MINUTES OF MEETING

NORTH SPRINGS IMPROVEMENT DISTRICT

 

            The regular meeting of the Board of Supervisors of the North Springs Improvement District was held on Wednesday, August 9, 2006 at 5:05 p.m. at the District Office, 10300 N. W. 11th Manor, Coral Springs, Florida.

 

            Present and constituting a quorum were:

 

            Salvatore Mendolia                                           President

            Steve Mendelson                                              Secretary

 

            Also present were:

 

            John Petty                                                        Manager

            Hal Anderson                                                   Attorney

            Jane Early                                                         Engineer

            John McKune                                                   CH2M Hill

            Jean M. Rugg                                                   Severn Trent Services

            Janice Larned                                                   Severn Trent Services

            Denise Ganz                                                     Ruden McClosky

            Rhonda Mossing                                               Prager, Sealy & Co. (Via Telephone)

            Fernanda Haido                                                Prager, Sealy & Co. (Via Telephone)

            Jorge Gutierrez                                                 Synalovski, Gutierrez and Romanik

                                                                                               

FIRST ORDER OF BUSINESS                               Roll Call

            Mr. Mendolia called the meeting to order and Mr. Petty called the roll.

 

SECOND ORDER OF BUSINESS                          Approval of the Minutes of the July 13, 2006 Meeting

            Mr. Petty stated each Board member received a copy of the minutes of the July 13, 2006 meeting and requested any corrections, additions or deletions.

            There not being any,

 

On MOTION by Mr. Mendolia seconded by Mr. Mendelson with all in favor the minutes of the July 13, 2006 meeting were approved.

 

 

 

SIXTH ORDER OF BUSINESS                              Consideration of Agreements and Documents Related to Bonds for Heron Bay North Assessment Area

            Mr. Petty stated this process has been ongoing since the fall of last year.  Tonight is to review these documents after staff reviewed them in substantial form to go over them for an understanding and then to approve them subject to staff finalizing them.

            Mr. Anderson stated we have been going through this process, which may be familiar to you from last fall when the public hearings were held to put assessments on the different areas within NSID.  They anticipated this particular bond issue for Heron Bay North as well as the property of Golf and Country Club assessment areas.  Those two were done last year.  This one is ready to be done.  There will also be a Parkland Village bond issue down the road.

            This is a series of documents we have been through before from the other bond issues.  All the different professionals involved have worked to make sure everything is in order for you to review and approve today.  Based on these documents we will be in a position to have a bond closing in a month or two.  There are several things before you.  I will ask Ms. Early to talk about the Engineer’s Report.  I will talk about the brief agreements we have.  Ms. Ganz will summarize the details of the bonds.

 

            I.          Supplement to Master Engineer’s Report

            Ms. Early stated there is a supplement to the Master Engineer’s Report in the agenda.  The booklet we put out last fall had the assessment area for Heron Bay North.  We updated the same projects.  It goes over the road projects, the lake projects and what this bond will cover.  We had to update the cost because construction costs have increased substantially. 

            The area we are talking about is called Supplementary B on this map, but it is referred to Heron Bay North.  It includes all of the lakes in Heron Bay North all of the way down to the pool deck.  It includes County Line Road West.  It includes two lanes of Nob Hill Road and it includes some of the landscape boroughs along the major roadways.  It is all outlined in this supplementary report.  It also shows what the assessments will be per unit on page seven and how the bonds are going to be issued in a Series A and B Bond. 

            Mr. Anderson stated I believe we are a little over $13 Million in costs.

            Ms. Ganz stated costs have gone up significantly since the original Engineer’s Report was approved.  A portion of County Line Road has to be extended further than previously anticipated.  There were two things added, bringing the costs up from what they were.  The costs were $8 Million and they went up to $13 Million.  There are certain master water management improvements, which benefit all the land in the Heron Bay North area.  There are certain improvements which are parcel specific.  They only benefit approximately 425 of the planned 852 units because they are specific.  They are not master water management.  They will have a cap of $1,000.  All 852 units will pay for the master water management improvements in an amount not to exceed $400 per unit.  The 425 units benefited by the parcel specific will pay an additional assessment of $600 per unit.  They will pay $1,000 and the other units will pay $400.  It is my understanding WCI fully disclosed this to their homebuyers. 

