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 7:35 p.m. on Tuesday, July 20, 1999 at the corporation office. Jim Leggieri was called upon to introduce attendees.

Directors in Attendance

Joe Graves, President
Philip Block, Vice-President
Larry Kaufman, Secretary-Treasurer
Kevin Alberts arrived at 7:37 p.m.
Scott Kilpatrick
Michael Paulson

Directors Absent

None

Consultants in Attendance

Wayne Ginn, PE, The Ginn Corporation
Ronnie Phillips, Esquire

Staff in Attendance

Jim Leggieri, General Manager
Darrin Ezell, Administrative Assistant

Public in Attendance

Frank Babb, Project Manager/Republic Property Group
Jeff Hurt, Esquire
Don McClary, CFO/CoServe
Bill McGuiness, CEO/CoServe
Rick Strauss, Partner/Republic Property Group
Tom Taylor, Executive Director/Upper Trinity Regional Water District
Ocie Vest, P.E./Huitt-Zollars
John Wagner, Partner/Republic Property Group

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

Rick Strauss spoke on the ownership of the Rayzor Ranch passing to his company about two weeks before the meeting. He apologized for not meeting with the Board previously. He then gave the attendees background on his company. He stated that his company owned a title company, a home building company that builds homes from 150,000 to 2,000,000 dollars, and Republic property group which has planned and built commercial, leisure and residential properties. He stated that his company has diversified so as not to be susceptible to market fluctuations. He further commented that they have built several planned communities.

Mr. Strauss stated that they were told not to discuss their plans with the property until only recently so as not to have too many rumors. He said that it worked in their favor anyway because in the early stages they didn't have a "game plan" anyway. Strauss indicated that his company becomes involved in the community and likes to become a good neighbor. Strauss stated that his firm is small and reachable. If anyone would like to call them at anytime, he was open for phone calls.

Strauss indicated that in order to start off on the right foot, his company has agreed to drop all the multifamily dwellings in the previous project. He understood that his plan was a little different than most developments. In Phase I, they will be building a golf course and 1100 homes with an average price of 250,000 to 300,000 dollars. There will be a number of homes in the 400,000 through 600,000 dollar range. He stated that housing of all prices makes a good community.

Strauss then alluded to mutual concerns and the 10% rule governing water purchased from the UTRWD. He wanted to try and work within the CDD#4 and UTRWD to make a beneficial relationship for all involved. He then said that he first wanted to state the initial water needs. The first 12 months will take 1.5 MGD growing to about 3 MGD sometime in the next 18 to 24 months. Strauss said at build out it should be 6 MGD so there are some hurdles in getting there. He said that they will meet anytime, anyplace, anywhere and as often as necessary.

Attorney Jeff Hurt was then called upon to speak about the legal issues concerning the CDD#4. He said his firm was retained in January of 1999 to create the CDD#4 in Denton County. He said the property owners were wanting to develop with a unified approach having one governmental entity providing water, sewer and such. He said he was familiar with BWSC and was not aware however, of the 10% rule. The rule as he stated prevents any Water Supply Corporation from taking more than 10% of the total of the UTRWD's water output. He then stated that the governmental entity, CDD#4, should be the one to buy water for the Rayzor Ranch in order to overcome this rule. The CDD gives a unique opportunity to be beneficial to both Bartonville WSC and other WSC's as long as a compromise can be worked out concerning the CCN. Hurt stated that if that were the case 10% of the water they buy would be freed up to be used by Bartonville WSC. He has been instructed to be available to work out an economically feasible plan that would work in favor of both parties concerning service in the Rayzor Ranch.

President Graves asked about the CCN and Denton's ETJ. Leggieri noted that only about 200 acres of the CCN were in Denton's ETJ. Graves noted that the development group would find the Board of Directors easy to work with.

Ronnie Phillips then stated that deciding how to proceed would be the best first step. Graves said that from what he's heard about the new proposals that have been thrown out that the TCEQ will have to agree to any contracts. Hurt stated that the TCEQ should not have a problem with the contract since both parties would agree to it.

