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05/19/2022 Minutes 16I 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 Thursday, May 19, 2022, at 1:00 P.M. at the Esplanade Golf and Country Club, 8910 Torre Vista Lane, Naples, FL 34119. Present and constituting a quorum: Zack Stamp Chairperson Ron Miller Vice Chairperson Bart Bhatla Assistant Secretary Tom Kleck Assistant Secretary Martinn Winters Assistant Secretary Also present were: James P. Ward District Manager James Messick District Engineer Greg Woods District Counsel Audience: Joseph Stigliano 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. PORTIONS OF THIS MEETING WERE TRANSCRIBED VERBATIM. ALL VERBATIM PORTIONS WERE TRANSCRIBED IN ITALICS. FIRST ORDER OF BUSINESS Call to Order/Roll Call Chairperson Zack Stamp called the meeting to order at approximately 1:00 p.m. Roll call was conducted, and all Members of the Board were present, constituting a quorum. SECOND ORDER OF BUSINESS Public Comments Public Comments for non-agenda items (Limited to three (3) minutes). Individuals are permitted to speak on items on the agenda during that item and will be announced by the Chairperson. Chairperson Stamp reviewed public comment protocols. Mr. Joe Stigliano thanked the Board for the new asset map which was informative. He noted, however, the street names on the map on the website needed to be made larger so as to be legible. He indicated he wished to discuss the budget. Wage 16I1 Flow Way Community Development District May 19, 2022 Chairperson Stamp asked Mr. Stigliano to wait to discuss the budget until the budget Item on the Agenda. Mr. Ron Miller asked for speakers from the audience to approach the microphone as he was unable to hear Mr. Stigliano. THIRD ORDER OF BUSINESS Consideration of Minutes I. April 11,2022—Meeting II. April 21,2022—Meeting Chairperson Stamp asked if there were any corrections or deletions. Mr. Ron Miller made some comments regarding the Minutes and asked for a correction to be made. Chairperson Stamp indicated this would be done. On MOTION made by Mr.Tom Kleck, seconded by Mr. Ron Miller, and with all in favor, the Minutes for the April 11, 2022 Meeting Minutes and the April 21,2022 Meeting Minutes were approved as amended. FOURTH ORDER OF BUSINESS Continued Discussion Continued Discussion—Fiscal Year 2023 Budget and Five(5)Year Capital Plan I. Fiscal Year 2023 Budget and Five(5)Year Capital Plan II. Consideration of Amendments by Board of Supervisors to Proposed Budget III. Consideration of Resolution 2022-3, a resolution of the Board of Supervisors approving the Fiscal Year 2023 Proposed Budget and setting the Public Hearing on Thursday,July 21,2022,at 4:00 P.M. at the Esplanade Golf and Country Club,8910 Torre Vista Lane, Naples, FL 34119 IV. Required Mailed Notice Letter to Property Owners Mr. Ward: The public hearing is scheduled for July 21, 2022 at 4:00 p.m. at the Esplanade Golf and Country Club. The purpose today would be for you to finalize any changes to the budget prior to us going to the public hearing so that we can send out the mailed notice, a copy of which is also enclosed in your Agenda Package, in accordance with the statute. This would be the Board's last time to make changes to the budget before the public hearing. During the public hearing, you can make any changes to the budget you desire, as long as you do not go over whatever you approve today pursuant to the resolution that is in your Agenda. The Budget has not changed, other than the one change that I've included in your package today, and that includes the backup pump and motor for the irrigation system which includes an additional $20,000 dollars and changes the assessment rate to$1,495.24 per year. That is the only change I have to the budget. Other than that, there are no changes to what was originally presented to you. Chairperson Stamp: This is the meeting that we will accept any amendments any Board Member wanted to offer for the budget. Ron, you had one? Wage i6I 1 Flow Way Community Development District May 19, 2022 Mr. Miller: Let me go over it once again. There is approximately$210,000 dollars in the budget for the maintenance of the external preserves. For this fiscal year I think it would be best to rule that back to $10,000 dollars to be used as an "emergency budget" because Taylor Morrison really has that responsibility and that's what we are suing about. Supposedly, Taylor Morrison is addressing these issues as we speak. Then, we can come back with an addition to the budget of$100,000 dollars as a contingent to make sure we have enough money in the budget should something else arise. So, the budget would go down a net$100,000 dollars. Discussion ensued regarding the changes proposed by Mr. Miller; exactly how much the budget would be reduced,and exactly which line item Mr. Miller proposed to change (external preserves). Mr. Bart Bhatla asked about the