MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS

OF THE

ARABIAN ACRES METROPOLITAN DISTRICT

Held: Friday, October 20, 2006 at 7:00 p.m. at 4455 Fountain Avenue, Cascade, CO.

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: Radford K. Walker Dennis Yoder David J. Biondo Sandy D. Zuniga Also present: Ken Rupp, private District Consultant, Terry Malcom, District Administrator, Mason Russell West, Auditor, and Jenny James, the District’s recorder of minutes.
Call to Order	Director Walker noted that a quorum was present and called the regular meeting of the Board of Directors of the Arabian Acres Metropolitan District to order at 7:05pm.
Disclosure Matters	Director Walker 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	No public comment was received.
Approval of Minutes	The minutes of the regular meeting of the Board of Directors held September 15, 2006 were read, and upon motion duly made, seconded and unanimously carried, were approved. Secretary Zuniga signed a copy of the minutes for the District’s formal records.
Review of Audit Report Financial Matters	Mr. Mason Russell West discussed the 2005 Audit with the Board and stated the District is in reasonable shape. New requirements for the audit should include management discussion on operations. A comparison of last year’s net assets with this year’s assets shows a slight increase in debt. Mr. West ran a cash flow projection with three or four different scenarios and said that by 2012 the District may run out of money. A concern that needs to be carefully watched and a plan needs to be devised to handle the situation. A copy of the audit will be e-mailed to Mr. Rupp. Discussion ensued regarding receiving the audit sooner. If the books are closed by January 15 or 20, the Board should be able to receive the report by the end of March. The report was due to the State by the end of July and an extension was received and therefore due on September 30. There was some discussion regarding the available taps left in Arabian Acres and Trout Haven and also generating extra revenue with outside water sales. A motion was made to approve the audit. The motion was seconded, unanimously carried and was approved. Mr. Malcom reviewed the Monthly Financial Statements and expenses with the Board and passed out a packet to all the Directors. Discussion ensued regarding water usage. The odd month always has very few receipts. The past due accounts receivables are declining every month. Discussion ensued regarding certifications of resolutions. For a resolution to go to the County, it has to go through a notice procedure and be sent certified mail. Fallwell is in foreclosure. The tenant ran up the bill and left. Casodos is in bankruptcy. The trustee was served notice but refused to pay. There are three resolutions that will be certified. Discussion ensued regarding water meter ownership. The District is five years old and was formed in 2002. At that time the first order of business was to do the meter changeover. It was suggested that the original letter in the file regarding ownership of water meters be updated. A list, divided into three sections, shows customers that own their meters, customers that have already turned their meters over to the District and customers that have forgotten if they turned their meters over or not and those that are unknown. Some customers are new and are listed because nothing is in the file. The letter would be sent to all customers that do not already have a letter on file. Discussion ensued regarding grants. Mr. Malcom tasked his son to look up grants and loans that may be of interest to the District. There is plenty of money for those that qualify. Mr. Malcom suggested the District come up with a list of projects that they would like to have done or do; new pumps, new tanks, capital improvements, etc. It would be worth the District’s money to get a professional grant writer and apply for grants. Projects will be identified with specifics and given to Mr. McGinn, District Engineer. Director Walker will contact Mr. McGinn regarding six projects that were mentioned: 1) Water Tower 2) Redrilling of wells #3 and #5 3) Repair of reservoirs 4) Replacement of Well House #B 5) Fire Hydrant 6) Meter Pits A motion to approve financials and disbursements was made. The motion was seconded, unanimously carried and was approved.
Operator’s Report	Mr. Volk, ECO Resources, Inc. did submit a written Operator’s Report to the Board; however, he is not in attendance. Discussion ensued regarding maintenance items. Mr. Rupp has not contacted Mike Milton as yet and will do so after conferring with Director Biondo. Mr. Rupp will supervise Mike Milton and start with the roof on Control Building B. A question was asked if it was too lake to do cement work. The State was told that the District would have the cement pads completed in July. It’s not too late for cement work and this will be the first maintenance project started. These are jobs that can be given to anyone and not necessarily ECO Resources. Discussion ensued regarding tank maintenance and Liquid Engineering. They came in the middle of the week without communicating with anyone. They were supposed to come on the weekend. Director Biondo received a call from John Volk, ECO Resources, that Liquid Engineering couldn’t get their truck up the hill because of the snow and wanted to bring another truck out which would cost more money. It was later learned; Liquid Engineering did get their truck up to the tank and inspected it but didn’t do any repairs. Director Biondo called Roger Michelbrink, ECO Resources, regarding the lack of communication. ECO Resources is not coordinating with the District’s consultant, Mr. Rupp. Liquid Engineering is from Billings, Montana and wants to do the repairs on the tank next summer when the water is warmer. It was noted as odd that Liquid Engineering came all this way and didn’t do the repairs. Discussion ensued regarding the status of water testing. The meter at 3501 County Road was replaced because of a leak. A question was asked if the Morgan’s meter had been replaced. Nothing was mentioned in the Operators report. Director Walker would like a report on how ECO Resources spent their hours. Discussion ensued regarding ECO Resources. The Board was expecting a report on water tests taken, however, nothing was in the report. ECO Resources has been on notice since June. Some of the items in the contract are mandatory. Mr. Malcom sent ECO Resources a letter and has not had a response as yet. The Board wanted a time-line for responses to repairs. Director Walker will call Mr. Michelbrink at ECO Resources to discuss the situation and will contact a superior, if necessary, in an attempt to resolve the issues.
