others became District employees.  Right now the situation has evolve to where everyone on-site is a District employee but you are providing services without any contract on a handshake deal to NSID where you have a number of employees plus you are providing utility billing services.  You are currently providing utility billing services to our clients.  You have your own hardware and software and will be migrating those out. 

            Mr. Fennell stated the fact is we need to step up and get those Interlocal Agreements. 

            Mr. Hanks stated you are saying we need to formalize any agreements we have handshake deals on.

            Mr. Fennell stated correct.  This individual needs to be a CSID employee.

            Mr. Hanks asked with regards to what?

            Mr. Fennell responded with the operational services.

            Mr. Hanks stated my concern is we are in the process of evaluating the management contract.  If we were not having this discussion about Severn Trent Services and the management services being provided, I would not have even thought about formalizing these agreements.

            Mr. Goscicki stated Mr. Hyche is shared between CSID and NSID.  What has always been the common link facilitating this was when it was with Gary Moyer.  When it was with Severn Trent Services, there was a common manager who oversaw and provided direction to this employee who is now a CSID employee.  There was a comfort zone by all of the boards involved saying, “My manager is overlooking the staff providing support to me”.  Whether this was my staff at NSID or staff at CSID, the common manager acted on the common interest of both districts.  This is the advantage Mr. Moyer created by having shared employees.  He chose to do so at the time rather than having them as his employees.  We will now make them our employees and share them out.  This way we keep the responsibility to not only manage those employees but assure equitable distribution to our clients.  The common manager is what made this process work in the past. 

            Mr. Fennell stated I think we need someone like that.

            Mr. Hanks stated being the person who is coordinating with the various districts.

            Mr. Fennell stated as well as with our own services. 

            Mr. Hanks stated this may be a role or responsibility of someone on staff. 

            Mr. Fennell stated our job should be to make sure we do the best we can with the services we have.  This gives you a chain of command including the employees who report to you.  We should coordinate and perform those services ourselves.  From a strategic standpoint, we need outside services, whether this by Severn Trent Services or someone else.  We need to go through this and decide which services we want to have.  As we have discussed this, it is becoming clear we need such an individual, not just from an operational standpoint but from a personnel standpoint. 

            Mr. Hanks stated we need to have a well organized structure and be supportive of our people.  If you do not have the right people and there is a breakdown between one person and another and one leaves, you are going to be in trouble.  In the end, we are only as good as our employees. 

            Mr. Goscicki stated even though you have shared employees and shared functions, in terms of looking at your activities, I suggest looking at CSID first.  Otherwise, you are making significant assumptions as to what other independent entities may or may not do.  This is putting a burden on your staff.  You are asking them to go through this analysis to change your structure and assume they will fall into line with whatever process you come up with.  It is best if you look at what is best for CSID from your perspective and how this works for you.  Once you go through this analysis and discussion, if you choose to move into other areas, you can determine how you will provide support or service to others. 

            Mr. Fennell stated I want to maintain the same services we are already providing.

            Mr. Hanks stated we need to be careful because we currently have people working for us in-house.  The supervisors can do what they want but I am thinking about what is going to be best for the employees. 

            Mr. Fennell asked what do you think we should do?  Now is the opportunity to make some changes.

            Mr. Hyche responded in my opinion, you seem to be moving in the right direction. 

            Mr. Hanks asked is this the right forum to have people discussing what is right?  I hate for someone to get burned because we chose to do something different.

            Mr. Fennell stated I still what to hear their opinions.  This is the only forum we have.

            Mr. Hyche stated operationally the districts are fine.  For many years, I operated the districts between Mr. Jan Zilmer, Mr. Dan Daly and myself as well as Mr. Frederick, Mr. Selchan and the other employees.  We brought people in who were running the plants before I was in this position and they are doing a good job.  The infrastructure is there and we are bringing them up.  How you want to handle the other services is entirely up to you.  I do not think I can handle it.  It is not my expertise.

            Mr. Frederick stated I agree.

