Santa Fe Trail Ranch
Metropolitan District
Special Meeting
Meeting Minutes
May 12, 2005 9 AM
109 East Main St., Trinidad, CO

Agenda

1. Call to Order
2. Roll Call, Proof of Quorum
3. Certification of Posting
4. Approval of Minutes of Last Meeting
5. Discussion and Approval of Mediation Agreement with OPEC Corporation and Intercargo Insurance Company, Now Doing Business as XL Specialty Insurance Company.
6. Other Business
7. Continuation/Adjournment

Minutes

R. T. Scott provide the proof of posting; North Door of the Las Animas County Court House, SFTR Guard Shack, and the SFTR Bulletin Board.  Minutes of the last meeting were not available and will be presented for approval at the next Board meeting.

R. T. Scott turned the meeting over to Will Potter to address the agenda item of the Mediation Agreement.  The following motion was made by R. T. Scott:

Motion of Settlement

I, R. T. Scott, Treasurer for the Santa Fe Trail Ranch Metropolitan District as an Officer of the Board of Directors make the motion to accept an amount of $255,000.00 (two hundred fifty-five thousand dollars) as a mediated settlement over the completion of the Water System and Warranty in accordance with the terms and conditions of the MUTUAL FULL AND FINAL RELEASE to be executed this Month of May, 2005 and to authorize my signature as executor of this document in the absence of the Metro President.

The following are points in support of this MOTION:

1. The Contractor, OPEC, is insolvent, and
2. The Surety is the only means of financial support for the completion of the System, and
3. The Surety limits of liability are $875,000, and
4. The Surety intends to file an Offer of Judgment increasing settlement risks to the Metro, and
5. The lawsuit against OPEC/Surety is limited in value to only the amount expended ( $373,000.00) to complete the System, and
6. Depositions in support of the continuation of the lawsuit may total $13,000, and
7. Attorney fees can exceed $100.000, and
8. The presiding Judge has limited Civil suit experience, and
9. The earliest the trial would commence would be July, 2006, and
10. The Jury pool may not provide jurors sympathetic to the Metro’s position, and
11. Any appeals process would lengthen the time for settlement and increase the risk and cost to the Metro, and
12. Interest expenses from May, 2005 to July 2006 is $25,000.

The direct cost to the Metro to continue with its legal position would be a minimum of $113,000 with a maximum judgment ruling in favor of the Metro of $373,000.  The maximum gain thus is $260,000.  The potential the jury ruling would be 100% in the Metro’s favor is very weak based upon documents the Metro created during the construction phase with OPEC.  Any jury ruling of less than $255,000 would require the Metro to compensate the Surety for it’s legal expenses for the difference.  The above MOTION is the optimum choice for the Metro and will provide it the opportunity to retire is Completion Loan early and reduce interest expenses of $25,000 over the minimum period of continuation.

Robert L. Scott seconded the Motion.  The elements as listed in the Motion were reviewed with expanded discussion on the “Offer of Judgment” portion.  This element was one factor in the decision of acceptance as recent legislation instituted a ruling that if a mediation settlement was not reached and one party issued an “Offer of Judgment” and the suit went to trial legal fees would pass to the other party if the ruling was less than the offer that was last made.  Will Potter brought the Motion to vote.  The vote carried with all voting in favor of the acceptance.

Will Potter turned the meeting back over to R. T. Scott for the continuation of the Agenda.  Robert L. Scott confirmed the total number of installations to be 33 with ones that were submitted the day of the meeting.  Will Potter offered his appreciation to those who had brought the Water System Completion project to closure.  Robert L. Scott made the motion to adjourn the meeting and the motion was seconded by Mike Shelton.

Meeting was adjourned.

Minutes submitted for review and approval at the next Board meeting by R. T. Scott, Treasurer, May 12, 2005.