MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS

OF THE

ARABIAN ACRES METROPOLITAN DISTRICT

Held: Friday, November 17, 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, Joan Fritsche, Attorney for the District, Mr. & Mrs. Charles Hallam, constituents of the District 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 7:00pm.
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. No conflicts of interest were noted.
Public Comment	No public comment was received. Mr. & Mrs. Charles Hallam attended the meeting to observe the proceedings.
Approval of Minutes	The minutes of the regular meeting of the Board of Directors held October 20, 2006 were read. The wording of the motion made in the October minutes under the District Representative Report on page 5 were changed to read, “was seconded and carried by majority.” Director Walker did not agree to the letter being mailed out to everyone that was not a customer. Also on page 2, it was stated the Audit Report was due to the State by September 30. It was changed to read that; “the report was originally due to the State on July 31. An extension was given and therefore due to the State on September 30. Another change on page 6 was made regarding an increase in the draft budget to include advice on grants. A motion was made to approve the corrections written into the October 20 minutes. Upon motion duly made, seconded and unanimously carried, the minutes were approved. Secretary Zuniga signed a copy of the minutes for the District’s formal records.
Financial Matters	Mr. Malcom reviewed the monthly financial statements and expenses with the Board and passed out a packet to all Board members. Water pumped this period is down for this time of year. The individual month is not accurate due to the billing being bi-monthly. Discussion ensued regarding the Income Budget Statement. The key things to look for are on the right hand side, percentage of budgeted item. The electrical and gas bill are always over the budgeted amount. Mr. Malcom was uncertain whether the budget amount of $4,000 was low or if the 06 bills were higher than in previous years. Telephone is high because of the combined web site. Discussion ensued regarding the water loss and whether it was acceptable at this point. It’s over 30% when the two months are combined. Unsure if it’s a miscalculation of numbers or an actual loss. According to ECO Resources, 559,000 gallons of water was pumped and 800,000 gallons of water was sold this month. The numbers are skewed due to the bimonthly billing. With October and November accounted for, 1,184,400 gallons were pumped and 800,000 gallons were sold. Director Yoder asked whether the 30% water loss was an acceptable rate? Mr. Malcom thinks some of the meters are under reporting. Meters normally do not run fast; they usually run slow. At the Cascade District, twenty meters were replaced out of 60. The majority of the water bills were showing 5-10 percent more water usage. A fairly large amount of water was being unaccounted for due to slow running meters, which may be the case in the Arabian Acres Metropolitan District. All meters need to be looked again to determine if they are running right. Discussion ensued regarding the past due list. It’s misleading and customers have until the 21^st of the month to pay their water bill. A lot of payments are received on the last day. Discussion ensued regarding the Income Budget Statement. Normally something is carried over from December to January. Last year nothing was carried over. The low amount of tap fees is a concern this year. Water sales are also down. Discussion ensued regarding two bills received from ECO Resources. The bills were received after last month’s meeting and items are not separated out. Chemical purchases and repairs may be included under water items, however it was hard to decipher. The bill from Liquid Engineering has not come in. Discussion ensued regarding water meter ownership. Four ownership transference letters were received this past month and the list of meter ownership is being updated as letters are received. This will be brought up again next April. A motion to approve the financials and disbursements was made. Upon motion duly made, seconded and unanimously carried, the financials and disbursements were approved.