            This also creates a cap on cash flow which can be generated from assessments.  We anticipate approximately $8.4 Million in bonds will be issued, which will net approximately $6.9 Million to put in the construction fund for this project.  WCI will be responsible for the balance of the costs not funded through the bond issue.  The total projects, both master and parcel specific, will be partially funded through bonds.  We made sure the assessments in the supplemental report do not exceed the maximums permitted by the assessment proceedings you conducted.  We also made sure the amount of bonds we want to issue are within the limits of the conditional bond delegation held last year where the court validated the bonds. 

            Mr. Petty asked is it safe to say the District’s position is virtually the same as it was before and is slightly updated for construction issues? 

            Ms. Ganz responded yes.

            Mr. Petty stated we do not have additional assessment levels.  We are not looking at higher levels.  We have gone through the hearing process.  The exposure is mostly to the developer.  I see we are trying to maximize our ability to pay for the development without increasing it.  Any interest in the reserve funds will go into this account as a fourth level to pay off any projects which may be outstanding.

            Ms. Ganz stated that is up to a certain point.  It goes to a different obligation account, which we will keep repaying. 

            Mr. Petty asked are we going to exceed our maximum under this issue?

            Ms. Ganz responded no.

            Mr. Petty stated we are not asking the Board to consider anything new.  This is within the guidelines you looked at last fall.  All of the exposure is to WCI for the increased construction cost of the project.

            Mr. Anderson stated we would like to get a motion on record to approve the supplement to the Engineer’s Report.

 

On MOTION by Mr. Mendelson seconded by Mr. Mendolia with all in favor the supplement to the Master Engineer’s Report was approved.

           

            A.        Completion Agreement

            Mr. Anderson stated this agreement commits WCI to pay for all costs, which we do not have funds for.  We expect to have approximately $6.9 Million in available funds.  This is based on the assessments in place from last year.  Because of the cost increase, this agreement will obligate WCI to pay additional costs.

 

            B.        True-Up Agreement

            Mr. Anderson stated this agreement allows for changes in the development plan.  After the bonds are issued they assume 852 units are being built.  If a few are not built, there are bond assessments on those units which need to be paid.  This obligates WCI to pay off any downward adjustments in the number of units built. 

 

            C.        Improvement Acquisition Agreement

            Mr. Anderson stated a great deal of construction will be done by contracts lead by the District, but WCI will be building certain components such as landscaping, sidewalks and a portion of the roadways.  We will buy the completed improvements from them.  This is like a purchase agreement on a house.  It obligates them to sell it to us at the engineer’s cost.

 

On MOTION by Mr. Mendolia seconded by Mr. Mendelson with all in favor the completion agreements, true-up agreement and the improvement acquisition agreements were approved.

 

            D.        Preliminary Limited Offering Memorandum

            E.         Third Supplemental Trust Indenture

            F.         Resolution 2006-9, Delegation Resolution

            G.        Continuing Disclosure Agreement

            H.        Contract of Purchase

            Ms. Ganz stated in August of 2005 you approved a resolution authorizing the issuance of bonds for the three assessment areas WCI was involved in; two Parkland Golf and Country Club assessment areas and Heron Bay North.  You also approved the form of the master indenture.  This indenture and the issuance of those bonds for the projects described in the indenture were validated by the circuit court.  We do not have to go back to the court and we have a master indenture in place.  The trustee under the indenture was Wachovia Bank, but they sold their Trust Department to US Bank.  They are the successor trustee. 

            We are asking you to authorize bonds for the Heron Bay North bond issue not to exceed $10 Million.  We believe it will be in the $8.4 Million range, but depending on how interest rates go we might be able to generate more proceeds.  We want to have the flexibility to create a not to exceed cap within the constraints of the assessments.  By adopting this resolution you will be giving us the authority to move forward and close the bond issue within the parameters set forth in this resolution as well as using the financing documents approved substantially in the form attached to this resolution. 

