MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS

OF THE

ARABIAN ACRES METROPOLITAN DISTRICT

Held: Friday, February 13, 2004 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, AquaTest, Inc. and Sue Thomas, District resident.
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 asked the Board to confirm that no changes have occurred to any of the Directors’ interests that warrant amending the written disclosures on file with the Secretary of State’s Office with regard to any potential conflicts of interest. 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	Ms. Thomas stated she was present to observe a District Board meeting.
Approval of Minutes	The minutes of the regular meeting of the Board of Directors held January 9, 2004 were read, and upon motion duly made, seconded and unanimously carried, were approved as revised.
Financial Matters	Mr. Stanford reviewed the financial reports through January 31, 2004 and cash disbursements journal through February 29, 2004, which were accepted by the Board. The Board requested that the Check Register be prepared and reviewed for consistency in line items and that AquaTest’s monthly fees be separated from any hourly charges incurred. A discussion followed concerning the “Budget to Actual” report prepared by Ms. Elzas. The year to date budget column should reflect a percentage of the District’s annual budget based upon the month of the year. The Board also requested a column showing this percentage.
Agreement for Management Services	Director Rupp requested Ms. Fritsche review the draft Agreement for Management Services with the Board, followed by comments from Mr. Stanford and each of the Board members. The Board directed Ms. Fritsche to revise the Agreement, as discussed, and distribute another draft prior to the next Board meeting.
Policy Matters	The Board determined to appoint the Board’s President as the contact person for all of the District’s consultants. Any work to be performed by a consultant shall be requested by the Board, at a Board meeting, or through the Board’s President. The Board also determined to conduct an annual survey of its customers to address customer service and District operations in general. The Board expressed intent to bid out the management/administration services and water system operator services on a regular basis as a policy matter, due to the size of the contract and the Board members fiduciary duty to the District. The Board agreed to review and comment on the Professional Service Policy (District bylaws) submitted by AquaTest for Board consideration and approval.
Manager’s Report	210 Tioga Trail. Mr. Stanford included in his Operator Report the excavator’s bid plus materials and a fire hydrant for the Tioga Trail line extension from the Trout Haven main, with construction to take place in the spring. A discussion followed concerning where the line should end – at the east end of Lot 7 or at the intersection of Trout Haven Road and Tioga Trail. The Board determined to extend the line only as far as necessary to reach Lot 7 and requested AquaTest to revise the estimate accordingly.
Attorney’s Report	Tioga Trail Main Easement Deed. Ms. Fritsche requested the Board accept the Tioga Trail line easement deed executed by Mr. Kuyper. Upon motion, second and unanimous approval, the Board accepted the Tioga Trail line easement from P-K Enterprises. Water Court Decree. Ms. Fritsche reported that the Petition to Amend the District’s Water Court Decree has been filed with the Water Court by David Lindholm.
Other Business	Newsletter. Director Billings distributed a copy of the second edition of the District’s newsletter. The Board directed Director Billings to proceed with printing and mailing the newsletter and approved the associated expenses. “Living Spreadsheet” Director Rupp presented an updated version of the “Living Spreadsheet” for the Board’s review. Director Rupp reported that the Spreadsheet provides for repayment in 2004 of the Rupp Family reimbursement and payment of outstanding legal fees from 2003. Director Rupp stated that with the projected seven taps per year, there should be ample funds to address depreciation and replacement of the water system’s infrastructure. Director Rupp also stated he would transmit the spreadsheet in electronic format to the Board and District Manager prior to the next Board meeting to assist the Board in drafting and adopting a Capital Improvements Plan (“CIP”). District Capital Improvements Plan/Well Development. Director Rupp asked the Directors to manipulate the Living Spreadsheet in order to get a better understanding of the District’s finances prior to adopting a CIP in the coming months. Prior to the March meeting, Director Rupp stated he will furnish each of the Directors and AquaTest with an itemized list of various capital improvements, based upon prior actual costs and JDS-Hydro’s cost estimates for use in preliminary CIP discussions. Director Rupp and Mr. Stanford will review the documents prepared by John McGinn at the time of the District’s formation and use their knowledge of the water system to prepare an initial draft CIP for the Board to work with. On a related note, Director Rupp stressed the importance of continuing to develop and install new wells in order to stay ahead of system demands due to the lengthy time frame of bringing a well on line. A discussion followed concerning the likelihood of having to re-drill Well No. 3 and Well No. 5, once water quality testing takes place in 2004.
Adjournment	There being no further business to come before the Board, and upon motion duly made, seconded and unanimously carried, the meeting was adjourned.

Secretary for the Meeting

AAMD\MINS

JMF0705

0650.0006