Minutes October 18, 2004

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<div> Minutes of Meeting of Board of Directors</div> <div> October 18, 2004</div> <bR> <div>      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 October 18, 2004, in accordance with the duly posted notice of said meeting, with a quorum of directors present as follows:</div> <bR> <div> Tony Garza, President</div> <div> E.C. Norris, Secretary - arrived at 7:06 </div> <div> John Irwin, Assistant Secretary</div> <div> Darryl Box, Investment Officer</div> <div> And being absent:</div> <div>                              Gary Hughes, Vice President </div> <div> Also present were Kathie Naumow - Recording Secretary, Terry Holland of Myrtle Cruz, Inc., Dusty Lane of Eco-Resources, Inc., Bob Leared of Bob Leared Interests, Marvin Zahradnik of Landev Engineers, Inc., Mark Brooks of Young & Brooks, 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>      After discussion, upon motion duly made, seconded and unanimously carried, the minutes of the September 20, 2004 board meeting were approved.</div> <div> <B>QUESTIONS/COMMENTS FROM THE PUBLIC</B></div> <div> No questions from the public. </div> <bR> <div> <B>AUTHORIZE ANY NECESSARY ACTIONS IN CONNECTION WITH YONAN TAX ACCOUNT</B></div> <bR> <div>      The board reviewed offer made by Mr. Yonan.  Mr. Yonan agreed with the 36 month plan but did not agree with the down payment of $5,000.00.  Mr. Yonan addressed to board with his reasons for not being able to make the down payment.  </div> <bR> <div>      The board went into executive session to discuss the account.  </div> <bR> <div>      After returning from executive session the board made a motion, seconded and approved to accept the repayment agreement without the down payment.</div> <bR> <div> <B>CONDUCT PUBLIC HEARING ON PROPOSED TAX RATE</B></div> <bR> <div>      Decided last month on the proposed rate.  No public present to discuss rate.</div> <bR> <div> <B>ADOPT ORDER ESTABLISHING TAX RATE FOR 2004</B></div> <bR> <div>      Proposed tax rate to be set at 37 cents for debt service and 13 cents for maintenance.  After discussion and upon motion duly made, seconded and unanimously carried the board approved the tax rate and the debt service rate, and adopted the attached Order Establishing Ad Valorem Tax Rate for 2004.</div> <bR> <div> <B>TAX ASSESSOR/COLLECTOR'S REPORT</B></div> <div>      Bob Leared of Bob Leared Interests, Inc., the District's tax assessor, reported as to the status of District's tax collections.  Taxes Receivable 8/31/2004: $44,410.80, adjustments $0.00.  Original 2004 Tax Levy: $0.00, adjustments $0.00.  Total Taxes Receivable: 44,410.80.  Prior years taxes collected $3,616.85, 2004 taxes collected $0.00.  Taxes Receivable at 9/30/2004: $40,793.95.  Month of 9/2004: beginning cash balance $21,116.36, total receipts $5,279.37, total disbursements $6,454.87, cash balance at 9/30/2004 $19,940.86.  Total Disbursements for month of October 2004 $2,950.13, remaining cash balance $16,990.73.  The district is 99.476% collected for 2001 taxes, 99.600% for 2002 taxes and 98.974% 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>      Bob informed that statements will be sent out by the end of the month.</div> <bR> <div> <B>FINANCIAL ADVISOR</B></div> <bR> <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 September 2004 Operations Report.  Total connections for September 2004 were 1487.  Meter installations and inspections for Aug 14 - Sep 13:  New taps Installed - 0; Sewer inspections completed - 0; Builder Inspections completed - 0; Customer Service inspections completed - 0; Net Rental Meter Change - 0. The required 7 samples were taken during 9/2004.  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 27,722,000 at Water Plant #1, Total supplied - 27,722,000, Daily Average - 924,066.  Subsidence Information: Estimated number of months available - 5.8, Permit months remaining - 3, Percent of permitted production - 60.7.  Water Accountability is at 94% Year to Date.  Total Operations Charges $9,787.88.  Actual work related expenses - $4,534.00.  Total Current billing  $68,804.05.  Total Aged Receivables $18,795.80.  Total Accounts Receivables $87,599.85.  Facility Checklist completed: Water Plant #1 on 8/23/2004.  Inspections Completed: Fire Hydrants on 6/7/2004.  Total Deposits for September 2004 $67,503.80.  Disconnects/Reconnects income: $252.00.  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.   Reported Katy Orthodontic meter was misread, will correct.  Informed the board that by the first of the year they will be able to offer other payment options.  John will have meeting with Tony regarding EMS billing.</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 reported Mason Road Shopping Center is doing dirt work.  Storm sewer being corrected.  Stanka is proceeding but still waiting on survey.</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> Terry Holland of Myrtle Cruz, Inc., the District's bookkeeper, presented the monthly report.  Debt service funds available October 18, 2004 - $2,368,314.27.  Total Debt Service Requirements for 2004: $1,371,182.50.  Capital projects funds available October 18, 2004 - $265,463.96.  General Operating: Previous cash balance September 20, 2004 - $5,911.75, total deposits $73,766.50, beginning cash balance October 18, 2004 - $78,259.61.  General Operating Funds available October 18, 2004 - $1,278,526.39.  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> <bR> <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 FIRST AMENDMENT TO THE RESTATED CINCO REGIONAL SEWAGE TREATMENT PLANT AGREEMENT</B></div> <bR> <div>      Tabled to next month meeting.     </div> <div>      </div> <div> <B>AUTHORIZE ANY NECESSARY ACTIONS WITH RESPECT TO GREENBELT TRACTS OR OTHER DISTRICT LAND </B></div> <bR> <div>      John Irwin reported flood control ditches have been cut.  Sidewalks are completed.</div> <bR> <div> <B>PENDING BUSINESS</B></div> <bR> <div>      N/A</div> <bR> <div> <B>TAX ASSESSOR PERFORMANCE REVEIW</B></div> <div>      </div> <div> Deferred to next month meeting.</div> <bR> <div> After concluding and there being no further business to come before the board, the meeting was adjourned at 7:40 p.m.</div> <bR> <bR> <div>                               _______________________________</div> <div>                                         Secretary</div> <bR> <div> Attachments:     Order Establishing Ad Valorem Tax Rate for 2004</div> <div> Bookkeeper's Report</div> <bR> <bR> </td> </tr></table></body>