SPECIAL MINUTES

A. PLEDGE OF ALLEGIANCE

B. ROLL CALL

Roll call showed the following Directors present: Whitney, Venturi, Monteleone, Orth, and Estabrook. Also present were Finance Committee members Bill Jack, Chuck Harden, Superintendent of Utilities Wendell Wilson, General Manager Mike Chapman, and Finance Assistance Pat Wilson.

C. ADDITIONS/ ADJUSTMENTS TO THE AGENDA

None

D. MINUTES OF PREVIOUS MEETINGS

None

E. SPECIAL PRESENTATION

None

F. PUBLIC HEARING

None

G. PUBLIC COMMENTS

None

H. ACTION AGENDA

1. BUDGET WORKSHOP; DRAFT BUDGET FOR FISCAL YEAR 2001-2002

General Manager Chapman began with a review of the various funds, explaining the difference between an "Enterprise Fund" and "Cost Center." An Enterprise Fund may be supported by both a tax base and user rates, while a cost center is normally supported by a tax base.

With the aid of the overhead projector, he focused on some of the problems facing the Golf and Fire Funds, pointing out that both funds are expected to sink progressively further into the hole. He reviewed the provisions of Proposition 218 relating to inter-fund transfers.

He provided a brief explanation of the proposed method to allocate wages at the end of the budget period, which he felt would provide a more accurate accounting of fringe benefits.

Director Whitney requested that the term "Retained Earnings" be replaced with "Fund Balance" so as not to infer that the District was a for-profit agency.

General Manager Chapman pointed out that the Golf Fund must rely on usage fees and should support itself, the Fire Fund must rely on government taxes, and the only funds which are currently in the black are water and sewer. However, those funds can only be spent on Water Fund and Sewer Fund expenses. Noting that water connection fees are restricted funds, he stated that he would like to set aside $100,000 into water plant reserves this fiscal year, if possible.

Moving on, he reviewed the sources of the projected revenues by fund, noting the anticipated delay between the cash outlay for abatements and the reimbursement from the County. Director Orth suggested the General Manager review the provisions of the Teeter Plan for clarification. Director Whitney voiced concern about the accounting of receivables for lien amounts by Assessor's Parcel number, and the negative balances in the enterprise funds. He suggested a thorough detailed audit of the District's accounting records be conducted to disclose any obvious violations of the provisions of Proposition 218. General Manager Chapman mentioned that such an audit could be very costly, and stressed his intention to comply with the law.

Getting back to the revenue sources, he explained that he based his budget on an 8% increase in water and sewer fees, which would result in an increase of approximately $50,000 in revenues. He called attention to the section of the Budget listing reserves and provided a brief explanation of the basis for the report, commenting that the District is $1.5 million behind where it should be for capital equipment replacement. Discussion ensued regarding the need to replace the steel water lines and the need to segregate the reserve funds from the operational funds.

He next reviewed the projected wages and salaries by department, noting that Board fees, Legal Counsel and District Architect had been put into the General Fund. He outlined the changes made to the insurance coverage, including earthquake coverage, noting that a firm figure for the annual premium would not be available until sometime in May. Other costs reviewed included the projected cost of the annual audit. General Manager Chapman updated the Board on the request for proposal process for the selection of an auditor.

Voicing dissatisfaction with the audit process, Director Whitney suggested the Board of Directors write a letter of instructions to the auditor. Finance Committee member Chuck Harden countered that the Board should provide direction to the General Manager, who, in turn, should provide instructions to the auditor.

Moving on, General Manager Chapman pointed out that he had added $3,000 for Network Support, and $3,500 for Professional Services and Engineering. President Estabrook suggested separate categories be defined for items related to specific funds, such as engineering studies required for the Sewer Easement. A brief question and answer session ensued regarding the various expenses shown in the report.

General Manager Chapman next reviewed the sources of revenue. Director Whitney suggested a separate page showing a more detailed breakdown of the revenues sources by line item.

Continuing, General Manager Chapman commented that Ambulance, Recreation, and Franchise would be folding into Administration. Finance Committee Member Bill Jack spoke in favor of discontinuing ambulance service, as it continues to operate at a loss. Director Monteleone summarized the discussion from the Focus meeting of April 17th, wherein Director of Emergency Services Daryl Schoeppner explained that based on actual costs, excluding depreciation, the ambulance does break even. Director Whitney spoke against folding Ambulance into Administration, so as to better show the breakdown of revenue and expenses, and to allocate wages and benefits. Finance Committee member Chuck Harden pointed out the intangible value of providing ambulance service. Discussion ensued concerning the provisions of Proposition 218 relating to the use of funds collected by means of fire tax, and the need to include ambulance as a part of the fire tax measure.

President Estabrook confirmed the Board's recommendation not to fold Ambulance into Administration, but to move it back into the Fire Fund for the upcoming fiscal year. Director Whitney asked for a future agenda item to discuss the accident which occurred at the flea market, when the ambulance refused to transport an elderly injured patient, to adopt policy for future such incidents.

Moving on, General Manager Chapman provided a review of revenues and expenses projected for the Fire Department. Significant changes included allocation of time spent by the General Manager from 5% to 25%, reduction in staff, payment of vacation time, and cost of electricity. He asked for input from the Board on the amount allocated for training and education.

Noting the effect of lot mergers on tax revenue, Director Orth commented that the amount charged to improved and unimproved lots must be considered when forecasting the increase necessary to the fire tax. Director Whitney asked for clarification of how the District accounts for assets donated to the Fire Department by the Brooktrails Firefighters Association (BFA.)

