Board Meeting

September 28, 2026

Transcript

Describer:

Castle Pines North Metropolitan District

7404 Yorkshire Drive, Castle Pines, CO 80108

September 28, 2026 at 6PM

I. Call meeting to order

A. Pledge of Allegiance

B. Roll call, disclosure of potential conflicts, confirm quorum

C. Consider: Approval of the agenda

Proposed motion: I move to approve the agenda as presented.

II. Public comment period (three minute maximum per person)

Public comment is designed to share your thoughts and concerns with the district, but it is not an interactive discussion.

If you would like to participate, please sign up at the back of the room or if you are attending virtually, type your name and address in the chat feature to be placed in the queue.

III. Consent Agenda

This is a group of items to be acted on with a single motion, second and vote by the Board to expedite the handling of limited routine matters. The Board has previously received information on these matters and/or discussed them at a prior study session. Any board member may move an item from the consent agenda to the meeting agenda at this time.

Proposed Motion: I move to approve the items as presented in the consent agenda.

A. Ratify claims for payment including check numbers 29813 – 29860 and

electronic payments issued from August 13, 2026 to September 16, 2026 totaling $3,090,455.49

B. Approve Meter Radio Expenditure in the amount of $140,940.00 page 3

Meter Radio Expense Request.pdf page 3

IV. Well Condition Update and Discussion

Emily is in attendance to provide an update on A2, answer any questions the board may have, and discuss CPNMD's well system in general.

V. Legal Counsel Status Report page 10

Legal Counsel will provide an update on legal matters affecting the District, including but not limited to: contracts, compliance issues, ongoing or potential litigation, and other legal considerations for the Board’s information and guidance.

9.25.2026 Legal Status Report - CPNMD 4908-2132-3220 v.1.pdf page 10

A. Well A-2 - Addendum to Layne Proposal Page 16

CPNMD A2 Pull Video Inspect Proposal 2026 Final.pdf Page 16

Layne-CPNMD A2 Addendum.docx Page 20

B. Approve August 17, 2026 Work Session Minutes Page 24

Proposed Motion: I move to approve the August 17, 2026 Work Session Minutes

CPNMD Work Session Minutes 8.17.26 DRAFT 4924-5722-4659 v.1.pdf Page 24

C. Approve August 24, 2026 Regular Board Meeting Minutes Page 28

Proposed Motion: I move to approve the August 24, 2026 Regular Board Meeting Minutes

CPNMD Board Meeting Minutes 8.24.26 DRAFT 4905-8571-4131 v.1.pdf Page 28

VI. Finance Report. Page 35

The Finance Director will present an overview of the District’s financial condition, including budget performance, revenue and expenditure activity, cash balances, and other financial matters for the Board’s review.

CPNMD 09.26.2026 Finance Board Packet.pdf Page 35

VII. District Manager Report. Page 55

The District Manager will present a report to the Board regarding district operations, project status, administrative activities, and other matters pertinent to the District

District Manager Board Report 9_28_26.pdf Page 55

VIII. Operations & Engineering Report Page 59

These reports are included in the monthly Board Packet, this agenda item serves as an opportunity for the board to ask any questions they have regarding the reports.

Engineering Board Memo Sept 2026.pdf Page 59

Operations Report- August 2026.pdf Page 62

IX. Director's Matters

Board members may raise and discuss items of interest, concerns, or announcements that are not otherwise included on the agenda.

X. Adjourn

Board President Jason Blankaert:

Good evening and welcome to the Castle Pines North Metropolitan District regular board meeting for September 28th, 2026, at approximately 6 p.m. We've concluded the Pledge of Allegiance. We'll move to roll call.

Board Member Director James Mulvey:

Jim. Present. No conflicts.

Board Member Director Tera Radloff:

Tera. Present. No conflicts.

Board Member Director Leah Enquist:

Leah. Present. No conflicts.

Board Member Director Jana Krell:

Jana. Present. No conflicts.

Jason:

And I'm Jason Blankaert present with no conflicts. We'll move to item. See here. Content. Consider approval of the agenda.

Board Voting All Speak:

I'll make a, I'll make a motion to approve the agenda as presented. Second. Having a second. We'll go to vote. Jim. Approve. Tera. I. Leah. Approve. Jana. Approve. I approve as well. The motion passes.

Jason:

All right, so we'll close out item number one and we'll move to item number two, the public comment period. I don't see anybody that wishes to speak tonight.

We have anybody on zoom?

Nope. Okay. So hearing none, we will go ahead and close out the public comment period. And we will move to item three, the consent agenda.