            Mr. Daly stated I agree with Mr. Hyche and Mr. Frederick.  We run without direction.  Our employees do their jobs.  This is a function of the Board planning and through no fault of the management company, has been fragmented over the years where you were going in one direction with one manager and then a new District Manager came in.  Some projects may not have seen their completion and some items on the agenda may have been revisited a month or two months later.  The Board needs to look at what leadership they want and who they want to report to.  You can hire someone from Severn Trent Services who can go out and hire someone or you can hire another management company.  Most of what management companies are capable of doing, we are doing.  Some of the things they cannot do in-house and should be doing in-house but do not have the expertise to do in-house, we need to look at whether you hire a national company or outside consultants.  They can work for us on a fee basis. 

            Working with Severn Trent Services is fine but I agree with whatever direction the Board wants to take.  The longevity and direction has to be separate due to employee differences with the management company.  It can actually happen with someone you hire off the street.  I would think the Board wants to take one of the long-term employees such as Mr. Hyche, Mr. Frederick, Mr. Zilmer or myself and get them involved in some of the meetings, whether they be finance, planning, budget or capital improvements.  Unfortunately with the absence of Mr. Petty, no one knows what the plan is.  The District is actually at a disadvantage by playing catch-up.  You only know what you hear.  My recommendation is for a person do their normal job and then structure it so they can do some of their duties through some of their employees and be involved in the meetings.  At least there is another set of ears and eyes so if something happens where they were in an accident or moved there is continuity and someone knows what was taking place and the direction the District is going in.

            Mr. Hanks stated Mr. Daly and I had some discussions over the past week.  You mentioned many issues were left off the table.  Sometimes it is too good to leave a project unfinished.  We need to have the right focus and realize we are working on the right one.  We need redundancy in the District management, which needs to be in-house.  It is not a redundant position at a management company.  Dealing with corporations, you may or may not have this individual there to continue the relationship.  If there was ever any personnel issue, hopefully things can be worked out so we could have a reasonable transition and both parties will not be transitioning at the same time.  I want the Board to consider this when we are structuring things.  It may mean some additional personnel costs.  This person cannot be on every conference call but certain key elements need to be identified.  Whatever firm is providing management services need to buy into this concept. 

            Mr. Fennell asked are there any other comments? 

            Mr. Petty responded you are looking at the broad spectrum and trying to decide where to put your focus.  It is a big task because you are starting from scratch.  If there is something in the past history you think is applicable and you want to look at it fresh, it is going to take some time.  There is some work involved.  I cannot say whether or not it is positive or negative.  If you have positives such as your operational staff, it gives you a point of demarcation.  You do not want to look at your entire operations.  If your operations are fine and you are looking at the management, finance and administrative services under the contract, you have a clearer view of where you need to go.  However, I can see much of the discussion is going in a bigger circle.  I do not know if I can give you any direction since there appears to be a bigger picture.

            Mr. Goscicki stated you have come a long way in this agreement in terms of where you were two years ago.  You institutionalized your operational staff being part of your employees.  From what I am hearing and what you described, I think you are there in terms of what you have.  You have a management company within Severn Trent Services dealing with high level strategic issues and providing oversight and direction.  You have on-site management operations employees, whether it is field operations and customer service operations.  Those employees are here on-site.  I think you have the mix you need in terms of how you work it.  You have a proposal on the table in terms of how you close more of the gap with having a manager but not seeing him often enough.  One of the things we would be more than happy to do would be to sit down and re-structure the contract and give better definition.  The current contract is from 1992 or maybe earlier.  It certainly is not a contract we use today.  We do not feel it accurately describes the relationships we have.  We welcome the opportunity to come back to you with a rate structure better defining those roles and relationships.  I think you evolved to a mix providing you the input, operations by your people on-site as well as the management services the Board is looking for from a management company, the expertise the management company brings and how you bridge this to the day-to-day operations in the field. 

            Mr. Hanks asked what are we doing in the meantime?

