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04/16/2019 Minutes 1 6 I 1 MINUTES OF MEETING FLOW WAY COMMUNITY DEVELOPMENT DISTRICT The Regular Meeting of the Board of Directors of the Flow Way Community Development District was held on Wednesday,April 16, 2019 at 3:00 p.m.,at the Offices of Coleman,Yovanovich&Koester, P.A., 4001 Tamiami Trail North, Suite 300, Naples, Florida 34103. Present and constituting a quorum: Drew Miller Chairperson John Wollard Vice Chairperson Tim Martin Assistant Secretary Ronald Miller Assistant Secretary Tom Kleck Assistant Secretary Also present were: James P. Ward District Manager Greg Urbancic District Counsel Audience: Tom Coffee All resident's names were not included with the minutes. If a resident did not identify themselves or the audio file did not pick up the name, the name was not recorded in these minutes. FIRST ORDER OF BUSINESS Call to Order District Manager James P.Ward called the meeting to order at approximately 3:04 p.m. and all members of the Board were present at roll call. SECOND ORDER OF BUSINESS Administration of Oath of Office Administration of Oath of Office for Mr.Tim Martin Mr. Ward indicated Mr. Tim Martin submitted his original Oath of Office; therefore the Oath of Office did not need to be administered. He stated Mr. Martin was now a sitting Member of the Board. THIRD ORDER OF BUSINESS Consideration of Resolution 2019-6 Consideration of Resolution 2019-6 re-designating the officers of the Flow Way Community Development District. 1jPage t611 Flow Way Community Development District April 16, 2019 Mr. Ward stated currently the officers were Mr. Drew Miller as Chairman, Mr. Tom Kleck as Assistant Secretary, Mr. Ronald Miller as Assistant Secretary, Mr. John Wollard as Vice Chairman and Mr. Tim Martin was newly selected. He indicated the Board could reorganize the officer's positions as it deemed appropriate. Mr. Drew Miller suggested keeping the Board's structure as it was and adding Mr. Tim Martin as an Assistant Secretary. The Board concurred. fOn MOTION made by Mr. Drew Miller,seconded by Mr.John Wollard, land with all in favor, Resolution 2019-6 was adopted as above and the Chair was authorized to sign. FOURTH ORDER OF BUSINESS Consideration of Minutes March 19,2019 Regular Meeting Minutes Mr. Ward asked if there were any additions, corrections or deletions for the March 19, 2019 Regular Meeting Minutes. Hearing none, he called for a motion. On MOTION made by Mr.John Wollard,seconded by Mr. Drew Miller, and with all in favor, the Minutes from the March 19, 2019 Regular Meeting were accepted. FIFTH ORDER OF BUSINESS Staff Reports Staff Reports a) District Attorney No Report. b) District Engineer No Report. c) District Manager Financial Statements February 28,2019(Unaudited) Mr. Ward stated he had no report unless there were questions regarding the Financial Statement. Mr. Ron Miller asked if the General Fund, Invested Funds, Reserve Account and Amount Available in Debt Services Balances reflected cash amounts in the bank. Mr. Ward responded in the affirmative; all bank accounts held cash, unless a "due to/due from" was indicated. Mr. R. Miller asked if the Reserve Account funds were invested in money market accounts. Mr. Ward responded in the affirmative; these were trust accounts, restricted 2IPage i 6 I I Flow Way Community Development District April 16, 2019 investments and were invested generally in "overnight" bank accounts. He explained these invested accounts did not earn much, less than 1% generally. Mr. R. Miller stated Federal Money Market accounts were yielding around 2.3%, which was more than twice what these accounts were currently earning. He asked if a change could be made to take advantage of higher yield rates. Mr. Ward responded the monies in the revenue accounts flowed out on May 1, and then again on November 1;therefore, it was difficult to take advantage of money market rates as the outflow would prevent full earning. Mr. R. Miller asked if there were other options to be considered. Mr. Ward responded the Board was limited in its investment options; accounts were required to be AAA securities, and the funds were much less from May until November annually. He stated he would research other options if Mr. R. Miller wished. Discussion ensued regarding US Bank, the type of security required, restrictions, and liquidity. Mr. R. Miller stated he believed there was an opportunity to increase investment yields and wished to investigate further. Mr.Ward indicated he would research options. SIXTH ORDER OF BUSINESS Supervisor's Requests and Audience Comments Mr.Ron Miller:Discussion of meeting with Executive Director of CREW. Mr. Ron Miller stated he wished to discuss the external preserves within the Community Development District,yet outside the general development. He stated he did not have any level of certainty