Santa Fe Trail Ranch
Metropolitan District
Minutes from Board Meeting
July 29, 2004, 9 AM
109 East Main St., Trinidad, CO
Board Members Present
Mike Shelton
Jim Davis
Robert L. Scott
Robert T. Scott
Board Members Absent
Will Potter
Guests
Bob & Julene Gyde
Carol Kaiser Friedrich
Diane Novacek
Dave Skogberg
Elizabeth Polasek
Dennis Scott
Lee Phelan
Todd Nathan
Meeting was called to order at 9:00 AM
Roll call taken and proof of a Quorum established
Robert T. Scott provided proof of Posting of Notice as of 6:30 AM, Monday, July 26, 2004
Approval of Minutes. Jim Davis stated that he had neglected to post the minutes from the May 19, 2004 Meeting at which the new Directors, Mike Shelton and Robert L. Scott assumed their positions and executed their Oaths of Office, an interim Director, Robert T. Scott, was appointed by the Board to replace Dennis Scott for his remaining term, and Water project updates were discussed. Jim stated he would post them as soon as possible and their approval would take place at the next board meeting.
The amended 2004 District Budget, as filed with the State Department of Local Affairs was discussed. The changes made reflected currently projected revenues and expenses when the system is completed and the revenues from the District's tax-exempt loan with International Bank and completion expenditures to date. Robert L. Scott motioned to accept and approve the amended Budget and Mike Shelton seconded. The motion passed unanimously.
Robert T. Scott, Treasurer, led a discussion of the Budget process for 2005. It is anticipated that the budget will be prepared in early September, for public posting by October 15, 2004 and adoption by December 31, 2005. Robert T. Scott reported that the Las Animas County Treasurer's office has collected approximately $4700 in delinquent property owner payments due on behalf of the Metro District and the POA. Approximately 75% of the amount collected is due to the Metro District. The County will continue its pursuit of remaining delinquencies turned over to it.
Robert L. Scott and Mike Shelton explained the request of Nelson Excavating, the contractor working on completion of the water system, to amend his contract. The amendment is requested due to increased fuel costs and equipment and parts problems due to a lack of onsite storage. He has built a trailer he can bring along to answer the parts problem and has requested an upward adjustment to his equipment charge to offset the rise in fuel costs. In return for this, he is willing to delete the "overtime" charges from the original contract. Based on bills to date, the net effect amounts to about $8.50 more per day, according to Robert T. Scott's review of those bills. Mike Shelton motioned to accept and approve the amendment. Robert L. Scott seconded. The motion passed unanimously.
In answer to questions and concerns raised by property owners recently about the bidding process and service selection process employed by the District, Jim Davis gave a summary history going back to 1996, when the POA assumed full governance of the property from the developer. He explained that it was the POA, through its respective utility committees, that initially sought and reviewed bids for the combined phone service and water delivery system contracts. He further explained that it was the POA, prior to the Metro District being operational, that signed the original construction contracts. After Metro was operational. the contracts were assigned to Metro. It was further explained that the substitution of Nelson Excavating for Schrepfer Industries came about as a result of large contract opportunities for Schrepfer which would affect the priority of our project and Schrepfer's willingness to stand by as a backup with Nelson. That, combined with the drawn out process of our litigation with OPEC and XL Surety, prompted the Board to engage Nelson and keep our momentum going, which has proven to have resulted in substantial progress. After having researched our legal responsibilities and discussed our actions with legal counsel, Robert T. Scott motioned that the Board not change its current practice. Robert L. Scott seconded. The motion passed unanimously.
Robert T. Scott initiated the discussion of the Board's procedures for authorization of expenditures. Jim Davis explained that the Metro District has historically followed the procedures that the POA adopted back in 1997. The Board takes the recommendations of the committee(s), reviews it and approves or disapproves the expenditures. In the case of the water/ phone project, the contracts specified the process for presentation, review and payment of invoices. With the water completion contracts, Mike Shelton explained that they were strictly "time and material" contracts, as no contractor was willing to "fix" their price, as there was no way for them to predict what they would run into in the completion process. Lee Phelan asked for an explanation of the "approval" process of invoices before they are paid. It was explained that the contractor submits a weekly diary of his work, broken down by day, location, work completed and charges incurred, together with a written and photo record of errors encountered and fixed for use in our litigation. These are reviewed by Mike Shelton and/or Robert L. Scott. They are marked approved and given to Century Small Business Solutions, who draws the checks. Two authorized signatures are required on any check. Other invoices not related to the construction process are reviewed and approved by another Board member and the payment process is the same. Carol Friedrich then asked if the Metro District could post monthly financials on the bulletin board by the mail boxes. Todd Nathan questioned the posting of Metro District minutes, committee reports and financials in the "Members Only" area of the website, as there are some property owners currently excluded from that area. The Board asked to reserve discussion of this until we reach "New Business".
Robert T. Scott introduced a new spread sheet format he desires to use to track the Metro budget. The Board agreed it will be a very useful tool. Discussion of the District's current financial position took place. It was emphasized that the decision to take a different direction, with regard to our completion strategy, has turned out very good so far. The committee and the Board believe that operations, in phases, can be initiated under the current financial position.
