CORNERSTONES MUNICIPAL UTILITY DISTRICT

Cornerstones Municipal Utility District

Minutes of Meeting of Board of Directors

April 16, 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 April 16, 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

and being absent:

Darryl Box, Investment Officer

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.; Mark Brooks of Young & Brooks, Doug Knopka of Cinco, LTD and Mike Fitzgerald.

The meeting was called to order at 7:01 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 March 19, 2007 meeting were approved.

QUESTIONS/COMMENTS FROM THE PUBLIC

     None

TAX ASSESSOR/COLLECTOR'S REPORT

     Brenda McLaughlin of Bob Leared Interests, the District's Tax Assessor/Collector, presented the Tax Assessor/Collector report.  Taxes Receivable 8/31/2006: $26,036.43, reserve for uncollectables $635.83; adjustments $92.91.  Original 2006 Tax Levy: $889,423.03, adjustments $430,532.12.  Total Taxes Receivable: $1,345,448.66.  Prior years taxes collected $17,286.08, 2006 taxes collected $1,261,321.09.  Taxes Receivable at 3/31/2007: $66,841.49.  2006 Receivables: Debt Service $43,078.09; Maintenance $15,555.97.  Month of 3/2007: beginning cash balance $57,162.66 total receipts $23,989.85, total disbursements $38,050.34, cash balance at 3/31/2007 $43,102.17.  Total Disbursements for the month of April 2007 $21,349.01, remaining cash balance $21,753.16.  The District is 99.978% collected for 2001 taxes, 99.940% for 2002 taxes, 99.976% for 2003 taxes, 99.901% for 2004, 99.590% for 2005 and 95.558% for 2006.     

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 March 2007 Operations Report.  Total connections were 1494.  Meter installations and inspections for Feb. 14 - Mar. 13:  New taps Installed - 0; Abandoned connections - 0; Sewer inspections completed - 0; Builder inspections completed - 1; 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 3/2007.  TCEQ Chemical Analysis: Metals 12/4/06; Radio-Chemicals 08/11/05; Volatile Organic Chemicals 8/11/05; and Minerals 5/18/06.  Water Production: Pumped 19,881,000 at Water Plant #1, Total supplied - 19,881,000, Daily Average - 641,322.  Subsidence Information: Estimated number of months available - 17.6, Permit months remaining - 9, Percent of permitted production - 14.56.  Water Accountability is at 96% Year to Date.  Total Operations Charges $11,313.14.  Actual work related costs - $3,604.00 for repairs.  Total Current Billing $55,476.80.  Total Aged Receivables $8,175.16.  Total Accounts Receivables $63,651.96.  Inspections Completed: Fire Hydrants on 12/30/2006.  Total deposits for March $60,014.19.  Disconnects/Reconnects income was $177.70.  Provided Discharge Monitoring Report, number exceeded all zero.  Reported on repairs made and 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.  

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

ENGINEER'S REPORT

Marvin Zahradnik of Landev Engineers, Inc., the District's Engineer, was absent.  Tony Garza reported on Marvin's behalf that there are no new items pending.  He is waiting on a completed drainage study for Royal Montreal project.

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 April 16, 2007 - $2,560,287.11.  Total Debt Service Requirements for 2007: $1,354,107.50.  General Operating: Previous cash balance March 19, 2007 - $5,043.26, total deposits $59,998.33.  Beginning cash balance April 16, 2007 - $63,428.67.  General Operating Funds available April 16, 2007 - $1,986,360.12.  Included a copy of the Budget for fiscal year ending September 30, 2007, the Investment Report and the Tex Pool Performance sheet.

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.

CONSIDER AND POSSIBLY APPROVE COST SHARING AGREEMENT WITH MEMORIAL MUD FOR STORM WATER DRAINAGE FACILITIES

     Waiting on study that Doug Knopka is having done.

CINCO REGIONAL OPERATING COMMITTEE REPORT     

     Tony Garza, Board Member, met with Mr. Calderon at the plant on Saturday.  The Operating Committee is requesting an additional change order to include:  1. Galvanized bridge needed for safety at an estimated cost of $10,600.00;  2. Remove Weirs and old traveling bridge at an estimated cost $56,200.00;  3. Remove and dispose chlorine chamber at an estimated cost $16,980.  Total estimated cost is $83,700.  Our portion is 33% which is $27,647.40.  

After discussion and upon motion duly made, seconded and unanimously carried, the Board approved the galvanized bridge and opposed the removal of the weirs and old traveling bridge and opposed the removal and disposal of the chlorine chamber.  They would like to see some comparative bids on these two items.  The Board will meet with Cinco MUD on Thursday.

AUTHORIZE ANY NECESSARY ACTIONS WITH RESPECT TO GREENBELT TRACTS

     Board Member Chip Norris reminded the Board of the need for plants to prevent graffiti in the greenbelt.  John will talk to Bryan Trepp with Junction Landscape.

PENDING BUSINESS

     No pending business to report on.  Doug Knopka met with Judwin; they are trying to provide Harris County with numbers that meet drainage requirements without detention.  He should know something next month.

After concluding and there being no further business to come before the Board, the meeting was adjourned at 7:44 p.m.

                                                                                                                            _______________________________

                                                                                                                            Secretary

Attachments:     Bookkeeper's Report