MINUTES

A. PLEDGE OF ALLEGIANCE

B. ROLL CALL
Roll call showed the following Directors present: Whitney, Monteleone, Orth and Estabrook. Also present were General Manager Chapman and District Counsel Neary. Director Venturi was absent.

C. ADDITIONS/ ADJUSTMENTS TO THE AGENDA
None

D. MINUTES OF PREVIOUS MEETINGS
October 9, 2001
Director Orth asked that on page 3216, in the second sentence under Public Comments, the words "MCOG and" be inserted in front of "County staff." He then moved to approve the minutes of October 9, 2001as amended, seconded by Director Whitney.

The vote on the motion was as follows:
AYES: Directors: Whitney, Orth, Estabrook
NOES: Directors: None
ABSENT: Directors: Venturi
ABSTAIN: Directors: Monteleone
Motion Carried.

E. SPECIAL PRESENTATION - Robert Hubik, CPA
PRESENTATION OF THE ANNUAL AUDIT FOR THE FISCAL YEAR ENDED JUNE 30, 2000 AND THE RELATED MANAGEMENT LETTER.
Deferred pending Mr. Hubik's arrival.

F. PUBLIC HEARING
None

G. PUBLIC COMMENTS
Jack Bothwell, resident of Buckeye Road, voiced concern about Director Venturi's excessive absences. He also voiced concern about low water level in the reservoirs and questioned the appropriateness of allowing 2000 water connections. President Estabrook summarized the discussion of the October 9, 2001 meeting. Mr. Bothwell also voiced concern about the deficit in the Fire Fund. He raised the question as to why various titles were used when referring to Daryl Schoeppner in the newspaper. He urged the Board to curtail spending, and commented that the financial information provided relating to the fire tax measure was confusing to the public.
Director Whitney assured Mr. Bothwell that it was not the Board's intention to deceive the public concerning the fire tax.

Claudia Reed, with the Willits News, commented that she was unsure of Daryl Schoeppner's official title and may have used incorrect titles when referencing him in the newspaper.

Bob Houtz, resident of Harrah Place, reported a potential fire hazard due to an unfinished house on Acacia Place.
President Estabrook noted that the Auditor had arrived.


E. SPECIAL PRESENTATION - Robert Hubik, CPA
PRESENTATION OF THE ANNUAL AUDIT FOR THE FISCAL YEAR ENDED JUNE 30, 2000 AND THE RELATED MANAGEMENT LETTER.

General Manager Chapman provided a brief summary of the figures noted his staff report.
Mr. Hubik called attention to the list of assets, noting that the total assets had decreased from $13,905,235 to $12,733,428 due to an adjustment in accumulated depreciation to correct overstated service life of sewer outfall lines and dams. General Manager Chapman provided further clarification of the charges, referring to page 27 of the audit and page 3 of the staff report.

Mr. Hubik explained that another adjustment was made to accrue the capital charge owed to the City of Willits for its share of the capital costs related to the sewage treatment plant. A brief question and answer session ensued concerning depreciation.

Mr. Hubik also noted an adjustment made in the Fire Fund to accrue hazard abatement receivables.
In response to Director Whitney's concern about the amount shown as the value of District-owned land, Mr. Hubik explained that financial statements do not reflect fair market value, but are based on historical cost or market value at the time of acquisition.

Going back to the subject of hazard abatement receivables, Mr. Hubik stated that the District could, in fact, afford to continue the abatement program if it were financed for one year, as the money does come back the following year on the tax bills. Jack Bothwell raised the issue of the legality of funding through the enterprise funds. Mr. Hubik recommended that the District obtain a legal opinion on the issue.

With reference to the Liabilities on page 4, Director Whitney recommended that the terminology be revised to differentiate between the two types of sewer charges. He voiced concern about the liability resulting from accrued vacation benefits.

