September 2009

Board Meeting Date:  September 28, 2009 ~ 9:00 A.M.

PERSONS PRESENT: Gary Winchester, Buzz Ahrens, Gene Cornelison, Eric Wilmarth, Nancy Martin, Steven Woodruff, Chris Wilbanks, Tom Heard, Janice Henderson, David Kubala, Bill Graham, Tom Roach, Jim Carpenter, Wesley Banks, Ryan Sarks, Rick Dobbs, Rick Wilson, Jeff Hooper, Clint Blackwell, Dwayne Fowler, Randy Mitchell, Dan Carson, Dwight Turner, Ron Banks, Beth Williams, Craig Ferguson, Bryce Holcomb, and Amy Wells.

Gary Winchester, Chairman, called the meeting to order.

1. AN INVOCATION WAS GIVEN BY BUZZ AHRENS, FOLLOWED BY THE PLEDGE OF ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA.
2. RICK DOBBS REPORTED THAT CORRESPONDENCE HAD BEEN RECEIVED FROM J.R. CONNOLLY, PRESIDENT OF HICKORY FLAT COMMONS, LLC, REGARDING SEWER FEES. In this correspondence, Mr. Connolly stated that Hickory Flat Commons requests that any remaining sewer tap fees be waived for future tenants.Mr. Connolly also noted that the Hickory Flat Commons shopping center, which opened in 2008, is comprised of Kroger and 43,905 square feet of retail shops, of which 16,900 square feet currently remain vacant. Hickory Flat Commons has already paid $200,000.00 in sewer tap fees for the development in addition to pump station fees, water tap fees, and County impact fees.Mr. Connolly noted that the temporary 90% decrease in impact fees by the Cherokee County Board of Commissioners for economic stimulus has increased interest in Hickory Flat Commons. However, the sewer tap fee increase in April 2008, which includes 22% for a dining seat, 22% for a bar seat, and 21% for a fast food seat have proven to be an economic hardship for any prospective restaurant tenants in these difficult economic times. Mr. Connolly noted that following the lead of Cherokee County in eliminating or dramatically reducing sewer tap fees would stimulate new business, jobs, economic development, and water/sewer usage revenues.

   Amy Wells, Project Manager for Hickory Flat Commons, distributed a worksheet (ATTACHED) which detailed the sewer tap fees, pump station fees, and County impact fees assessed to Hickory Flat Commons.

   Rick Dobbs noted that the Authority has honored the former sewer tap rates for this project because prices were quoted for the project prior to the rate change in April 2008. Mr. Dobbs noted that it is not feasible for the Authority to honor these former rates any longer because the project should have been built-out at this time.

   Tom Heard cautioned that approval of this request would set a precedent.

   Gary Winchester noted that this request is for the Board to waive remaining sewer tap fees for future tenants, as well as for the Board to consider holding the former sewer tap fees that were in place prior to April 2008.

   MOTION BY ERIC WILMARTH AND SECOND BY GENE CORNELISON TO DENY THE REQUEST MADE BY HICKORY FLAT COMMONS FOR THE BOARD TO WAIVE REMAINING SEWER TAP FEES AND TO ALSO DENY THE REQUEST FOR THE BOARD TO CONTINUE TO HONOR FORMER SEWER TAP FEES IN PLACE PRIOR TO APRIL 2008. All members voted for the motion.