regarding the preserves; he was in a discovery phase and wished to know more. He stated Esplanade as a community had gone through a lengthy and tortuous legal experience over a 10 year period regarding environmental implications, as several different developers wished to build a development in the Esplanade area:the Toll Brothers,then I.M. Collier and finally Mirasol (a.k.a.Taylor Morrison). Mr. Drew Miller stated Taylor Morrison purchased the property from Mirasol. Mr. Ron Miller reported the developers were challenged by various environmentalists. He stated on 07/24/2007 Judge Donald Alexander ruled in favor of I.M. Collier as the Judge believed the development I.M. Collier proposed would not negatively affect the environment and may improve it. He read from the judgment: "the preserve areas included 846.95 acres external preserve area to the north and northeast of the area to be developed" and reported it was anticipated that this northern preserve area would ultimately be donated to an existing mitigation area known as the Corkscrew Regional Ecosystem Watershed, otherwise known as CREW, along with an interest bearing fund to ensure perpetual management. He noted more litigation followed this judgment. He stated in August 2012 a Public Announcement was made by the Audubon Society,National Wildlife Federation,Conservancy of Southwest Florida: "Mirasol has committed to donating a bulk of the onsite preserves, over 1,000 acres, after restoration, and if accepted, to the Regional Wetland and Habitat Resources Partnership Project called the Corkscrew Regional Ecosystem Watershed (CREW) or other public entity." He stated he believed Mirasol was Taylor Morrison, but he was unsure. He stated recently he came across sales disclosure information from Taylor Morrison which was now on the sales contract, but this was not present in his sales contract. He asked if the firm was involved in changing the sales disclosure language. Mr. Drew Miller responded in the negative. He explained he understood this sales disclosure was included in the original sales contracts, but the contract software was changed and as a result there were a handful of contracts which did not include the sales disclosure; however, this was fixed and the disclosure was again included. Mr. Ron Miller read the disclosure: "Esplanade Golf and Country Club of Naples has conservation preserve areas consisting of approximately 36 acres of onsite, and 1,087 acres of offsite conservation areas. In the future the offsite conservation areas may be conveyed either to a public, 3 ; page 161 1 " Flow Way Community Development District April 16, 2019 local, state or federal entity, or an environmental conservation group such as the CREW Land and Water Trust, a private nonprofit conservation organization dedicated... ...If the offsite conservation area is conveyed to another entity,seller will attempt to retain a passive recreation easement over the existing pedestrian trails for continued use by the owners; however, there is no guarantee that such an assessment will be granted. If the offsite conservation areas are conveyed to a receiving entity such as CREW the trails could be opened to the general public." He stated he wished to know what would happen with the offsite conservation area. He noted Taylor Morrison had conveyed this acreage to the CDD and the CDD now owned the acreage. He asked if the CDD was legally obligated to give this conservation area to CREW or another entity, could CREW demand the preserves and what would happen with the nature trails. He pointed out the 2007 ruling also indicated the preserve acreage would be donated with an interest bearing fund to ensure continued maintenance. He stated Mr. Tim Hall, a consultant, provided information which indicated the escrow account should be a non-wasting account able to generate sufficient funds to maintain the preserve in perpetuity. He noted Mr. Hall had indicated based on recent bidding this would equal $100 dollars per acre, per year; therefore, an account would need to be large enough to generate approximately$109,000 dollars per year. He stated long term Treasury Bonds, 30 year Treasury Bonds, had an interest rate around 2.5% to maybe 4.25%, which would require a fund balance of approximately 2.5 million dollars to 3 million dollars in order to generate $109,000 dollars annually. He stated he was unsure if this was actually legally required; he was still just investigating. He stated he believed it was important to figure out what was to happen with these preserves. Mr. Drew Miller stated private and public conservation entities always hoped for a perpetual entity to maintain conservation lands. He stated Taylor Morrison was at some point involved with this, but this project had many different developers considering this land. Mr. Ron Miller stated at some point Taylor