            The concept is to have two series of bonds; a long term series and a shorter term series to be paid by WCI or the landowner as residential units are sold to end users.  This portion of the assessment will not be passed along to the end users.  It will be the B Bond, which is a short term bond.  The A Bond will be the long term assessment, which will be within the parameters I mentioned when we were talking about the Engineer’s Report. 

            The resolution provides for the sale of bonds to Prager, Sealy & Company as the underwriter.  It attaches a form of a bond purchase agreement, which will be entered into between the District and Prager, Sealy & Company.  It authorizes the President or any member of the Board to sign the bond purchase agreement subject to these parameters after we market the bonds. 

            The parameters are in section five on page five of the Resolution.  The aggregate principal amount of the series will not exceed $10 Million.  The final maturity will be no later than May 1, 2027.  The per annum interest rate will not exceed seven percent per annum.  The long term A Series will be subject to optional redemption no later than May 1, 2016.  The redemption price will not be greater than 102 percent of the principal amount redeemed.  The short term series will not be subject to optional redemption.  The price, exclusive of original issue discount, at which the bonds will be sold to Prager, Sealy & Company will not be less than 98% of the amount for which the bonds are initially offered to the public.  These parameters are similar to the ones we had for Parkland Golf and Country Club.

            Mr. Petty stated there was a parameter on the last one you and I talked about, which was the audit being March 31.

            Ms. Ganz stated it is not a parameter.  It is a different issue.  It comes up in the context of the Continuing Disclosure Agreement.  There are terms of which the bonds will be sold to the underwriter.  There is a Preliminary Limited Offering Memorandum attached to this resolution.  By adopting this resolution you approve it substantially in this form.  This is the document the underwriter will use to market the bonds.  After they have been out in the market the interest rate will be set for the bonds, the actual par amount of the bonds as well as the final maturity and redemption provisions.  As long as they are within these parameters, we can consummate the sale of the bonds to Prager, Sealy & Company.  We hope to do this by the end of September.

            This provides for continuing disclosure in the secondary market once the bonds are issued.  This is a modern form. It provides up to 365 days for the District to complete its audit.  Separate and apart from this there are other bond issues outstanding in the District from the late 1990s which had more restrictive time periods.  We will be dealing with it apart from this bond issue to get appropriate amendments in place.

            Mr. Petty stated we are trying to get it to mirror state statute because it is how we operate.

            Ms. Ganz stated I will ask for you to consider the resolution for approval.  We have Ms. Mossing and Ms. Haido from Prager, Sealy & Company on the phone.  They can talk to you about the market.  They reviewed this and feel the parameters are appropriate.

            Ms. Haido stated the parameters are conservative.  The long term bonds, which have a 2027 maturity, will probably have an interest of 5 ⅜ percent.  The B Bonds, which have a maturity of 2016, will be approximately 5.25 percent.  Long term rates have not moved a great deal since last year.  The Parkland Golf and Country Club long term bonds we priced last year were 5.5 percent with a 26 maturity.  The B bonds, which had a 2015 maturity were 5 ⅛ percent.  We are close to where we were a year ago.  We are in a good interest rate environment.

            Ms. Ganz stated we are close to being able to print the prospectus.  We have been working with WCI and your counsel to get it ready.  There are a few open issues.  I am hopeful we will be able to get into the market in the next three weeks or so.  How long do you need before we can price them?

            Ms. Haido responded after we mail, we will need a week to 10 days to market the bonds.  We will need another week after we price and sell to close.

            Ms. Ganz stated I believe we can still shoot for closing before the end of September. 

            Ms. Haido stated all the documents are in final and good shape, subject to final sign off by WCI and the financing team.  We will likely close by the end of September.

            Mr. Mendolia stated the rates show 7 percent, but you are saying 5 ¼ percent to 5⅛ percent.  Do you think it will be the same within a month?

            Ms. Haido responded it has not moved in the past year.  I do not believe we will exceed 7 percent, which is conservative.  I believe we will be close to 5 ¼ percent.

            Mr. Petty stated the interest rate is not as material to the residents because they will be paying a maximum amount.  If we get a lower interest rate, they will get a higher principal amount.  This is the impact to the developer.  Higher rates mean they will get less payback on the infrastructure.

