MINUTES OF THE REGULAR MEETING OF THE BOARD OF DIRECTORS

OF THE

ARABIAN ACRES METROPOLITAN DISTRICT

Held: Friday, December 15, 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, Mr. Charles Hallam, resident 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 7:10 pm.
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 conflict of interest was noted.
Public Comment	No public comment was received. Mr. Charles Hallam, a District resident, attended the meeting to observe the proceedings.
Approval of Minutes	The minutes of the regular meeting of the Board of Directors held November 17, 2006 were read. Changes to the minutes will be given to Mr. Malcom for correction before reprinting. Minor changes were made on pages 4, 5, 6, and 7. There was a motion to accept the amended minutes. Upon motion duly made, seconded and unanimously carried, the minutes were approved. Secretary Zuniga made changes on the minutes and will give them to Mr. Malcom for reprint before they are signed at the December meeting and put into the formal records.
District Representative Report	The District Representative Report was handed out to all Board members. Mr. Malcom was not at the meeting. Discussion ensued regarding the report. There was a difference in the amount of water production on the Report than what appeared on the Operator’s Report. The Operator’s Report may not have been adjusted. The Operator’s Report is crucial, in that there is no sense of water loss rates without the report. Discussion ensued regarding the required yearly Water Accounting Form, as submitted to Mountain Mutual Reservoir Company and to the Colorado, District 23, Water Commissioner. The form calculates the yearly augmentation water to be released as per District Decree. The consumptive use of all horses using water in the District is also a part of the accounting process. Discussion ensued regarding the Income Budget Statement. Water sales were up 8% this year over last year. The operating expenses were 79% of what was budgeted. The water chemicals were over the budget. Legal fees were under budget. Repairs/Maintenance was 25% over what was spent last year but still under what was budgeted. Discussion ensued regarding the past due list. There are seven accounts that the District has not received any payments on since July 06. The large amounts listed are for properties that are in foreclosure. The Bond payment was paid out of the District’s Colorado Trust account, leaving a balance of $21,232.38. The District also received $912 in County tax revenue. 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 District Board members reviewed the Operators Report. Discussion ensued regarding the letters written to ECO Resources. ECO Resources is six months into their contract and has ignored maintenance issues and is apparently unwilling to deal directly with anyone the Board has instructed ECO Resources to deal with, such as the District Representative or the District consultant. Discussion ensued regarding items on the maintenance list. Mr. Rupp did spot checks on the system and everything is running satisfactorily. Water production is down in Building A. Two wells were off-line. The malfunction has not been addressed in the Operators Report. Mr. Rupp left a note for ECO Resources to trouble shoot the wells, but has not heard from ECO. It is difficult to tell from the report whether maintenance items are being completed since there is no verification or certification of meters. Completed items should be taken off the list. Mr. Rupp handed out a map showing where he completed maintenance. Director Biondo suggested the Board think about whether they want to keep ECO Resources. ECO Resources is doing a disservice to the District. Mr. Migchelbrink ignores the District Board member’s directives and defends ECO Resources.
Attorney’s Report	None Given. No update on the demand letter to AquaTest, Inc. has been received.
Consultant’s Report	Mr. Rupp confirmed no additional movement on the Camp Iana/CSU Easement or the Trout Haven Resort Vacated Roadway Easement. Discussion ensued regarding the costs of the Augmentation and Exchange Water Court Decree. It is estimated it would cost an additional $1500 for a temporary supply plan. Mr. Rupp suggested the Board authorize Mr. Lindholm, the District’s water attorney, to move forward with the plan even though there may be liabilities for legal fees. The District owns the water rights. Mr. Rupp stated that Mr. Jim Felt is unacceptably requesting things in the original decree be changed. Water could be sold to Gold Rush and Sierra. Director Walker wanted to know what needed to be done in order to sell it to companies. If talking about companies, as opposed to individual sales, it would have to be on the honor system and the company would have to have their own meter to plug into their truck to fill with. Highland Lakes is also interested in buying water from the District. A motion was made to have Mr. Lindholm proceed with the paperwork for the Temporary Supply Plan. The motion was seconded. Discussion ensued regarding talking to the attorney first. An amended motion was made to first discuss the plan with the Attorney and to set limits on expenditures. An amended motion was made for Mr. Lindholm, the District’s water attorney, to proceed with the Temporary Supply Plan related to the Augmentation and Exchange Water Court Decree. This motion is precluded if Mr. Rupp and Director Yoder find hidden costs after talking to Mr. Lindholm. There was further discussion regarding adding administrative costs to the plan in anticipation of any hidden costs. It was thought the Temporary Supply Plan might have already been drafted. The amended motion on the floor is to add administrative costs not to exceed $2,000 into the plan. Upon motion duly made, seconded and unanimously carried, the motion was approved.
Old Business	Discussion ensued regarding ECO Resources receiving an Email from Mr. Rupp and Mr. Billings. Mr. Billings sent Mr. Volk, of ECO Resources, the report pertaining to the water meters. The District has already been through three Water Operators this past year. It was suggested another letter be sent to Mr. Migchelbrink, of ECO Resources. ECO Resources has been billing each month for additional items under the existing contract. They are only committing to a certain number of hours per the contract. The Board needs an explanation on how they spend their contractual 10 hours each week and justification on their over-run expenditures. Mr. Rupp, along with Director Biondo, will draft up a letter of line items requested by the District from ECO Resources in order for the Board to be able to authorize payment for various over-runs, as per Mr. Michelbrink’s Email of December 1, 2006 and send it to all Board members for review before sending it out. A copy of the letter will also be sent to ECO Resources headquarters in Texas, once approved. Discussion ensued regarding only hiring a water system operator for testing and hiring a separate maintenance person. Discussion ensued regarding the Bond restructuring. The original bonds had various interest rates. Director Biondo made a conference call to Allen Matlosz so that the Board could ask questions. The new bonds will be at a fixed rate for 30 years. The process would take about 60 days. Discussion ensued having the accountant look at the restructuring of the bonds first and then go forward with it. A plan will be put together and finalized within a 60-day window. A motion was made to refinance the bonds under the principals that Mr. Matlosz suggested. Discussion ensued regarding pricing the job with other bond writers. The difference in commission would be miniscule. The motion was duly made and seconded, to have the accountant look at the restructuring numbers and to move forward with the refinancing of the bonds. The Motion carried 3-0, Ms. Zuniga abstaining..
New Business	Discussion ensued regarding paying $2,500 to the Rupp Family Partnership, RLLLP per the restated Advance and Reimbursement agreement. A motion was made to approve the Fifth Amended and Restated Advance and Reimbursement Agreement for 2007 and to have Mr. Malcom write a check for $2500 for this year, 2006, to pay the Rupp Family Partnership. The motion was duly made, seconded and was unanimously approved. All appropriate parties duly signed the document.
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: January 19, 2007
	_________________________________________ Secretary for the Meeting