Minutes September 20, 2004

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=125 BGCOLOR="#996699" TEXT="#080000" bgproperties="fixed" background="1da467d1erlcll.gif"> <div> <FONT SIZE="5" COLOR="#FFFFFF" FACE="Arial" ><B>Cornerstones Municipal Utility District</B></FONT><B>     </B><B>|     </B><A HREF="index.htm" TARGET="_top" TITLE="Cornerstones Municipal Utility District"><U><B>home</B></U></A></div> <div> back to<B>  </B><A HREF="id27.htm" TARGET="_top" TITLE="Archived Minutes"><U><B>Archived Minutes</B></U></A></div> <div> </div> </td> </tr><tr> <td valign="top" width=190 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <A HREF="id190.htm" TARGET="_top" TITLE="Minutes January 19, 2004"><U>Minutes January 19, 2004</U></A></div> <div> <A HREF="id196.htm" TARGET="_top" TITLE="Minutes February 16, 2004"><U>Minutes February 16, 2004</U></A></div> <div> <A HREF="id197.htm" TARGET="_top" TITLE="Minutes March 15, 2004"><U>Minutes 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HREF="id398.htm" TARGET="_top" TITLE="Minutes December 19, 2011"><U>Minutes December 19, 2011</U></A></div> <DIV ALIGN="LEFT"></DIV> <div> <B><IMG SRC="21f46600.gif" border=0 width="70" height="96" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></B></div> </td> <td valign="top" height=355 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <B>UNICIPAL UTILITY DISTRICT</B></div> <DIV ALIGN="LEFT"></DIV> <div> <B>CORNERSTONES MUNICIPAL UTILITY DISTRICT</B> </div> <div> Minutes of Meeting of Board of Directors</div> <div> September 20, 2004</div> <bR> <div>      <FONT SIZE="2" COLOR="#000000" FACE="Arial" >The Board of Directors of Cornerstones Municipal Utility District (the “District”) met at 805 Hidden Canyon, Katy, Harris County, Texas at 7:00 p.m. on September 20, 2004, in accordance with the duly posted notice of said meeting, with a quorum of directors present as follows:</FONT></div> <div> Tony Garza, President</div> <div> Gary Hughes, Vice President </div> <div> E.C. Norris, Secretary</div> <div>               John Irwin, Assistant Secretary</div> <div> Darryl Box, Investment Officer</div> <div> And being absent:</div> <div>      None   </div> <div> Also present were Kathie Naumow - Recording Secretary, Mary Jarmon and Terry Holland of Myrtle Cruz, Inc., Dusty Lane of Eco-Resources, Inc., Brenda McLaughlin of Bob Leared Interests, Marvin Zahradnik of Landev Engineers, Inc., Mark Brooks of Young & Brooks, Greg Sissel of BKD, LLP, Doug Knopka of Cinco, LTD., and resident Bryan Yonan. </div> <div> The President called the meeting to order and declared it open for such business as might come before it.</div> <div> <B>APPROVAL OF MINUTES</B></div> <div>      Correction on minutes of August 16, 2004 to reflect Chip Norris arrived at 8:00 pm not Gary Hughes as indicated.  After discussion, upon motion duly made, seconded and unanimously carried, the minutes of the August 16, 2004 and August 31, 2004 board meetings were approved after correction noted.</div> <div> <B>QUESTIONS/COMMENTS FROM THE PUBLIC</B></div> <div> No questions from the public. </div> <bR> <div> <B>CONSIDER AND POSSIBLY APPROVE YONAN TAX PAYMENT PROPOSAL</B></div> <bR> <div>      Mark Brooks went over email from Carl Sandin with the board.  The tax payment proposal is for $5000.00 down payment with 36 monthly payments at approximately $800.00 per month.  Mr. Yonan is not aware of the down payment.  Mr. Yonan will get back with Mark and Carl after talking to his counsel and his mother.  After discussion, upon motion duly made, the board approved to accept the plan as indicated.</div> <bR> <div> <B>HIRE AUDITOR</B></div> <bR> <div>      Greg Sissel presented engagement letter with fee of $9100.00 plus postage equaling approximately $9500.00.  He also informed the board that they do not electronically transmit information without board permission and officially asked the board to approve electronic transfer of files.  Upon motion duly made, seconded and unanimously carried, the board approved hiring BKD as the auditor and also approved the electronic transfer of file.  The board also will look at other auditors next year.</div> <bR> <div> <B>ADOPT BUDGET</B></div> <bR> <div>      The board reviewed the changes made from meeting of August 31, 2004.  Jan Bartholomew recommended the board to consider levying a 2004 tax rate of $0.37 per $100 of assessed valuation for debt service purposes and $0.13 per $100 of assessed valuation for maintenance purposes.  Tony Garza stated that Cinco STP voted to postpone upgrades and improvements to the Cinco plant for six months (mid next year), but to proceed with the proposed repairs to the Conveyance System.  