CHAPPELL HILL WATER SUPPLY CORPORATION

BOARD OF DIRECTORS MEETING

DECEMBER 22, 2011

MINUTES

DIRECTORS PRESENT – Robert Nash, Raymond Dabera, Barbara Schultz, Aisand Miles, Virgil Wilburn, Mary Tom Middlebrooks

OTHERS PRESENT – Edward Bentley, General Manager

CALL TO ORDER – Robert Nash     Nash welcomed Board members and thanked them for attending the meeting during Christmas week.  He emphasized the importance of the meeting  during which we would be brought up-to-date on the Water Supply’s relationship with the “Village” development. Nash also reminded the Board that we would meet again on January 12, 2012.

UPDATE ON “VILLAGE” PROJECT –Edward Bentley, General Manager

• ·         Bentley briefly reviewed both Options 1 and 2, initially presentedto the Board on December 1, 2011.
• ·         Bentley reported on his December 8, 2011 communication from Fred Nelson, the Water Supply’s CPA.  Mr. Nelson had  reviewed both Option 1 and Option 2 carefully.  His findings were:   If Option 1 was put into place, it would adversely impact our 501C12 tax status with the IRS.  Under our 501C12 status, 85% of our revenues must come from our customers.  Option 1 would violate that 85% revenue requirement because sale of water to the Village would exceed the amount of revenue allowed with the 85% rule.  If we adopted Option 1, we would lose our present 501C12 status.  Mr. Nelson had researched carefully the IRS code and had forwarded to Bentley those documents. 

Mr. Nelson felt some form of Option 2 would be much more favorable. 

• ·         Based on the recommendations of the CPA, Bentley revised slightly Option 2 and met on December 9, 2011 with Guido, representing the “Village”.  Mr. Guido was presented with the revised version of Option 2 for the developers to consider.  The developers responded December 22, 2011after reviewing Option 2.  They agreed with all points of Option 2, except numbers 1 and 2 (Option 2 as presented to the developers is attached as a matter of record. 
• ·         Bentley felt that Option 2 without numbers 1 and 2 would not be in the best interest of the Chappell Hill Water Supply.  Mary Tom Middlebrooks moved that we authorize Bentley to inform the developers that the Board does not see that Option 2 is feasible to consider without numbers 1 and 2.  Aisand Miles seconded.  The motion passed.

Mary Tom Middlebrooks  referenced an email from Axel Baehren, regarding federal monies available to water supply corporations.  (that email is attached as a matter of record)

There being no further business, the meeting was adjourned.

Mary Tom Middlebrooks, Secretary