Board Voting All Speak:

We will I'll propose the motion. I move to approve the items as presented in the consent agenda. Same day. Have any issues? Nope. Second. All right. Jim. Approve.

Tera. Yeah. Approve. Leah. Approve. Jana. Approved. I approve as well. Motion passes.

James:

A quick meeting today.

Jason:

All right. Next, we will move on to item number four. The well condition update and discussion.

District Manager Nathan Travis:

So for this evening appearing on zoom, we have Emily Hudish, PE. She is with Kennedy Jenks. And she's been spearheading the effort not only on A2 and A6 the wells we have down, but also just kind of doing a broader system evaluation.

So we brought her in tonight just to kind of give the board an update and then give you an opportunity to ask any questions that you may have.

Jason:

Thank you. Welcome, Emily.

Nathan:

Welcome, Emily.

Emily Hudish, PE, Kennedy Jenks:

Yeah. Thank you. Thank you for having me. Can everybody hear me? Okay. Yes. Okay, great. Great. So I thought I'd start with, well, A2 and then, talk a little bit more about some of the overall system analysis that we've been doing in response to the, well, failures that the district's well field has been experiencing.

So starting with, well, A2, what you know, we've been working with Layne Christensen and district staff on kind of next steps and what to do. So we have a proposal from Layne to pull the equipment and go into a, basically an inspection that will be performed by the manufacturer. And the purpose of that assessment is to determine whether or not there is a manufacturer defect that has caused the, well, equipment to fail.

As you all may know, this well has failed in the same method with a shaft failure. More than one time. And so that's really the root of some of the concerns and issues and why the district is looking to get some more information from the contractor, who is Layne Christensen and ultimately the manufacturer of the pumping equipment, which is Baker Hughes.

So the proposal right now is to send the equipment back to the manufacturer to do a failure analysis. And and Layne Christensen, you know, this will be discussed further under the legal contract review. But they are often offering, you know, to, to share in the costs of that. And, you know, I know one question may be what what type of work are they are going to do with this inspection report?

We do have experience working with Baker Hughes. They have a testing and manufacturing facility in Casper, Wyoming. And so that's where the equipment would be going. And as part of this, Layne has also offered to have a third party inspector, be present to observe the inspection analysis. So, you know, I have asked for some further clarification from Layne as to exactly what the failure analysis will consist of.

But in the past, based on my experience, what they will do is really a, they basically very slowly disassemble the equipment and evaluate, you know, how the equipment is coming apart. And so they'll kind of do one layer at a time to observe, you know, any, any scratches, any cracking, any indications of failure modes. And then they will use that information to say, you know, these are indications of these type of failures based off of what they're seeing from the tear down.

If the equipment is in, you know, there's really three pieces of equipment with these pumps. There's the pump, the seal and the motor. And if they are still in a, you know, any kind of a holistic assembly they can perform like rotation or electrical testing on them. But of course, if they're broken, they can't do that. So that's where it really becomes more of like a tear down analysis.

So I'll pause there and see if, if there's any questions on the inspection or the work that's being discussed with Layne right now.

Leah:

I have a few questions. It might be more for Nate, and Paul, but can you remind me how many well, failures have we had in total? I'm. I'm assuming like, are they. Can you remind me?

Like, are they the same wells and how many different wells? And then, can from my understanding, this doesn't seem normal. So wanting to understand, like, is this normal? And then assuming it's not normal, what are. Do we have any recourses for recapturing some of those costs and investments?

Emily:

Absolutely. Nathan, do you want to start maybe with the first one and I can answer the last two?

Nathan:

Yep. And Paul has the dates handy, so I'm going to pump that over to him.

Legal Counsel Paul Polito, Esq.:

Specifically for the A2. Well, I'm noting that it's for failures 20, 23, 24, 25 and then the latest in August of 2026. So it has been four total.

Leah:

And is is that guessing that's not normal.

Emily:

No, no, that is definitely not normal on average. I mean, I have, you know, over 20 years of experience in this particular well field in this aquifer, Denver Basin wells. And I would say common is for pumping equipment to last 8 to 10 years. For, for the well equipment itself.

And then there's that's the really the pumping equipment and then there's the, well, itself and the casing and that, you know, that can be, you know, 30 to 30 around 30 years is kind of commonly what we see for the, the well casing and the screens. Depending on the materials that were used for the, the casing and the screens and the water quality.

But certainly an annual, you know, failure of the pumping equipment is not normal. And so that's really what we're doing is digging into what are all the possible failure modes. A manufacturer failure or manufacturer defect is certainly a failure mode. There are other failure modes, that we are evaluating. And so what we're really doing is, you know, through we on our team.

