CORNERSTONES MUNICIPAL UTILITY DISTRICT

Cornerstones Municipal Utility District

Minutes of Meeting of Board of Directors

October 16, 2006

     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 16, 2006, in accordance with the duly posted notice of said meeting, with a quorum of directors present as follows:

Tony Garza, President

Gary Hughes, Vice President  

John Irwin, Secretary

E.C. Norris, Assistant Secretary

Darryl Box, Investment Officer

and being absent:

None

Also present were Kathie Naumow, Recording Secretary; Terry Holland of Myrtle Cruz, Inc.; Brenda McLaughlin of Bob Leared Interests; Dusty Lane of Eco-Resources, Inc.; Marvin Zahradnik of Landev Engineers, Inc.; Mark Brooks of Young & Brooks and Doug Knopka of Cinco LTD.

The meeting was called to order at 7:00 and declared open for such business as might come before it.

APPROVE MINUTES OF PRIOR MEETINGS

     After discussion, upon motion duly made, seconded and unanimously carried, the minutes of the September 18, 2006 meeting were approved.

QUESTIONS/COMMENTS FROM THE PUBLIC

N/A

PUBLIC HEARING/ADOPT TAX RATE

     Board President Garza announced that one purpose of this board meeting is to conduct a public hearing on the District's proposed tax rate for 2006.  The board noted that the District tax assessor has published the required notice for the public hearing and that the public hearing is also noted on the agenda for this board meeting.  The board reviewed discussions at the previous meeting leading to the proposed tax rate as reflected in the published notice.  President Garza then declared the public hearing open and invited questions and comments from the public.  There were no questions or comments from the public.  There being no members of the public in attendance, the public hearing was closed.  

The board then considered the attached Order Establishing Ad Valorem Tax Rate for 2006, which was reviewed by the board, passed, and adopted upon motion duly made, seconded and unanimously carried.

TAX ASSESSOR/COLLECTOR'S REPORT

     Brenda McLaughlin presented the Tax Assessor/Collector report.  Taxes Receivable 8/31/2006: $26,036.43, reserve for uncollectables $635.83; adjustments $5.00.  Original 2006 Tax Levy: $0.00, adjustments $0.00.  Total Taxes Receivable: $25,395.60.  Prior years taxes collected $4,136.09, 2006 taxes collected $0.0.  Taxes Receivable at 9/30/2006: $21,259.51.  2006 Receivables: Debt Service $0.00; Maintenance $0.00.  Month of 9/2006: beginning cash balance $31,564.25 total receipts $6,039.18, total disbursements $16,813.03, cash balance at 9/30/2006 $20,790.40.  Total Disbursements for the month of October 2006 $11,421.91, remaining cash balance $9,369.49.  The district is 99.995% collected for 2001 taxes, 99.978% for 2002 taxes, 99.929% for 2003 taxes, 99.957% for 2004, 99.787% for 2005 and 99.709 for 2006.  Presented board with a list of the top delinquent taxpayers.  

After discussion and upon motion duly made, seconded and unanimously carried, the board approved the tax assessor/collector's report and payment of the tax bills presented.    