            Ms. Haido stated the numbers attached to the Engineer’s Report assume a 6 percent interest rate for the long term bonds and a 5 ½ percent for the short term rate.  The assessments will be the same, but it will generate a higher par as well as more construction proceeds. 

            Mr. Petty asked do you have a specific suggestion on how you would like them to approve the order?

            Ms. Ganz responded we need to approve the resolution in the form presented with the documents attached. 

 

On MOTION by Mr. Mendelson seconded by Mr. Mendolia with all in favor Resolution 2006-9, delegation resolution, presented along with the documents attached within the resolution was adopted in substantial form.

 

SEVENTH ORDER OF BUSINESS                        Staff Reports

            C.        Engineer

            Mr. Petty stated we would like to have the engineers talk to you about the repair and construction of new tennis courts at The Commons.

            Ms. Early stated I would like to introduce Mr. Gutierrez from Synalovski, Gutierrez and Romanik.  They are the architects who did the original buildings.  We hired them to go through it because they are familiar with it.  He can give you a rundown of his report.

            Mr. Gutierrez stated I am going to give you a summary of the items we are planning to work on.  They involve the clubhouse, the pool as well as the pool cabana, and the restroom building.  We looked at the building.  Our structural engineer climbed in the attic to look at the structure.  The structure on the roof is in good shape.  There are no structural repairs to be done in the building.  The structural repair will be replacing the roof cosmetically.  Most of the work will be cosmetic. 

            In regard to the exterior of the building, we feel the existing columns need to be pressure cleaned, refinished and waterproofed.  We noticed cracking on the walls and want to patch, repair and paint them.  There is damage on the trim.  We want to repair the trim and seal everything around the exterior. 

            Mr. Petty stated there are iron screens showing signs of rust.  We need to sandblast and repaint those.  They are artistic screens which set off the entry.  A great deal of the front entryway has lost its impact.  They have a huge lantern the storm ripped away from the ceiling.  It has to be replaced.  These are signature pieces.

            Mr. Gutierrez stated when we install the new light fixture we are going to have chains giving it support.  We are going to do the same for the bathroom facilities.  We are replacing the roofs on the clubhouse, the restroom building and the pool cabana.  We are going to refinish the fascia.  The gates at the pool are in need of repairs.  The self closing hinges need to be replaced.  We will install new locks as well. 

            Mr. Petty stated we are fighting with the insurance company and FEMA in regard to payment.  They tried to get us to accept a check in the amount of $24,000.  We sent it back.

            Mr. Mendolia asked when will this materialize?  Are we waiting on insurance?

            Mr. Petty responded no.

            Ms. Early stated he is estimating these repairs will come in at $520,000.

            Mr. Petty stated we have the money in reserves for this.  You will see it in your budget.  We can do this work and we are ready to go.

            Ms. Early stated because it is over $500,000 it requires a 30 day bid to be advertised.  We can probably get it in the paper next week, open the bids in September and bring it to the October meeting.

            Mr. Petty asked can we make the September meeting?

            Ms. Early responded no.

            Mr. Gutierrez stated we included a 10 percent contingency and 5 percent cost estimate in our estimate.  If we estimate the roof will cost $150,000 for all three buildings, four months from now it may cost an additional 5 percent.

            Mr. Petty stated it is possible it will come in under $500,000, which will beat the 30 day requirement and we will be able to have it for the next meeting.  Why do we not try it?  We cannot hurt ourselves.  We will still be ready by October if we do not make it. 

            Ms. Early asked when is the next meeting?

            Ms. Rugg responded if we meet on the second Wednesday, it is September 13, 2006.  The second Thursday is September 14, 2006.

            There was Board consensus to meet on Wednesday, September 13, 2006.

            Mr. Gutierrez stated in regard to the tennis courts we have the existing facility with all the approved courts, which have been built already.  We feel we can add four courts.  The plan is to do the same things we did with the other courts.  We spoke to the city regarding zoning requirements.  We should be okay in terms of getting this approved.  They are not going to make us go through a full blown site plan approval process.  We will do an amendment to the existing site plan.  We think we will have to show them four or five additional parking spaces.  Because we have sufficient asphalt parking spaces, we can add the parking spaces required for the additional courts in the grass area. 