            Mr. Fennell responded we already made some changes such as appointing Mr. Daly our District Manager.  We also have management services from Severn Trent Services, which we have not terminated.  From our discussions today, I feel we need our own on-site day to day operational manager.  This person will be our employee.  He is here when we have a natural disaster like a hurricane.  On the other hand, we need strategic thinking and management from a finance and operations point of view in terms of dealing with all the issues we have.  There are some real strategic issues; not day-to-day operations issues requiring some real thinking.  The only real issue is how those two individuals work together. 

            Mr. Hanks stated you have experience with more organizations than we have. 

            Mr. Lyles stated you ultimately need to have one person in charge.  The trick is having two functions because both are necessary to CSID’s short-term and long-term operations.  The detail is going to be in a service contract.  If it is going to be Severn Trent Services, there needs to be a contract spelling out when and under what circumstances they are going to be needed and how they are going to get paid.  Telling them they are needed is going to have to come from here or from the day to day manager or administrator.  You do not want to have to guess who the responsible person is.  You want to have one person to talk to whose job it is to make sure the in-house staff is appropriate and knows what they are doing.  If they need to go outside under this Consulting Services Agreement, he or she will hold Severn Trent Services accountable and get those tasks completed for you. 

            Mr. Fennell stated I hear you.  Is there a possibility for us to appoint two people, a District Manager and an Assistant District Manager, one from a consulting company and the other from on-site staff?

            Mr. Goscicki responded if one is the manager, you need to define their relationship where one is the District Manager and the other is the Assistant District Manager and define their roles.  The confusion is where you try to have co-managers and mixing their responsibilities. 

            Ms. Zich stated I agree.  When you said two people, I thought we only needed one person.

            Mr. Fennell stated it is not just the people but there would be two different groups; one representing Severn Trent Services and their interest and the other representing CSID.  There can be issues where those interests can conflict.  What is best for CSID may not be the best for Severn Trent Services.  For instance, we had an issue with Severn Trent Services, which was an in-house issue that lost us our District Manager and Financial Advisor.  It had nothing to do with us.  It was not a CSID issue.  There are conflicts like this, which do not necessarily serve one versus the other.  We have two different organizations with different goals.

            Mr. Goscicki stated you have the same conflicting issues even if it is an individual.  If you hire an individual to be the General Manager, this individual will have their own personal interest as well as the interest of the District.  You always have this dichotomy whether it is a company or an individual.  What you are looking for with the company is whether the ethics or cultural and values are there saying “We are in the business of supporting our clients and are going to do what is right for our clients”.

            Mr. Hanks stated keep in mind; we are trying to build a great organization.  Some of the best ideas come about as a result of tension.  Look at some of the documents we have had for the last 200 years such as the Constitution or Declaration of Independence.  Those were not formed in a time where there was no discussion or when everything was in harmony.  There were serious issues being discussed at that time.  There is something to be said about tension between entities.  You are giving conflicting or different viewpoints on items but the Board in the end is the deciding factor.  We can benefit from having two different viewpoints.  We have to be careful and clear on the responsibilities and accountability of the different positions or people involved but we can benefit greatly from having an extra voice.

            Mr. Fennell stated I think so.  An example of this is having a general staff coming in and making joint decisions, like the Germans do.  Our own staff is modeled after them.  Many times you need another viewpoint; an operational viewpoint versus a strategic viewpoint. 

            Mr. Hanks stated you are going to have people looking at this from a financial standpoint and looking at the details.  We need to benefit from all these viewpoints.

            Mr. Fennell stated I agree.  What I want to see is a lead man.  In an emergency, the operations guy is in charge, not the strategic man.  During a strategic decision, you need the outside expertise. 

            Mr. Goscicki stated absolutely.  The strategic guy’s job is to decide what help you need and what resources he can bring to you.  Otherwise, you need to get out of their way and let them do their jobs.

            Mr. Fennell stated I want Severn Trent Services to review the existing contract.  Given that we are looking for an operational services type of manager or strategic manager position, I want you to define what those roles are; what services we want in-house; if we want two roles, an operation services manager and strategic manager and what those operations will be.  This will make Severn Trent Services job easier.  I am looking for a proposal from Mr. Daly and Mr. Goscicki for these two positions and rewriting our service contract in regards to what services we want in-house and what outside services we should be purchasing.

