MINUTES

REPORT ON CLOSED SESSION

President Estabrook announced that the Board had just come out of closed session regarding contract negotiations with the General Manager, and had given direction to the General Manager.

A. PLEDGE OF ALLEGIANCE

B. ROLL CALL

Roll call showed the following Directors present: Monteleone, Orth, and Estabrook. Also present were General Manager Chapman and District Counsel Neary.

C. ADDITIONS/ ADJUSTMENTS TO THE AGENDA

None

D. MINUTES OF PREVIOUS MEETINGS

1. April 21, 2001 - Deferred

E. SPECIAL PRESENTATION

None

F. PUBLIC HEARING

None

G. PUBLIC COMMENTS

Ginger Pohlson reported that Solid Wastes of Willits had donated the costs of disposing all material collected on the recent cleanup day, and asked that the Board write a letter of thanks.

H. ACTION AGENDA

2. REVIEW OF PROVISIONS OF PROPOSITION 218

President Estabrook called attention to page 18 of the Howard Jarvis booklet that was included with the staff report, wherein it states: "Revenues derived from a fee or charge shall not be used for any purpose other than that for which the fee or charge was imposed." He pointed out that potential problems could arise in the budgeting process, with regards to negative fund balances.

General Manager Chapman provided an overview of the various types of fees and taxes charged in the District, noting which ones were subject to the provisions of Proposition 218.

Note: Director Whitney arrived at 7:10 p.m.

District Counsel Neary provided an historical perspective of the budget process and tax assessment process utilized in the District during his tenure, which began in 1976. He also explained the basis for Proposition 218, which limits the uses of property-based fees and taxes. He pointed out the difficulty in passing special assessments for a subdivision the size of Brooktrails with many property owners residing outside of the District. He noted that the Proposition was drafted in reaction to unpopular budgeting practices of municipalities, such as Los Angeles and Sacramento, and pointed out the problems faced by Special Districts which, unlike cities, do not receive a portion of sales tax revenues to supplement their General Fund. In closing, he advised staff to assure that the District's budget comply with the State Constitution.

A brief question and answer session with the Board members ensued, District Counsel commenting that the Proposition is only two years old, and challenges are just now appearing in court.

President Estabrook asked Counsel to clarify that only one public hearing is required for rate increases. District Counsel Neary confirmed, adding that a 45 day notice is required prior to the hearing. He noted that the proposed rates cannot be changed at the hearing, as the hearing is a protest hearing, and if more than 50% of the property owners protest, either in writing or in person, then the rates cannot be raised.

President Estabrook asked that the recommended language in the ACWA booklet be incorporated into the District's rate resolutions.

3. REPORT ON PROPOSED RATES AND FEES FOR GOLF

In response to Board direction at the previous meeting, General Manager Chapman presented revised rates and fees for the golf course. He also reviewed the rates and other suggestions received from the Green Committee at their meeting of May 17th.

With the aid of the overhead projector, he reviewed the changes to the forecast and his proposed rates. He also provided a recalculated payment schedule for the loan from the sewer fund. Charts were provided indicating the number of rounds played by annual members, the number of annuals purchased by category, the number of dailies by category, and a recap of the sales. He pointed out that the attrition rate did not increase as a result of the increased price of an annual the previous year.

Director Orth commented that the General Manager's proposal was very close to what the Green Committee recommended. He spoke in favor of renegotiating the sewer loan, although he was not in favor of forgiving the debt as had been suggested. He also supported changing the Golf Fund to a cost center.

Director Monteleone stated her support of the proposed compromise.

Director Whitney summarized the discussion at the Green Committee meeting of May 17th. He recommended a more detailed cost analysis be done for future reference. He spoke in favor of extending the sewer loan to reduce the payment, and for allowing a first time member to purchase a pro-rated annual. He also spoke in favor of the Green Committee's recommendation to review the rates in September, and recommended that each fund of concern to the General Manager be reviewed on a quarterly basis. He stated his opinion that the debt from the Sewer Fund was inadvisable and a burden to the Golf Fund.

President Estabrook voiced appreciation to the Green Committee for their input. He commented that although a review of rates is a good idea, the beginning of the rainy season may not be the best time to adjust golf rates. He had no objection to reclassifying the Golf Fund as a cost center, but pointed out that the only legal Fund that can transfer money out is the General Fund, and there must be money available, which was not currently the case. He recommended that the Board continue to explore ways to fund recreational activities, including the lease concept, a golf tax, or formation of a greater Willits area Recreational District. He spoke against eliminating the debt to the sewer fund.

