MINUTES

General Manager Chapman asked that item 3b be deferred to the next meeting. No objections were raised.

D. MINUTES OF PREVIOUS MEETINGS

December 11, 2001
Director Orth moved to approve the minutes of December 11th, as written, seconded by Director Venturi. Motion was passed unanimously.

December 27, 2002

Director Orth asked that the sentence "Director Orth pointed out that two area fire districts are folding because of insufficient funds" be changed to "Director Orth pointed out that Legget and Piercy fire districts are folding because of insufficient funds." He then moved approval of the minutes as amended, seconded by Director Monteleone. The vote was taken as follows:

AYES: Directors: Pohlson, Monteleone, Orth, Skezas
NOES: Directors: None
ABSENT: Directors: None
ABSTAIN: Directors: Venturi
Motion carried.

E. SPECIAL PRESENTATION - None

F. PUBLIC HEARING

2. RATE INCREASES PROPOSED BY SOLID WASTES OF WILLITS, INC.

General Manager Chapman reviewed the proposed rates, and the increased costs cited by Jerry Ward as justification for his request.
President Skezas opened the public hearing at 7:10 p.m. No members of the audience came forward, so President Skezas closed the public hearing at 7:11 p.m.

Director Orth asked that the measures taken by Mr. Ward to reduce his expenses, such as raising insurance deductibles and no longer paying for health insurance coverage for his employees' dependents be included in the record. He also noted that garbage pick up service in the District is voluntary, not mandatory.

In response to a question from Director Pohlson, Mr. Ward explained that the increases would result in approximately $800 in additional franchise fee to the District, and stated that he did intend to reinstate employee benefits, if possible, when the rate increases were in place from all agencies.

Director Pohlson asked the Board to consider waiving the additional franchise fee, to allow for a lesser rate increase to the residents. Mr. Ward estimated that the pass-through increase of .32% would approximately equal the $800 increase in the franchise fee.
Director Monteleone read an excerpt from paragraph 7B of the contract approved in October of 2000, which stated that there would be no rate increase for two years. For that reason she spoke against the proposal, adding that approval of rate increases at this time would have a detrimental effect on the success of the fire tax measure in March.

Mr. Ward countered that he was not asking for a Cost of Living (COLA) rate adjustment, and was therefore within the provisions of the contract, citing paragraph 7C.

Director Orth spoke in favor of the increase, and of the suggestion made by Director Pohlson concerning the waiver of the franchise fee.

Director Venturi moved to adopt Resolution No. 2002-1, a Resolution Approving the Rate Schedule for Garbage Collection and Curbside Recycling Effective February 1, 2002, modified to reduce the proposed rates by the amount of the increase in the franchise fee, as discussed.

The motion was seconded by Director Orth and the vote was taken as follows:
AYES: Directors: Pohlson, Venturi, Orth, Skezas
NOES: Directors: Monteleone
ABSENT: Directors: None
Resolution No. 2002-1 Adopted.

G. PUBLIC COMMENTS

Director Venturi welcomed back Mike Adair, of the Willits News.

H. ACTION AGENDA

3a) REVIEW OF ACCOUNTS PAYABLE AND AUTHORIZATION TO ISSUE CHECKS

Director Orth moved to approve the accounts payable and to authorize the issuance of checks. The motion was seconded by President Skezas, and passed unanimously.

3b) ANNUAL REPORT OF OFFICER AND EMPLOYEE EXPENSE REIMBURSEMENT
Deferred.

4. REVIEW OF THE 2001 DOMESTIC WATER SYSTEM INSPECTION REPORT FROM THE DEPARTMENT OF HEALTH

General Manager Chapman commended Robert Melluish, District Water Plant Operator, for passing his grade 4 Water Operator Certification.

Using the overhead projector, General Manager Chapman reviewed the major elements of the report.

Robert Melluish came forward and, in response to Director Orth, explained the needed expansion of the clear well, estimated to cost $500,000, and reviewed the other capital expenditures outlined in the report.

Discussion ensued concerning water meters which had been installed but are not in use. Director Orth stressed the need for the Board to address water capacity issues to avoid negative impacts to the real estate market.

