MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS

OF THE

ARABIAN ACRES METROPOLITAN DISTRICT

Held: Friday, November 14, 2003 at 7:00 p.m. at 400 W. Midland Avenue, Suite 250, Woodland Park, Colorado.

Attendance	The regular meeting of the Board of Directors of the Arabian Acres Metropolitan District was called and held in accordance with the statutes of the State of Colorado. The following Directors were in attendance: Kenneth R. Rupp Dennis Yoder Alan L. Jordan Gene L. Billings David J. Biondo Also present were Joan Fritsche, Seter & Vander Wall, P.C.; Dave Stanford and Beth Elzas, AquaTest, Inc.; Paul Goedecke, L. Paul Goedecke, P.C.; and Mary Garmoe.
Call to Order	Mr. Rupp noted that a quorum was present and called the regular meeting of the Board of Directors of the Arabian Acres Metropolitan District to order.
Disclosure Matters	Ms. Fritsche advised the Board that written disclosures had been filed with the Secretary of State’s Office with regard to any potential conflicts of interest and that pursuant to Colorado law, certain disclosures may be required prior to taking official action at the meeting. The Board reviewed the agenda for the meeting, following which each Board member disclosed their conflicts of interest, stating the fact and summary nature of any matters, as required under Colorado law, to permit official action to be taken at the meeting.
Public Comment	District resident Mary Garmoe had no public comment but was present to observe the meeting and left during the budget discussion.
Approval of Minutes	The minutes of the regular meeting of the Board of Directors held on October 10, 2003 were read, and upon motion duly made, seconded and unanimously carried, were approved.
Financial Matters Past Due Accounts	Ms. Elzas reviewed the financial reports through November 30, 2003 and payment of claims through November 30, 2003, which were accepted by the Board. Ms. Elzas reported that customers Novarowski and Nuessle have not paid the minimum monthly water charge imposed on inactive tap customers for over 90 days. Ms. Nuessle has requested the Board consider lowering or eliminating the monthly fee for inactive taps. Upon discussion, the Board directed AquaTest to send the property owners certified letters outlining the value of the taps, the necessity for imposing the minimum monthly fee on all taps, the consequences of not paying the monthly fee in accordance with District Rules and Regulations and informing Ms. Nuessle that the Board has declined to amend the District’s fee structure for inactive taps. Ms. Elzas also reported on the status of 1460 Gerka Lane. The property is currently owned by HUD. Ms. Elzas has not been able to locate a mailing address for HUD where monthly bills should be sent.
2004 Budget	Mr. Goedecke opened the discussion by reviewing the District’s income statement and enterprise status of the District’s water system. Mr. Goedecke recommended using a cash to budget analysis for the monthly financial reports to assist the Board in tracking the District’s financial position on a month to month basis. Copies of the draft 2004 budget were distributed by Ms. Elzas. Mr. Goedecke reviewed the draft budget with the Board and suggested changes to the format and content of the budget. Mr. Goedecke also noted that the District needs to amend its 2003 budget due to unappropriated expenditures. Mr. Goedecke suggested using the “living spreadsheet” format prepared by Directors Rupp and Jordan for the District’s income statement. Mr. Goedecke will consult with Ms. Elzas and prepare an amended 2003 budget and 2004 budget prior to the budget hearings next month. The Board indicated it intended to clean up the “living spreadsheet” numbers at the continued meeting so that Mr. Goedecke would be working with accurate figures. Mr. Goedecke left the meeting after the budget discussion.
Manager’s Report	Water Tank Level Control System. Mr. Stanford distributed a Water Systems Operator/Manager’s report for the Board to review. The first item concerned replacement of the level control system for the water tank. Mr. Stanford recommended installing a submersible pressure transducer in the tank and two Red Lion readouts to use with existing equipment to regulate the level of water in the tank. The current system needs to be replaced because of lightening damage. A discussion followed concerning ice build up in the tank, damage to the interior of the tank and the best way to control ice build up during the winter months. Director Rupp expressed concerns over letting the water level drop too low. Upon motion duly made, seconded and unanimously carried, the Board authorized AquaTest to replace the water tank level control system. Extending Service to Tioga Trail. Mr. Stanford estimated the costs of installing a water main off of the Trout Haven Resort main to Lot 7 on Tioga Trail are approximately $12,000 for parts and labor, plus $45 an hour for inspections. The excavation costs were estimated at $8,970.