So my kind of expertise is in groundwater pumping systems. And then we also I have some of our staff that are electrical engineers and instrumentation and in INC engineers. And so we're really looking from kind of a mechanical, electrical and instrumentation as to what some potential failure modes are. And, you know, I would say holistically, there are some items that we have found within the well field, including at A2 and A6, as well as other locations that will be recommending, the district address.

And, you know, I don't necessarily want to take your entire evening, but I can go through some of those, if you would like, would you like me to go through some of them? I don't want to overspend my time.

Jason:

Yeah. If you can give us a brief overview.

Emily:

Yeah. Okay. So one thing that we have found is that there is not working level transducers in any of the wells.

So there are level transducers that there there are some instances where there are transducers installed. However we have found that they are either not operating or they're not wired back to the PLC in all scenarios except with the exception of, well, a seven. None of the wells are programmed to use the level, the water level to operate the pumping equipment.

And I would say fundamentally, this is extremely important. Why this is so important is because this Denver Basin well field has an aquifer that is declining over time. And the the pumping equipment and the water levels basically are consistent with their original design. And one of the things that we I commonly do with other clients in the area is, you know, we, we use basically, the programming is directly tied to the level transducer.

The level transducer is what shows what the water level is. When you turn on these wells, there is a significant decline in water level between what static water level or what the water level is when the wells just sitting there versus what the water level is when you're pumping. And there can be anywhere from 100ft to 300ft drawdown between static water level and pumping water level.

And the problem is that right now, if there is no functioning level transducer or any programming to look at the level transducer and use that to protect the pumping equipment, there is a possibility that these wells are being drawn down to the point that the water level is getting at or close to the pump intake, and that on some level this is not, like as I mentioned, the water level in this aquifer has been declining over time.

And so it's very likely that this wasn't happening in the past. It wasn't an issue because their water level was sufficient. And now potentially, you know, the water level is really just getting kind of close enough, especially if you're pumping over multiple months. That that could be a potential cause of failure. So that's an example of something that we're looking into.

So that's something that the good news is that those are very, you know, fast and cost effective to address. So, you know, we're working on getting a programming workshop scheduled with the programmers, the integrators of the district in the next two weeks, and getting new level transducers installed. And that's something that, you know, I'm confident we can get addressed because we don't have any level.

Oh, sorry. Go ahead.

Jason:

Why was this never done?

I can’t... Why were these transducers never put into?

Nathan:

So it's a hodgepodge across. So we have some of them that we're in and not connected appropriately. In terms of specifically the most recent failures, there's really no good excuse for it. So the level translucent level transducers are shown on the install reports. But then they just weren't actually installed in the field.

And so that's definitely, a startup failure, one, they should have been installed. So there's some level of responsibility on the contractor there. And then also district staff, well operations staff, when we were out doing these actual startups, didn't catch that they weren't in or reading.

Jason:

I mean, we reconditioned these wells every couple of years, it seems like.

Or we've done.

Nathan:

With these ones. Yeah.

Jason:

So why wasn't it address then?

Nathan:

It should. It absolutely should have been. It's it's an oversight. Okay.

Emily:

So so I yeah I will say I agree Nathan, that it is shown on the pump install reports. I consider this kind of three phases. There's is the level transducer installed in the well.

And that's really I'd say the responsibility of the well contractor. And then there's a termination point at the wellhead. And then there's wiring between the wellhead and the PLC. And that needs to be working properly and installed. And we did find I think, one well where that wasn't I think there's conduit but possibly not wiring there. And then there's the programming.

And so there's kind of three different points at which, you know, I think the contractor certainly has responsible for, responsibility for making sure that the level transducers were installed. I, I don't think that it's contractually in Layne's contract to ensure that they are programmed and working effectively. That's a programming challenge.

James:

Oh, can I stop you there for a second?

Emily:

Yeah. Of course.

James:

During installation of this equipment, is it safe to say that this represents the transducer itself represents a significant or important safeguard to the operation of the pumping system? Yes. Okay.

Okay, okay, I have one more just to you indicated between non operation and operation pumping. Yeah. During the pumping operation you maybe I wrote it down. Wrong. 100 to 300ft difference. And is that how does that manifest. I mean obviously local to the bottom of the well. I mean the you're going to pump water, the water is going to rush in and then continue to be pumped.

But you're telling me there can be a 100ft to 300ft? How does that manifest itself? What is that? Is that in the well casing itself, or is that I mean, locally, the aquifer is not going to move up and down 300ft. That's just doesn't sound plausible. So how does that what does that look like?

Emily:

Yeah, absolutely. So for I mean hydrogeological and I'm not a hydrogeology.