external preserves versus the internal preserves. He stated he thought the preserves were the preserves, be it external or internal. He asked if there were additional funds assigned to the internal preserves which Mr. Miller was excluding from his proposed changes. Mr. Miller responded he was not trying to change the internal preserve budget, only the external preserve budget. He explained the internal preserves had never been an issue with Taylor Morrison. He stated the Board acknowledged the internal preserves were a part of CDD's responsibilities. Mr. Bhatla disagreed. He stated he believed the preserves were a package and the preserves were a compensatory easement to do the development. All these preserves, external or internal, it does not matter. At least as my understanding of the preserves as it is put forth. I want clarification. If there are internal preserve maintenance costs, I think they should— Mr. Miller: The difference is, if you go back to the documents, like the Corps, South Florida, US Fish and Wildlife, the documents make a distinction between the internal and external. Only the external preserves were to be eventually transitioned over to some kind of environmental agency along with the permanent funding of an escrow account. There is a second document which relates to the internal preserves and that document there was no language to transfer those to anybody, nor was there any language about any escrow fund. The actual permit documents that bind Taylor Morrison were different for the two different kinds of preserves, external versus internal. Mr. Bhatla: I missed that. I thought preserves as a definition was a preserve region compensatory for issuing the permit. I'll have to read that again. Chairperson Stamp: There has never been any doubt we are responsible for the internal preserves. Mr. Woods: The lawsuit involves the external preserves, not the internal preserves. Chairperson Stamp called for a motion. Mr. Ward: I suggest the motion reduce the line item we call the western preserve, northern preserve area 1, and northern preserve area 2, in the amount of$210,895 dollars in the budget, and we will include a contingency of$10,000 dollars in storm water services preserves and add a contingency as another line item for$100,000 dollars. I will probably put it in your main storm water program. 3 ! Page 16I 1 Flow Way Community Development District May 19, 2022 On MOTION made by Mr. Ron Miller, seconded by Mr. Bart Bhatla, and with all in favor, the western preserve, northern preserve area 1, and northern preserve area 2 line items were reduced in the amount of $210,895 dollars, a contingency of $10,000 dollars in stormwater services preserves were added and a contingency of $100,000 dollars was added as another line item. Mr. Joseph Stigliano asked if resident recommendations regarding the budget could be taken into consideration at the public hearing or was the budget finalized at that point. Chairperson Stamp explained the budget would not be finalized and resident recommendations could be considered; however, once the Resolution was adopted today, the cap rate would be set, and the Budget could not go higher than the cap rate. If you come in and want us to spend half a million dollars on something, we would have to take it out of somewhere else; we can't go up. The cap is the cap. Mr.Stigliano: At what point will we know how much the assessment will be increased. Chairperson Stamp: We can give you a close number today, but on July 21 you will have the exact number. Mr.Stigliano: Will you explain how it is derived? Whether it is a percentage of your tax assesses? Chairperson Stamp: It is not ad valorem. It is per unit. Mr. Ward: It was$1,495.24 before the change today, so it's going to go down slightly from that. It is going to go down approximately $80 dollars. In addition, you will get a mailed notice from the District, sometime in the latter part of May, before the public hearing, which will give you the cap rate number. Mr. Stigliano thanked the Board and Mr. Ward. Chairperson Stamp: Okay, consideration of Resolution 2022-3. Mr. Ward: The Resolution sets your public hearing date for July 21, 2022, Thursday, at 4:00 p.m. Keep that time in your heads. It will be at the Esplanade Golf and Country Club, 8910 Torre Vista Lane, Naples, FL 34119. It approves your proposed budget as amended today. Mr. Miller: Jim, you've got an explanation letter going on this. Maybe you could put some additional language in the letter indicating this did not represent an increase in the overall operating expenses of Esplanade;it is simply the result of the transfer of responsibility from the HOA to the CDD because the HOA had been previously paying for this. Maybe smooth it down a little bit, because that's the reality of what's going on. Whether or not the HOA actually did that under Taylor Morrison is a different subject, but in concept