After discussion, the board decided that the District's source of funds for payment of the Conveyance System line repair would be surplus capital projects funds. The board currently has excess of $300k in surplus funds.  Any other capital projects at CINCO would be financed with the balance of the surplus construction funds.  After those are expended the board would use operating funds.  The $250,000 which was designated for transfer to debt service in the budget for fiscal year ending 9/30/04, will instead be transferred into a designated operating investment for future capital projects.  There will be no transfer to debt service budgeted for fiscal year ending 9/30/05 and any excess revenues during this period will also be segregated for capital projects.  After that time, the board would like to begin budgeting transfers to debt service again.  After discussion, upon motion duly made, the board approved adoption of budget with these revisions.</div> <bR> <div> <B>AUTHORIZE PUBLICATION OF PROPOSED TAX RATE</B></div> <bR> <div>      Authorized tax assessor to prepare publication of tax rate and place ad in the Katy Times.  Publication will be done at least seven days prior to October 18, 2004.</div> <bR> <div> <B>TAX ASSESSOR/COLLECTOR'S REPORT</B></div> <div>      Brenda McLaughlin of Bob Leared Interests, Inc., the District's tax assessor, reported as to the status of District's tax collections.  Taxes Receivable 8/31/2003: $39,272.72, adjustments $6,128.96, total $45,401.68.  Original 2003 Tax Levy: $1,181,410.10, adjustments $66,010.50, total $1,247,420.60.  Total Taxes Receivable: 1,292,822.28.  Prior years taxes collected $16,832.85, 2003 taxes collected $1,231,578.63, Total $1,248,411.48.  Taxes Receivable at 8/31/2004: $44,410.80.  2003 Receivables: Debt Service $11,723.06, Maintenance $4,118.91.  Month of 8/2004: beginning cash balance $35,672.41 total receipts $4,216.22, total disbursements $18,772.27, cash balance at 8/31/2004 $21,116.36.  Total Disbursements for month of September 2004 $6,454.87, remaining cash balance $14,661.49.  The district is 99.472% collected for 2001 taxes, 99.563% for 2002 taxes and 98.730% for 2003 taxes.  Upon motion duly made, seconded and unanimously carried, the board approved the tax assessor/collector's report and payment of the tax bills presented. </div> <bR> <div> <B>FINANCIAL ADVISOR</B></div> <div>      N/A</div> <bR> <div> <B>OPERATOR'S REPORT</B></div> <div> Dusty Lane of Eco-Resources, Inc., the District's operator, reported as to District operations and facilities and presented the August 2004 Operations Report.  Total connections for August 2004 were 1487.  Meter installations and inspections for Jul 14 - Aug 13:  New taps Installed - 0; Sewer inspections completed - 0; Builder Inspections completed - 1; Customer Service inspections completed - 0; Net Rental Meter Change - 0. The required 7 samples were taken during 8/2004.  TCEQ Chemical Analysis: Metals 8/25/99; Radio-Chemicals 10/29/02; Volatile Organic Chemicals 10/29/02; Minerals 3/23/04.  Water production: Pumped 34,373,000 at Water Plant #1, Total supplied - 34,373,000, Daily Average - 1,108,806.  Subsidence Information: Estimated number of months available - 7.4, Permit months remaining - 4, Percent of permitted production - 51.76.  Water Accountability is at 93% Year to Date.  Total Operations Charges $18,145.62.  Actual work related expenses - $11,309.  Total Current billing  $64,251.89.  Total Aged Receivables $10,967.82.  Total Accounts Receivables $75,219.71.  Facility Checklist completed: Water Plant #1 on 8/23/2004.  Inspections Completed: Fire Hydrants on 6/7/2004.  Total Deposits for August 2004 $50,479.06.  Disconnects/Reconnects income: $150.00.  Pull Fees: $0.00.  Provided Discharge Monitoring Report, number exceeded all zero.  Reported on repairs made and also presented the board with a copy of the Cornerstones M.U.D. Delinquent list.   Gave prices for repairs of approximately $3600.00 for vulnerability repairs.  </div> <bR> <div> Upon motion duly made, seconded and unanimously carried, the board approved the operator's report and authorized repairs on plant.</div> <bR> <div> <B>ENGINEER'S REPORT</B></div> <div> Marvin Zahradnik presented the Engineers Report.  Reported on inquiry of 8 acres south of park by Stanka & Partners for mixed use project of 140,000 square feet. </div> <div> Upon motion duly made, seconded and unanimously carried, the board approved the Engineers report.</div> <div> <B>BOOKKEEPER'S REPORT</B></div> <div> Mary Jarmon of Myrtle Cruz, Inc., the District's bookkeeper, presented the monthly report.  Debt service funds available September 20, 2004 - $3,509,664.67.  