Minutes of a Regular Meeting of the Board of Directors

MINUTES OF A REGULAR MEETING OF THE BOARD OF DIRECTORS OF THE CASTLE PINES METROPOLITAN DISTRICT

Held: Wednesday, July 26, 2017, 7:30 a.m., at 5880 Country Club Dr., Castle Rock, Colorado

A regular meeting of the Board of Directors of the Castle Pines Metropolitan District, Douglas County, Colorado, was called and held as shown above and in accordance with the applicable statutes of the state of Colorado, with the following Directors, constituting a quorum, present and acting:

Joe Gschwendtner Dick Munday Craig Sundquist Bob Tomz

Director Krueger was absent and excused from the meeting.

Also present were: Jeff Coufal, Carolyn Frainier, Phil Hunt, Sue Mantz, Katie Mazurowski, Dan Montano, District Staff; Lori Strand, District Counsel, Fairfield and Woods, PC; Mark Larson, Manager, Castle Pines Homes Association (CPHA); Matt Beerbower, Jen Ulrich, RubinBrown; Rick Huser, Resident.

Guest Introductions

Director Munday welcomed Rick Huser.

Potential Conflict of Interest Disclosures

District Counsel Strand stated that the Conflict of Interest disclosures were filed with the Secretary of State’s Office.

Approval of the Agenda

Director Sundquist made a motion to approve the agenda as presented, seconded by Director Tomz. Director Tomz suggested having the auditors lead off the Action Items portion of the agenda. Director Gschwendtner proposed moving Metrics to Executive Session. The Board unanimously approved the amended agenda.

Comments from the Community

There were no comments from the community.

1 Safety Report

Mr. Montano reported that the Field Staff are participating in daily “tailgate meetings.” At the meetings, supervisors discuss the day’s work and how to work safely. The meetings serve as a daily reminder to keep safety first. Supervisors have reminded Staff to continue to report any near misses so that any safety issues can be addressed. Director Munday suggested an objective of no safety incidents.

Action Items

Accept the Comprehensive Annual Financial Report (CAFR) for Fiscal Year 2016. Review ViewPoints (Report to Governance) – Director Tomz made a motion to accept the Comprehensive Annual Financial Report (CAFR) for the fiscal year of 2016, seconded by Director Sundquist. Ms. Mantz introduced Mr. Matt Beerbower and Ms. Jennifer Ulrich from RubinBrown, who were at the meeting to present the CAFR. Ms. Ulrich presented the audited financial statement, which meets all of the requirements to receive the Government Finance Officers Association (GFOA) certificate. Ms. Ulrich informed the Board that the CAFR presents a clean opinion of the District’s financials. While presenting the report, Ms. Ulrich focused on: GASB (Governmental Accounting Standards Board) 68 (year 2) and GASB 72, a newly required disclosure for fair value measurement which was added to the financial statements. Ms. Ulrich answered various questions from the Board members. Mr. Beerbower reviewed the ViewPoints – Report to Governance, which presents information regarding the scope of the audit and other matters. The report summarizes the results of the audit engagement. Mr. Beerbower answered questions about the report from the Board. The auditors had no new suggestions for the District. Mr. Beerbower reported that the audit went smoothly and there were no difficulties in the audit process. Mr. Beerbower said that he appreciated Ms. Mantz’ and Director Tomz’ assistance with the reporting. The Board thanked Ms. Mantz for all of the work she did in completing the audit. A vote was called and the Board unanimously approved the CAFR for 2016.

Approval of the Minutes from the June 28, Regular Board Meeting – Director Tomz made a motion to approve the minutes from the June 28, 2017, Regular Board Meeting, seconded by Director Gschwendtner. Ms. Frainier noted several changes. A vote was called and the motion passed unanimously.

