The Board of Directors of Brooktrails Township Community Services District met in special session on April 17, 2004 at 9:00 a.m. in Brooktrails Community Center.
A. PLEDGE OF ALLEGIANCE
B. ROLL CALL
Roll call showed the following Directors present: Ziady, Horrick, Skezas, Pohlson and Orth. Finance Committee members Bill Jack and Chuck Harden were also in attendance. Also present was General Manager Chapman.
C. ADDITIONS/ ADJUSTMENTS TO THE AGENDA
D. MINUTES OF PREVIOUS MEETINGS
E. SPECIAL PRESENTATION
F. PUBLIC HEARING
G. PUBLIC COMMENTS
H. CONSENT CALENDAR
I. ACTION AGENDA
1. Review of Fiscal Year 2004-2005 Proposed Budget.
J. SPECIAL REPORTS - GENERAL MANAGER
General Manager Chapman described GASB34 requirements and procedures, which were used in this year's budget preparation for the first time. He indicated that GASB34 standards now require that governments depreciate all of their exhaustible capital assets, including infrastructure. For the first time the General Fund and the Fire Fund (government funds) along with the enterprise funds (water, sewer, and golf) will be depreciated. Secondly, he pointed out GASB34 requirements of providing the public an easily written analysis of the government's financial activities based on current known facts, decisions, and conditions ("Manager's Statement"). General Manager Chapman then pointed out the new GASB34 Combination Statement specific categories; the Combination Statement; and the Project Statement.
General Manager Chapman cautioned that he did have some concerns with the City of Willits sewer pond system and their RWQCB-mandated requirements. For example, in 2003 the District share was 37.69% of an estimated $9.5 million (raised from $5.5 million in 2002). Now it is estimated to be $11.5 million for 2004. He stated that a possible grant of $1-2 million might be obtained by City of Willits for the difference, but it is not known how it would be distributed between the parties. The dynamics are such that a later sewer rate increase can't be ruled out. For sewer figures found on page 17, Mr. Chapman confirmed Director Horrick's question that the 2004-2005 figures do include the $11.5 million Willits loan figure.
Regarding other projects, he stated that two-thirds of the clearwell funding is for expansion, and the District therefore can legitimately access the Water Capital Facility Fund (connections fund) for this tank. General Manager Chapman clarified that the District will pay $250,000 down (from the connections fund) and borrow $450,000.00 to $475,000.00 from USDA Rural Development on the clearwell project (which will include the backwash ponds).
In a related matter, President Orth pointed that he sees enough in the budget to launch an EIR on raising Lake Emily, which the District would have to basically self-finance before seeking grants.
General Manager Chapman reviewed the proposed budget on a page-by-page basis. He first addressed specific projects outlined in pages 1-8. On the "Poppy Drive Sewer" project, he advised that Mark Vogel did survey this area two years ago, and the estimated cost to repair the 600-foot stretch is $100,000.00. The funding source will be the Sewer Enterprise Fund.
Many budget topics arose. A brief discussion centered on leasing a pickup truck for the fire department. President Orth stated that this item will only happen if there is a fire tax increase. Director Skezas asked if this budget assumed golf operations will be turned over to Ron Runberg, and General Manager Chapman confirmed this as an assumption in the budget. District personnel costs and workers compensation premiums were discussed. In another matter General Manager Chapman stated he expects a large increase in auditing costs due to GASB34 requirements, and he is hopeful that $15,000.00 will cover the cost for the ensuing year.
General Manager Chapman discussed the cost uncertainty for Wells #2 and #3 scheduled for May and December 2004. Director Skezas reminded the group that because official DHS testing cannot be done until August 2005 on the third well, it may not be possible to deliberate on the matter until after that testing is done. General Manager Chapman clarified for Director Pohlson that the new wells will be deeper and therefore more expensive than the first well. He also clarified that current priorities are the well drilling, followed by the mandatory soil boring test requirement associated with the dredging of Lake Emily. Dredging EIR's are expected to cost between $100,000 and $150,000 before the District can even obtain a loan. Director Pohlson stressed that she wanted the budget to reflect due diligence; Mr. Chapman interjected that this can be done as long as the District has the cash flow money available. Director Pohlson stated that the consideration by the Board as to continuing the well drilling should be added to the goals and objectives timeline. Brief discussion ensued and Mr. Chapman said that if the District does strike water in one well, obviously more well drilling will be pursued, depending on the then-current cash flow.