General Manager Chapman voiced concern about having to continue to make payroll despite the deficit in the Fire fund. Director Whitney asked for a summary of restricted and non-restricted funds. Questions arose concerning the possibility of a repayment obligation resulting from past negative fund balances, and the collateral used in the past to secure a line of credit from the bank.

Director Orth noted the public concerns raised about how the departments were charged for the Specific Plan process, as there is contention that the Fire Fund was overcharged. Finance Assistant Pat Wilson clarified that the Fire Department was not charged for the Specific Plan. The costs were divided between Water, Sewer, and Admin. Director Whitney asked for a report on the breakdown of costs related to the Specific Plan. He spoke against funding the Fire Department with borrowed funds, and made suggestions as to how to cut expenditures. He also suggested a report be done on past lawsuits against the Fire Department to bring the issues out to the public and to disclose accurate information.

Director Monteleone provided a summary of the meeting held in 2000 with representatives of Little Lake Fire District concerning the possibility of annexation. She made the suggestion that Brooktrails Fire Department focus on abatement, and turn fire protection responsibilities over to Little Lake. Director Venturi noted that the one and only proposal offered by Little Lake was to take Brooktrails into their fire district and charge the residents their tax rates.

Moving on, General Manager Chapman reviewed the expenditures for the Golf Fund, and offered suggestions to remedy the projected deficit. Director Whitney asked for clarification of the accounting of the loan payments to the Sewer Fund. Director Orth reminded the Board of a suggestion made in the past, to pay interest only on the debt for a few years to improve cash flow in the Golf Fund.

General Manager Chapman compared the cost and sales of annuals and green fees at Brooktrails with Ukiah. Director Venturi asked for an accounting of the number of annuals sold, and the number of annuals that are pro-rated. He suggested that the annuals not be based on the fiscal year, but that they be good for one year from date of purchase.

As requested by Director Monteleone, General Manager Chapman reviewed the options proposed; 1) close the course and convert it into a park, 2) lease the entire course, 3) charge more for non-residents to play, 4) ask for financial support from the City of Willits, and 5) close the course during the winter months.

Director Orth suggested mortgaging Chipp's house to provide operating cash, and raising rates over a five year period. Director Whitney voiced opposition to taking on additional debt, and spoke in favor of pursuing a lease of the entire facility, pointing out that the pro-shop was the only profitable portion of the enterprise. Discussion ensued regarding the pros and cons of leasing the entire facility and the issues that would arise as a result.

General Manager Chapman pointed out that 80% of the revenues are derived from daily green fees, and stressed the need to raise those rates as well as the annuals. Finance Committee Member Bill Jack suggested cutting out the proposed $7500 in planned capital improvements to reduce the amount of projected deficit. Other suggestions were made to cut costs, including reduction in staff time.

Director Orth asked the General Manager to prepare a proposal of rates for residents and non-residents for discussion by the Green Committee. Wendell Wilson commented that previous attempts to charge non-residents higher rates were opposed based on the fact that Brooktrails' residents utilize recreational facilities in the City of Willits at the same rates as their residents. Director Monteleone spoke in favor of charging higher fees to non-residents.

After a brief discussion of the budget figures, General Manager Chapman offered to review his proposed rates and report back at a future board meeting.

Moving on to the Sewer Fund, General Manager Chapman noted that, according to a telephone conversation with the City Controller, the over-all rate, including capital costs, is expected to be less this year. Director Whitney voiced concern about capital costs being charged against current operating expenses. He suggested the District's auditor and legal counsel be questioned about the justification of paying a percentage of the capital costs without the benefit of a percentage of ownership, especially as it relates to the purchase of land. Director Monteleone agreed that the subject should be researched.

Director Whitney also voiced concern about the sewer flow measurements, and asked for a report of the comparison of the District's measurements compared to the City's.

General Manager Chapman provided a breakdown of revenues and expenses, clarified the appropriate use of stand-by fees and connection fees, and answered questions concerning the allocation of wages. Director Monteleone voiced concern about the effect of the proposed increase to the sewer base rate on residents with fixed incomes. Director Venturi reminded her that it is the Board's fiduciary duty to assure that the District operates in the black, even though it may not be the most popular decision with the public.

General Manager Chapman next provided projections for the Water Fund, and reiterated his goal of setting aside $100,000 in reserves. He explained the process used to calculate the proposed rates, advising an 8% increase in the base rate and the usage tiers. Projected expenses and capital replacement items were reviewed, and measures to handle possible power outages over the summer were discussed. Director Whitney suggested a future agenda item be scheduled to discuss the energy crisis.

Reviewing the appropriations, President Estabrook noted a 21% increase in operational costs for the fiscal year, and stressed the need to increase rates sufficiently to avoid falling behind in the goal to build reserves.

General Manager Chapman suggested the 8% increase in water rates be adopted, and offered to review the proposed increase for the sewer rate.

I. SPECIAL REPORTS - GENERAL MANAGER

i. Significant Correspondence received since last meeting:

ii. Personnel

iii. Finance

iv. Planning

v. Possible upcoming agenda items

vi. Other

J. PUBLIC COMMENTS

None

K. ADJOURNMENT

Director Orth moved to adjourn and President Estabrook declared the special meeting of April 21, 2001 closed at 2:40 p.m.

MICHAEL V. CHAPMAN

Secretary to the Board of Directors

RICHARD ESTABROOK,

President