Approval of the June 2017 Payables and Review the June Revenue and Expense Report – Director Sundquist made a motion to approve the June 2017 payables, seconded by Director Gschwendtner. Staff met with Director Tomz to review payables. Ms. Mantz reviewed the June payables, which totaled $1,418,308.42. Ms. Mantz answered questions regarding the following invoices from the following vendors: Auto Truck Group, Burns, Figa & Will, P.C., Cummins Rocky Mountain, LLC, Dana Kepner, Layne Christiansen, McGrane Water Engineering, LLC, Ramey Environmental Compliance, Inc., Sign Design, Tetra Tech, Inc., Timber Line Electric Corp. Ms. Mantz also answered questions regarding manual checks including: John Deere (Murdoch’s) and Steve Williams (resident). A vote was called and the Board unanimously approved payment of the June 2017 expenses in the following amounts: general fund $1,000,600.84, enterprise fund $360,539.68 and manual checks $57,167.90.

2 Ms. Mantz reviewed the June 2017 revenue and expense report. Ms. Mantz reported a projected year-end positive variance of $1.4M in the general fund and a projected year-end positive variance in the enterprise fund of $782K. Both positive variances are primarily due to the deferral of the new storage tank project.

Consider Approval to Update Signature Card for Wells Fargo Securities – Director Sundquist made a motion to update the signature card with Wells Fargo Securities, seconded by Director Gschwendtner. Ms. Mantz reported that the District wanted to update the signature card on the treasury and security account. In the past, the District had all Board members, Mr. Coufal and Ms. Frainier as signatories on this account. The new signature card will only list Director Tomz, Director Munday, Mr. Coufal and Ms. Frainier. A vote was called and the motion passed unanimously.

Consider Approval of Water Meter Upgrade Project (iPERLs) – Director Gschwendtner made a motion to approve the water meter upgrade project, seconded by Director Tomz.  The District has drafted a contract with UMS for the install.  Mr. Coufal said that it will take six weeks to receive the iPERL meters, once we place the order.  Dana Kepner will give the District a discounted price of $190 (compared to $195) for 1,500 meters, for a total cost of $285K.  Installation of the meters will cost approximately $136K.  The new FlexNet Software cost will be $18,683 (a one-time expense)  Dana Kepner does not recommend purchasing the customer portal at this time as they have not received positive feedback and are currently working out the bugs.  Staff will verify with Parker Water & Sanitation District, as well as another district that has installed iPERL meters along with the analytics, that the software is producing the expected results and reports.  The annual maintenance fee of $15K for the FlexNet software will remain the same as currently budgeted.

Director Gschwendtner amended the motion to approve $440K contingent on further research of customers using the analytics, and as long as the Staff is comfortable with the research results. A vote was called and the motion passed unanimously.

Discussion Items

Confirm Wednesday, August 23, 2017, at 7:30 a.m. – The Board confirmed the August 23, 2017, Board Meeting at 7:30 a.m.

Well Production and Well Repairs Update – Mr. Coufal reported that LDA-12 is back online and A-4R is expected to be online by July 28, 2017. Ms. Mazurowski reported that due to the regional draw-down of the Denver Basin aquifers, the District is experiencing a 12.46% decrease in well production compared to 2015 data. This equates to approximately one Arapahoe well. Ms. Mazurowski is working on analyzing how many new wells will need to be drilled in conjunction with a new 2 MG storage tank to meet the historical peak day demand of

3 approximately 4 MG. Ms. Mazurowski expects to have the analysis completed for the August Board meeting. Director Tomz said that McGrane was positive that the numbers from the Long Range Water Master Plan were valid for 30-50 years. He asked how accurate the new numbers were. Mr. Coufal said the proposed well sites include an Arapahoe well near Filing 40 and a Denver and Lower Dawson well near WTP1. Mr. Coufal said that Mr. Dennis McGrane’s model included a contingency percentage for the unknown; however it was not large enough. Staff will contract with Mr. McGrane to update the model in the spring after the aquifer levels recover. Mr. Coufal expects to bring forth a 2018 budget proposal for additional wells.

CIP Update – Mr. Montano reported that Foothills Paving and Maintenance has completed the planned roadway treatments for the 2017 Capital Improvement Project. The contractor is currently completing the punch list and it will be done next week. Overall, the District exceeded the contract by 3%, due to additional patching required. Additional roadway and paving projects are scheduled to be completed throughout August including: paving from Village Lakes to Tolland Drive on Castle Pines Drive South, paving the access trail from Red Pass Lane to trailhead after well site, Gate 3, Canyon Club, Egress Access Road and vehicle pull-offs.