Morrison took ownership of the land, including the preserves, and in 2018 Taylor Morrison conveyed the property to the CDD. He asked who would ultimately be the owner of the conservation property and who would fund it, because if the CDD was required to fund this land, then the CDD needed to ask Taylor Morrison for the funding. Mr. Drew Miller noted the CDD intended to maintain this preserve in perpetuity;therefore,the land would not go to CREW. Mr. Ron Miller stated if the CDD were required to maintain this property in perpetuity then the CDD should keep the property private for the enjoyment of the CDD residents. Mr. Ward noted for the CDD to continue to maintain the property in perpetuity, and keep it private, it would cost each home approximately $93 dollars per year, which he believed was a fair price. Mr. Ron Miller indicated he was in favor of the CDD retaining ownership, but worried the CDD might eventually lose control of the property and be required to donate it with funding. Mr. Drew Miller stated the CDD could request further legal opinion, but he understood the idea was for either CREW or a public entity to take this responsibility on in perpetuity. He explained the CDD was the public entity which would continue ongoing preservation maintenance, and only a Board action to give the preservation area away would change this. Discussion ensued regarding the disclosure. Mr. Drew Miller stated he believed the disclosure was satisfied; Taylor Morrison was to transfer the preserves either to CREW or a public entity, which was done when it was transferred to the CDD, a public entity. Mr. Ron Miller asked Mr. Drew Miller to obtain clarification from Taylor Morrison. He requested CDD Counsel to provide a written opinion regarding the community preserves; an opinion to specifically address the obligation of the CDD to turn over preserves to CREW or any other agency at any future time. He asked to know if there was an obligation to turn over the preserves if requested by CREW or other agency at any future time, as well as whether existing walking trails were included or excluded from any turnover, and to address any funding obligation of any turnover. He asked counsel to provide sites when providing the written opinion. Mr. 41Page 161 1 Flow Way Community Development District April 16,2019 Drew Miller stated he believed it would be beneficial to have Taylor Morrison give its opinion in this regard. Mr. Ron Miller stated he still wished to have Counsel's opinion. Mr. Drew Miller suggested asking the land use attorney,who worked for the CDD,to address this matter. Mr. Ron Miller stated the land use attorney could consult with Counsel and share information, but he still wished to have a written opinion for clarification purposes. Mr. Urbancic stated the land use attorney was his partner. On MOTION made by Mr. Ron Miller, seconded by Mr. Drew Miller, and with all in favor, the request to have Counsel provide a written opinion regarding the community preserve and the obligation of the CDD to turn over said preserves, including potential funding obligations,was approved. Mr. Drew Miller stated the walking trails were not within the preserve area, but residents could walk out into the preserves. Mr. Ron Miller thanked the Board for its attention to this matter. Mr. Tom Coffee stated the map included in his paperwork clearly indicated the trail was located within the District property,as well as corners and pieces of the preserves. He stated in his business endeavors over the years he had always done due diligence to be certain of all sales and purchases prior to completion of sales. He asked why the CDD had accepted property without ensuring all liabilities, contingent or otherwise,were covered. He stated if land use counsel for Taylor Morrison was a partner in this firm, and CDD counsel was a partner in this firm, it was pointless to complete separate review assessments. Mr. Ward explained intent in Florida: a public entity was required to maintain whatever facility it was given, utilities, preserves, roads, etc.; Districts throughout Florida consistently accepted preserve areas as a District was defined by law as a public agency. He explained under the stipulation Ron Miller mentioned, the CDD met the obligation of being able to take ownership of the preserve because the CDD was a public agency, and the CDD would not be obligated to give the preserve to CREW. He explained the funding obligation was written into the disclosure in case the preserve land went to CREW and CREW needed the money to maintain the preserves; however, the preserves did not go to CREW, the preserves went to the public agency (Flow Way Community Development District) for overall operation and maintenance. He stated the CDD had no obligation to give the preserves to CREW. He stated there was significant case law which