I'm kind of civil on the more pumping side. But hydrogel I'll, I'll represent the hydrogeology. Basically there's a code of depression. And that happens. And really the, the, the depth of the drawdown is dependent upon how many other wells may be pumping in the area or, you know, the, kind of what the aquifer consists of or what the, you know, screen material, not the screen.

The so there's a gravel pack around the screens and, you know, as the pump turns on, it is kind of creating this cone of depression hydro in the aquifer around that well. So you're right, the entire aquifer is not dropping down 300ft. But in the area of that, well, it is as it's a, you know, and I will say, these wells, you know, the Castle Pines, Wells are very high producing wells for the Denver Basin.

Well field. You know, most of the wells in the Denver Basin produce 1 to 300 wells, 300 gpm. Excuse me. So you guys have very high producing wells, which is great. You're in a really good location of the aquifer. And so, yeah, you can expect to see a little bit greater drawdown. It is, you know, directly related to the flow and the production that you get out of these wells.

James:

Okay. Thanks.

Emily:

Yeah. One other one other thing I did want to just mention is, you know, we've the other thing that we're looking at is the pumping the pump curve. So all of these pumps have a recommended operating range, that the pumps should be operating within. And that's something that we are assessing to verify that the equipment is, in fact, operating within its range.

That's difficult to do without pumping water level, because the pumping water level data, which we would pull from historical level transducer information, is directly related to the total dynamic head that the pump is seeing. And that's what controls, you know, where the pump is operating on its curve. So we're kind of using some other known information from nearby wells, from other systems that we work for, and kind of our best available knowledge to say this is where we think this is operating.

Once, once we get the level transducer data back in, we will confirm it. But in general, because of the, you know, the pumping water level and then there is some variability in the system pressure. So some of these wells see somewhere between like 50 and 100 psi on the system side, depending on which wells are online.

There's variability in the pressure. Now this is the entire reason that pumps on in the Denver Basin well field are equipped with variable speed drives. And I apologize, this is all very technical. So stop me if you're if you're getting lost. But variable speed drives, what value they provide is they allow the wells to maintain a consistent flow, and they are able to maintain that consistent flow with varying total dynamic head as the system pressure changes or as the pumping water level changes, the VFD can change its speed to maintain a constant flow with those variable conditions.

However, what we found in the field is that the VFD are currently clamped to only operate between 50 and 52Hz, and that is something, as I understand, that is something that Layne has done as part of these wells. I haven't spoken with Layne, to understand why they would do that, but the VFD are not functionally or are not functioning to their full capacity, right now.

And so that is also something. And we can, you know, we that's another thing. We can work with the programmers to really use the VFD to its full range and improve the system operations. And it's absolutely going to help protect the pumping equipment. So with the clamped range, I want to look into whether or not we're operating outside of the recommended operating range on these pumps, because that could be another failure mode.

So I'll say those are the two primary items. We have a few other items, that, you know, we're looking into on the electrical side. Just we're really kind of saying what's all the possible failure modes? And we're going to either prove to ourselves that this is a failure mode or it isn't, and work to address all of the items.

So.

Jason:

Okay. You have any questions for Emily?

James:

Like a hundred. But on the whole.

Jason:

All right, you're hearing no questions. Thank you very much, Emily, for that, presentation. That was very enlightening. And troublesome. So, we'll go ahead and close out the, well condition update and discussion.

James:

Can we continue to discuss them on ourselves. Yeah. I mean, it's it kind of safe to say that, you know, you you have your variable speed drives or PWMwhatever's controlling it, it's clamped or as she used 50 to 52Hz.

And then on the other side, we don't have a transducer that's telling us what our water level is. So, you know, you you essentially have this thing crippled. You know, that's what it feels like, I don't know. Have you ever heard of anything like this?

Jana:

No, but I don't have any experience in pumps at all.

James:

Yeah, but, I mean, it just seems very problematic.

I want to ask those questions immediately. Why they restricted the operating speed. And that could also cause some of the weird startup behaviors and things like that.

Nathan:

Yeah, it absolutely could. From what I understand, at least specifically with A2, the VFD was clamped because of a concern for potential sand production. So one of the things that you can do with the well, if it's producing a lot of sand, is to slow it down.

I don't know that that was actually the case or if that's something that we actually saw or if that was just a like, hey, it could be this thing. And so they, you know, put that clamp on.

James:

I mean, is there any written documentation that he provided along with this, or is this conversation stuff. That's.

Nathan:

Yeah there's nothing.

Yeah. There's nothing specific in any of the well install reports or anything. We have that point to why that was done.