Draft of Long-Range Roadway Master Plan – Mr. Montano presented the first draft of the District’s Long-Range Roadway Master Plan. In the draft, Mr. Montano added an option to use Pavement Surface Evaluation and Rating (PASER) instead of the Pavement Condition Index (PCI). PASER is a different method of analyzing road surfaces. Using this method, the entire village can be analyzed in one day. Pavement structures evaluated by the PASER method are rated from 10 (excellent condition) to 1 (failed pavement), based on the type, severity, and extent of the observed conditions. For example, a rating of 6 indicates that a slurry seal is needed. PASER will allow the District to have better control over the cost of the CIP. The PASER method will measure the condition of the road and will come back with a recommendation of what treatment is necessary for the roadway. This method works in conjunction with the District’s existing software, Carte Graph. Upgrading Carte Graph is cheaper than using the PCI software. Director Tomz said the Long-Range Roadway Master Plan should be incorporated in to the District’s Ten-Year Financial Plan. Mr. Montano informed the Board that he has the analytics for the next five years of roadway treatment, which will be cyclical. On the last page of the report, PCI ratings are converted to PASER ratings. This conversion was conducted by the Federal Highway Administration. Mr. Montano mentioned that Castle Rock, Colorado Springs and Arvada use the PASER method.

2B Drainage Final Report – Mr. Montano reported that the District has been completing the landscaping in this area, which delayed the closing of the project. Overall, the project went very well and there were few complaints. The budget for this multi-year project was $513K and at the end of the project there was a positive variance of $38K.

Metrics Committee Update – This update was moved to Executive Session.

Surface Water Test Well Permit – Ms. Mazurowski reported that Tetra Tech believes the U.S. Fish and Wildlife Service will require a biological assessment for the Preble’s Meadow Jumping Mouse. The District is working on obtaining two permits: Nationwide Permit (NWP)

4 18 and NWP 13. Based on timelines provided by Tetra Tech, construction of the test wells could begin as early November 2017, assuming no unforeseen delays occur. The District will be moving forward with Tetra Tech. There will be more discussion about this discussion item in the Executive Session.

Discussion of the District’s Position in Chatfield Reservoir – Mr. Coufal said that Chatfield Reservoir is moving forward with construction. Mr. Coufal will work on preparing a comprehensive report for the August Board meeting.

CPHA – Mr. Larson reported that an E-Blast was sent out regarding the issues at the Canyon Club with teenagers and underage drinking. The measures that were taken were successful. Mr. Larson said that he appreciated Metro’s help with the emergency evacuation road. The site-screening mitigation efforts what were taken for the Meadows extension are almost complete.

Staff Reports

Employee Engagement Survey – Ms. Frainier, Ms. Kerry Knackstedt, and Mr. Greg Swaney presented the results of the Employee Engagement Survey. These same results were presented to the Staff on July 18, 2017. The Management Team met with Ms. Brittany Johnson and Ms. Heather Shockey, from Mountain States Employers Council, to discuss the survey results. Ms. Shockey recommended repeating the survey every two to three years. Survey ratings less than 3.00 were interpreted as negative and ratings above 3.75 were interpreted as very positive. The average rating reported by the District Staff was 4.12.

Manager / Operation’s Report – Mr. Hunt reported that utility boxes along the main collector roads were being repaired and painted. The project will take two months for full-time and seasonal employees to complete. Ms. Mantz said that this was project that originated from the Beautification Committee. Mr. Montano reported that The Greens residents requested a speed study on Country Club Parkway. Drivers were traveling at an average of 34 m.p.h. Mr. Montano sent the information to LSC Engineering for mitigation recommendations. The next step would be using a sign which displays the speed of the driver. Mr. Montano said that he will bring more information to the Board next month. The residents on North Star Circle also requested a speed study. Mr. Coufal reported that the storage tank is leaking and divers were at the District yesterday. It is roughly a 10-gallon a minute leak. Mr. Jason LeTellier found the leak while he was performing required routine checks of the tank.