Phillips inquired as to using grey water for watering the golf course. Hurt replied with a yes concerning the grey water. Kaufman inquired as to the groundbreaking date. Strauss replied that January 1st, 2000 was the estimated ground breaking date according to their business plan and schedule. First construction would be on the golf course, then onto new home construction.

Kilpatrick inquired as to a water consumption model for the project and wanted a copy of the model data. Ocie Vest replied that yes there was a model.

Strauss said that they are wanting to build out at a rate of 350 homes per year and at the top end of build out it would be 500 homes a year. This would occur over a 10 year period. Coserve, as Struass stated, has agreed to serve as a "strategic partner" supplying 30 million dollars in utility investment.

Block questioned the development company's role in developing the infrastructure without straining the current memberships water needs. Strauss said that any water they would be using would not take away from the members water source. He said there would be things that the Board could offer that would help everyone rise to the consumption levels needed.

Graves mentioned that Bartonville WSC has come a long way in delivering water to their members. Graves also questioned Tom Taylor about the water line coming through BWSC's area. Taylor said they have been planning to build the pipeline for 5 years. He said that the 36" pipeline that can deliver 20 million gallons per day (MGD) and will run parallel to the electric line easement in the same corridor. Taylor said he would have it ready for the interested parties when they need it.

Jeff Hurt said that at the time the bonds were paid off that they would give the infrastructure away to Bartonville WSC at a very low cost. Strauss said that his company would buy the water through the CDD to where it could be delivered. Tom Taylor said that the easiest thing he has ever heard of is the water being available and the only thing needing to be done is the paperwork.

Ronnie Phillips suggested that they all agree to break up into caucuses and settle the legal, engineering and financial management groups using small work groups. Graves stated that he wanted to make sure that the customers were shielded from taking the brunt of the cost from the project.

Jeff Hurt said that the underwriters would be more comfortable if the CDD owns the facilities in the CDD's area. He stated that none of the current customers would pay for the facilities and once the infrastructure and bonds are paid off then Bartonville WSC would buy the system for a dollar. Up until that time, he said the CDD needs to own the facilities and when they are transferred it would be a seamless transaction.

Tom Taylor stated that the right of reuse clause in BWSC/UTRWD contract would have to be worked around. Block suggested that there be at least one Board member in every meeting concerning the project. Phillips inquired as to what the development group would like to see scheduled for meetings. Taylor suggested that there were two or three time sensitive issues such as the equity fee that increases at $25,000 per month. Taylor said that UTRWD has 10 MGD unassigned at this time but that Bartonville WSC would need to send a letter of commitment to the UTRWD concerning the water reservations.

Strauss stated that he would really like to see some fast movement on the project because the clock was running on a gigantic interest meter on the land loan. He promised that if Bartonville WSC set meetings as close together as possible his company would make the meetings.

Phillips suggested that everyone meet at 5:00 on Thursday the 22nd of July. Several attendees agreed to the time or said they would try to make it. Vest and Ginn said they would meet earlier than that and discussed their own time of meeting.

Tom Taylor said that the engineers should consider a second point of delivery from the Upper Trinity Regional Water District. Strauss said that they will have someone there at all the meetings.

Kaufman suggested scheduling an open meeting every week. He said to post an agenda to take care of the quorum and agenda rules and if no one showed up then it was no big deal.

Leggieri said he would post the agenda concerning a meeting on the next four Tuesdays and Strauss confirmed that he would have someone at the Thursday 5:00 p.m. meeting.
Tom Taylor suggested that the subscription to our water needs be upgraded. He said there was no money involved but a letter notifying the UTRWD would be sufficient.

Strauss then thanked the Board for their time and the attendees filed out of the board room.

2. Executive Session:

At 8:55 P.M., President Graves announced that the Board would reconvene the Executive Session concerning the following:

A. All Matters Related to Development of the Rayzor Ranch Pursuant to Government Code, Section 551.071.

The Board took no action and reconvened in Open Session at 10:18 p.m.

4. Adjournment

Motion by Paulson and second by Block that the meeting adjourn. Motion approved unanimously; the meeting adjourned at 10:19 p.m.

Recorded by Darrin C. Ezell, Administrative Assistant

Certified by Larry Kaufman, Secretary-Treasurer