MINUTES

A. PLEDGE OF ALLEGIANCE

B. ROLL CALL

Roll call showed the following Directors present: Eads, Estabrook, Orth and Skezas. Director Whitney was absent. Also present were General Manager Williams and District Counsel Neary.

C. ADDITIONS/ ADJUSTMENTS TO THE AGENDA

Director Estabrook commented that he would like someone from Brooktrails to attend the Solid Waste meeting to be held on Thursday, May 27th. Director Orth agreed to attend.

D. PUBLIC COMMENTS

None

E. ACTION AGENDA

1. BUDGET WORKSHOP; BOARD MEMBERS WILL BEGIN WORKING ON THE DRAFT BUDGET FOR FISCAL YEAR 1999- 2000, INCLUDING THE DRAFT FIVE-YEAR CAPITAL IMPROVEMENT PLAN UPDATE.

General Manager Williams supplied Board members with pages reflecting minor changes to the information which was handed out in April. Also, as requested at the previous meeting, he prepared and distributed charts showing the actual revenue as of April 30, 1999, the projection to July 1st, the comparison of actual revenues versus budget, and the effect of lot mergers on revenues.

Using the overhead projector, he began his presentation with the General Fund, generated for the most part by property taxes and miscellaneous fees such as design review and franchise fees. He pointed out that the anticipated franchise fees from Solid Waste of Willits was less than expected, paying approximately $13,000 as opposed to the $16,000, as projected.

There was a discussion about the inconsistency in the amounts received each year from property taxes. Director Eads suggested that it may be due to reassessments. General Manager Williams expressed his concern about the possibility that it could be due to collections. He pointed out that last year's Budget included $103,000 in revenues from the Line of Credit which was not included in the current figures.

A brief review of the expenditure detail included $1,200 for Board members to attend conferences and seminars, $5,000 for the annual audit, (a reduction of $500 from the previous audit,) election costs, Board member fees, District Counsel fees, and costs associated with the operation of the Board.

He pointed out that this Budget did not include the second access seed money for the County, which was included in the last two budgets, as no agreement has been reached with them to date, and they are moving forward with plans to establish an Assessment District to cover the associated costs.

He explained that, as a result of Proposition 218 which prohibits inter-fund transfers, personnel costs are allocated to the various funds. The cost of the annual collection of property taxes has gone up, insurance costs have gone down, however the proposed firearms issue may affect those premiums. Costs required to bring the District into Y2K compliance were reviewed, including telephone systems and computer software.

Director Eads stated that unless there is an indication that they will not ask for it this year, he felt that the second access money should continued to be allocated to the County, as they may have it included in their Budget. He felt that if it were pulled out, the County should be notified, acknowledge that the money is not expected, and assure the District that momentum for the project will continue.

Director Estabrook stated that the County has made it very clear that the second access is their project, and they will continue to move at their own pace. He felt that the money could be better allocated elsewhere.

Director Orth stated that SB45 provides funds for transportation projects, and the County realizes this. He feels that they are moving away from the Assessment District formation strategy to the normal planning process of prioritization.

President Skezas suggested issuing a statement of support for the second access without the allocation of funds, as funds could be provided, if needed, as part of the Budget adjustment process later in the year.

General Manager Williams then reviewed the remainder of the items proposed to be covered by the General fund, including the allocation of funds for retirement costs, recreation facilities, work in the greenbelt, playground equipment, parking lot maintenance, and community center upkeep.

Director Eads asked for clarification of the income sources for the Active Use fund. Both he and Director Estabrook expressed support for continued allocation of funds for the benefit of the public. Director Estabrook suggested relocating fire abatement costs from Active Use to Fire, or perhaps setting up a separate fund for fire abatement. General Manager Williams explained that, to assist in balancing the Fire Budget, some allocation of fire abatement to Active Use is justified because of the resulting trail maintenance, improvements to the Greenbelt, and time spent by Fire personnel. Director Orth pointed out that because of the recent increase in water rates, increases in the Fire Tax to balance the Budget would probably not meet with public approval this year. District Counsel Neary confirmed that a 2/3 majority vote is required to raise the Special Fire Tax. A brief review of the Fire Department Budget demonstrated limited resources, the two major revenue sources being Fire Tax and fees for Ambulance service.

In response to concerns raised by Director Estabrook, General Manager Williams explained that the deficiency in the Fire Budget is due to rising costs and increased staffing. When the Fire Tax was first established in 1981, it was based on one full time Fire Chief. Director Orth pointed out that growth was supposed to provide for additional funds, however growth has been less than anticipated. President Skezas stated that the Ambulance service was added since the passage of the Fire Tax, and suggested, as a possible solution to the deficit problem, that those services not originally anticipated be removed from the Fire Budget, until which time the Fire Tax is increased sufficiently to cover them, and those costs be provided for from the General Fund. Director Estabrook suggested a future agenda item to discuss the problems of funding for the Fire Department. General Manager Williams indicated that he would provide some alternatives, and that the first meeting in June was targeted to discuss alternatives for the Fire Department.

General Manager Williams continued his presentation with the Golf Course Budget. Stating that the projected revenues of $154,160 would not be achieved, he revised his expected revenues to $126,000. As a result, current fiscal year capital projects were limited to just the replacement of the mats. The new restroom on tee number 5 is carried over, as well as the purchase of the spray rig. The major capital item this year is replacement of a bridge. Tree trimming continues along the fairways, and four payments are left to pay off the loan from the Sewer Fund.

Moving on to the Sewer Enterprise Fund, revenues are expected to increase due to an increase of $20 per year for the Sewer Standby charge and $1 per month for the service charge. The major expense is the payment to the City of Willits for processing. Some repairs may be necessary to the lines in the Poppy area. The only capital item provided for this year is a new trash pump.

The Water Fund is the largest revenue Fund, as well as the largest expense. Repairs to a water line in Dutch Henry Creek are planned at a cost of approximately $10,000, which will be refunded by FEMA. The major revenue sources for the Water Fund are the annual Water Availability charges of $30 for each undeveloped lot, and $5 for each developed lot, as well as monthly service charges which were raised substantially in March.

A letter has been received from the State Health Department outlining the results of their annual inspection of the water system. They noted that the roofs on the water tanks are in need of replacement, and sixteen have been scheduled in this Budget year. Another capital project planned is the re-wiring of the treatment plant to accommodate a standby generator, in reaction to Y2K concerns.

Other items provided for in the Budget include the hiring of a consultant to study wind patterns in the treatment plant area, to predict who would be threatened in the case of a chlorine gas leak, purchase of a remote chlorine gas detector, and an automatic shut- off device for the chlorine gas tank. General Manager Williams provided additional material to Board members outlining the program which must be in place by August 2000.

In closing, General Manager Williams reviewed the projected Water connection fees, based on 20 units per year. He also discussed a geological study done several years ago on the possibility of drilling a well in the parcourse area to provide an alternative water source, and the costs that would be associated with such a project.

It was decided that the Five Year Capital Improvement Plan Update would be discussed at the next Budget Workshop scheduled for the meeting of May 25, 1999.

F. PUBLIC COMMENTS

Robert Terry from Poppy Lane commented that he supported an increase in the Fire Tax to provide additional funds for the Fire Services Budget.

G. ADJOURNMENT

Director Orth moved to adjourn and President Skezas declared the adjourned meeting of May 18, 1999 closed at 9:30 p.m.

PAUL A. WILLIAMS

Secretary to the Board of Directors

GEORGE C. SKEZAS,

President