Attorney’s Report	None Given.
District Representative Report Consultant’s Report	Discussion ensued regarding the restructuring of the District’s Bond payments. Director Biondo will consult with the District’s financial advisors and have more information by the next meeting. Discussion ensued regarding the 2007 Budget. The Budget will be open to the public in November and there isn’t enough time for a Budget Committee. The Budget will be talked about later in this meeting. There is over $55,000 in Colorado Trust account. Money is transferred out of the checking account to pay the reserve fund. According to the audit, it was not paid back. Initial bond was $3,000 or $4,000 over of what was borrowed. There is $135,000 currently in the Reserve Fund. Mr. Rupp will check on it. Director Biondo stated that the amount in the Reserve Fund varied monthly. The property tax is due in February and June and most people pay these taxes at the end of the year. Director Biondo will call Teller County and check on situation. Discussion ensued regarding sending a flyer out to everyone in the District to get more tap revenue. If sent to customers not on the main line, it would cost around $80 to send the flyer out. Should have addresses from last flyer sent. It was suggested for the Board to come up with something creative, maybe in a form letter and point out the potential benefits as to why someone may like to do a tap. The letter may be of little value if the District doesn’t offer some incentives. Director Zuniga volunteered to go through all addresses and subtract out who is not a customer. Mr. Malcom will give Director Zuniga a list of the water customers. A motion was made to mail a letter out to everyone who is not a customer along the main. The motion was seconded, and carried by a majority. Mr. Rupp confirmed no additional movement on the Camp Iana/CSU Easement or the Trout Haven Resort Vacated Roadway Easement. Mr. Rupp made a follow-up call to Mr. Felt regarding the Augmentation and Exchange Water Court Decree. Mr. Rupp also talked to Mr. Lindholm, the District’s water attorney. In Mr. Felt’s most recent reply regarding the District’s Augmentation and Exchange Decree, Mr. Felt wants the District to open up the first decree for the District obtained in 1994 and include Highland Lakes’ complete list of issues in the Decree. Discussion ensued regarding Highland Lakes wanting to buy water from Arabian Acres. Mr. Rupp will contact the Swans. A temporary supply plan is an alternative plan for the District to contemplate in order to be allowed to sell excess water to entities outside the District, however there are a lot of legalities. Highland Lakes will still have a chance to express their response in court to the Temporary Supply Plan, but normally would not have a negative effect with the court. Highland Lakes’ water rights are senior to Arabian Acres’ water rights. The Board will have to resolve this. The sales of excess water to sources outside the District should be a good way to bring in more revenue for a limited time.
Other Old Business	Discussion ensued regarding old business under Item 11 on the agenda. Inventory of the District’s physical assets will be kept open. The Board is waiting for more information on the water vending machine. Discussion ensued regarding the 2007 Budget. Mr. Malcom put together a draft format for the Budget and divided it into two sections, operational and non-operational. Actual numbers were put in for January – September of 2006. Director Biondo will obtain the property taxes information from the County. A copy was given to all Board members. The right hand column still needs to be determined. Water operations increased; however, it is still less than the Budget was for 06. Proposed operational numbers are less then it was for 06. Delinquency list was cut down. There are three new houses on line. The expenses were extrapolated. The average bill from ECO Resources is $1475, which is the base price for operator contract and repairs and maintenance under overage have been estimated. The consensus of the Board is to cut down on legal fees. There was a question regarding the amount for water operations contractor, as not being realistic. It was suggested it be adjusted 1 ½ percent because their contract is not renewed until June 07. The tax revenues have not been inserted yet. Also, there are two big items: projected tap fees and bond interest payment. A rough estimate needs to be agreed on. The Budget has to be approved at the next Board meeting. Mr. Malcom will e-mail the Budget to all Board members for any other input as soon as Director Biondo receives the tax information. The newsletter is included under Office Supplies. It was suggested that legal fees be increased to $8,000 in anticipation of possible legal fees to support a grant writer and that $5000 be included in the Budget for the writer. A minimum of $1,000 was put in the Budget to re-pay the Rupp Family Partnership, RLLLP. Discussion ensued regarding insurance. A partial list of properties were mentioned: 2 lakes, 5 miles of service lines, 7 miles of mains, 4 acre-feet of water, and a list of buildings. Director Walker suggested that since it was getting late, any other input on the Budget could be done by e-mail.
Adjournment	There being no further business to come before the Board, and upon motion duly made, seconded and unanimously carried, the meeting was adjourned at 10:50 PM. Next Meeting: November 17, 2006
	_________________________________________ Secretary for the Meeting