MINUTES
OF MEETING
NORTH
SPRINGS IMPROVEMENT DISTRICT
The regular meeting of the Board of Supervisors of the North Springs
Improvement District was held Thursday, September 5, 2002 at 4:10 P.M. in the
District Office, 10300 N. W. 11 Manor, Coral Springs,
Florida.
Present and constituting a quorum were:
Matt Lauritzen
President
Salvatore J. Mendolia
Secretary
Also present were:
Rhonda K. Archer
Finance Director
Dennis Lyles
Attorney
Donna Holiday
Recording Secretary
Jane Early
Gee & Jenson
Roger Moore
Engineer
Scott Davidson
WCI
Dave Rohal
CCL
FIRST
ORDER OF BUSINESS
Roll Call
Mr. Lauritzen called the meeting to order at 4:10
p.m.
SECOND
ORDER OF BUSINESS
Approval of the Minutes of the Minutes of the August 1, 2002
Meeting
Mr. Lauritzen stated that each board member had received a copy of the
minutes of the August 1, 2002 meeting and requested any additions, corrections
or deletions,
There not being any,
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the minutes
of the August 1, 2002 meeting were approved as
submitted.
THIRD
ORDER OF BUSINESS
Public Hearing to Consider the Adoption of the Water and Sewer
Budget
Ms. Archer stated we adopted our general fund budget, debt service fund
budgets, special operating budget for Heron Bay Commons and Parkland Isles and
this is the last budget we need to adopt to start the fiscal year on October
1. This is the water and sewer
enterprise fund budget and includes operations and debt service. We project our revenues next year will
be $9,037,386 that is down from this year's budgeted $10,452,925 and we expect
to see by the end of the fiscal year $7,968,431, The largest discrepancy in what we
budget versus what we actually experience is in the development in the District,
which is how many new units come on line, what we projected to come on line
versus what actually came on line so far.
It is not a problem because we are still covering our expenditures but
our revenues are lower year to date than we expected. The debt service is shown on page two
with a total of $2,409,734. On page
three is the administrative budget and totals $468,410 and that is up slightly
from the prior year of $431,466.
The most significant increase is related to personnel costs and the rest
of the fees are fairly level or have gone down slightly. The largest expenditure in personnel
costs that we are experiencing is related to health insurance. We received a notice from our health
insurance carrier that they projected our insurance was going to go up 40%. We are researching and will be in a
position shortly to convert our health insurance to another company which is
going to be similar to the plan that our employees already have but a little
less expensive for the District and less expensive for the employees with
dependent coverage which is a payroll deduction for them. We might be looking at a slightly higher
deductible so that they can afford to cover their dependents on the policy. That is the case as well in plant
operations. The personnel costs in
plant operations have gone up related to the health insurance but also related
to hiring additional personnel to operate the plant facility. As we continue to complete our plant
expansion and hire more personnel to operate the different facilities in the
different locations, we are adding more personnel to the budget. Also this year we added to the budget,
our security line item. The total
plant budget is $3,125,025 compared to the prior year of $2,376,329.
Mr. Lauritzen asked are we able to refinance any of our
bonds?
Ms. Archer responded we are looking at that and it is something we are
working on. We will bring a
proposal to you at a future Board meeting.
The field operations relate to the water distribution and wastewater
collection system that outside the gates of the plant facility. This includes the electricity for the
lift stations, trucks and field crews that work on the water and sewer
lines. The field operations budget
is $1,122.480 as compared to this year's budget of $1,040,150. Total operating expenditures in all
departments of $7,180,285 compared to the prior year of $6,285,524. Page 6 shows the projected surplus funds
that we will generate this year, the debt coverage, the balance remaining and
keep in mind this excess is supposed to go toward paying off a future bond issue
that we should have been in a position of issuing about this time in
anticipation of the plant expansion that hasn't started yet because the last
plant expansion isn't finished. You
can see we will not have a rate increase to cover that future bond issue because
we are generating sufficient revenues with the user rate we have on our
system. If we need any type of rate
increase for that plant expansion and future bond issue, it should be slight
considering we are generating surplus funds right now to pay for that bond
issue.
Mr. Lauritzen opened the public hearing and there being no comments or
questions from the public, the public hearing was closed.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the water and
sewer budget for fiscal year 2003 was approved.
FOURTH
ORDER OF BUSINESS
Acceptance of the Audit for Fiscal Year 2001
Ms. Archer stated a copy of the audit was provided to you prior to the
meeting and is for fiscal year ended September 30, 2001. This is a clean audit as you can see in
the report of independent certified public accountants, the report on compliance
and internal controls and financial reporting, the report on bond compliance and
the management letter.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the audit for
fiscal year 2001 was accepted.