Mr. Melluish confirmed that all deadlines in the report would be met, and that the required improvements would result in better tasting water to the consumer. He also provided information on low interest loans available through the State to assist with financing of the capital improvements.

5. REPORT OF WATER PROCESSED VERSUS WATER SOLD

Using the overhead projector, General Manager Chapman reviewed a chart showing the percentage of processed water lost through the system. He noted the opinion of Mark Vogel, Engineer, that the District does fall within the reasonable standard of the industry, especially considering the expanse of the distribution system and the number of undeveloped lots.

With reference to a chart regarding the average use per single family dwelling, he noted that the State has questioned the accuracy of the 220 gallons per day (GPD) average referenced in the Specific Plan and used as the basis for the allowable connections to the system, suggesting a more appropriate amount of 278 GPD. He reported that a consultant would be hired to address the concerns raised by the State.

Discussion ensued concerning means to increase the capacity of the lake. General Manager Chapman provided information on the feasibility of utilizing wells. Mr. Melluish commented that the cost of development and testing has to be weighed against increase in the amount of single family homes that could be served. As to the possibility of dredging the lake, Mr. Melluish did not feel that the amount of sedimentation was significant, based on recent measurements.

6. DISCUSSION OF RESPONSE TO ANNUAL AUDIT CONDUCTED BY ROBERT HUBIK, CPA

General Manager Chapman provided a brief review of the concerns reported by the Auditor in the management letter. He recommended financing the cash shortfalls in the Fire Fund and Golf Fund through Tax Revenue Anticipation Notes (TRAN notes) which allow special districts to receive funds in advance based on taxes receivable. In response to concerns about Proposition 218, he provided copies of correspondence from the Howard Jarvis Taxpayers Association and a response sent by District Counsel Neary. He reported that he would be meeting with representatives from the City of Willits concerning anticipated costs of the sewer treatment plant capital improvements. As to the adjustments to the depreciation of fixed assets, he noted the importance of Generally Accepted Accounting Practices (GAAP) standards. He also reviewed the proposed controls which would be implemented for the Golf Fund.

Director Pohlson voiced concern about the inconvenience to customers who may have to write separate checks for green fees and pro shop purchases. She suggested incorporating a liability release statement into the proposed sign-in sheet.
Director Monteleone spoke in favor of the proposed golf course controls.

President Skezas voiced concern about the effect of the depreciation adjustment on the District's financial position. He asked that financing through TRAN notes be deferred until the Proposition 218 issue was clarified. As to the separation of funds at the golf course, he pointed out that the use of credit cards would be a factor to consider.

Superintendent of Utilities, Wendell Wilson, came forward to remind the Board that much of the District's infrastructure is old and beginning to fall apart. President Skezas commented that infrastructure also included the Fire Department. Mr. Wilson referenced problems with the telemetry system which was installed in the 1960's. He voiced concern about funds with deficit balances utilizing water and sewer funds. In response to his concerns, District Counsel Neary explained the substance of his letter to the Howard Jarvis Taxpayers Association, and his opinion that the District is not violating Proposition 218. Mr. Wilson voiced concern that the deficit balances had gotten larger, indicating that the water and sewer funds were not being repaid.

Director Pohlson stressed the need to prioritize water and sewer issues.

I. SPECIAL REPORTS - GENERAL MANAGER

iii. Finance

The Board reviewed the list of payments made in December

iv. Planning

A proposed schedule was provided for the Annual Planning Session. After a brief discussion, Board members tentatively suggested canceling the second Tuesday meeting in January and scheduling the Planning Session for Saturday, January 26th. President Skezas also asked that the discussion of parking issues and the workshop on trails be added to the next agenda.

J. PUBLIC COMMENTS

Director Venturi reported that the hearing on the Brooktrails Lodge Use Permit application had been rescheduled for February 14, 2002.

Director Pohlson asked for an update on the phase II hazard abatement process. General Manager Chapman offered to report back to the Board with the figures.

K. ADJOURNMENT

Director Orth moved to adjourn and President Skezas declared the meeting of January 8, 2002 closed at 9:04 p.m.






GEORGE SKEZAS, President

MICHAEL V. CHAPMAN, Secretary to the Board of Directors