            Ms. Early asked do you want to tell them how much you think it will cost?

            Mr. Petty responded we believe we have funding for a minimum of two courts at the moment.  We will try to get funding in the next year and a half to do the other two courts.  We have cash for at least two, hopefully all four.

            Mr. Mendolia stated I would not do only two.  I would do all four and forget about it.

            Mr. Petty stated we will pull as much cash as we can.  If we need to pull money from other funds, Ms. Larned will look into it.  We will report the options at the next meeting.  Our intention is to get the courts done now while we are doing the permits.

            Ms. Early stated we need authorization if you want us to proceed.

            Mr. Mendolia asked do you have a price for this?        

            Mr. Petty responded it is approximately $250,000 per court.

            Mr. Gutierrez stated it includes lights, fencing and irrigation.

            Mr. Mendolia stated we have to negotiate.  That is too high.

            Mr. Petty stated the husband of one of the girls who works here does the asphalt version.  They are in the price range you talked about.  The clay courts are pricy. 

            Mr. Mendolia stated we need to price it.

            Mr. Petty stated they will be bid.

            Mr. Mendolia stated let us do it and do all four.

            Ms. Early asked can you give them a timeframe?

            Mr. Petty responded I thought you were going to advertise now.

            Ms. Early stated we need design plans for this.

            Mr. Petty stated we should post a sign instructing the residents who use the facility of the new construction, which will be ongoing, so they understand the mess as well as post a sign showing where the new tennis courts will be.

            Mr. Mendolia stated you should send a brochure to the Heron Bay residents.

 

THIRD ORDER OF BUSINESS                             Public Hearing to Consider Adoption of General Fund Budget for Fiscal Year 2007, Resolution 2006-6, and Levy of Non Ad Valorem Assessments, Resolution 2006-7

            Mr. Mendolia opened the public hearing.

            Mr. Petty stated I will direct you to the summary page and talk about the assessment levels.  If you look at the general fund, which is where all of your operation and maintenance actions are, you will see assessments went down.  We have plenty of action going on as you just saw.  We are providing improvements.  We are enjoying economies of scale.  Our District has grown by unit count and the services have not jumped up as much.  You will see a bigger number next year.  We increased unit counts by a little over 2,000, yet our requirements for service were not as great.  These are brand new units.  Operation and maintenance is not caught up.  In the next year or two you will see the number go back to the $80 to $90 range.  The debt service tables remain as they were before and they are fixed by the bond cost.

            Mr. Mendolia asked have you met with anyone from each of the areas?

            Mr. Petty responded I met with WCI in regard to The Commons.  I met with the landscape committee for Parkland Isles.  We met with field crews for water and sewer as well as drainage.  We met with our engineers on this issue.  We also met with Ms. Walker.  There are some things which came in late in the process for the general fund.  We will have them for your consideration in the water and sewer budget.  We would like to leave the general fund as is.

            There is an item I want to bring to your attention under Special District, which is the mitigation area, on page 16.  The mitigation area started around 1995 and was considered to be beneficial to the area called Heron Bay and hit 3,000 units.  This is the littoral shelf plantings.  They did what was recommended at the time and a great deal of it did not work.  We put a number out there for maintenance and we hired a contractor to take care of it.  We went out to look at it six months ago and it is in bad shape.  We lost 30% to 40% of our plants.  WCI did not get approval of the process from Broward County, which means it will be tested by today’s standards.  They have to be rebuilt. 

            Mr. Mendelson asked what is the difference economically?

            Mr. Petty responded they have to cover it because they did not get approval for the entire process.  They need to rebuild a great deal of this to the current standard, which is good for us.  We met with WCI.  We terminated the contract with Acquagenics.  We are working with WCI’s environmental engineer, Miller Leg.  They are writing the specifications for a better maintenance contract.  We have our maintenance people gearing up to oversee it.  We cannot rely on contractors.  This is why this number went up.  It has gone from the tax levy of $83,000 to $218,000.  It was $27 to each unit.  It is now $72.  This is real maintenance, not “play” maintenance.  The impact to the residents is minimal.  The percentage impact is significant, but the dollar amount is not.  WCI is putting in over $500,000 for corrective actions.  You will see a significant change.  We will jump on top of this with maintenance.  We will be going out to bid for the contractor within the next 30 days.  Our own staff will take over in a six month transition.  The contractor will be utilized for the big plantings. 