Director Orth commented that he was on the Board at the time the loan from the sewer fund to the golf fund was approved, and that the golf course is a better course as a result.

General Manager Chapman pointed out that no changes were proposed to the rates for Junior Golfers.

Wendell Wilson pointed out that the money loaned to the golf course came out of the sewer fund reserves, and should therefore go back into to the reserves as opposed to being used for operating expenses.

Chuck Harden asked for clarification of how the term of 30 years was derived, and the difference in the cost of interest. General Manager Chapman explained that the Board had directed him to use a 30 year term, and the cost of interest was about $800 for one year.

Jack Wade, resident of Clover Court and previous member of the Green Committee, commented that he was on the committee at the time the transaction occurred, stressed that the transaction was proper at the time, and spoke in favor of the golf fund repaying the loan. He assumed that the proposed rates were justified, if approved by the Green Committee. He doubted the validity of the attrition analysis, but agreed that the golf course is an asset to the community.

Bob Hagan, resident of Peacock Place and current member of the Green Committee, voiced concern about the proposed increase in annual membership fees, and pointed out that annual members bring in players that pay daily green fees. He commented that many of the members of the Men's Club volunteer to work on the course.

Don Metz, resident of Birch Drive, former member of the Green Committee and former President of the Men's Club, commented on the "Plan for the 90's" and the installation of the irrigation system. He spoke against the increase proposed for the annual fee, voicing concern about retirees on fixed incomes.

Doug Pohlson, Assistant Park Superintendent, spoke in favor of the volunteer program, and suggested offering a discount to the annual members that volunteer to work on the course.

Ron Runberg, Proshop Manager, noting elimination of the senior discount, suggested eliminating the all day rate, as well. He commented that additional advertising would be beneficial, and outlined other promotional activities, including development of a website. Director Monteleone suggested linking the website to the District's website.

Rob Gitlin, owner of the Brooktrails Lodge, spoke in favor of keeping the senior discount. He also asked if group rates were available. Noting the historical link between the Lodge and golf course, Director Orth suggested that he work out group rates with the District when the Lodge is open for business.

Ginger Pohlson spoke in favor of the proposed increases. President Estabrook clarified for her the percentage of revenues received from the property taxes paid to the County. Citing lack of revenues from sales tax, she pointed out that no money is available for recreation unless the residents are willing to pay for it.

Jack Wade spoke in favor of establishing a recreation district as a means of raising funds. Director Orth suggested working with the Boys and Girls club. Director Monteleone provided an update on recent Boys and Girls Club activities.

Director Orth commented that recent increases in property values and the number of home sales should result in additional property tax revenues for the District. He spoke in favor of the golf course volunteer program. He reported that a $30,000 state grant had been approved for recreation, and that $6,000 would be spent on capital items for the golf course.

Director Whitney made a motion that a rate review be done in September, annual green fees be prorated for first time golfer on a monthly basis, the golf fund be changed from an enterprise fund to a cost center, the loan payment be amortized over 30 years, the rates proposed by the General Manager be adopted, except that the all day rate be eliminated, and a $15 discount be instituted off the cost of an annual for volunteers that contribute 15 hours of work on the course, ($330 for singles, $560 for two adults in the same family.) General Manager Chapman confirmed no changes were proposed for dailies or annuals for Juniors. Director Orth seconded the motion.

Director Monteleone suggested that the discount for volunteers be handled as a rebate after the 15 hours of volunteer work was completed. Mixed reactions were received from the audience members regarding the discount for volunteers.

A vote was called on the motion, which was passed unanimously by the members present.

A break was called to change the tape.

4. REPORT ON PROPOSED RATES AND FEES WATER

President Estabrook provided a review of the discussion at the last meeting, and presented revised water rates for the Boards' consideration. He stressed the fact that the cost to produce water is directly related to usage, and suggested the increase in the monthly base rate be lower, and the increases in the usage rates be higher.

District Counsel Neary confirmed that another mailing would be required with the revised rates. President Estabrook asked if there could be alternate rates presented at the hearing from which the Board could select. District Counsel Neary stated that there did not appear to be a problem presenting two options, although the purpose of the hearing is for the public to comment on a defined plan.