Operator’s Report	The Operator’s Report to the Board was sent by e-mail and ECO Resources was not represented at this month’s meeting. An addendum to the report was received this morning. Discussion ensued regarding supplies ECO Resources has requested. It was suggested to establish a cash fund or other type of an account with Mr. Malcom for ECO Resources. There was further discussion that if ECO Resources goes through their suppliers, the price will go up. It was assumed that ECO Resources had a $500 authorization. Director Walker will contact ECO Resources to see whether they expect the Board to buy their supplies or have the supplier deliver them to the control building. ECO Resources is a professional organization and is bonded and licensed. Discussion ensued regarding checks made out to ECO Resources. A question was asked whether all charges were legitimate. Some of the line items have different codes. A question was asked whether tests were part of the contract. If tests were taken, results should be given to Board. Another question was asked how ECO Resources used their base line hours. Mr. Rupp needed more information regarding charges. It was recommended the base price be paid with a request for explanation from ECO Resources regarding the other charges. There are no codes listed in the contract and it is difficult to determine what is what. No taps or maintenance repairs have been completed by ECO Resources as yet. A letter will be sent with payment saying the Board needs supporting documentation and charge explanation. During the past month, Director Walker made two phone calls to Roger Migchelbrink; however, he was either out of the office or at a conference. No calls were made to his superior. There are items in the contract that haven’t been done. The Board is having communication problems with ECO Resources. Discussion ensued regarding a letter that was sent to ECO Resources in September. They didn’t respond to the letter. Ms. Fritsche stated that she didn’t think the contract was very clear regarding what Board members to call. Apparently, Mr. Migchelbrink had three priority lists and wasn’t sure who the president was or who to call. There are contractor commitments that are not being accomplished and the same questions are asked every month. ECO Resources need to justify their expenses. It was suggested that the attorney write a letter to ECO Resources asking them to attend the next meeting with a copy to their home office. ECO Resources should only be talking to the District Representative, Director Biondo. Ms. Fritsche commented that ECO Resources has a very good reputation in the industry and in several districts. This District is different in that there is no full time operations manager. The Board never received a scheduled maintenance plan. It was suggested that the checks be made out for baseline amount only on one bill and the baseline amount and two other items on the other bill. More information is needed. Specific bill entries will be referred to in the letter. Mr. Rupp suggested that a separate maintenance person be hired and that the Board pay for his insurance. A motion was made to pay ECO Resources their baseline pay at the greater rate for September and October and pay two additional line items on one bill. A lower rate was printed on the bill then what was in the contract. Chlorine sample pillows and the emergency break at 3124 County Road # 42 will be paid for. Payment on other line items will be deferred pending documentation. Director Biondo will write the letter and send it to the Board members for comments before it goes out. Upon motion duly made, seconded and unanimously carried, the motion was approved.
Attorney’s Report	None Given.
Consultant’s Report	Mr. Rupp confirmed no additional movement on the Camp Iana/CSU Easement or the Trout Haven Resort Vacated Roadway Easement. Little has been done on the water court decree. Mr. Rupp will talk to Jim Felt about his reasoning regarding amending the first water decree. Mr. Rupp passed out letter from Mr. Lindholm. Mr. Rupp suggested the Board do a temporary Water Supply Plan and reported that Mr. Lindholm is 95% certain that it will go through. The cost is approximately $1300. The State allows you to submit a temporary plan. A risk is involved if someone opposes it and Highland lakes still has an opportunity to do that. If the District drops it, Highland Lakes can come back in and get attorney fees for it. Mr. Rupp suggested the Board talk to Mr. & Mrs. Swan and possibly present it to the Highland Lakes Water Board.