            Ms. Zich asked can we have this before the next meeting?

            Mr. Fennell responded yes.

            Mr. Hanks stated we expressed concern and frustration about the transitions in Severn Trent Services staff and how it affected CSID.  Are we doing anything at this time in regards to re-structuring things so we know where we are going with this?  We had consensus in looking for an internal position(s).

            Mr. Fennell stated I do not know if this is going to be a rotating position.  I am looking for an operational services person who is the day-to-day person you call when issues arise.  He is the person on-site.  On the other hand, there is a strategic viewpoint.  During an emergency, I have seen corporations where there are General and Plant Operations Managers.  I will consider any way to look at sharing this power.  I also like the idea that both of them are more involved in the operations; i.e. the operational person knows something about the strategic side and vice versa.  There is some overlap of what takes place so if something happens with one of them, there is still some knowledge there.  There should be some overlap and coordination.  From a strategic standpoint, we have canals needing to be cleaned out.  Currently this responsibility is put on one person but this only works so long as the person stays there forever.

            Mr. Hanks stated unfortunately this person has a predisposition to focus on a particular area.  I want to reinforce this with our staff, management and our consultants.  If there is a viewpoint not being considered, please bring it to our attention. 

            Mr. Fennell stated there is a tendency for any strong individual in charge to try to get his staff behind him.  There is another issue which is we try to get people on the Board who can handle certain types of issues.  We have been good in doing so. 

            Mr. Hanks stated I will be happy to work with staff on the proposals.  Are there any Sunshine Law issues by doing so?

            Mr. Lyles responded no, so long as you work with them one at a time.

            Ms. Zich stated I am glad to hear we are going to look for one person to give input on what we actually need.  I am looking forward to hearing what they have to say.

            Mr. Fennell stated the next meeting is in three weeks.  Since we have Mr. Daly here temporarily, I am not panicked about losing anything fairly quickly.  We have not put Severn Trent Services on notice and they are still expected to pull their full weight.  We are looking for a re-structuring of our operations.

            Mr. Hanks stated our landowner’s election is in June.

            Ms. Zich stated I am not aware of how this process works.

            Mr. Fennell stated if you want to be re-elected you have to get proxies from your neighbors saying they will vote for you.

            Mr. Lyles stated you can get proxies from the manager.  There is a specific form to use.

            Ms. Zich asked how many proxies do I need to get?

            Mr. Fennell responded about 30.

            Mr. Lyles stated we had an election not long ago where 61 proxies were enough and 59 were not.

            Mr. Fennell stated anyone can run for office.  This is an open forum.

            Ms. Zich asked if there are five people in one household, do you need to get five proxies?

            Mr. Fennell responded it is one vote per property owner.  The individual has to be a resident of the District.  Theoretically all landowners can show up or you can bring proxies. 

            Ms. Zich asked do you need to meet certain criteria?

            Mr. Lyles responded they need to live in the District and own property.  They also must be a citizen of the United States and resident of the State of Florida.  Every once in awhile, someone who is a long-time resident/property owner or developer will attempt to be on one of these Boards but they never became a US citizen so they cannot serve.

            Ms. Zich asked do all of the proxies need to be from landowners within CSID?

            Mr. Lyles responded yes.

            Mr. Fennell asked please send out proxy forms to each of us.  This will be the last landowner’s meeting if the current law passes.  Then we have the choice to go to a General Election.

            Ms. Zich asked how long are we elected for?

            Mr. Fennell responded four years.

            Mr. Hanks stated if we are going to be adjusting the structure of the District, I want to make my adjustments beforehand.

            Mr. Fennell stated we should see if we can do so before the next meeting.  We already have continuing support from management.  We are not in a bad position from an operational standpoint.  We probably have some issues as far as what we are doing with our programs and money planning.  Mr. Goscicki spoke to me personally about some upcoming issues.  I understand the issue of going out for short-term funding but there are issues with us doing short-term funding for an insignificant time during a two year period because it no longer looks like immediate funds but long-term funds.  Now we have to structure this in a payback issue dealing with shortages of money and who gets paid first.  Apparently the short-term bonds are not structured this way.