Robert T. Scott reported on his June communications with David Knope, Colorado Division of Water Quality, in Pueblo. Mr. Knope has shared with us an agreement the State required to be executed between the home owners and the providers of a water system in a development very similar to ours. The State required this in order to approve that water delivery system. It outlined the responsibilities of both parties and addressed periodic, required inspection and testing procedures that some in our community might consider an intrusion of privacy. A State approved "waiver", which would avoid such problems is included in the agreement. His communications also discussed the requirement for a "certified" water operator with a minimum Class D certification and what that person's required duties would be for a "Consecutive Water System", which is what ours will be classified as.
Robert T. Scott summarized his discussions and attempts to find a system operator. He related conversations with ECO Resources, the successor to the AquaSource Company the committee had talked to about sanitization services and had received a bid from about three years ago. Their bid had more than doubled just for the sanitization phase and they had no reasonable ideas about operations. Bob also talked to the Colorado Rural Water Association about obtaining a list of possible operators. They said they would "approach" some candidates on our behalf, but we never got a single response. Bob also asked our consulting engineer, Clyde Young Company, but they could not find a prospect. Bob then called system operators in the Yellow Pages, but could not generate any interest. Two suggestions were offered. One was to contact the State Licensing Board and obtain the list of those licensed and canvas them and the other was to place an ad in the area papers. Mike Shelton motioned to place an ad with the general job description and minimum classification requirement. Robert L. Scott seconded. Todd Nathan then asked if a Ranch resident couldn't get certified and take the position and if a cost savings couldn’t be realized. He then mentioned a specific resident familiar with the water system. Mike Shelton responded that as that resident is involved in the litigation as a representative of OPEC and/or the bonding company, that would be a true conflict of interest.
Mike Shelton and Robert L. Scott reported that Tank #1 was being sanitized and twice the required amount of chlorine had been placed in it to account for the time it has sat unused. Dave Skogberg suggested that the rate of depletion be monitored. Todd Nathan and Dave then shared their respective thoughts on the monitoring of chlorine levels in the system going forward. The Board emphasized that the State Division of Water Quality will be our guide on this, as their approval for use of the system is our goal.
Four items came up under "New Business"
Todd Nathan's question concerning Metro District information being under the "Members Only" area of the website was discussed. Jim Davis felt that Todd had a very good question that nobody had addressed before. Jim said he would contact Pat Roehl, our webmaster, and request that all Metro District postings be placed in the general information area and that the archives of postings for the Metro be brought up to that area so anyone accessing the website may see it. He said that in the meantime, such information could be requested to be printed out at Century Small Business Solutions office. In a somewhat related area, Todd Nathan asked why our Board meetings weren't tape recorded or video taped, as City and County Board meetings were. Jim Davis responded that with the exception of a few Annual POA meetings, that has not been done by either Board. Mr. Nathan then criticized the quality of the minutes and it was suggested he may want to offer his recording services, as he has done this on his own in the past. Carol Friedrich allowed as she has a great deal of experience in recording and transcribing meetings and may be willing to be of assistance in the future. The Board said it would contact her prior to its future meetings.
Mike Shelton initiated a discussion of the requirements for registering our water delivery system with the Utility Notification Center. He outlined the two "tiers" of registration, the costs of each, the advantages of each and the appropriateness of each to our system. At this stage of our development, Mike recommended the less cumbersome and less costly Tier 2. As it is a requirement, Robert T. Scott motioned to register at Tier 2. Robert L. Scott seconded. The motion passed unanimously.
Todd Nathan and Elizabeth Polasek raised questions concerning the costs versus revenues of operating the water system and whether or not those that do not sign up to be users may end up being "over-taxed" in the future due to possible revenue shortages. The Board answered that the costs of operating the system will be carried by the users. The cost of installation of the phone service and water delivery system was to be carried, proportionally by all property owners, as it enhances property values. Whether you use the services is a separate decision. If you never have a phone, you never have phone use expenses. The Board expressed that it really does not know exactly what to expect, but has tried it best to design a successful operating plan. Reference was made to a "model" Bill Wenstrom had done a couple years back that showed a projection of revenues, break-even points and profit points based on various levels of owner use. In summary, it showed we could succeed and be profitable if the system worked and people use it.
Jim Davis gave an update on the litigation issue. The June 25 mediation hearing was postponed for two principal reasons. OPEC's bankruptcy, against which we still have a claim, requested that OPEC be brought back into out lawsuit in the hope that a future appearance in Federal Bankruptcy Court can be avoided by resolving the issue in the 3rd District Court. Secondly, XL Surety requested a delay to Across-claim@ against certain individuals and/or entities involved with OPEC due to some indemnities or personal guarantees that were initiated as a requirement for issuing the bonds on the contracts. The new mediation hearing dates are September 28 and 29.
As no further business came before the Board, Robert L Scott motioned to adjourn. Robert T. Scott seconded. The motion passed unanimously.