it is moving it from one pocket to another. Mr. Ward: I tend to stay away from that type of language when we do these transfers because it does tend to imply that the HOA should do something, and whether they do or don't is not a District 4IPage 16I1 ' Flow Way Community Development District May 19, 2022 decision. I understand the concept, but I tend to stay away from those kinds of words in a governmental letter for this kind of a budget. Chairperson Stamp: Jim and I have talked about the letter several times and the reality is, a lot of this stuff wasn't done by the Taylor Morrison controlled HOA and probably should have been done by the Taylor Morrison HOA, and they didn't do it,so it's kind of misleading to the people to say this was an HOA expense as it was never funded. Mr. Bhatla agreed. Mr. Miller: Okay. On MOTION made by Mr. Bart Bhatla, seconded by Mr. Martinn Winters,and with all in favor, Resolution 2022-3 was adopted,and the Chair was authorized to sign. Mr. Ward: I will just tell you, your public hearing is July 21, so I am going to schedule this to be mailed roughly the end of the second week of June in order to meet the deadline. I want to point out, we use the County Property Appraisers Rolls for purposes of the mailing. That may or may not be perfect. People's addresses change, the don't change them with the County, property sells between the time I get a roll and the time the letter goes out. They may have the home in a trust. There are a lot of reasons why a person might not get it. But we are required to use the rolls from the County for purposes of the mailing. You will get people who will say they never got the letter, but those are the reasons why this happens. Mr. Bhatla: Is that address the same as the County tax rolls? Mr. Ward: Yes. Chairperson Stamp: We will post it on our website and give it to the HOA to post. FIFTH ORDER OF BUSINESS Staff Items I. District Attorney—Woods,Weidenmiller, Michetti, & Rudnick a) Status Report on Litigation i. Depositions of Current Director have been requested ii. Deposition of Former Engineer scheduled for May 27,2022 iii. Deposition of Former Attorney around the last week of May 2022 b) Update on mediation held on April 26, 2022 c) Non-Binding new Arbitration Hearing scheduled for May 31,2022 d) Former Directors' Motion for Summary Judgement scheduled for Hearing on June 21,2022 e) Anticipated trial period between July 11,2022,and August 5,2022 f) Update on discussions with HOA as to potential new litigation Mr. Woods: Mediation was held on April 26, 2022 with the HOA and Taylor Morrison. I will talk more about the mediation in our executive session. Subsequent to the mediation we have requests SIPage 16I1 ' ' Flow Way Community Development District May 19, 2022 for additional depositions. The Taylor Morrison list is to depose the currents directors. Mr. Bhatla was deposed yesterday. Mr. Miller has already been deposed and Mr. Martin Winters and Mr. Kleck is coming up. We will be deposing the former CDD Engineer on May 27, and the former CDD Attorney May 30 or so based on the Taylor Morrison former Board Members filing a motion saying they relied on the former engineer and former attorney for making their decisions. We are going to investigate. All that is upcoming. The new date for the nonbinding arbitration is May 31, 2022. Interestingly though, Taylor Morrison has recently filed a motion for leave to amend its defenses and counterclaims. Defenses are the estoppel and(Indecipherable). The counterclaim is basically against the Board for allegedly not complying with the prior agreements between the CDD and Taylor Morrison. They are trying to add that to the lawsuit. That motion for leave to amend will be heard next week. If the court grants it leniency (indecipherable). (Indecipherable) August or early September trial docket. Then, because of these new claims, I suspect Taylor Morrison will request to push back the arbitration a little bit to see if these claims are incorporated into the lawsuit, so we are arbitrating all of the additional claims to hear them all together. There is a chance that the May 31 nonbinding arbitration is pushed back as well. The former Directors have a motion (indecipherable) that's scheduled for June 15Y. Taylor Morrison has a motion for a summary judgment scheduled in July. Those will all be activities leading up to (indecipherable). We have a lot going on in the case, but we will discuss the mediation aspects of it in executive session. Mr. Bhatla asked about the mediation between Taylor Morrison and the HOA. Mr. Woods:(Indecipherable). Mr. Bhatla: Has the HOA filed their claim? Mr. Woods:(Indecipherable). A discussion was held regarding Taylor Morrison and the HOA claims; and Taylor Morrison being aware the HOA would be filing a claim. Mr. 32:52: (Indecipherable). Mr. Miller and Mr. Kleck discussed the technical difficulties being experienced. Mr. Woods