3. DAN CARSON REQUESTED APPROVAL OF CONTRACT CHANGE ORDER #1 FOR THE COLEMAN’S BLUFF #1 & #2 SANITARY SEWER INTERCEPTOR PROJECT. Mr. Carson reported a total change order amount of -$72,998.38. Mr. Carson noted the reason for the change order is to reflect actual quantities installed. Mr. Carson reported a present contract price of $329,267.00, a final contract price of $256,268.62, and a total of $25,558.93 paid to Hayes Pipe Supply.MOTION BY ERIC WILMARTH AND SECOND BY NANCY MARTIN TO APPROVE CONTRACT CHANGE ORDER #1 IN THE AMOUNT OF -$72,998.38 FOR THE COLEMAN’S BLUFF #1 & #2 SANITARY SEWER INTERCEPTOR PROJECT. All members voted for the motion.
4. DAN CARSON REQUESTED APPROVAL OF CONTRACT CHANGE ORDER #1 FOR THE ROSE CREEK WPCP INFLUENT SCREEN REPLACEMENT PROJECT. Mr. Carson reported a total change order amount of -$48,250.00. Mr. Carson noted the reason for the change order is to revise the control allowance from $25,000.00 to $1,440.00, for a deduction of $23,560.00, and to revise the general allowance from $25,000.00 to $310.00, for a deduction of $24,690.00. Mr. Carson reported an original contract price of $469,400.00 and a revised contract price of $421,150.00, which incorporates this change order.MOTION BY ERIC WILMARTH AND SECOND BY NANCY MARTIN TO APPROVE CONTRACT CHANGE ORDER #1 IN THE AMOUNT OF -$48,250.00 FOR THE ROSE CREEK WPCP INFLUENT SCREEN REPLACEMENT PROJECT. All members voted for the motion.
5. DWIGHT TURNER REPORTED THAT A LETTER HAD BEEN RECEIVED FROM AUTHORITY CUSTOMER LORI BEARDSLEE, WHO WAS CONCERNED ABOUT RECEIVING A LARGE WATER BILL UPON DISCOVERY OF A WATER LEAK. Mr. Turner noted that Ms. Beardslee is now satisfied and is set up on a twelve-month payment plan.
6. MOTION BY GENE CORNELISON AND SECOND BY CHRIS WILBANKS TO APPROVE THE 8/31/09 BOARD MEETING MINUTES AS PRESENTED. All members voted for the motion.
7. BRYCE HOLCOMB OF CITIGROUP GLOBAL MARKETS PRESENTED THE PROPOSED CURRENT REFUNDING OF SERIES 1997 AND 1998 BONDS . Mr. Holcomb noted that tax exemption rates have hit 42-year lows, and as market-to-market data has continued to rally, the Authority can achieve significant savings by refunding the Series 1997 and Series 1998 bonds. From the Series 1997 bonds, Citigroup recommends that the Authority refund the Term Bond maturing on 2027 ($14.555 million), and from the Series 1998 bonds, Citigroup recommends that the Authority refund the Term Bond maturing 2028 ($11.140 million). Mr. Holcomb also noted that, per an analysis conducted on 9/23/09, the Authority could realize a total gross savings of $2,112,642.06, a present value savings of $1,466,012.15, and a present value savings as a percentage of refunded bonds of 5.71%. Mr. Holcomb noted that this summary assumes the issuance of traditional fixed rate, uninsured, callable bonds, as well as that current surety polices are sufficient to provide debt service coverage for proposed 2009 Refunding Bonds. Savings are present valued back to the delivery date of the bonds at the estimated bond arbitrage yield. Mr. Holcomb also noted that this summary assumes the Authority issues a 30-day conditional call notice to avoid funding an escrow and incurring negative arbitrage. All savings figures are net of Costs of Issuance.Mr. Holcomb noted that Citigroup would like to move forward with this refunding, pending Board approval, so that rates can be locked in as soon as possible. Mr. Holcomb also noted that the Authority may have the opportunity to refund a portion of its 2001 bonds. Mr. Holcomb stated that, pending Board approval, Citigroup could investigate this opportunity more closely.

   Mr. Holcomb stated that the Authority would need to set a pricing date for the bonds, and noted that the pricing date would be the actual date that the rates would be locked in. The Board of Directors would need to conduct a Called Meeting at that time in order to adopt a resolution.

   Mr. Holcomb noted that the Authority is under no obligation until such time that a Called Meeting has been conducted.

   MOTION BY NANCY MARTIN AND SECOND BY ERIC WILMARTH TO AUTHORIZE CITIGROUP AND BRYCE HOLCOMB TO MOVE FORWARD WITH THE REFUNDING OF THE 1997 AND 1998 BONDS, AND TO ALSO INCLUDE THE REFUNDING OF 2001 BONDS, IF DEEMED FEASIBLE BY CITIGROUP. All members voted for the motion.

8. JANICE HENDERSON PRESENTED AN AMENDMENT TO DEPRECIATION FOR THE 2009 BUDGET, AS WELL AS AN ADDITION FOR OTHER POST EMPLOYMENT BENEFITS (OPEB). Mrs. Henderson noted that $481,000.00 will be included for OPEB for Fiscal Year 2009. Mrs. Henderson noted that the Authority will continue to meet bond coverage requirements with approval of this amendment.MOTION BY STEVEN WOODRUFF AND SECOND BY ERIC WILMARTH TO APPROVE THE AMENDMENT TO DEPRECIATION AND ADDITION OF A LINE ITEM FOR OPEB IN THE AMOUNT OF $481,000.00 FOR THE FISCAL YEAR 2009 BUDGET. All members voted for the motion.
9. JANICE HENDERSON PRESENTED PROPOSED AMENDMENTS TO THE 7/27/09, 6/29/09, 5/26/09, AND 1/26/09 BOARD MEETING MINUTES, DUE TO TRANSCRIPTION ERROR. The amendments are as follows:

   1) 7/27/09 Minutes: Page 2, Item 8: “net loss of $1,480,235.00” will be changed to “net income of $613,114.00”

   2) 6/29/09 Minutes: Page 2, Item 7: “net loss of $1,606,717.00” will be changed to “net loss of $1,490,285.00”

   3) 5/26/09 Minutes: Page 2, Item 6: “net loss of $2,027,242.00” will be changed to “net loss of $1,940,613.00”

   4) 1/26/09 Minutes: Page 2, Item 7: “sales have exceeded budget projections” will be changed to “water sales have exceeded budget projections”

   MOTION BY NANCY MARTIN AND SECOND BY GENE CORNELISON TO APPROVE THE PROPOSED AMENDMENTS AS PRESENTED. All members voted for the motion.

10. JANICE HENDERSON PRESENTED THE FINANCE REPORT. Mrs. Henderson reported that total operating revenues are approximately $1,090,069.00 under budget for the period ending 7/31/09. Mrs. Henderson also reported total operating expenses are approximately $1,844,456.00 under budget for the same period. Mrs. Henderson stated that income from operations is approximately $754,387.00 over budget, and reported a year to date net income of $2,839,180.00 as of 7/31/09.
11. TOM HEARD REPORTED THAT, IN LIEU OF RECENT FLOODINGS, CHEROKEE COUNTY EMA HAD INVITED THE AUTHORITY TO ATTEND A FEMA MEETING ON 9/26/09. Mr. Heard noted that the Authority is not requesting assistance from FEMA at this time.
12. CLINT BLACKWELL PRESENTED THE WATER TREATMENT OPERATIONS REPORT. Mr. Blackwell reported an average daily treatment of 14.2 MGD for the month of September at the Etowah River Water Treatment Facility. Mr. Blackwell also reported that the Hollis Q. Lathem Reservoir is full at 1189 feet.
13. MIKE VENTERS PRESENTED THE WASTEWATER TREATMENT OPERATIONS REPORT. Mr. Venters reported an average daily treatment of 1.925 MGD at the Rose Creek facility, and an average daily treatment of 3.880 MGD at the Fitzgerald Creek facility.
14. MIKE VENTERS REPORTED THAT THE DECANTERS AT THE FITZGERALD CREEK FACILITY HAVE BEEN REPAIRED AND ARE NOW IN OPERATION.
15. BILL GRAHAM PRESENTED THE CONSTRUCTION REPORT. MR. GRAHAM REQUESTED APPROVAL OF CONTRACT CHANGE ORDER #1 FOR THE SIXES ROAD UTILITY RELOCATION PROJECT. Mr. Graham reported a total change order amount of -$35,076.13, and noted the reason for the change order was to reflect actual quantities installed. Mr. Graham reported a present contract price of $164,190.60 and a final contract price of $129,114.47.MOTION BY NANCY MARTIN AND SECOND BY ERIC WILMARTH TO APPROVE CONTRACT CHANGE ORDER #1 FOR THE SIXES ROAD UTILITY RELOCATION PROJECT IN THE AMOUNT OF -$35,076.13. All members voted for the motion.
16. TOM HEARD PRESENTED THE GENERAL MANAGER’S REPORT. MR. HEARD NOTED THAT THE CITY OF CANTON HAD QUESTIONED IF THE AUTHORITY IS INTERESTED IN PURCHASING TWO MILLION GALLONS OF CAPACITY IN THE HICKORY LOG CREEK RESERVOIR.
    
    Tom Heard noted that he would contact Mayor Hobgood to determine if the City of Canton desires to conduct a joint meeting with the Authority for further discussion of this issue.
17. GARY WINCHESTER REPORTED CONCERNING PILGRIMS PRIDE. Mr. Winchester stated that Vernon Rowe of Pilgrims Pride has noted that Pilgrims Pride intends to honor its existing contract with the Authority.
18. MOTION BY BUZZ AHRENS AND SECOND BY ERIC WILMARTH TO ADJOURN. All members voted for the motion.

The meeting adjourned at 10:25 A.M.