            Ms. Early stated Ms. Reed received approval from Broward County.

 

On MOTION by Mr. Mendolia seconded by Mr. Mendelson with all in favor the public hearing was closed and Resolution 2006-6 adopting the general fund budget for fiscal year 2007 was adopted.

 

            Mr. Petty stated this is a two part process.  We will ask you to consider the next resolution, which is how we levy the non ad valorem assessment to the property appraiser.  It is Resolution 2006-7.

 

On MOTION by Mr. Mendolia seconded by Mr. Mendelson with all in favor Resolution 2006-7 levying the non ad valorem assessments for fiscal year 2007 was adopted.

 

FOURTH ORDER OF BUSINESS                          Distribution of Proposed Water and Sewer Budget for Fiscal Year 2007 and Consideration of Resolution 2006-8 Setting a Public Hearing

            Mr. Petty stated I apologize for bringing this to you late.  In doing the assessments and getting the TRIM notices out, we had trouble and it put us back in the schedule.  We are asking you to approve this in order to disseminate it to other government agencies.  We will ask you at a later date to adopt it for implementation in the next fiscal year.

On MOTION by Mr. Mendolia seconded by Mr. Mendelson with all in favor Resolution 2006-8 approving the water and sewer budget and setting the public hearing for September 13, 2006 at 4:30 at the District Office in Coral Springs, Florida was adopted.

 

FIFTH ORDER OF BUSINESS                               Consideration of Permits

            A.        Heron Bay North Plat 3 (50’s)

            B.        Heron Bay North Plat 3 (75’s)

            Ms. Early stated these are typical surface water permits.  These are the last two parcels in Heron Bay North.  We had two parcels at the last meeting.  It meets the District’s criteria.

 

On MOTION by Mr. Mendelson seconded by Mr. Mendolia with all in favor the permits for Heron Bay North Plat 3 50’s and 75’s were approved.

 

SEVENTH ORDER OF BUSINESS                        Staff Reports (Continued)

            A.        Manager’s Report – Meeting Schedule for Fiscal Year 2007

            Mr. Petty stated in your agenda package we have a recommended meeting schedule for fiscal year 2007.  We would like to advertise this at one time.  If the schedule is not to your liking, we can do it monthly.

 

On MOTION by Mr. Mendolia seconded by Mr. Mendelson with all in favor the meeting schedule for fiscal year 2007 was approved.

 

            Mr. Petty stated we will be doing a communication officer position.  It is in the water and sewer budget.  It is important for us to talk to the residents about what we do.  We will be talking about how we project our image to the residents.  This is based on feedback from The Commons.  This is to put us in the proper light for what we do, receive customer appreciation and to find out from the public what they want from us.

 

            B.        Attorney’s Report

            There being no report, the next item followed.

 

EIGHTH ORDER OF BUSINESS                           Approval of Requisitions and Invoices

            Mr. Petty stated we asked Mr. McKune to mutiny his current position and join us.  We have a couple of concerns.  CH2M Hill is an engineering firm we do not know very well.  Mr. McKune and Ms. Early we rely on and trust.  We are asking Mr. McKune if he will consider being an independent contractor for us in order to do quality engineering and oversee the invoices we are getting.  We can pay his salary from the savings he will generate.

            Mr. Mendolia stated it is done.

            Mr. Mendelson stated yes.

 

On MOTION by Mr. Mendolia seconded by Mr. Mendelson with all in favor the requisitions and invoices were approved.

 

NINTH ORDER OF BUSINESS                             Adjournment

            There being no further business,

 

On MOTION by Mr. Mendolia seconded by Mr. Mendelson with all in favor the meeting was adjourned.

 

 

 

 

 

                                                                        

 Steve Mendelson                                                            Salvatore Mendolia

 Secretary                                                                        President