summarized: Essentially, Taylor Morrison has asked for all of the Board Member depositions. We are lining all that up. There will be depositions of the former District Engineer and former District Attorney that we are taking based on Taylor Morrison former Board Members' claims that they relied on those gentleman's opinions to make their decisions. The mediation occurred on April 26. We will talk about that in executive session. Taylor Morrison filed a motion to have leave to amend their pleadings. They are adding a couple of permanent defenses based on having gotten off the permits, and a (indecipherable) based on some grievance between the CDD and Taylor Morrison dating back to 2013 and 2015. They have also filed a counterclaim against the CDD saying that the CDD has breached it's prior agreements by essentially not taking care of the preserves. They are trying to add that to the lawsuit. If the judge grants the motion for leave than the pleadings are open, and we will file our own defenses related to those claims and so it's pushing things back. The court has already moved the trial period from July/August to August/September. I anticipate with the May filing of the new pleadings that the nonbinding Wage 16 I 1 Flow Way Community Development District May 19, 2022 arbitration may be moved. There are a lot of moving parts at the moment, but this is normal as you get closer to trial. The other items and mediation should be addressed during the executive session. Mr. Miller: If the judge allows those changes by Taylor Morrison, could we then ask a second time to have them include our grievances from the second lawsuit into the first and then not have to file a second? Mr. Woods: We could try that, but the problem is that their amendments fairly relate to the existing claims in the case, whereas with the construction defect claims, Taylor Morrison would then be adding the subcontractors who did the work to the case, and by adding subcontractors, they are obviously entitled to do a lot of discovery which will take the case back another year or so. That's why the judge wouldn't allow us to bring in construction defect claims. Mr. Miller: I understand the difference. Chairperson Stamp: If they are saying it's moot because the HOA is now the permittee and they are no longer the permittee, how do they have standing to bring a suit for us for not doing the maintenance? Are they in or are they out? Mr. Woods: They are basing it on agreements between the former CDD and Taylor Morrison when they controlled it. Mr. Bhatla: Is legal action the only avenue available to use for construction defects? Is there a non-legal mediation in which we could put forth the construction defects and have them talk about it? Mr. Woods: You would be asking Taylor Morrison to cooperate and do a pre-suit mediation, which in theory they did with the HOA present. Mr. Bhatla: what was discussed? Mr. Woods: We can't talk about it. Mr. Bhatla: But that came under the umbrella of the legal action. They haven't started any legal action at this point. Mr. Woods: They have not, but in order for a pre-suit mediation to work, you have to have two parties that want to negotiate in good faith, and I'm not sure that you have that in this situation. Chairperson Stamp: Parties could always get together and agree, but they haven't shown any inclination to do that. Mr. Woods: So, the HOA has been having discussions with them, but it appears that the HOA will also be in litigation with Taylor Morrison, by all appearances. 7 ' Page 16I 1 Flow Way Community Development District May 19, 2022 Mr. Martinn Winters: Did/ understand correctly that Taylor Morrison's position now is that they are going to throw their counsel and engineer under the bus by saying they acted on bad advice gotten from their hired professionals? Mr. Woods: The former Board Members are going to say they relied on the professionals. That is a large part of the motion for summary judgment. Chairperson Stamp: They are not going to say it was bad judgment. They are going to say it was a reasonable judgment "because the engineer and attorney told us." I think that's what they are trying to slide it under. They are kind of throwing them under the bus, but not exactly throwing them under the bus. Mr. Stigliano: I understand what the mediation is doing. With the nonbinding arbitration can you make a motion to the arbitrator for discovery from the other party, which you wouldn't be able to do at mediation? Mr. Woods: No. Nonbinding, no. Basically, the court proceedings (indecipherable), so you get the discovery through the court process. Mr. Stigliano: Between mediation and nonbinding arbitration, arbitrators mediate, and mediators arbitrate. It's a very fine line, and that's why I was wondering. The definition is about the same for both, but if they would turn it over to a real arbitrator(indecipherable)so, you can't get