James:

And the point I was making with with Emily. Emily was if we actually have, you know, this transition that's not actually connected or doing anything, and we're water levels dropping. That could be the undercurrent, stuff like that.

Things just free wheeling, and spinning in space, basically. Or sucking a lot of air, you know. So, yeah, you know, with cavitation or sucking a lot of air is damaging.

Nathan:

Well, and with A2 specifically and that failed seal. Right. So if it's pulling down to the level of that seal and that seals partially out of the water or on that edge, it's not getting the cooling advantages.

And so that is something that would explain that multiple failure on that part that we've seen is that that seals heating up. That's why it's failing mid run. It just gets to a point where it fails in beers. So yeah the the well transducer is not being installed. And the ones that were the condition of the well transducers was something that we absolutely should have had a better handle on.

And it floored me when I found that out.

Jason:

Layne is the only contractor on this?

Nathan:

Correct. Yep.

James:

Okay. Did he provide any explanation there?

Nathan:

Not yet. We've kind of been in a holding pattern on some of those broader discussions while Paul works through the, like, well, pull addendum language before everybody really gets to talking, we need to have that finalized.

James:

Okay. And the only final thing I'll say is, as far as the inspections that are talked about and having a third party, one of the things that we didn't talk about is going through the invoices, receipts and making sure that we didn't receive remanufactured or refurbished well, equipment. Again.

You know, it's that was disturbing the first time. But if if he repeated that same behavior, then I think we have a really big problem on our hands because we don't know how many cycles are on those shafts. And and well, the motors, one part of it, I mean, you can do a mega on a motor and you can look through it and see if it's shorted or burned up or, not having the appropriate resistance per winding and things like that.

A lot of things you can do. But more importantly, if we show any kind of damage or stripping or cracking in those shafts, then I think, you know, we have to start looking at cross-sections and metallography and, you know, I can look at a lot of stuff and tell you what's going on under a microscope. But the reality is, is, you know, there's a level of trust I don't think we can have here.

And I think given what we've seen in the past, I think we have to assume nothing unless it's documented. So I don't know if somebody is looking at paperwork, but I think we need to start there, you know. Thanks.

Jason:

Good points. Jim.

Anybody else have any.

Leah:

How long do we expect investigation to take?

Nathan:

Emily, once we get the contract signed, we're probably 6 to 8 weeks at least for the Baker Hughes inspection.

Emily:

Yeah, I think that's appropriate. Yeah, they'll they'll have to pull. They'll have to mobilize to pull the equipment and then take it up to, you know, they'll bring in a large vehicle and haul it all up to Casper, Wyoming.

And then the inspection will take place at Baker Hughes facility. And then after the inspection, they do OSA reports. And I, I am planning to help the district to review that report and provide comments. Having worked with Baker Hughes on these type of scenarios before, I, I expect I'll have to push them a little bit to give us conclusions.

So we may have some back and forth on, you know, the inspection and what they're really seeing. But I've worked to try and set clear expectations on what we're expecting to see from this inspection.

Leah:

Sorry, I had one more, in this kind of leads into what you just mentioned. Do do we have a contingency plan if they don't have any clear findings?

Tera:

Well, yeah. Well, in the contract, it basically says that we are going to split the cost depending on what the finding is. And if the finding is inconclusive, then we're still going to split the cost at the finding is a determination. Then the cost will be based on that. Correct?

Paul:

That's exactly right.

Leah:

But not just from a cost perspective but from like an equipment.

Nathan:

So we have if if it gets to that point, the next line of defense, Kennedy Jenks has identified a materials testing lab that we could go to that's outside of Baker Hughes. And so that would be the next line the next fall back. If we need to do further investigation with third party.

Leah:

Yeah. Just like if it's not functioning then who pays for it?

Tera:

Well, I think that's what this process is about, those we're trying to determine who's responsible and go from there. So without actually getting the work done, the preliminary work, we don't know. That's what that whole process is about to try to determine what the cause is.

Paul:

That's exactly right. So this investigation will determine what the root cause is and whether it comes down on, well, conditions, in which case it would be the districts.

Leah:

No, sorry. I think I'm being misunderstood. I understand that my question was, let's say they come back and they do not have a conclusive explanation for what's going on at that point. So I'm not talking about the payment piece. I'm talking about we have these wells that aren't functioning and we don't know why. So I want to understand, like what is the contingency plan for that.

Several Speak at once:

Engineering basis.....

Leah:

To fix it like it was to go to that other facility to see if they can identify anything. And and so I'm more talking like hypotheticals. But part of the reason I'm talking hypotheticals is because we've been spinning in this same place for years where we've been investigating and we've done different things and we haven't made any progress.