Mr. Hubik provided a summary of the fund balances for the General and Special Revenue Funds for the current and prior fiscal year, noting an improvement during the current fiscal year. He explained that the loss for the current year was partially attributable to the adjustment for hazard abatement receivables. Bill Jack asked for clarification of where the ambulance loss is being categorized. Mr. Hubik explained that the ambulance figures are included in the General Fund, but are not split out in the audit. He assured Mr. Jack that the information is available in the books of the District, and suggested it be set up as a separate enterprise fund to address the accountability issues. Mr. Hubik pointed out that the General Fund showed a small profit prior to transferring funds to the Fire Department.

Moving on, Mr. Hubik reviewed the favorable and unfavorable changes in the Fund Balances - Budget and Actual. He pointed out an increase in revenues and decrease in expenses for the enterprise funds, which resulted in net income of $79,000 before the prior period adjustments, and an increase in cash and cash equivalents of $308,000.
He next reviewed the Management Letter noting the cash shortfalls in the General Fund, Fire Protection Fund and Golf Course Enterprise Fund. Director Whitney asked that the liability of the District to reimburse the funds prior to the passage of Proposition 218 be investigated. A brief discussion ensued concerning the provisions of Proposition 218. General Manager Chapman confirmed that his concern for public safety figured into his decision to sign checks against negative fund balances.

Director Whitney made a motion that an agenda item be scheduled for the next Board meeting to discuss the cash situation in the General Fund and the Fire Fund, where the cash is coming from, if the District is complying with 218, and what will be done about it. President Estabrook confirmed that this issue needs to be addressed, but voiced concern about being able to do so at the next Board meeting.

District Counsel Neary commented that he would like to amplify his previously written opinion on the subject, to gain perspective of what is stated as prohibition, noting that very little case law exists interpreting Proposition 218.

Director Orth offered to second Director Whitney's motion, provided the matter be scheduled for the December meeting as opposed to the next meeting. Director Whitney amended his motion accordingly. A vote was taken on the motion which passed unanimously by the members present.

Mr. Hubik suggested the Board consider borrowing from the other funds as opposed to borrowing from outside sources or practicing inter-fund transfers. Superintendent of Utilities, Wendell Wilson, who was present in the audience, strongly urged the Board not to renegotiate the terms of such loans, as was recently done between the Golf Fund and Sewer Fund. Mr. Hubik suggested "arms length borrowing", meaning borrowing under terms as like unrelated parties.

Robert Melliush, District Water Operator III, asked why the Board was more concerned about the provisions of Proposition 218 than in the past.

President Estabrook explained that the establishment of the Finance Committee and the format of the financial statements provided by General Manager Chapman made it much more clear what was really going on.

Director Monteleone stressed the Board's goal to address the financial issues of the District and voiced appreciation to Finance Assistant Pat Wilson, who was present in the audience, for her work.

Ms. Wilson called attention to page 2 of the Management Report, which states that the inter-fund transfers are not formally approved by the Board. She provided additional financial reports, voiced concern about continuing to pay expenses from the funds with deficit balances, and asked for Board approval to issue checks for payment of those expenses.

Director Whitney asked District Counsel for a legal opinion outlining his understanding of the auditor's management letter, as he felt that some confusion exists.

District Counsel Neary explained that the authority to issue checks comes from the adoption of the budget. He pointed out that immediately after the passage of Proposition 218, the District began the process of segregating funds and implementing rate increases to bring the funds into balance. He suggested reviewing the methods of allocating staff time and expenses across the funds during the budget process. He stated his opinion that nothing illegal is being done, and suggested the issue be addressed by a formal Board policy at the time the budget is considered.

General Manager Chapman pointed out that the problem has been brought to light during the current budget process which began in March, and that it was his intention to balance the 2001-2002 Fire Department budget as it was adopted in June 2001. However, addressing the prior year negative fund balances is beyond the scope of the 2001-2002 budget. Realigning this matter, time-wise, is partially dependent on the March 2002 Fire Tax Measure.

