1. Call to Order

The special meeting of the Board of Directors of Bartonville Water Supply Corporation was called to order by President Graves at 7:24 p.m. on Tuesday, August 5, 1999 at the corporation office.

Directors in Attendance

Joe Graves, President
Philip Block, Vice-President
Larry Kaufman, Secretary-Treasurer
Scott Kilpatrick
Michael Paulson arrived at 7:50 p.m.

Directors Absent

Kevin Alberts

Consultants in Attendance

Wayne Ginn, PE, The Ginn Corporation
Ronnie Phillips, Esquire
Jennifer Drury, Consulting Accountant

Staff in Attendance

Jim Leggieri, General Manager
Betty Robertson, Administrator
Darrin Ezell, Administrative Assistant

Public in Attendance

Frank Babb- Project Manager/Republic Developement Group
Rick Strauss, Partner- Republic Developement Group
Jeff Hurt, Esquire- Counsel for CDD # 4
Bob Zollars, Partner- Huitt-Zollars
Sanford Case, P.E.- Huitt-Zollars

3. Discussion and Action on Matters Related to Development of the Rayzor Ranch Property

Ronnie Phillips gave a synopsis of the talks between lawyers on the points of the plan between BWSC and CDD#4. He said that there was only one thing he wasn't sure about and that was the $350.00 fee per customer as the Board had calculated $370.00 per customer. Phillips said that he believed the additional $20.00 was for health insurance for employees.

Jeff Hurt responded by first taking the time to introduce several new people from Huitt-Zollars. Hurt stated that Mr. Strauss was out of town on vacation and he had brought him current on the issues at hand.

Phillips stated that there would be an initial payment of $250,000.00 up front. This would cover engineering fees, legal fees, new trucks, hiring additional employees and other up front costs. He also stated that he had Wayne Ginn, P.E. go back through the last 10 years of construction costs and classify which should be capital expenditures and which were expenses. Phillips said that there would be a clause in the agreement that would dictate that a committee consisting of engineers and accountants from both sides that would agree on costs and building decisions and if there were a tie or deadlock, an independent third party would make the decision breaking the deadlock.

Phillips said that there would be a 3% per year increase on the $370.00 fee. Phillips also stated that there would be a minimum payment the first year of $160,000.00 based upon the $370.00 that would be for the period of September 2000 to September 2001. That same minimum would be in effect each year. According to the building rates, the minimum would be covered by the build out. Phillips stated that the rest was a drafting issue.

Phillips did want to make the CDD#4 aware that BWSC's storage tanks were concrete and not steel which would mean a higher cost. Ginn, the engineer, would specify the type of tanks.

Strauss stated that he would pay the amount for the meters at whatever was set and that he would cover all start up costs. Hurt said that he had some variations from what Phillips had but essentially they agreed. He said that the 3% could be bad for both sides in times of high inflation. Kaufman said that the inflation rate could be tied to some other factor. Hurt said that he liked the idea of looking at the audits and figuring out the fee that way.

Strauss said for the Board to pick which way they wanted to figure out the fee and they would go with it. He said the problem he saw was with the lump sum payments. He stated that they may be behind schedule and then they wouldn't be able to meet the payments. The problem, he said, was the dates that benchmark the Republic Development plan. He stated once again that BWSC would be covered for its cost. He said that the initial water would be needed on the golf course in September 2000. The first lots would be delivered on January 2001. He stated that those were not houses but lots only. He suggested pegging the minimum payment to when the houses first came on the property.

Phillips apologized for the dates being moved up but that the repositioning of dates was fine.

Strauss stated that with the $250,000.00 conforming to the business plan of Republic Development, there was no problem. He said that they don't mind reimbursing for the money as long as they can have a bill for the accountants.

Zollars asked what the intent of the $250,000.00 was. Phillips explained in detail what the start up costs were and how BWSC had figured them. He stated that it would be a nightmare to characterize the costs during start up in the contract so the lump sum was easiest. Phillips explained that the lump sum would cover any costs if the development went "belly up". Kaufman agreed.

Strauss admitted they have yet to arrive early on a project. That was the reason for the trepidation regarding the early payment of the sum. He suggested that the two groups get together and figure how the $250,000.00 is to be phased in.

Leggieri said that he wasn't sure what involvement BWSC would have in the project in the beginning. He said that he felt the UTRWD would make the developer have an air gap in the reception point of the water and that the tank required would cost some money up front.

President Graves stated that the Board was ready to go ahead with the concept of how it was to be done. They just needed some dates to benchmark the financials.

Strauss said the timing issues were of importance and that the staff of BWSC would without question be of immense help.

Phillips stated that the main points had been covered and that a motion be made to instruct the attorneys and staff to start drafting the agreement for a review by the UTRWD, FMHA, TRWA, TCEQ and all appropriate agencies.

Motion by Block and second by Kilpatrick to instruct the attorneys to start drafting the agreement. Motion carried unanimously.

Strauss asked for something in writing for the UTRWD and the other agencies involved in the project. Phillips asked if a resolution would be alright. Strauss agreed.

Strauss stated that the Board was hard working and very reasonable in negotiations. He thanked all present. Phillips said that he had checked on Strauss's reputation and that it was good and the attendees filed out.

President Graves suggested a break at 7:55 p.m. and then reconvened at 8:07 p.m.

2. Executive Session:

The Board did not convene in Executive Session.

4. Adjournment

Motion by Paulson and second by Block that the meeting adjourn. Motion approved unanimously; the meeting adjourned at 8:08 p.m.

Recorded by Darrin C. Ezell, Administrative Assistant

Certified by Larry Kaufman, Secretary-Treasurer