discovery. Mr. Woods: Correct. II. District Engineer—Calvin,Giordano&Associates a) Engineer's Report 1. Strategic Operational Plan 2. SFWMD Water Use Permit& Pump Maintenance 3. Water Quality Report Mr. James Messick: There are three items to discuss. Maybe we can wait until the end for questions. The first thing is Strategic Operational Plan. Ultimately, there are no changes. Second item is the South Florida Water Management District Water Use Permit. I did make a submittal to the SFWMD for the Water Use Permit transfer application on March 31. The day after last month's board meeting, we received a request for additional information from SFWMD asking for evidence of applicant's legal control over the irrigation facilities. Because the parcels and tracts included in the irrigation easements are limited the HOA will need to be added as a joint permittee. I am currently awaiting a response from the HOA. I will follow up with them. The last item to discuss, water quality sampling, GHB Services provided water quality sampling services for the CDD in five locations. He discussed what was measured at each location, noting there were no water quality concerns at this time. He noted the next sampling event was planned for June. Chairperson Stamp: Bonita wants to put in temporary pumps, or permission to utilize— Will you explain it to us? Wage 1.6 1 , Flow Way Community Development District may 19, 2022 Mr. Messick: The County had a board meeting where those things were discussed. Bonita Springs applied for a temporary permit to pump from the Logan right-of-way south into Collier County which would be immediately discharged into our preserves. The proposed structure they don't have the details for in theory. The permit is an emergency permit. They would need to get approval after the (indecipherable) for Lee County. They will have a certain number of days wherein if they meet certain criteria for flood requirements, then they can get approval from the District to discharge to the south. It is a program that was prepared in joint between the District and Bonita Springs which is rare. (Indecipherable). They do have (Indecipherable) requirements downstream that show there is no flooding internally higher than pre-hurricane or pre- emergency situation. (Indecipherable). Mr. Kleck and Mr. Miller discussed the technical difficulties being experienced. Mr. Woods: I was contacted by Commissioner Andy Solis here at the County. Mr. Solis told me, essentially, this area of Bonita has always flooded, and despite that, the City of Bonita Springs issued permits for people to build in the flood area. Now, the City of Bonita Springs is seeking this emergency permit to pump out these flood areas and essentially, they will pump the excess water into our preserves and some of these houses are on septic, so you're going to get seepage and leakage, and that would be passed on down into Collier County. Additionally, when you get events like Hurricane Irma, you have problems with flooding down the canal, so these communities like Palm River and Collier Preserve have issues. But because of the type of water being pumped in the preserves, it should be of some interest to this community clearly, and so I think Mr. Solis talked about calling a Town Hall Meeting at some point. You guys might want to think about sending a representative to that and think about maybe being politically active on this issue. Mr. Bhatla: Should we request they provide us an engineer's assessment of the environmental impact on the preserve? Mr. Woods: You'll have to ask Jimmy, but I would assume that's part of the dealing with the South Florida Water Management District that they would have to do a lot of that. We may want to get the County to take a lead role in this. Mr. Bhatla: I believe we need to be visible because this is going to impact us. Chairperson Stamp: I suggest Jimmy and Greg work to get some more details and prepare jointly a resolution to bring back to the next Board meeting, if appropriate, that we tell Collier County we would like to join them but have a resolution to consider at the next meeting. It may be no more than tell them we are interested, but it will depend on where the data takes us. III. District Manager—JPWard&Associates, LLC a. Financial Statements for period ending April 30,2022 (unaudited) b. Update on Discussions with HOA regarding ultimate ownership/maintenance responsibilities Mr. Ward: The items on the Agenda are continuing on, otherwise, I have nothing for you today. SIXTH ORDER OF BUSINESS Audience Comments Wage 16I1 ' Flow Way Community Development District May 19, 2022 Audience Comments: Public comment period is for items NOT listed on the Agenda, comments are limited to three (3) minutes per person, assignment of speaking time is not permitted, however the Presiding Officer may extend or reduce the time for the public comment period consistent with Section 