indicated the CDD could not give the preserves to CREW regardless as it was a private not for profit agency. He explained Taylor Morrison, as a private company, could have given the preserves to CREW, but a public agency such as the CDD was not able to give the land to a private agency. Mr. Coffee stated he believed the CDD accepted this preserve land without ensuring the maintenance was funded properly and the CDD created a liability for itself as a result. He asked what the trade-off was in accepting this liability. Discussion ensued regarding all properties accepted were liabilities including lakes, lakes being within the district and the preserves being outside the District. Mr. Coffee asked why the CDD would accept the preserve lands if the preserve lands created a liability. Mr. Ward explained it benefitted the overall development and benefitted the community to accept the preserve lands to keep them private; CREW would have had the right to make the lands public. Mr.Coffee stated he disagreed as the land could not be developed, being preserves, and the trails were not included on the preserve property. He stated he felt the CDD should not have accepted the preserve lands. Mr. Ward indicated all public agencies in Florida accepted public facilities such as roads, utilities, parks, preserves, etc., for operation and 5IPage 1b11 � Flow Way Community Development District April 16,2019 maintenance on a long term basis. Mr. Coffee asked if the CDD could donate the preserves to another entity. Mr. Ward responded in the affirmative; the preserve land could be donated to another public entity, but not a private entity. Mr. Coffee asked if another public entity, such as the County would accept the preserve lands. Discussion ensued regarding the County not having the funds to maintain the preserves, the CDD being formed to manage the onsite infrastructure within the development,the CDD having the right to own lands outside the boundaries of the District, and CDD's being created to maintain public infrastructure for communities. Mr. Coffee asked who was on the Board at the time this preserve land was accepted by the CDD. He stated he wondered how many Board Members were also Taylor Morrison representatives. Mr. Ward stated all Board Members would have been representatives of Taylor Morrison. Mr. Coffee asked if this was a conflict of interest. Mr. Ward responded in the negative. Mr. Coffee listed the facilities owned and maintained by the CDD. He noted there were several of these facilities owned by the CDD which were maintained by the HOA. He asked why this was. Mr.Ward explained the HOA was not required to maintain the facilities, it chose to through an agreement with the CDD, but the HOA chose not to maintain the preserve area due to the complicated nature of the maintenance. Mr. Coffee asked if an independent engineer reviewed the design of the residential irrigation systems, stormwater management, lakes and ponds, ensuring these facilities were constructed according to specs, prior to the CDD acquiring these. Mr. Ward stated County Water certified all water facilities. Mr. Coffee stated he understood there were residential irrigation systems which were not working properly along some streets due to filters not being designed properly and snails were getting into the system. He stated there had been procrastination regarding fixing this. He stated he believed this problem might be due to a design flaw. He asked if the HOA assumed any responsibility for this. Mr. Ward responded in the affirmative. Mr. Coffee stated the CDD was ultimately held responsible and he wondered if there was any recourse if it was discovered that the design plans were flawed. Mr. Drew Miller stated the agreement with the HOA indicated the HOA was responsible for all maintenance; however, if there was capital renewal or replacement of components in the system, then this would be the obligation of the CDD. He explained this was not an atypical arrangement, but every community was different. He stated at this point it was necessary to determine exactly what the problem was. Mr. Coffee asked if, when the CDD accepted the residential irrigation systems, the contract indicated the CDD was assuming the facilities based on the facilities being properly built and maintained and did the CDD have recourse if this was not the case. Mr. Drew Miller responded in the negative. Mr. Coffee asked what the CDD's means of recourse was if there were flaws in facilities it acquired. Mr. Greg Urbancic responded Mr. Coffee was asking hypothetical questions which he could not answer as a blanket statement. He explained all circumstances were different and would be analyzed and approached as such. He noted the CDD owned assets which would never bring in money, but money would be spent to maintain the assets for the benefit of the community. He