PRESENT

DANNY STONE - 2009 - 2011 - PRESIDENT

PRESTON MASON - 2009 - 2013 - SECRETARY/TREASURER

LEON SEIDL, SR.- 2008-2011 - VICE PRESIDENT

LANNY YOUNG, JR. - 2009 - 2013 MEMBER

KIM DELZ - 2010 - 2014 - MEMBER

EARL FOSTER - GENERAL MANAGER

SHARON VALENTINE - OFFICE MANAGER

1) CALL TO ORDER –The meeting opened at 7:00 P.M. with the Pledge of Allegiance. 

2) This meeting was held in accordance with the Texas Open Meetings Act. A quorum WAS REACHED.

3) PUBLIC COMMENTS –Michael Shaw lives on River Oaks Dr.  His bill is usually between $26.00 and $34.00 and he got a bill for $145.00.  He still has a bill coming for over 100,000 gallons of water. They found the leak today; it was a broken line under a concrete slab in the backyard.  He has been granted leak relief under the rules in the tariff of $294.20.  He would like to know if the board can do more than that. He will still owe over $450.00 on his account.  After discussing it the board decides that he has been granted the amount of leak relief that he is entitled according to the tariff.

4) APPROVAL OF MINUTES FOR REGULAR MEETING OF JANUARY 18, 2010 – Need to change the spellings on item 9 from Semon’s to Siemon’s.  Spell out Fanny Mae and Freddie Mac on item 6.  On item 11 delete poured and change to painted.  Lanny makes a motion to accept the minutes as amended.  Preston seconded the motion and the motion carried unanimously.

At this time we will jump to item #7

7) INVESTMENT POLICY – Mr. Mason has spoken with David Porter, Investment Broker and he is here to make a presentation to the Board.  We have approximately 1.5 million to invest.   Mr. Porter explains 2 bond options.  Government guaranteed collateral backed bonds and Mortgage backed bonds.  These are not the same type of mortgage bonds that caused the economy to collapse.  He does not think that we should put all of our money in one type of investment.  Ginny Mae bonds are government backed securities – no one knows when they will mature.  The type that we would look at would pay off on the front end – in 2 – 4 years, these pay interest monthly and could pay as much as $32,000.00 (4%).  We would blend in 2 tiered index bonds with a fixed interest of about 6%.  This is a prioritized amortization bond and they are very liquid.  The other option with the balance of money is an inverse floater and Mr. Porter has seen them with a coupon of 15.9% - this is 1 ¼% per month.  If we were to buy right now we could possibly get a 12% coupon.  Mr. Porter has estimated a blended return of $77,500.00 over the year.  Mr. Porter’s fee would be no more than $5.00 per $1000.00 in bonds.

We will need to revise the investment policy in order to be able to make these investments.  Mortgage backed bonds are not allowed by the PFIA; however since we are at WSC we are not required to follow the PFIA. 

5) TREASURER’S REPORT ON JANUARY FINANCIAL REPORTS - Preston Mason gave the treasurers report.  We did have some expenses this month that are not usual monthly expenses, the TCEQ annual assessment, the printing and publication for the annual meeting and THM letter, the audit, LCRA true up as well as some repair bills for the treatment plant. With miscellaneous income and fees, total revenue was $126,652.57. Total expenses for the month were $147,256.81, leaving a net income including capital fees and without deducting depreciation was (20,604.24).  Short-term investments are $1,490,370.77.   Long term investments are $69,718.33.   Mr. Mason feels that we should move money out of the sweep account and possibly into prosperity.  We should bring our deposits down to the FDIC protection level of $250,000.00.   Kim made a motion to accept the treasurer’s report. Leon seconded the motion and the motion carried unanimously.

6)COMMITTEE REPORTS:

Personnel Committee - Renew Health Insurance Blue Cross Blue Shield – Leon made a motion to renew the health insurance with BCBS, this would be a continuation of the same coverage that is currently carried for the employees. There was an increase in the premiums, but this was allowed for in the budget.   Mr. Mason states that he feels that this is one way that we can compensate employees’ tax free.  Lanny seconded the motion and the motion carried unanimously.