            Mr. Goscicki stated we met with SunTrust today.  They are going to meet with Bond Counsel tomorrow to discuss the structure of a loan.  The issue dealt with your existing bond covenants, which did not provide a loan of funds to pay a subordinate lien.  Even though you are allowed to have subordinate liens, through your enabling legislation you do not have the mechanism to pay the subordinate lien.  There was an issue getting amendments to your current bond resolution to permit this flow of funds.  It is not a huge issue but an issue nonetheless.  The other concern is you are only allowed to have a two year revolving Line of Credit.  You are not allowed to go to five years.  You can use what you need from the credit and then roll it into another issuance but your current resolutions do not allow for a five year loan separate from your bonds.

            Mr. Lyles stated it is in the Special Act and not proposed to be changed.  The bond covenants allow you to do a short-term borrowing but short-term is defined as two years.  CDD’s and other local governments have short-term loans at five years or less and do not require validation because of some controls put in 1970.  There were some issues the bank and Bond Counsel brought up regarding this.  There is still the opportunity for a short-term financing.  It just needs some revisions before it comes before you for formal action.

            Mr. Goscicki stated some of the concern was the short-term loan can be taken out by a long-term loan and longer term loans can be backed by an increase in your rates.  You need to have the rate study in place first because of the continuing obligation.  It basically turns into the equivalent of a Bond Anticipation Note.  We are working with the bank to see what flow of funds is required.  There is one other major issue I need to make the Board aware of.  I was made aware of this today and still verifying the validity.  You currently have a $6.8 million construction project underway for the Wastewater Treatment Plant improvements.  I met with Mr. Day and the accountant and their concern is there are not sufficient funds in place at this time to cover the contract.  Without this short-term revolving loan or some other loan mechanism, we are going to get into a cashflow crisis until you make those payments.  I am meeting tomorrow with the accountant and Ms. Pam Rower to structure out what we have on an annual basis.  You do not have a Capital Budget; you only have an Operating Budget, which you approve each year.  Your capital is basically one line in the budget in terms of funds available.  We want to structure this out so it looks more like a Capital Budget showing the amount of money available at the beginning of the year, what you are looking to spend and what your fund balance is going forward for the following year to make sure we understand what is available.

            Mr. Fennell stated we were supposed to have a Project Budget for the next 10 years and a Cashflow Budget.  This is what Ms. Janice Larned was working on.  I am glad to see we are moving along those same lines.  However, since Ms. Larned resigned, I no longer have this information.

            Mr. Goscicki stated we are putting it together.

            Mr. Fennell asked who is replacing Ms. Larned?

            Mr. Goscicki responded Ms. Pam Rower.

            Mr. Fennell asked Ms. Rower, do you have a background in finance?

            Ms. Rower responded I have an MBA and BA in Accounting and a registered CPA.

            Mr. Fennell stated we have long-term capital plans going out 10 years but we were putting together a new one.  We have to match this up with the cashflow.  If we have a cashflow issue, we want to know about it.  I want to see what we are committed to now, what our proposed plans are and how we are going to cover this.

            Mr. Goscicki stated we have done this for a number of our clients. 

            Mr. Fennell stated I thought this was in place.  This is one of the items we lost.  We believed for a period of time in long-term planning, long-term cashflow planning and long-term project planning.  The fact this information is changing is disappointing. 

            Mr. Goscicki stated the information does not change.  The facts are going to be what they are and we are making sure we clearly understand what the facts are.  My personal concern is to make sure if we are going out for a short-term financing, we get sufficient funds in place to cover the continuing construction before we have to go out for a public notification process.  We are working with SunTrust to determine the current flow of funds generated through existing revenue streams without increasing them and structure a financial instrument that does not violate your bond covenants or your enabling legislation but allows us to get some monies into place. This is the complexity we are working through to make sure we can get a loan in place. 

            Mr. Fennell asked what was the plan before Mr. Petty left?