2007 Public Budget Hearing	Director Walker opened the Public Hearing at 9:40 p.m. for the 2007 Budget. Mr. Malcom forwarded an updated copy of the Budget to all the Board members. There was one change from two weeks ago. Under non-operating revenues, the final numbers were received and there was a change under the projected 2006. The actual proposed Budget is $45,000. Real estate taxes will go up and will be about a $4,000 increase. The operating income is $10,000 less than budgeted. The operating expenses are close on what was projected. The utilities area is up more this year. Discussion ensued regarding taps. There was an estimation of 6 taps last year and the District received 4. Over-all building is declining and taps are not a dependable source of income. Taps should be under a separate column in the Budget and not under operating income. The money from taps goes toward the Bond repayment. The actual operation is making money. Projected to make $30,000 in 06 and maybe a little more in 07. The income from operations should pay for the operations. The taxes should be paying off the capital on bonds. There is an assumption that $6,000 should be spent on trying to get grants for capital improvements. Director Biondo mentioned people on the western side of the Metro District might be interested in obtaining taps. There is an area in Trout Haven that is basically without water. Mr. Malcom mentioned the District is doing a good job on the operation side. The bond expansion interest is $90,000 and the District made $30,000. Sales are taps and water is supply. Other comments on the 2007 Budget: Contract operator is at $17,966 base amount with contractual add-on. Other expenses included repair and maintenance. Both items may be low. It was suggested that repairs and maintenance be raised to $8,000. Cannot plan for catastrophic failures. Some of the tap fees that should have been in 05 were in 06. It was suggested that the Board go with 3 or 4 tap fees in the Budget. Director Biondo proposed putting in 4 taps and raising maintenance to $12,000. There were actually two taps in 06. There was a recommendation for grant money and travel reimbursement for one person going to conferences. Director Yoder recommended accepting the Budget as proposed with modifications of $24,000 to $32,000 on tap fees; $1,000 for engineer, $12,000 for repairs and maintenance; direct reimbursements at $500 and $1200 for miscellaneous and keep everything else the same. There are no election expenses in 07. A motion was made to approve the 2007 Budget. The Budget hearing was closed at 10:05 p.m. Further discussion ensued regarding the $10 water rate increase last year. Director Walker wanted to know if the water rate increase was in the Budget. There is a $40 amount fixed charge now and Director Biondo doesn’t think it’s a good idea to raise the rate. There was a $10 increase last year, however, it was never implemented. Director Yoder suggested it be addressed as needed. Ms. Fritsche suggested approving the Budget with the increased tap fees. Approve the resolution by fund, general fund, debt service fund and capital fund and the rest as mentioned. There was a motion to approve the 2007 Budget as amended. There being no further discussion the motion was seconded and carried unanimously and was approved. Ms. Fritsche passed the Budget around for the Board members’ signature.
District Representative Report	Discussion ensued regarding the restructure of bond payments. There is a debt service comparison on page 2 of the packet. The objective is how to save money for the District. The bonds can be restructured again in five years if necessary. Interest rates have dropped from 7.65 % to 6.5% for bonds. The District would be saving a lot of money over a longer period of time. The District had several bonds at different rates and some of them will go away in 2027. The District is on a 5-year term and will be going to a 30 year fixed rate. All the bonds are paid off in 2020. The cost is $59,000 this year to restructure and would be the same in another 5 years. The interest would be $300,000. The District is not generating enough revenue to make a payment of this size. It was suggested all information on the bond restructuring be sent to Dawn Schilling, District Accountant, to find out what really works for the District. There is a 60-day window of opportunity at the rate of 5.2%. The District will ask for a quick response and hopes to have some answers by the next meeting.
Other Old Business	Discussion ensued regarding the replacement of the concrete pad on Well # 8. It will have to be done in the Spring. Director Walker discussed the list of projects for grant proposals. The list was given to the Engineer and Director Walker was hoping to have some information by this meeting. Discussion ensued regarding people that do not have taps. A list was put together including clients that have taps but have other properties and may want additional taps. Director Zuniga believes the list is complete and has given it to Director Biondo. Information will be sent out by questionnaire to find out if anyone is interested in getting a tap in the next five years. Director Walker told the Board Members that he has filed an affidavit and is a candidate for the Mayor of Thornton in November’s election. He may get appointed earlier because the current Mayor has quit. If this happens, he will resign from the Board in January 2007. Mr. Malcom told the Board that he has two people that will be taking over some of the duties of the District that he now performs and will know sometime in 07 after they are trained when he will resign.
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 11:10 PM. Next Meeting: December 15, 2006
	_________________________________________ Secretary for the Meeting