CORNERSTONES MUNICIPAL UTILITY DISTRICT

Cornerstones Municipal Utility District

Minutes of Meeting of Board of Directors

January 15, 2007

     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 January 15, 2007, 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, Doug Knopka of Cinco LTD and Blake Roberts.

The meeting was called to order at 7:00 p.m. 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 December 18, 2006 meeting were approved.

QUESTIONS/COMMENTS FROM THE PUBLIC

Blake Roberts gave an update on his project.  On December 21, 2006 he purchased the 4 acres previously discussed with the Board.  He has secured all permits and submitted all to Fort Bend County.  He is currently waiting for platting information and has submitted a full set of drawings to Marvin.  He has established two web pages with all art renderings posted.  His hours of operation will be until 10:00 pm on weekdays and 11:00 pm on weekends.  Projected completion date is sometime in August 2007.

APPROVE AUDIT

Deferred until next month.

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 $238.56.  Original 2006 Tax Levy: $889,423.03, adjustments $423,297.10.  Total Taxes Receivable: $1,337,882.17.  Prior years taxes collected $8,993.58, 2006 taxes collected $743,981.51.  Taxes Receivable at 12/31/2006: $584,907.08.  2006 Receivables: Debt Service $417,848.79; Maintenance $150,889.83.  Month of 12/2006: beginning cash balance $81,492.37 total receipts $682,059.39, total disbursements $68,918.48, cash balance at 12/31/2006 $694,633.28.  Total Disbursements for the month of January 2007 $688,163.06, remaining cash balance $6,470.22.  The District is 99.978% collected for 2001 taxes, 99.930% for 2002 taxes, 99.957% for 2003 taxes, 99.862% for 2004, 99.029% for 2005 and 56.675% for 2006.  Brenda discussed tax exemptions for 2007.  Currently they are $30,000 for persons over 65 or disabled.   

After discussion and upon motion duly made, seconded and unanimously carried, the Board approved the Tax Assessor/Collector's Report; and payments 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 the Districts operations and facilities, and presented the December 2006 Operations Report.  Total connections were 1494.  Meter installations and inspections for Nov 14 - Dec. 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 12/2006.  TCEQ Chemical Analysis: Metals 12/4/06; Radio-Chemicals 08/11/05; Volatile Organic Chemicals 8/11/05; Minerals 5/18/06.  Water production: Pumped 15,867,000 at Water Plant #1, Total supplied - 15,867,000, Daily Average - 511,838.  Subsidence Information: Estimated number of months available - 1.9, Permit months remaining - 0, Percent of permitted production - 85.86.  Water Accountability is at 95% Year to Date.  Total Operations Charges $13,715.72.  Actual work related costs - $5,900.00 for repairs.  Total Current Billing $61,248.66.  Total Aged Receivables $11,833.97.  Total Accounts Receivables $73,082.63.  Facility Checklist completed: Water Plant #1 on 12/27/2006.  Inspections Completed: Fire Hydrants on 6/15/2006.  Total deposits for December $52,516.04.  Disconnects/Reconnects income was $325.00. 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.  Informed the Board of new EPA rule regarding chloroform detection and devices.  

Upon motion duly made, seconded and unanimously carried, the Board approved the Operator's report.

ENGINEER'S REPORT

Marvin reported no requests for service.  He will review the plans submitted by Blake Roberts.   

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 January 15, 2007 - $1,775,986.77.  Total Debt Service Requirements for 2007: $1,354,107.50.  General Operating: Previous cash balance December 18, 2006 - $11,876.67, total deposits $157,585.82.  Beginning cash balance January 15, 2007 - $73,305.93.  General Operating Funds available January 15, 2007 - $1,727,062.82.  Included a copy of the Budget for fiscal year ending September 30, 2007, the Investment Report and Tex Pool Performance sheet.

     Terry reminded the Board that no one has registered for the AWBD conference.  If anyone plans on attending they need to register as soon as possible.

After discussion, upon motion duly made, seconded and unanimously carried, the Board approved the Bookkeepers report and payment of 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.

RENEW INSURANCE

     Mark Brooks presented the Board with insurance renewal proposals.  The current agent, ANCO-McDonald, is offering the same coverage plan with an approximate $90.00 total premium increase.

After discussion, upon motion duly made, seconded and unanimously carried, the Board approved the renewal of the current insurance plan with ANCO.

CONSIDER AND POSSIBLY APPROVE DEVELOPER REIMBURSEMENT FOR 12-ACRE COMMERCIAL TRACT AT ROYAL MONTREAL AND MASON ROAD

Doug Knopka needs a new reimbursement agreement signed.  The original agreement was signed in 1996.   Board could have Jan with Dain Raushcer look at the value to support reimbursement at 100%.  Reimbursement will eventually total $343,232.00 to 350,000.00 including the engineering work.  After discussion, upon motion duly made, seconded and unanimously carried, the Board approved the start of the engineering work by Marvin for the remaining Royal Montreal property.  The Board also requested to have Jan Bartholomew with Dain Rauscher attend next months meeting to discuss numbers.

CONSIDER AND POSSIBLY APPROVE MEMORIAL MUD REQUEST FOR REVISIONS TO WATER SUPPLY AGREEMENT

     The Board discussed an email requesting the District to make permanent the temporary agreement to provide water that serves (70 connections) Memorial Mud property.  We do have the capacity.  The Board discussed concerns and is waiting to hear back from Memorial MUD.  Board has no objections to the proposed agreement.

CONSIDER AND POSSIBLY ADOPT ORDER ESTABLISHING OFFICES AND MEETING PLACES OUTSIDE THE DISTRICT

     The Board discussed several possibilities and will consider further at a later date.

CINCO REGIONAL OPERATING COMMITTEE REPORT     

     Tony updated the Board on progress.  There are another three to four months to go on repairs.  There is approximately $300,000 in the account.  They are anticipating another cash call of $100,000.

AUTHORIZE ANY NECESSARY ACTIONS WITH RESPECT TO GREENBELT TRACTS

     All irrigation has been repaired and is working fine.  The Board discussed possibly scheduling a quarterly inspection of system by Junction's irrigation specialist.

PENDING BUSINESS

     Puppy and kitty sales along Mason Road are getting out of hand again.

After concluding and there being no further business to come before the Board, the meeting was adjourned at 8:07 p.m.

                                                                                                                                    ________________________

                                                                                                                                    Secretary

Attachments:     Bookkeeper's Report