Infrastructure Committee – All the permits to do the By-Pass have been approved. We are just waiting on LCRA to approve the erosion control.  Chlorine Scrubber – There is a company in Denver that has 2 scrubbers that they bought and never installed.  We are making an offer to them of $20,000 for 1 scrubber.  Excel has quoted us $32,000, for the installation.  We have an engineering firm preparing us an emergency operating plan.  This will give us the information we need to form an emergency response plan.  We will have to report to the EPA since we will have 1 ton canisters of Chlorine.

Credentials Committee – No Report

Rate Committee – No Report

Tariff Committee – Approve Tariff change to section E 14 Rules for Disconnection of Service – the proposed change is adding:  Failure of the member to pay the late fee and where the charges are less than the base monthly rate.Approve Tariff change to section G 19 Double Check Valve/P.R.V. testing – add the wording and annually thereafter.
Kim made a motion to make both changes as noted.  Leon seconded the motion and the motion carried unanimously.

8) CHLORINE SCRUBBER – This item was covered under the infrastructure committee report.

9) APPROVE S.D. KALLMAN INVOICE #3553 FOR CONSTRUCTION – S.D. Kallman invoice #3553 in the amount of $7,631.88.   Leon made a motion to pay Kallman invoice #3553 in the amount of $7,631.88.  Lanny seconded the motion and the motion carried unanimously.

10) APPROVE S.D. KALLMAN INVOICE #3549, 2545 BY-PASS PLANS & ENGINEERING – Mr. Mason made a motion to pay Kallman invoice #3549 in the amount of $18,433.20.  Kim seconded the motion and the motion carried unanimously.

11) APPROVE EXCEL CONSTRUCTION PROGRESS BILLING #6 FOR NEW PLANT – Progress billing #6 for the new plant construction in the amount of $201,875.00.   Lanny made a motion to pay progress billing #6.  Preston seconded the motion and the motion carried unanimously. 

12)GENERAL MANAGER’S REPORT, INCLUDING OPERATION & MAINTENANCE – Earl presented his report.  The overall cost for us to make water did go up due to the extra expenses during the month.

13)REQUEST FOR FUTURE AGENDA ITEMS– Special meeting to review and revise the investment policy and the investment strategy on February 16, 2010 at 2:00 p.m.

14)ADJOURNMENT – Lanny made a motion to adjourn the meeting.  Leon seconded the motion and the motion carried unanimously.  The meeting was adjourned at 8:40 p.m.

KINGSLAND WATER SUPPLY CORPORATION BOARD OF DIRECTORS MEETING

FEBRUARY 15, 2010

PRESENT

DANNY STONE - 2009 - 2011 - PRESIDENT

PRESTON MASON - 2009 - 2013 - SECRETARY/TREASURER

LEON SEIDL, SR.- 2008-2011 - VICE PRESIDENT

LANNY YOUNG, JR. - 2009 - 2013 MEMBER

KIM DELZ - 2010 - 2014 - MEMBER

EARL FOSTER - GENERAL MANAGER

SHARON VALENTINE - OFFICE MANAGER

1) CALL TO ORDER –The meeting opened at 7:00 P.M. with the Pledge of Allegiance. 

2) This meeting was held in accordance with the Texas Open Meetings Act. A quorum WAS REACHED.

3) PUBLIC COMMENTS - There were no public comments.

REVIEW AND REVISE INVESTMENT POLICY – Mr. Mason stated that the real question is do we want to invest in the bonds (that were presented by David Porter at the February 9, 2010 meeting), if we do not then we do not need to change the policy.  The board concurred that investing in the bonds was the best way to go at this time.

REVIEW AND REVISE INVESTMENT STRATEGY – Mr. Mason emailed his recommended updates to the board members for his investment strategy based on the board making the decision to invest in bonds.  His recommendation is that we keep $250,000 in operating cash reserve in Security State and Prosperity Bank to fund day to day operations.  We would invest $1.0 million in Priority Amortization Class Bonds and $250,000 in Inverse Floater Bonds.

Preston made a motion to except both the revised investment policy and strategy.  Lanny seconded the motion and the motion passed unanimously.

ADJOURNMENT – Leon made a motion to adjourn the meeting.  Lanny seconded the motion and the motion passed unanimously.  The meeting adjourned at 12:16 p.m.