So just trying to understand, like, is that the if they can't figure it out, like, is that the state that we just have to operate within, or do we have to do like more repairs, like, do we have to redo everything, you know, so just trying to understand.

Deputy District Manager Rene Santin:

So Emily has mentioned to us some additional things to try.

For example, we could try a smaller motor which would reduce the flow, but it might help the situation. Another thing we're looking at is looking at our storage. So right now our two tanks aren't enough. And we don't have enough storage. Therefore we're cycling the wells on and off more frequently than they would like. So looking at additional expediting the additional storage so that we could potentially just turn on a well and let it run, the level transducers will give us a lot of valuable information in terms of what drawdown.

So I think the next steps would be, to do it right. And do the transducers look at the pump curves, look into maybe decreasing the size of the motor, and, and looking at our operations and how we're running these things. And maybe, we're hoping additional storage would also help with that.

Leah:

Okay. Thank you. Yeah.

Emily:

So. And I can thank you. Rene. Yeah. Getting what I've been trying to do is really think through what's the lowest hanging fruit and what's the highest priority. And, you know, where do those converge and focusing on those. So getting level, getting functioning level transducers in is the number one priority and making sure that they're wired.

And then working with Mountain Peaks, integrator to get them programmed. So that's something that I would say for the wells that are currently running are actually the the highest priority to make sure they continue to stay running. So we're working on that very quickly, as I mentioned, working to get a programming workshop. And I know that the mountain peaks already met with the level transducer manufacturer on site last week.

So we're working quickly to get that addressed. And I really believe that that could be a potential root cause of failure. We will we will know we will be able to know if that is a root cause of failure once we have functioning level transducers. So what we do with that, what basically we're going to program these wells so that we'll have two low water level set points.

The first low water level set point will slow down the the VFD and the pump and allow it to maintain the water level. If the water level continues to draw down in the well and it hits the low, low water level will shut down the pump. And so those it we will, you know, if we're getting those alarms and those shutdowns, if we see that happening, we will know that previously it was running below that water level.

And that will give us quite a bit of information. So we will be able to validate whether or not the water level was getting below this set point. We're also actively working on, you know, getting all of the information. We're recruiting pump calculations and evaluating the pump curve. And then we'll be working with the programmer to use the full range of the VFD.

I really believe with those two things, it's really going to improve the protection of the system and the operating conditions of the system. As Rene mentioned, we're also looking at the overall system, hydraulics to understand, you know, how frequently are these pumps turning on? Can we run them for longer durations to minimize the number of times that it starts and stops?

You know, with a potentially a larger tank in the system, that would certainly help because it was will help the pumps run for longer duration. But we're also seeing is there anything else we can do for system hydraulics or, you know, from a hydrogeological perspective? The district has asked us to put together some standard operating procedures to look at checklists for how, you know, when when the operators go to these sites, what are they looking for?

You know, what are the operating conditions that they should be seeing? And if they aren't seeing those, what should they do? And then also kind of holistically, are there wells that if they're run at the same time, they create, kind of interference or difficult hydraulic conditions. So that's something that we're looking at. So I certainly appreciate that.

The, you know, the district and the board is frustrated with the situation. And, you know, I'm doing everything I can to help get you guys a system that maintains pumping equipment for, you know, an appropriate life.

Okay.

Jason:

Good. All right. Thank you again. Emily. I think that satisfies all of our questions for today. Regarding this issue. So we'll go ahead and close out the will condition update and discussion and move to item number five, which is the legal counsel report with Paul. And I'm sure Paul would like to tell us about this, legal aspect to this.

Describer:

On screen. 25 August 2026

Castle Pines North Metropolitan District

7404 Yorkshire Drive

Castle Pines, CO 80108

Attn: Mr. Nathan Travis, General Manager

Subj: A2 Pull, Video Inspection, Equipment Factory Inspection

Dear Mr. Travis:

Layne Christensen Company is pleased to present this proposal for service work on the above-mentioned well. Layne would propose the following scope of work:

-Mobilize pump hoisting rig and crew to/from the well site

-Remove downhole equipment from the well

-Mobilize tv video van to/from the well location

-Complete post rehabilitation televised video survey of the well with both straight down hole perspective and side scan perspective (as needed to view an item of interest), provide copies of the survey

-Ship motor/seal/pump to equipment manufacturer for disassembly/inspection. Provide a 3rd party inspector to observe.