            Mr. Petty responded the plan was as described to the Board, the mechanism was in place, the banks were contacted and the bond covenants were checked.  The attorney was supposed to review everything.  If you wish to re-invent, you certainly can.  Certainly Severn Trent Services with its capabilities can re-build the system.  The system you had in place did all the checks and balances and was near completion. 

            Mr. Fennell asked how are we going to cover the $6.8 million?

            Mr. Petty responded you may recall the $6.8 million contract Mr. McKune talked us into nine months ago was subject to funding because of this issue.  If funds became available, we wanted to make sure we had the contractor on-site.  The contract is contingent on having funds and is cancelled if you do not have the money.  You can include this as part of your capital program but there were some economies of scale by having the contractor on-site.  This has been a discussion item as we talked about the short-term funding over the past six months.  These are new issues, which have been looked at and addressed.

            Mr. Fennell asked are we committed?

            Mr. Petty responded no.

            Mr. Goscicki stated we will need to have the engineer provide us with a copy of the construction contract.  Your attorney and I will review the contract to see what the termination provisions are.  Currently we have already paid $1 million to the contractor against this contract.  They are mobilized on-site and working.  We are looking to see what the contingencies are.  Our hope is you will be able to continue with this project and put together a source of funds.  We want to make sure we are doing whatever we can to not jeopardize it. 

            Mr. Hanks asked is it an essential project?

            Mr. Goscicki responded we will have to verify with the engineer but I remember this project from two years ago.  This is an upgrade of your solids handling to meet current digestion standards.  You never had enough digestion capacity in your existing Wastewater Treatment Plant.

            Mr. Rodriguez stated it is essential.  This was a requirement by the inspector for the Wastewater Treatment Plant.

            Mr. Petty stated in the award of the contract, you had slightly over $3 million in your Capital Project Fund.  As you were told during your rate analysis, the original methodology adopted in the early 1990’s had a certain proportion allocated for capital projects.  It was also supposed to be adjusted on a regular basis for cost of living and changes to your budget.  The Board may recall there has been a change to the rates and we showed you in the rate sufficiency we were no longer collecting funds for the capital projects.  You had the need for solid handling facilities to meet certain requirements but you no longer had the ability to generate the revenue.  You awarded the contract contingent on the funding.  You started the project to do the best you could with the funds available and authorized the rate sufficiency to see where to go next and a capital improvement program to put it all together.  In your capital improvement program are solids handling facilities.  If you can build them in your $6.8 million contract, great, otherwise they are in the current capital improvement program, which Mr. Rodriguez and Mr. McKune are currently working on.

            Mr. Hanks stated how soon will we have the rate study?

            Mr. Rodriguez responded we are committed to bring it to the next Board meeting.

            Mr. Hanks stated not just commit, let’s have it at the next meeting.  We already delayed it one month. 

            Mr. Rodriguez stated we are preparing a model and from this model, you can come up with the rates.

            Ms. Zich stated I have already seen it.  Our water is fairly economical compared to everyone else’s.  You will like the presentation.

            Mr. Daly stated we compared our fees to other cities as far as the fees they charge for services they provide.

            Mr. Goscicki stated the engineers will bring you a rate model.  Based upon input received from the engineer, the Board needs to make a decision on what to put into the model.

            Mr. Hanks stated we need $40 million.

            Mr. Goscicki stated the Board needs to decide if you are going to spread it out over the next 10 years, finance it all up front or do a sequence series of bonds.  Many capital improvement decisions need to be made affecting the model.  Likewise, the model will give you the feedback to make the decisions.  You may want to restructure the program over a multi-year period.  It is a great tool for decision making.

            Mr. Hanks asked is it reversible?

            Mr. Rodriguez responded you are in a good position to have the lowest rate around the area.

            Mr. Lyles stated you will need to conduct a public hearing in order to do this as public notice is required.  This hearing will be in connection with one of your regular meetings.

            Mr. Hanks stated I am concerned about the commitments outstanding for plan improvements and the funding gap.  One way of getting this funding gap addressed is to act quickly with regards to the rates.  What is the time frame?  Do we need two weeks for public notice?