Director Whitney stressed the importance of following adopted Board policy with regards to inter-fund transfers.
Wendell Wilson, spoke against the reallocation of expenses based on cash flow. Robert Melluish agreed.
Director Whitney voiced concern that Green Fees, especially annuals, are made payable to Brooktrails Golf Shop, as opposed to the District, and suggested the issue be reviewed. Mr. Hubik offered several suggestions to improve the audit trail.

Moving on to Condition No. 5 of the Management Letter, the Sewer Agreement with the City of Willits, Director Orth pointed out that the contract prohibits prior year adjustments to the sewer expense, as suggested. President Estabrook asked that a future agenda item be scheduled to discuss Condition No. 5 in greater detail.

Director Whitney voiced concern that disputed charges for capital items had never been resolved, as the District will be obligated to pay for a portion of the cost of expansion of the sewer plant within a few years.

Discussion ensued concerning Condition No. 2 and the use of connection fees to pay the District's portion of the capital costs.

District Counsel Neary pointed out that most of the expenditures would be funded through the standby charges, and that the District had raised its Sewer Standby Charge to address anticipated sewer expansion.

President Estabrook thanked Mr. Hubik for his audit, which he found to be the most thorough and helpful to date. Directors Orth and Monteleone, as well as District Counsel Neary, agreed.

A break was called.

BREAK at 9:52 p.m. - RECONVENE at 10:01 p.m.

H. ACTION AGENDA

President Estabrook asked that agenda items 2 and 3 be combined. No objections were raised.

2. ANNUAL REPORT ON USE AND OPERATION OF DISTRICT AMBULANCE

3. QUARTERLY REPORT ON USE OF DISTRICT AMBULANCE, JULY 1, 2001 THROUGH SEPTEMBER 30, 2001

Director of Emergency Services, Daryl Schoeppner, presented the annual report for the Fiscal Year ended June 30, 2001. Calling attention to the Ambulance billing, he noted that some charges are being turned down because the code book used to bill the insurance companies was out of date. As a solution to the problem, he recommended utilizing an outside billing service for a nominal fee.

Director Orth pointed out that the reports indicate the service is a regional service as opposed to a local service. Mr. Schoeppner commented that the County EMS coordinator informed him that the District could become the first responder for Brooktrails as a Basic Life Support (BLS) ambulance with an Advanced Life Support (ALS) as backup. However, he suggested that the volunteer pool of EMTs be expanded before taking on that responsibility.
Director Whitney questioned the appropriateness of the terms "Accounts Receivable" and "Financial Report". He also suggested changing the format and terminology used in the report.

Robert Melluish suggested asking Liberty Ambulance to handle the billing, as Brooktrails acts as backup for them. He also voiced concern about the stress of the obligation to provide BLS first response to the District.

4. DISCUSSION OF EMERGENCY REPAIR NECESSARY TO BRING DISTRICT AMBULANCE VEHICLE BACK INTO OPERATIONAL STATUS

General Manager Chapman reported on the repair needed to the transmission of the ambulance vehicle. He stressed that Brooktrails staff will still act as first responder to medical calls within the District. Based on current financial conditions, he recommended not repairing the ambulance at this time.

Director Whitney spoke against expending any funds which were not budgeted. He asked that the Board address asset management issues in the near future, and suggested providing funds through the sale of donated lots.
Director Monteleone, also spoke in favor of deferring the repair.

President Estabrook stressed that the ambulance provides a tremendous service to the whole area, but agreed that the current financial situation prohibits funding of the repair. He suggested approaching Little Lake, the City of Willits, and the County to contribute towards the cost.

Mr. Schoeppner stated that he would be pursuing available grants to repair the vehicle.
George Skezas voiced concern that deferring repairs to the ambulance may appear to be blackmailing the public to assure passage of the fire tax. General Manager Chapman pointed out the coincidence of the timing, noting that blackmail had noting to do with his decision, and that his letter references the fact that there is no tax revenue for funding the ambulance.

Ginger Pohlson suggested asking Liberty Ambulance for financial support.
Director Whitney asked that an agenda item be scheduled for the next meeting to discuss funding options.