Director Orth voiced concern about constantly increasing the tiers. He pointed out that part of having a fire-safe community is having some watered landscape. He also voiced concern that President Estabrook's proposal provided $9,000 less in revenues, and the cost of electricity is an unknown factor.

General Manager Chapman pointed out the effect of increased tiers on households with families. He spoke in favor of spreading the increase evenly throughout all users.

Director Whitney spoke in favor of increasing the construction rate, and because of concern about under-funding the water department, was in favor of the higher base rate.

Director Orth voiced concern that too high of an increase may have a negative effect on the passage of the fire tax.

Director Monteleone agreed, and spoke in favor of the lower base rate and increased usage rates. She pointed out the large increase proposed for sewer service.

Bob Houtz, of Harrah Drive, was supportive of either alternative.

Bob Hagan, of Peacock Place, stressed the need to build reserves.

Doug Pohlson, Assistant Park Superintendent and resident of Brooktrails Drive, spoke in favor of the General Manager's proposal.

Wendell Wilson, Superintendent of Utilities, spoke in favor of increasing the rates equally, as proposed by the General Manager.

Ginger Pohlson, of Brooktrails Drive, compared the proposed rates with the City of Willits, and felt that the proposed rates were reasonable.

President Estabrook made a motion that the proposed rate increases be re-noticed, based upon his proposal, with the provision that rates be reviewed in six months. The motion was seconded by Director Monteleone.

Director Orth pointed out that three staff members had come forward to support the General Manager's proposal, and commented that he would not support the motion. Director Whitney concurred.

Director Monteleone voiced concern about the effect of the General Manager's proposal on residents with fixed incomes and on the passage of the fire tax. She voiced support of President Estabrook's proposal.

A vote was taken on the motion as follows:

AYES: Directors Monteleone, Estabrook

NOES: Directors Whitney, Orth

ABSENT: Director Venturi

Motion failed.

Director Whitney stated his appreciation for the depth of the analysis. He suggested a compromise, and made a motion that the base rate be increased to an even $24.00, and the usage tiers be increased to $0.013; $0.023; $0.028; and $0.035 per cubic foot. The motion was seconded by Director Orth.

Ginger Pohlson pointed out that very few people complained about the increases when the first notice was mailed out. She felt that residents expected rates to go up because of increases in the cost of electricity.

A vote was taken on the motion, which passed unanimously by the members present. President Estabrook expressed his appreciation to Director Whitney for his compromise.

5. REPORT OF PROPOSED FIRE TAX RATE (DRAFT 1), ELECTION COSTS, AND TIME FRAME FOR THE NOVEMBER 6, 2001 ELECTION

General Manager Chapman reviewed the expense options which were based on various alternatives as to staffing and services.

Director Orth spoke in favor of proposal "D" with the vacant lot tax of $40 as opposed to $27, and asked for an expense scenario based on two billits.

Director Whitney asked that a scenario be based on actual cost, noting that a good deal of fire department staff time is spent on wildfire prevention and the abatement program. He agreed that the vacant lot rate should be higher, and spoke in favor of an additional part-time person to act as Fire Marshall. He voiced concern about the loss of volunteer EMT's if the ambulance service were discontinued.

Director Monteleone also spoke in favor of proposal "D" with a vacant lot assessment of at least $40, perhaps more.

President Estabrook asked that ambulance revenue be included in the analysis. He suggested the tax be based on overcharging the first few years to build a reserve, so that when cash flow becomes negative the life of the tax can be extended by drawing off of the reserve. He spoke in favor of keeping the ambulance if at all possible.

Director Orth commented for the record that the fire department did fight a structure fire on May 21, 2001.

Bob Houtz asked for clarification of the basis of the tax rates. He suggested basing the District's tax on Little Lake's. He reported that fire season was officially declared early, and stressed the need for a chipping service that can be utilized by residents.

President Estabrook suggested combining items 6, 7 and 8 on one motion. No opposition was voiced.

6. SCHEDULE PUBLIC HEARING FOR JUNE 12TH ON PROPOSED F/Y 2001/2002 BUDGET

Director Orth pointed out that there would be three Directors elected in November, as opposed to two as stated in the budget.

7. SELECTION OF ACCOUNTING FIRM TO PROVIDE ANNUAL AUDIT AND MANAGEMENT REPORT

General Manager Chapman recommended the Board appoint Robert Hubik, CPA, to act as District Auditor, as his proposal for a three-year agreement was considerably less than Terry E. Krieg, whose rate had increased.