FINANCIAL ADVISOR

     N/A

OPERATOR'S REPORT

Dusty Lane of Eco-Resources, Inc., the District's operator, reported as to District operations and facilities and presented the September 2006 Operations Report.  Total connections were 1494.  Meter installations and inspections for Aug 14 - Sep 13:  New taps Installed - 0; Abandoned connections - 0; Sewer inspections completed - 0; Builder Inspections completed - 0; Customer Service inspections completed - 0; Net Rental Meter Change - 0.  Wastewater treatment; Permitted Average Daily Flow - 3,000,000GPD.  The required 7 samples were taken during 9/2006.  TCEQ Chemical Analysis: Metals 8/25/99; Radio-Chemicals 08/11/05; Volatile Organic Chemicals 8/11/05; Minerals 5/18/06.  Water production: Pumped 27,829,000 at Water Plant #1, Total supplied - 27,829,000, Daily Average - 927,633.  Subsidence Information: Estimated number of months available - 54.1, Permit months remaining - 3, Percent of permitted production - 68.51.  Water Accountability is at 95% Year to Date.  Total Operations Charges $23,851.75.  Actual work related costs - $16,000.00 for 4 tap repairs and 5 commercial meter repairs.  Total Current Billing $69,472.74.  Total Aged Receivables $10,577.62.  Total Accounts Receivables $80,050.36.  Facility Checklist completed: Water Plant #1 on 9/27/2006.  Inspections Completed: Fire Hydrants on 6/15/2006.  Total deposits for September $65,167.21.  Disconnects/Reconnects income was $422.75.  Pull fees totaled $140.00.  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.   Everyone has been duly notified of situation and it is being addressed.   Discussed EMS collections vs. checks paid out.

Upon motion duly made, seconded and unanimously carried, the board approved the operator's report.

ENGINEER'S REPORT

Marvin reported on activities in the district.  Received call from Jerry Gregory with AIA Engineers regarding possibility of adding lanes on Mason Road.  Memorial MUD has agreed to share cost of storm sewer along Mason Road per Harris County requirements.  No request for utilities or service this month.  Doug Knopka updated the board on projects in the district and informed board there are 12-13 acres on west side of Mason Road left for development.   

Upon motion duly made, seconded and unanimously carried, the board approved the Engineers report.

BOOKKEEPER'S REPORT

Terry Holland of Myrtle Cruz, Inc., the District's bookkeeper, presented the monthly report.  Debt service funds available October 16, 2006 - $1,719,391.19.  Total Debt Service Requirements for 2006: $1,349,070.00.  General Operating: Previous cash balance September 18, 2006 - $4,194.17 total deposits $182,197.76.  Beginning cash balance October 16, 2006 - $186,224.41.  General Operating Funds available October 16, 2006 - $1,841,659.85.  Included copy of budget for fiscal year ending September 30, 2006, Investment Report and Tex Pool Performance sheet.

After discussion, upon motion duly made, seconded and unanimously carried, the board approved report and said bills and ordered checks issued on the appropriate District accounts in payment thereof.  

CONDUCT HEARING ON TERMINATION OF WATER AND SEWER SERVICE

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.

AUTHORIZE ANY NECESSARY ACTIONS IN CONNECTION WITH DISTRICT WEBSITE

Tony and Mark discussed reviewing website format.  Board doesn't think any changes are needed, although it might be a good idea to update the message page.  Mark's office will check periodically and Board Members will check regularly for any questions or concerns.

CINCO REGIONAL OPERATING COMMITTEE REPORT

     Everything running smooth and work proceeding as scheduled.

AUTHORIZE ANY NECESSARY ACTIONS WITH RESPECT TO GREENBELT TRACTS

Irrigation system - authorized repair to be done by Junction Landscape.  Cost $4,230.00 - They will replace all Rainbird Thunderbird Series rotors (235 rotors) with Hunter PGP series rotors along fence line and areas along entrance at street and along the street at Highland Knolls.  Also adding valve box covers to those that are damaged.  They will furnish all labor, equipment and material for the completion of work.

  After discussion, upon motion duly made, seconded and unanimously carried, the board authorized the repair of the irrigation system by Junction Landscape.  The board also authorized Mr. Norris to arrange for removal of graffiti from the brick fence at a cost to not exceed $200.

PENDING BUSINESS

     Brenda informed the board that courtesy statements would be sent out in January to all unpaid taxpayers.  The cost will be .39 for postage and .10 for copy for a total of .49 each statement.

After concluding and there being no further business to come before the board, the meeting was adjourned at 7:49 p.m.

                                                                                                                              _______________________________

                                                                                                                              Secretary

Attachments:     Order Establishing Ad Valorem Tax Rate for 2006

    Bookkeeper's Report