Robert Melluish suggested asking the Brooktrails Firefighters Association for a loan to repair the ambulance. Mr. Schoeppner voiced concern that the public may not approve of such a request, as BFA funds were donated for purchase of the Jaws of Life tool.

Director Orth moved to continue the meeting to 11:00 p.m. The motion was seconded by Director Whitney and passed unanimously by the members present.

5. CONSIDERATION OF A PROPOSED ORDINANCE DETERMINING AND PROVIDING FOR ADOPTION OF REVISED TAX FOR FIRE PROTECTION AND PREVENTION, PURSUANT TO GOVERNMENT CODE SECTION 53978, AND SCHEDULING A PUBLIC HEARING FOR NOVEMBER 13TH.

Director Whitney asked for clarification of how the tax would be assessed per parcel, and voiced concern that the tax roll may not be reconciled with the Assessor's Parcel Map.

Director Orth moved to introduce Ordinance No. 117, an Ordinance Determining and Providing for Adoption of Revised Tax for Fire Protection and Prevention, pursuant to Government Code Section 53978, and to schedule a public hearing for November 13, 2001. The motion was seconded by Director Whitney.

Robert Melluish suggested asking CDF to staff the abatement program during the winter months to lower the cost of the program, and urged the Board to maintain a good working relationship with them.

A vote was taken on the motion as follows:
AYES: Directors: Whitney, Monteleone, Orth, Estabrook
NOES: Directors: None
ABSENT: Directors: Venturi
Motion Carried.

Director Orth moved to continue the meeting to 11:30 p.m. The motion was passed unanimously by the members present.

6. CONSIDERATION OF A RESOLUTION DECLARING A PUBLIC NUISANCE BECAUSE OF ILLEGAL GRADING ON CERTAIN PRIVATE PARCELS WITHIN THE DISTRICT.

Director Orth moved to schedule a two public hearings for November 13, 2001, one on the Dotson matter and one on the Grishaber matter. The motion was seconded by Director Monteleone and passed unanimously by the members present.

7. RELEASE OF CONFIDENTIAL OPINION FROM DISTRICT COUNSEL CONCERNING BOARD MEMBERS MARRIED TO DISTRICT EMPLOYEES.

Director Orth moved to release the legal opinion, seconded by Director Monteleone. The motion passed unanimously by the members present.

8. RESPONSE LETTER TO THE WILLITS NEWS REGARDING LETTER FROM WRITER ANDY ROMANO. THE SUBJECT MATTER WAS EMERGENCY ACCESS TO BROOKTRAILS TOWNSHIP.
Director Whitney suggested the Board approve the draft letter which he had written correcting the erroneous information. Director Orth pointed out that Sherwood Road was not paved all the way to Laytonville, as inferred, and asked that the letter be amended accordingly. Director Monteleone pointed out one grammatical error. Director Orth made a motion to send the letter, as amended. The motion was seconded by Director Whitney and passed unanimously by the members present.

9. RAILS TO TRAILS LETTER.

Director Orth moved to approve the draft letter as written, seconded by Director Monteleone. The motion passed unanimously by the members present.

I. SPECIAL REPORTS - GENERAL MANAGER

i. Significant Correspondence received since last meeting:

Board members reviewed the update from County concerning the under-grounding of utilities. Director Whitney suggested that the General Manager ask for a report from the County staff of which items have been completed. Director Orth asked for a report of the source of funds, and whether they were available on a one time or annual basis.

iv. Planning
Board members reviewed the Lot Merger Program report and the Development Review Activity Report.

J. PUBLIC COMMENTS
Director Orth provided a verbal report on recent earthquakes.

K. ADJOURNMENT
Director Monteleone moved to adjourn and President Estabrook declared the meeting of October 23, 2001 closed at 11:10 p.m.


MICHAEL V. CHAPMAN
Secretary to the Board of Directors


CHARLES A. ORTH,
Vice President