Attorney’s Report	Acquisition of Trout Haven Line. Ms. Fritsche presented a draft agreement for the acquisition of the 4” water main owned and maintained by the Resort for the Board’s review and comment. A discussion followed concerning the number of potential taps that could be serviced from the main and the use of tap fee revenue to pay for the purchase of the main. Further discussion was tabled until Mr. Kuyper provides the Board with main as build costs and the Board has finalized its 2004 budget. Connector Reimbursement Agreements. Ms. Fritsche referred to a memorandum outlining her findings concerning the District’s power to charge new customers the cost of extending service to their properties. The District’s formation documents are based on the Water Court Decree in Case No. 94CW281, which clearly places the burden on the District for extending service and not on property owners. Legal Description. Director Rupp distributed a revised legal description of the District prepared by Alessi and Associates and explained how and where the discrepancy arose. McGhee Response. Ms. Fritsche reported that her office has been in contact with an attorney representing the owners of Lot 7 on Tioga Trail. Their attorney had a few questions concerning the District’s tap application and the District’s Rules and Regulations. Ms. Fritsche handed out a written response to the McGhees and requested clarification from AquaTest on the application requirements. The Board directed Seter & Vander Wall, P.C. to send the response as drafted. Ms. Fritsche also reported that the McGhees were not prepared to submit a tap application at this time but expected to do so in the next month or two.
Other Business	Rupp Family Partnership Donations. Director Rupp, on behalf of the Rupp Family Partnership, LLLP, presented the District with a check in the amount of $25,000 as a donation to the District. Director Rupp stated his parents were interested in seeing the District get off to a good start and that the funds should be used at the discretion of the Board. Director Rupp also presented the District with a Special Warranty Deed conveying the “Recreational Area” Block 6, and Lot 4-B, Block 7, both in Arabian Acres Filing # 2, from Arabian Acres, LLC to the District. Upon motion duly made, seconded and unanimously approved, the Board was thrilled to accept the donations from the Rupp Family. To avoid any conflict of interest, Director Rupp abstained from voting on the matter as did Director Yoder, as the current President of the Arabian Acres Property Owners Association (“AAPOA”). The District anticipates continuing the practice of working with the AAPOA for the provision of recreational services and maintenance for these parcels, as outlined in the Agreement by and between Arabian Acres, LLC, and the AAPOA, assigned to the District upon conveyance of the parcels. The Agreement is attached as an exhibit to the recorded Easement Deed granting an easement from Arabian Acres, LLC to the AAPOA for the purpose of providing park, recreational, maintenance and repair services and facilities on Block 6, and Lot 4-B, Block 7, in Arabian Acres Filing # 2. The Board directed Ms. Fritsche to review the District’s insurance coverage concerning ownership of these parcels. Under the Agreement described above, the AAPOA is responsible for insuring its easement interests in these parcels. Director Yoder will confirm that the AAPOA has general liability coverage for these parcels and will add the District as an additional insured on its policy. Surplus Water Sales Update. Director Rupp submitted a report to the Board outlining his research concerning the potential sale of the District’s surplus water. The temporarily sale of surplus water will more fully utilize the District’s water rights and will bring in additional revenue to the District. Director Rupp was unable to obtain administrative approval of the plan through the Water Commissioner or the Division Engineer. He subsequently contacted David Lindholm, the water lawyer who represented the Arabian Acres Water Company in Water Court Case No. 94CW281 and assisted the Water Company with the sale of its water rights to the District earlier this year. Mr. Lindholm outlined his suggested course of action in a letter to the Board of Directors which was included in the packet. Mr. Lindholm recommended petitioning the Water Court to amend the Decree in Case No. 94CW281 to provide for the temporary sale of surplus water. He enclosed a draft petition and proposed order with his letter. Director Rupp also presented a letter addressed to the District from the Arabian Acres Water Company, LLC pledging to reimburse the District for any and all legal expenses incurred in amending the Decree to allow for the sale of surplus water for a period of twelve months (November 11, 2004) and up to the amount of $5,000. Upon discussion, motion duly made, seconded and unanimously approved, the Board authorized retaining Mr. Lindholm for the purpose of amending the Decree in Water Court Case No. 94CW281. Director Rupp abstained from voting on the matter.
Continued Meeting	The Board determined to continue the meeting to Saturday, November 15, 2003 at 10:00 a.m., Teller County Board of County Commissioners’ Hearing Room, 112 North A Street, Cripple Creek.

Secretary for the Meeting

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