FIFTH
ORDER OF BUSINESS
Consideration of Plats
A. Mary Help of
Christian Plat
Mr. Rohal pointed out on the map the location of the Mary Help of
Christian plat and stated they are going to expand the facilities for a
school. The bottom one third of the
property was platted as Parkland Heights, the center was platted and the
remaining third of the property is unplatted. We are combining all three pieces of
property into one plat. We are
going through a rezoning and small land use change at the city and county level
so that we can take some of the vested uses that we have and distribute them
across all the property. The church
will remain in its existing location in the southern portion of the property and
a school with grades K-8 will be constructed, a rectory and some day care
facilities.
Ms. Archer stated our consulting engineer did review the plat and
provided a letter that was included in your agenda package recommending approval
and acceptance of drainage from the land within the plat.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the Mary Help
of Christian Plat was approved.
B Parkland
Western Community Park Plat
Ms. Early stated they have already commenced the work on Parkland Western
Community Park and even though it is over 40 acres they can go right to South
Florida for a permit but North Springs still needs to look at their plans if
they are outfalling through a North Springs right of way. We also want to make sure they have
11.4% surface water area. I did
notify the city engineer that they in fact did not have a permit from North
Springs. I'm working with him and
that is why we stipulated that last paragraph. The plat is fine we want them to be
aware that we need to see those final plans.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the Parkland
Western Community Park Plat was approved subject to the conditions listed in the
engineer's review letter.
SIXTH
ORDER OF BUSINESS
Consideration of Permit Request for Parkland Country Club Maintenance
Area
Ms. Early pointed out the Parkland Country Club maintenance area on the
map and stated this is a typical surface water permit and we recommend
approval.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the permit
request for Parkland Country Club Maintenance Area was approved subject to the
conditions outlined in the letter from the engineer.
SEVENTH
ORDER OF BUSINESS
Consideration of Work Authorization 94 for Parkland Country Club and
Engineering Design Agreement with WCI
Ms. Early stated this work authorization is for the entire development
and is for the water and sewer design and the funding agreement is with
WCI.
Ms. Archer stated this is the usual two step process that we go through
with a new subdivision.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor Work
Authorization 94 and the funding agreement with WCI was
approved.
EIGHTH
ORDER OF BUSINESS
Staff Reports
A.
Attorney
Mr. Lyles stated we are back at the point in the year when we are up
against local hearings on new bills for the Legislative Delegation to take up
and as you know our codification bill which we are required to prepare and file
did not get accepted last year and therefore, was not acted on. I reported to you then that we will be
required to do it again this year and that is coming up in October and we will
dutifully submit our proposed codification bill of all our special acts and
amendments to the Legislative Delegation and hope for the best from our local
elected officials.
The issue that has caused a great deal of staff effort to be undertaken
both before the last meeting and before this one is the continuing problem we
have with our water plant expansion and our contractor, Felix Equities which has
been purchased by and is a subsidiary of a national firm called Linknet. As we reported to you last month,
Linknet is in bankruptcy proceedings as of July and we are continuing to have a
severe problem with the contractor progressing with the work and the subs and
suppliers doing any work they contracted to do with Felix Equities. They are essentially not working or not
working very much on the plant expansion.
The basic issue is we are not getting the plant completed in a timely
fashion. We have subs and suppliers
unpaid who refuse to work or deliver equipment. Normally when you have that situation it
is a default under the contract and it would be except for the fact that we have
a bankruptcy proceeding. That stops
us from being able to demand that the surety come in and take over. All of us have been in communication
verbally and in writing with our opposite numbers at both the surety and the
contractor regarding the bankruptcy proceeding. The surety has initially reviewed this
claim they know is coming and they have classified it as one where they do owe
coverage to us and they have targeted it as one they intend to come in and take
over once the proper steps can be taken.