286.0114, Florida Statutes Chairperson Stamp asked if there were any additional comments or questions from audience members. Mr. Stigliano: You brought up a good point about the water which could be pumped into the preserves. There could be sewage in there, diesel oil, a lot of things. Maybe have real time sampling at the pump head of the quality of water coming through and then in some cases have a remediation program in place in case they have to add chlorine or add some sort of neutralizing agent, so at least we know what's coming. Once they pump it out, then you have to go back like this thing with Taylor Morrison and ask who did it, when did it happen, did it come from underground, etc. I would go for real time monitoring, and at least you'll know what we are getting and what problems you're going to face. Then if there's hazardous waste coming through there, chemicals, you can do some remediation. You can't stop it from coming, but we should know what we are getting. That information should be made somewhat publicly available, like with the blasting with the seismic readings. In Manhattan when we did blasting, we had to put seismic measuring all over the place, and that had to be real time access to people. Mr. Bhatla: You make an important point. We need to understand what all we are going to get. Chairperson Stamp: I think that will be a part of Jim and Greg to put together. I don't think this resolution will commit us to anything that we can't modify or change going forward as we learn more or things develop. Mr. Messick: I did reach to the District and talk to my contact and requested more information about it. I'm still waiting to hear back. Chairperson Stamp: This is all fairly new. Mr. Ward: What is the timing for all of this? Is there something out there that says the regulatory agency will grant whatever the parameters are to issue that permit in the event of--? Is that coming up in a month? Mr. Messick: They have prepared a program. The program is in place that matches the pumps they have at their site. The program would be used after emergency conditions, and therefore, they are accelerating the approval process to allow them to start pumping. Mr. Woods: The County Commissioner is calling a Town Hall Meeting to give information to give information. Mr. Ward: The County and us are basically in defensive positions that we have to act to stop it at this point because it's already done. Got it. Chairperson Stamp read: "The sole purpose of the executive attorney/client session is to discuss a settlement in the Flow Way Community Development District's lawsuit. The executive session is 10IPage b11 Flow Way Community Development District May 19,2022 expected to last approximately thirty minutes. At the conclusion of the executive session the Board of Supervisors will go back into Regular Session to conduct the balance of the regular agenda items. The attending parties shall be the following members of the Board of Supervisors: Zack Stamp, Martinn Winters, Bart Bhatla, District Attorney Greg Woods, and District Manager James Ward. At the close of the executive session the Board will reopen the meeting for any additional items to be considered by the Board of Supervisors." He noted a court reporter would be present recording the proceedings. He noted the records would become public following the lawsuit. He indicated the sole topic of the shade session would be settlement offers. He dismissed the public for purposes of entering a shade session. He noted the audience was welcome to wait outside until the shade session was complete. SEVENTH ORDER OF BUSINESS Executive Session Executive Session of the Board of Supervisors(Closed to Public) The sole purpose of the executive attorney/client session is to discuss a settlement in the Flow Way Community Development District's lawsuit,File Number:20-CA-4147. The executive session is expected to last approximately thirty (30) minutes. At the conclusion of the executive session the Board of Supervisors will go back into Regular Session to conduct the balance of the regular agenda items. The attending parties shall be the following members of the Board of Supervisors: Zack Stamp, Martinn Winters,Bart Bhatla, District Attorney Greg Woods,and District Manager James Ward. At the close of the executive session the Board will reopen the meeting for any additional items to be considered by the Board of Supervisors. Chairperson Stamp called the regular meeting back to order. EIGHTH ORDER OF BUSINESS Announcement of Next Meeting Announcement of Next Meeting—June 16,2022 Chairperson Stamp announced the next meeting would be held June 16, 2022. NINTH ORDER OF BUSINESS Adjournment The meeting was adjourned. On MOTION made by Mr.Tom Kleck, seconded by Mr. Ron Miller, and with all in favor,the Meeting was adjourned. Flow Way Community Development District James .Ward,Secretary Za Stam , . p rson 11IPage