Layne would propose completing the work for the lump sum price of $70,000.00. Layne would propose CPNMD paying half of this fee and Layne absorbing the other half of the fee. This proposal is subject to the following attached terms and conditions. If acceptable, please sign

below and the work will be scheduled. If you have any questions, please contact our office.

Layne Christensen Company has appreciated this opportunity to be of service.

Sincerely,

LAYNE CHRISTENSEN COMPANY

Brian W Dellett, Senior Account Manager

Paul:

I would, I would. Good afternoon everyone. If you go to page 16 of the board packet, that is the proposal from Layne, to pull the equipment and conduct the work. My addendum, since I wasn't happy with the with Layne's proposal, as is, is on page 20. So just a well, you don't need to much background here.

Describer:

On screen. ADDENDUM NO. 1 TO PROPOSAL FOR

A-2 PULL, VIDEO INSPECTION, AND EQUIPMENT FACTORY INSPECTION

This Addendum No. 1 (this “Addendum”) is entered into as of , 2026, by

and between CASTLE PINES NORTH METROPOLITAN DISTRICT, a quasi-municipal

corporation and political subdivision of the State of Colorado (the “District”), and LAYNE CHRISTENSEN COMPANY (“Layne”). The District and Layne are referred to herein individually as a “Party” and collectively as the “Parties.”

RECITALS

A. Layne submitted to the District a proposal dated August 25, 2026, for “A2 Pull, Video Inspection, Equipment Factory Inspection” at the District’s Well A-2 (the “Well”), together with Layne’s standard terms and conditions attached thereto (collectively, the “Proposal”).

B. The Proposal contemplates that the motor, seal, and pump removed from the Well (collectively, the “Equipment”) will be shipped to the equipment manufacturer for disassembly and inspection, with a third-party inspector provided to observe.

C. The Well has experienced repeated equipment failures, and the Parties share an interest in determining the cause. The Parties desire to clarify certain terms governing the inspection, the custody of the Equipment, and the allocation of costs, and to confirm that neither Party’s rights with respect to prior work at the Well are affected by the Proposal or this Addendum.

Paul:

But essentially this is the same pump that has failed four times. August 2026 was the last we had seen stemming from a June 2026 installation. The district's warranty and claim rights under the original contract going to June 2027, since the work was completed in June 2026, and the warranty is for workmanship and materials up to a year after the completion, the completion being in June 2026.

The completion of the work. In order to determine what the root cause was, to then determine whether we can submit a claim under the warranty, they're doing the root cause failure analysis and submitting the, well equipment to Baker Hughes. That is the proposal from Layne on page 16 is to pull that equipment and send it to Baker Hughes and determine that cause.

So as far as what they propose, they would pull the well video survey ship, the motor, seal and pump all the Baker Hughes for a tear down with a third party observer. $70,000 lump sum split 50/50 district share as of this point is 35,000. The proposal is on Layne's standard terms. Now, you may recall the district did or the board, enacted a standard form of contract that I had drafted a while ago for these sorts of situations.

It wasn't in effect at the time that this contract was was signed, so it just wasn't in effect. It is for everything moving forward. But for here, we're dealing with Layne's original contract.

Their proposal here is on that as on those same standard terms that the original contract was on. I recommend did not signing it as is because last time we did have an issue, the last manufacturer tear down was inconclusive. And Layne's terms would have given Layne the evidence. At that point, the district wouldn't have necessarily even gone back its equipment, and it just would have been inconclusive without many rights to the district, which didn't quite sit well with me.

Describer:

On screen. NOW, THEREFORE, in consideration of the mutual covenants set forth herein and the Parties’ respective performance under the Proposal, the receipt and sufficiency of which are herebyacknowledged, the Parties agree as follows:

1. Third-Party Inspector. The third-party inspector referenced in the Proposal shall be selected by the District, subject to Layne’s approval, which shall not be unreasonably withheld, conditioned, or delayed,

and shall be engaged by the District. The District shall notify Layne in writing of its proposed inspector, and Layne may object within five (5) business days after such notice only on the grounds that the proposed inspector lacks the qualifications to perform the inspection or is not independent of Layne, its affiliates, and the manufacturer. Absent timely objection, the District’s selection shall be deemed approved. The cost of the inspector’s engagement shall be borne by the District, and the

lump sum price stated in the Proposal shall be reduced by the amount, if any, included therein for third-party inspection services. Layne shall coordinate with the manufacturer as necessary to ensure that the District’s inspector is afforded the access described in Section 2.