There are other jobs that Linknet or Felix Equities is in the middle of
that they are not going to accept coverage on, there are defects in the notice
or coverage or something but we are not going to suffer that fate. We are lined up and properly ready for
the surety to take the job over and hire another contractor or renegotiate
something with Felix Equities to get the job from here to the end. They can't do that because of the
bankruptcy proceeding. The
bankruptcy stops everything and it stops us as an owner of a project even though
we are a public entity from declaring the job in default which is the step you
have to take before you can bring in the surety. My last conversation with the bankruptcy
attorneys for Felix Equities was this morning and this afternoon, and it appears
that they are going to be able to get everyone involved from the surety side as
well as the contractor side to file with the bankruptcy court a motion to reject
our contract, meaning Felix will say formally they don't want to perform the
rest of the contract and that in effect sort of waives the bankruptcy
protections that they have and allows us to do what we need to do with the
surety but we have to involve the surety in every step of all of this,
otherwise, we run the risk of waiving the benefit of the surety. They have projected this job internally
we believe and their attorneys believe as a negative cash flow job. In other words if they had to complete
the rest of the contract, their position is that they will lose even more
money. They will ask to be let out
of the contract, bring in the surety to do what they need to do and that way
they will lose less than they otherwise might. From our point of view they are not
going to perform this contract, we are all satisfied they are not able to
perform and get the subs and suppliers back on track with the right kind of
payments and as of today we still have not gotten the authority to issue two
party checks made payable to Felix and the subcontractor. They have to agree on how the proceeds
of that check will get divided before it actually gets negotiated. It is a very complex situation and we
have all independently found out that nobody has run into exactly this situation
before. This is a unique situation
so we have a bit of a problem but we believe we have in place a plan to get us
from here to there. We are hoping
to get the final authority to file this motion and again it will have to be
Felix to file it. We are not a
party to the bankruptcy proceeding because we are not a creditor or debtor at
this point but we are an owner of a project and have a contract in play
here. With our urging and
cooperation they are going to court and file this motion to reject the
contract. I would like you as a
Board to pass a motion indicating your approval of the filing of the motion to
reject the contract on behalf of Felix in the U.S. Bankruptcy
Court.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the Board
approved the filing of the motion to reject the contract by Felix Equities in
U.S. Bankruptcy Court.
Mr. Lauritzen stated assuming that happens are you ready to jump in with
some bids?
Mr. Lyles stated it will be the surety to get the bids and negotiate
directly. The surety will take the
job over which is part of the coverage that was paid for when the performance
bond which is part of our contractual requirement was put in place. They have to perform under our
specs. They can't provide us with
something different than what we contracted for. Our obligation is going to be to take
the remaining funds that we have in the construction account and pay it to the
surety.
Mr. Moore stated the surety has issued one or two checks to Felix
Equity. Since the permits are all
in Felix Equities name, I believe the surety will come in with a new contractor
and have a learning curve and expense to take over the project but they will
probably negotiate with some of the present employees. They talked to some of those people over
a month ago. That will minimize
their loss. There is enough money
left in the pot that they will come out losing a minimal amount of money on this
job. On some of the other jobs the
money is gone, our money is still there.
I believe it will be a win/win situation if we can get over this one
hump.
Mr. Lauritzen stated I feel we are in a spot depending on them to do a
good job.
Mr. Moore stated so far the quality of the work is okay and we are 85%
complete. We have 15% of the funds
left.
Mr. Lyles stated we don't have that in hand yet but believe we will be
there. In case it doesn't work out,
one thing that may occur is we may have to file on our own behalf in the
bankruptcy court a petition to release the stay and allow us to declare the job
in default and go through the technical steps that we hope to avoid by doing it
the way I described where they reject the contract and get permission for the
court and it goes right to the surety.
If that doesn't happen we have to get a 15 day notice of our intention to
declare default and a 20 day notice that it is in default and a time to cure and
those are all conditions in the surety instrument itself that we are going to be
facing and we hope not to face. To
get to that point we may have to go into bankruptcy court and file a
petition. There is a third
possibility which would be a negotiated situation where we would put our money
into the court registry and allow the court to get involved in the completion of
the project and worry later on about who gets what money as long as it is all
deposited. I request at this time
to give staff authority if necessary bring in a bankruptcy specialist who does
this kind of work along with surety law work to represent our interests. It would be a quick and relatively
inexpensive because we are not going to do a whole bankruptcy proceeding. Everybody I have talked to about this,
all recommend that if we are going to go forward beyond the point we are at we
need to bring in a bankruptcy specialist to protect our interests. I would like to be able to bring in
someone quickly and timely so we don't wait another month if
necessary.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor staff was
authorized to retain a bankruptcy specialist as outlined above if necessary, to
report and ratify the fee arrangement at the next
meeting.
B.
Engineer
There not being any, the next item followed.
C.
Superintendent
Ms. Archer stated the county contacted me and asked me to respond to an
inquiry they had as to whether or not we were implementing some type of review
procedure for the water management permits that we issue such as the five year
renewal program we talked about a few months ago. We will identify the magnitude of the
project and we will have that information for you at the next meeting and how we
will do a five review and renewal of those permits. The county is going to present to the
legislature again this year a bill requiring Districts to adopt a five year
renewal program or they will step in and do it themselves. We will have that on your next agenda
for consideration.
NINTH
ORDER OF BUSINESS
Supervisor's Requests and Audience Comments
There not being any, the next item followed.
TENTH
ORDER OF BUSINESS
Approval of Requisitions and Invoices
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the
requisitions and invoices were approved as
submitted.
On
MOTION by Mr. Mendolia seconded by Mr. Lauritzen with all in favor the meeting
adjourned at 5:05 p.m.
Salvatore
J. Mendolia
Matt Lauritzen
Secretary
President