Administration Report – Ms. Frainier reported that there are two full-time Maintenance Tech positions open. Mr. Corey Yount resigned his position on Monday and his last day at the District is Friday, August 4, 2017. Ms. Frainier reported that there are currently four open workers’ compensation claims: a wrist injury that occurred on 12/12/14, an ear injury that occurred on 12/31/14, a shoulder injury that occurred on 5/17/17 and a thigh injury that occurred on 6/20/17.

5 Ms. Tammi Hartley, from Willis Towers Watson, was in the office on Monday, July 24, 2017, to present health benefits to the Staff and answer questions. Ms. Frainier reported that the price of the SDA Conference is good until one week before the conference and then the price will increase. Ms. Mantz reported investment summary rates for Treasury notes. The Investment Committee, comprised of Director Tomz, Director Sundquist, Mr. Coufal and Ms. Mantz will meet August 1, 2017. At the June Board meeting, the Board asked Ms. Mantz to review the last three years of water leaks in which the maximum credit of $1,000 was applied. Ms. Mantz provided the data to the Board. Many years ago, the District gave a credit with no cap. In 2010, the Board readdressed the leak policy and adopted a $1,000 cap. Ms. Mantz said that Staff is open to what the Board directs regarding this policy. Mr. Coufal recommends that the District bill at the first tier with language that allows the Board to make exceptions. This policy would be going forward and not retroactive. Ms. Mantz will bring an amended leak policy to the Board at the August Board meeting.

Attorney’s Report – Ms. Strand reported that the CPHA attorney, Ms. Suzanne Leff, is reviewing the stormwater easement agreement. After confirming with Director Munday that it was okay, Ms. Strand provided Ms. Leff with the storm water tables and maps that Fairfield & Woods prepared for the District.

Liaison / Project Reports

Plum Creek Water Reclamation Authority (PCWRA) – Director Munday, Director Sundquist, Mr. Coufal and Ms. Mazurowski attended the PCWRA Board Meeting. The bulk of PCWRA’s Board meeting was focused on the rate model and expansion of the plant, both urgent issues for PCWRA. Tetra Tech’s memorandum regarding the District’s involvement in the expansion of the plant and reverse osmosis discussion was included in PCWRA’s Board packet. COD Loading Update – Ms. Mazurowski reported that contractors spent a week and a half cleaning the 340-foot long outfall line that runs under Santa Fe. On July 7, 2017, piles of asphalt and rock debris (about one foot thick) were removed from the flume by PCWRA and CPMD staff. The first post-cleaning sample taken at the flume resulted in a 60% reduction from the previous week’s value. Data from July 11 – July 18, 2017, produced an average COD concentration of 1,020 mg/L, a 40% reduction from COD concentrations between March 28 - and July 7, 2017. Ms. Mazurowski has scheduled contractors to clean the line once more on Wednesday, August 2, 2017, and will continue to monitor COD values after this is complete. The District will develop maintenance and cleaning schedules for the line.

Water Conservation Water Usage Report – Director Tomz reported that June was the second highest usage month ever recorded at the District.

Executive Session

At 10:51 a.m., Director Tomz made a motion pursuant Executive Session pursuant to CRS 24-6-402(4) for the purpose of conferring with counsel, to determine positions that may be subject to negotiations. The motion was seconded by Director Sundquist and passed unanimously. Legal Counsel and Staff were invited to remain. All others left the meeting.

6 At 12:07 p.m., all Staff with the exclusion of Jeff Coufal left the meeting. The Executive Session continued and concluded at 12:30 p.m.

Adjourn

There being no further business to come before the Board, and upon motion duly made, seconded and unanimously carried, the Board adjourned the regular meeting at 12:30 p.m.

The Board of Directors approved the foregoing minutes on the 23rd of August, 2017. The preceding constitutes a true and correct copy of the minutes of the above referenced meeting.

______Co-Secretary