stated Mr. Coffee was asking good questions, but he could not give a blanket answer as there were too many variables to consider. Mr. Drew Miller stated Taylor Morrison was required to fulfill certain steps throughout the permit process which ensured the developer's obligations were satisfied and the CDD would not be accepting facilities with subpar construction. An Audience Member 58:02 stated on page 2 of the Maintenance Agreement between the CDD and HOA it read: "The Association agrees to meet with the District's representative no less than 1 time per month to walk the property, discuss conditions, schedules, terms of concern regarding this agreement..." He asked if this ever happened. Mr. Ward responded in the negative; the language was 6I 16l 1 Flow Way Community Development District April 16,2019 for the District's benefit if it chose to enforce this point. He explained the agreements were standardized, but none of his Districts had ever enforced this. The Audience Member 59:35 asked about the provision that annually the association would certify in writing to the District Manager, with copies to the Chair of the Board of Supervisors and District Counsel, its compliance specifically with its duties under the agreement. Mr.Ward responded in the negative. Discussion ensued regarding the contracts, Mr. Urbancic and Mr. Ward not micromanaging the HOA, the CDD being informed of capital problems and fixing said problems. The Audience Member 1:02:40 stated it seemed the Agreement listed specific happenings which signified a cooperative effort between the CDD and HOA which simply did not happen. Discussion ensued regarding the CDD being ultimately responsible for lake maintenance, the HOA working on behalf of the CDD, lake maintenance not being required early on with newer Districts, maintenance coming into play as time passed and/or hurricanes caused damage, and homeowners being responsible for property up to the lake bank edge. Mr. Ward explained HOA's were not required to do much in the way of maintenance besides spraying lakes to prevent algae buildup or weed growth. He explained this continued until restoration became necessary at which point responsibility fall back onto the CDD as the CDD had substantively more technical expertise and ability to perform restoration of a capital asset. An Audience Member 1:07:10 asked if reserve funds were being set up to pay for upcoming restorations. Mr. Ward responded in the negative. He explained the CDD had assessment authority and would assess over time in the future when needed. Discussion ensued regarding reserve funds and future problems with lake banks. Mr. Coffee stated he believed it would be better to build a reserve fund for future problems and he listed the reasons he felt this was important. He stated he felt the preserves were accepted without due diligence. He stated he believed all contracts and agreements should be followed to the letter to prevent litigation. He stated he believed there was too much intertwining between the HOA and the CDD. Mr. Ward stated Mr. Coffee should not be concerned regarding intertwining; there were no conflicts of interest. He stated the HOA took care of minor simple maintenance such as spraying the lakes and looked to the COD for capital restoration work. He indicated he did not foresee any difficulties with this arrangement. Mr. Coffee stated lake maintenance was more than just spraying the lake, sometimes trees would be removed by the HOA and plantings would be made. He stated last hurricane several trees fell into his lake and the HOA removed them. An Audience Member 1:18:15 asked why some lakes had weeds and plants growing along the banks, while other lake banks were barren. Discussion ensued regarding littoral plantings, environmental factors affecting growth and non growth, seasons affecting growth, and being unable to control bank plant growth. Mr. Ward stated he had a request to change the date of the Board Meetings. Discussion ensued regarding possible Board Meeting dates and the need to have at least three Board Members present to constitute a quorum. It was determined the next Board Meeting would be held on Thursday, May 16, 2019 at 1:00 p.m. Mr.Ward stated he would create a resolution labeled 2019-7 to this effect. 7IPage 1 6 I 1 Flow Way Community Development District April 16, 2019 On MOTION made by Mr. Drew Miller, seconded by Mr. Tom Kleck, and with all in favor, the request to change the next Board Meeting date to Thursday, May 16, 2019 at 1:00 p.m. (Resolution 2019-7) was approved. SEVENTH ORDER OF BUSINESS Adjournment Mr.Ward adjourned the meeting at approximately 4:28 p.m. On MOTION made by Mr. Drew Miller, seconded by Mr. Tom Kleck, and with all in favor,the Meeting was adjourned. Flow Way Community Development District Q iJ.o rat J es P.Ward,Secretary Drew Miller,Chairperson 81Page