Total Debt Service Requirements for 2004: $1,371,182.50.  Capital projects funds available September 20, 2004 - $299,388.93.  General Operating: Previous cash balance August 16, 2004 - $2,194.80, total deposits $80,512.95, beginning cash balance September 20, 2004 - $80,960.82.  General Operating Funds available September 20, 2004 - $1,255,140.94.  Included copy of budget for fiscal year ending September 30, 2004, Investment Report and Tex Pool Performance sheet.  Upon motion duly made, seconded and unanimously carried, the board approved the Bookkeepers monthly report.  After discussion, upon motion duly made, seconded and unanimously carried, the board approved said bills and ordered checks issued on the appropriate District accounts in payment thereof.   </div> <div>      </div> <div> <B>CONDUCT HEARING ON TERMINATION OF WATER AND SEWER SERVICE </B></div> <div> The board conducted a hearing on the termination of utility service.  The operator presented a list of delinquent utility accounts that were delinquent by more than 60 days and reported that the customers have been given written notice 10 days prior to this meeting and the opportunity to appear before the board of directors to explain, contest or correct the utility service bill and to show reason why the utility service should not be terminated for nonpayment.  None of the customers on the list were present or have presented any statement on the matter.  After discussion, upon motion duly made, seconded and unanimously carried, the board authorized the operator to terminate utility service to the unpaid accounts in accordance with standard procedures.</div> <bR> <div> <B>CONSIDER AND POSSIBLY APPROVE PROPOSALS OF FOR ARBITRAGE COMPLIANCE CALCULATIONS IN CONNECTION WITH DISTRICT BOND ISSUES</B></div> <bR> <div>      Mark reported increased IRS Audits on small issuance bonds.  $1,500.00 each to do reports on Bond Issues for 1995 & 1996 by Arbitrage Compliance Report.  After discussion and motion duly made the vote was 3 to 2 in favor.  Tony Garza, Chip Norris and Gary Hughes were For and John Irwin and Darryl Box were Against.</div> <bR> <div> <B>CONSIDER AND POSSIBLY APPROVE FIRST AMENDMENT TO THE RESTATED CINCO REGIONAL SEWAGE TREATMENT PLANT AGREEMENT</B></div> <bR> <div>      Tony Garza reported that at the Cinco STP Meeting earlier this month Memorial Mud's Attorney stated attorney fees to fight Cinco's exclusion of their repair responsibilities to the Conveyance System and Trunkline referred to as Phase Four (4) would be more than the amount estimated for repairs.  Tony Garza stated Memorial MUD has agreed to pay Cinco's share of the repair and exclude Cinco MUD #1 from any future responsibility or usage of  the Conveyance System. Leaving 63.9% as Conerstones MUD percentage of responsibility for the repair of the Phase 4 Trunkline.  Memorial MUD has also agreed to exclude Cornerstone MUD from any future responsibility of the section of Trunkline referred to as Phase Three (3). In the future Conerstones MUD will take up 72.04%, and Memorial MUD 27.96% of the Phase Four (4) Trunkline.  Estimated cost to repair the Trunkline $381,350.00, Cornerstones MUD $319,819.00, Memorial MUD $61,531.00. Brown and Gay Engineers, Inc. will be responsible for management of all aspects of the line repair.</div> <bR> <div> <B>AUTHORIZE ANY NECESSARY ACTIONS IN CONNECTION WITH RECENT VULNERABILITY ASSESSMENT</B></div> <bR> <div>      N/A</div> <bR> <div> <B>AUTHORIZE ANY NECESSARY ACTIONS WITH RESPECT TO GREENBELT TRACTS OR OTHER DISTRICT LAND </B></div> <bR> <div> Sidewalks located by Eckerd's/CVS on Highland Knolls and driveway on triangle lot completed. </div> <bR> <div> <B>PENDING BUSINESS</B></div> <bR> <div>      Board Member Darryl Box requested the District to be better prepared next year before hiring of an auditor for the District's annual audit.  Mr. Box stated he would like to have enough time to look at other auditors prior to the Sept. 30th deadline.</div> <div>       </div> <div> <B>OPERATOR PERFORMANCE REVEIW</B></div> <div>      </div> <div> No problems reported.  Daryl would like Dusty to continue to try and get the billing of EMS separated or broken out as separate item on bills.  Tony Griffin will work directly with John Irwin to resolve this matter.</div> <bR> <div> After concluding and there being no further business to come before the board, the meeting was adjourned. </div> <div>                               _______________________________</div> <div>                                         Secretary</div> <bR> <div> Attachments:     Bookkeeper's Report</div> <bR> <bR> </td> </tr></table></body>