            Mr. Lyles responded you can do this in 30 days.  By having your regular meeting in three weeks you will receive the model, discuss it and give staff direction on how you want to proceed.  You will then call a special meeting before your May meeting specifically for the rates.  Thirty to forty days is the minimum notice you need.

            Ms. Zich stated if everyone sees what a deal they have been getting and we have not increased the rates in a long time, I do not know how anyone can not expect to get an increase.

            Mr. Fennell stated no one can accuse us of being political.

            Mr. Hanks stated I am looking at this from a practical standpoint.  We have the short-term funding issue and a capital improvement or plant modification, which was a condition of the permit from DEP.  If we do not follow through with it, we will not be in compliance with DEP.  We know we have an issue and it will be irresponsible of us to delay acting on it.

            Ms. Zich stated if you look at the rates of other cities, we have the cheapest water around.

            Mr. Fennell stated 14 years at 3% collection per year; we should at least have had a 50% increase, which is nothing.  We talked a couple of years ago about doing cost reductions.  The problem is the electrical rates kept increasing.  We are going to have to do something.

            Ms. Zich stated I think the rate study will tell the true story.

            Mr. Fennell stated we will have the model at the next meeting and in the meantime, we will give notice of the rate hearing for the May meeting.  Do we need a special meeting?

            Mr. Lyles responded I thought the question was how quickly we could hold the rate hearing.  The quickest way, if you are satisfied with the methodology and the modeling, is to give 10 days notice in the newspaper and have a special meeting before the end of May.

            Mr. Goscicki stated we currently have $35 to $40 million.  There is no definition to this number yet. 

            Mr. Hanks stated I am looking at this from an interim standpoint of knowing we have a large capital improvement program coming up.  We still have a bond issue to figure out.  We need to take a closer look at it.  However, we have immediate funding needs we need to be addressing. 

            Mr. Rodriguez stated due to the emergency, I suggest we meet before the next meeting.

            Mr. Fennell stated come to the next meeting prepared and with a recommendation.  In the meantime, work with our manager so we know they looked at it and it has been pre-approved.  Do your homework.

            Mr. Hanks stated address our immediate budget shortfall and give us our Capital Improvement Budget over the long-term.

            Mr. Fennell stated Mr. Petty did not believe we had a budget shortfall.

            Mr. Goscicki stated what Mr. Petty told you was you did not have enough money for the $6.8 million project and you awarded the contract with the assumption you will get additional monies in place.  I question this practice and would never have recommended it to the Board.  I will look closely to see whether the contract has specific language saying you were only authorizing $2 million or $6.8 million.  Otherwise, you have encumbered $6.8 million and there is an expectation by the contractor.

            Mr. Fennell stated Mr. Petty did not work for Severn Trent Services when he made the suggestion.

            Mr. Goscicki stated yes he did, which is why I am concerned.  We are working to fix this.

            Mr. Fennell stated with all of your people watching over things.

            Mr. Goscicki stated we are not denying our responsibility.  We are going to deal with this.

            Mr. Hanks asked is there anything we need to take action on this evening?

            Mr. Fennell responded no.  At the next Board meeting, we will discuss the following items:  1) Recommendations from both staff and Severn Trent Services on the modification to the service agreements; in-house or outside, 2) Structure the specifications for a Service Manager/District Manager, 3) Rate Sufficiency Study with recommendations from staff and 4) Flowchart on capital spending versus loans and how much cash is needed.  The District has to re-do everything. 

 

THIRD ORDER OF BUSINESS                       Other Business

            There not being any, the next item followed.

 

FOURTH ORDER OF BUSINESS                    Adjournment

            There being no further business,

 

On MOTION by Mr. Hanks seconded by Ms. Zich with all in favor the meeting was adjourned.

 

 

 

 

                                                                                                                                                      

Sharon Zich                                                               Robert Fennell

Secretary                                                                   President


Notes for 3/19/07 Meeting

 

Agenda Items for Next Meeting

 

        Presentation of Draft Rate Study

 

 

***NOTE:  Schedule rate meeting

 

        CH2M-Hill to provide chart and schedule from regarding capital improvement program, pumping information and rates and list of outstanding work authorizations for inclusion in agenda packages.