Director Skezas asked if the water-exemption lots listed recently on the market are included in our count and asked how many lots that we have with meters but no dwellings. He asked if those people were to come in with plans, would that meter be transferable. General Manager Chapman updated the Board on this situation. He stated that in a recent telephone conversation with Bruce Burton, District Engineer of DHS, DHS's attorney advised them that the meter exemptions are APN-site-specific. However, if the lot is sold, the District ordinance allows one year for the applicant to complete the process. General Manager Chapman stated he does not know how this is to be worked out in the future; it will have to be presented to the Board on a case-by-case basis.
As to page 19, Fire Fund, Mr. Chapman stated he is declaring the FEMA fire truck grant revenue of $225,000 for this year but is waiting for the auditor's advice as to the proper way to declare it. A brief discussion occurred when Finance Member Chuck Harden stated regarding the "jaws of life" that he did not see how the District could spend $20,000 on something it had never used or needed before.
President Orth announced a break at 10:50 a.m. The meeting reconvened at 10:56 a.m.
Under questioning, General Manager Chapman advised that there has been a systemic history of loss for the Golf Course, and the District's intention now was to cut that loss. The discussion then turned to the Golf Enterprise Fund figures on page 20, specifically depreciation. He stated that if there were a major equipment breakdown, such as of the irrigation system, he was not sure how this would be handled. He stated that at a minimum the District would have to subsidize $8,300 from the General Fund. Director Pohlson asked where the money would come from in the event of major repairs. General Manager Chapman said that it would be the General Fund, as Golf is part of Parks. Discussion ensued about specific aspects of the golf operations proposal including electric, propane, and insurance. Director Skezas specifically wanted to know what category 3600, "State/County Charges," represented and whether these charges should be transferred to Mr. Runberg. Mr. Jack stated that the golf agreement should be reviewed at least every two years.
Discussion ensued on various other golf issues. Mr. Chapman advised that a $10,000 cap had been proposed to be applied for the District's over-all exposure. Discussion ensued about the possibility of profit-sharing in the future. A discussion ensued around golf rates and the group agreed it would basically go with Mr. Runberg's suggestions.
In other topics President Orth stated he would like to see the District Office building situation addressed as a project in the next year or so, to bring it up to a decent construction standard. It does not have a foundation. Lastly, General Manager Chapman addressed certain aspects of the Reserves as depicted beginning on page 21.
2. Finalize Rates & Fees for Fiscal Year 2004-2005.
The group discussed the proposal to keep rates and fees the same for this year. Mr. Jack reminded the group that there will be three different impacts on the community's lot owners from the upcoming water projects and these should be kept in mind. Mr. Chapman clarified that there are three pending projects with USDA which could very well affect rates: the City of Willits sewer project; clearwell/backwash ponds project; and, at least two to three years from now, the $1.4 million dredging project. Mr. Chapman stated that raising Lake Emily could easily cost about $7 million due to the major restructuring of the dam required. A brief discussion ensued about raising rates in 2005, an election year. Director Pohlson discussed the crowded ballot for November 2004, and stated she felt there was a need for a special election for the fire tax measure earlier than November. President Orth stated that the November election would attract the most voters, and the most community-minded voters as well.
Mr. Chapman stated he felt the District's overall cash flow was healthy and recommended that the rates and fees not be raised for this year. He clarified that Ron Runberg, PGA, did not request any rate changes for the golf operations. Director Skezas moved to approve the General Manager's recommendation for not increasing the rates and fees for Fiscal Year 2004-2005. President Orth seconded the motion.
Roll call vote was as follows:
AYES: Directors: Ziady, Horrick, Skezas, Pohlson, Orth
NOES: Directors: None
ABSENT: Directors: None
Mr. Jack complimented Mr. Chapman on the financial progress of the District and stated that the results are improving every year.
K. PUBLIC COMMENTS
Mr. Jack stated he was encouraged by President Orth's comment about using the standby fees; he had been concerned that they would not be available and the General Fund would be drained.
Director Skezas moved to adjourn and President Orth declared the meeting of April 17, 2004 closed at 11:53 a.m.
MICHAEL V. CHAPMAN
Secretary to the Board of Directors
CHARLES A. ORTH,