District Counsel Neary advised staff to assure that both quotes were based on the same set of accounting principals, and that the statements would be prepared according to the requirements for Special Districts.

Board members agreed to defer the matter to the next meeting.

8. NOTICE OF VACANCY ON BROOKTRAILS GREEN COMMITTEE

President Estabrook asked for a motion to schedule a public hearing on the Fiscal Year 2001-2002 Budget, and to accept the resignation of Marion Hulett and post the notice of vacancy on the Brooktrails Green Committee. Director Orth stated "So Moved." The motion was seconded by Director Monteleone and passed unanimously by the members present.

Director Orth moved to extend the meeting for 15 minutes. Director Monteleone seconded, and the motion passed unanimously by the members present.

9. DISCUSSION OF LAFCO APPORTIONMENT FOR FISCAL YEAR 2001/2002

Director Orth made a motion that the Board draft a letter requesting that the County Board of Supervisors pick up a larger share of the Special District charges, and further request the distribution of charges to Special Districts in rural areas be looked at and modified in the next year so that Special Districts feel welcome as members of LAFCO. The motion was seconded by Director Whitney, and passed unanimously by the members present.

General Manager Chapman commented that during a recent meeting it was proposed that hospitals be exempted from the fees, which would result in a substantial increase in fees charged to other Districts.

I. SPECIAL REPORTS

i. Significant Correspondence received since last meeting:

a) Memo from the County of Mendocino re: amended Use Permit Application from Rob Gitlin for Brooktrails Lodge

President Estabrook commented that this was not an action agenda item, simply a notice of correspondence received.

Dr. Gitlin came forward and offered to answer questions. He reiterated his appreciation to the Board for their efforts. He stated that he had taken all comments into consideration, and he hoped that what he had submitted was what the Board was looking for.

Director Monteleone commented that because this was not an action agenda item, she had not thoroughly reviewed the revised permit application, and did not want "no comments" to infer acceptance by the Board.

President Estabrook asked that the application be placed on a future agenda.

Director Whitney commented that three alternatives had been proposed, that the Board make comments on the Use Permit, and send a letter to the County, that he go through the Development Review process to get official District interaction and appropriate modification and support of his proposal, and that he apply for water meters and sewer connections. He asked Dr. Gitlin how he intended to address the issue of water and sewer service.

Dr. Gitlin responded that he had already gone through the Design Review process, and that he currently has water service to the property.

Director Whitney asked Dr. Gitlin if he intended to take an adversarial position with the District. Dr. Gitlin responded that he had never taken an adversarial position with the District, and was not doing so now. Director Whitney reminded him that the District had sent a letter informing him that he would need additional water meters before going forward with the Use Permit, and asked him if he intended to comply. Dr. Gitlin responded that he had been acting under the advice of his legal counsel.

President Estabrook offered to provide an appropriate response as a future agenda item.

District Counsel Neary commented that he had discussed the Utilities Ordinance with Dr. Gitlin's legal counsel.

b) Report of Tax Sale Lots

Director Whitney updated General Manager Chapman on previous discussions, noting that the Board was interested in seeing if there was any way that the District could acquire some of the lots that continually come up at tax sales.

District Counsel Neary noted that the Board could request a parcel be removed from the auction, and arrangements be made with the County to pay the taxes on an installment basis.

Director Whitney suggested that the property owners be contacted with an offer to donate the property to the District, which would provide a tax deduction in excess of the amount owed to the County.

President Estabrook asked that the County Tax Collector be contacted to request that the District be notified of the tax sale in the future, at the earliest possible date.

ii. Personnel

iii. Finance

iv. Planning

Director Monteleone asked for an update on the property Lilac Road that appears to be operating an automobile repair facility.

v. Possible upcoming agenda items

Director Monteleone asked that an agenda item be scheduled to discuss a publicized notice of the existence of the Design Standards.

vi. Other

General Manager Chapman asked for volunteers to be a part of the next review team that will review the site of the proposed THP. President Estabrook stated that he would try to attend.

J. PUBLIC COMMENTS

None

K. ADJOURNMENT

Director Orth moved to adjourn and President Estabrook declared the meeting of May 22, 2001 at 11:00 p.m.

MICHAEL V. CHAPMAN

Secretary to the Board of Directors

RICHARD ESTABROOK,

President