2. Inspector Access. With respect to the disassembly, inspection, and testing of the Equipment by the manufacturer, the District’s inspector shall be permitted to: (a) be present for all disassembly, inspection, and testing of the Equipment; (b) receive not less than five (5) business

days’ advance written notice of the date, time, and location of such activities; (c) photograph the Equipment and its components and take measurements thereof; (d) receive copies of all inspection reports, test data, dimensional measurements, and photographs generated in connection with the 20 inspection; and (e) receive advance notice of, and be present for, any destructive testing, sectioning, or other procedure that will materially alter the condition of any component. No destructive testing or sectioning of any component shall be performed without the District’s prior

written consent.

3. Custody and Return of Equipment. The Equipment removed from the Well is and shall remain the property of the District. This Addendum constitutes the District’s prior specific written instruction to the contrary for purposes of the “Title and Ownership” provision of Layne’s standard terms and conditions, and no Equipment or component thereof shall become the property of Layne or of the manufacturer. Layne shall document the chain of custody of the Equipment from the wellhead through its return to the District. Upon completion of the manufacturer’s inspection, Layne shall cause all Equipment and components, including all fractured shaft sections and seal components, to be returned to the District. No component shall be scrapped, discarded, repaired, altered, or retained by Layne or the manufacturer without the District’s prior written consent.

Paul:

So I drafted an addendum that in the number of protections for the district, and I'll go through them on a high level here, number one being an inspector. So the district would propose an independent inspector Layne can object to that inspector, but only for a lack of qualifications or independence. And that inspector has real participation rates. Not just observation.

And then any destructive testing that Baker Hughes would like to do would require district consent. As far as custody failed, parts are preserved and returned to the district.

This overrides Layne's title clause in their proposal, and if Baker Hughes refuses access to the parts, just come to district custody. As far as the warranty, it locks in Layne's Owner in description, workmanship, material defects one year from installation and then there. As director Radloff mentioned before, there is a 50. The 50/50 split is in turn pending, the determination of the cause of the failure.

So if the cause is Layne's workmanship or material defect, the district is reimbursed for this proposal and then would be able to submit a claim for that warranty as well. Do you have a question, Director Mulvey?

James:

Is that Okay? Yeah. Does the fact that and again, this kind of goes back to what is it, Baker Hughes, if they have a recommendation or guidance in their installation that requires the use of these, you know, level transducers that weren't properly installed, and or wired or verified working.

Is that considered workmanship or is that just negligence or is how do we define this?

Paul:

It depends on whether that contributed to the failure itself. So that would be a discussion with me, engineers Layne's council on whether that actually contributed to the failure. So if this well shaft required that transducer to work properly and it wasn't there and it failed.

And I have a third party engineer that tells me that. Then decent chance the district would not be able to to assert it wouldn't be able to claim any sort of warranty under that because the transducer. But it depends on how it relates to failure itself. So I know, you know, the typical lawyer answers, it depends, but it really does depend on how it relates to the failure.

James:

I'm used to that. I guess what I was more, pushing towards. I was going to ask Emily to do this, but if Baker Hughes has recommended guidance for installation for their product, that this is should be in all cases, utilized and mean, to me, that's should be something that we kind of collect that and understand if you know it was just installed or not hooked up, installed, but not hooked up to me is is virtually the same thing.

Emily:

It's yeah. And that's where I mean, looking back at the. Oh, she's still in. Yeah. Sorry, I, I thought I'd stay on during this part since I thought there might be questions for me, but.

Paul:

No Please do.

Emily:

You know, looking back at the contract language, you know, it's basically procure and install, the level transducer, and then there is a kind of startup phase that they have, and presumably during that they would verify, you know, that everything's working.

Now, I don't know what the contractual or, you know, former or informal discussions were in the field with the programmer. If, you know, I mean, it's sometimes like Layne may install the equipment and no one's there to push go. And Layne's not the licensed operator. And so they're not going to run the system without someone there.

And so, you know, did they know that the level transducer wasn't working? I you know, I can't answer that. We'd have to dig into that. So it kind of depends on, you know, contractually, this is where I think it is a little bit of a gray area on, you know, are they responsible for making sure that the programming is working and that the system is protected?

I think that's a bit of a stretch. Is it their responsibility to make sure that the level transducer that they procured and installed is working? I say yes, so it is a collaborative piece.

Nathan:

For a quick clarification for A2 the level transducer was installed and wired in, but it was reading high.

James:

What is reading high mean.

Nathan:

It was showing a level that was greater than was real.

James:

So it was defective.

Rene & Nathan:

But possibly that could also be. Yeah, not calibrated defective. There's a number of things from there. Yeah.

Paul:

Right. So again, as far as, process Laynes, legal department accepted most of the addendum. They pushed back on a couple items, including the inspector selection, the, the some fine details within the cost allocation mechanics and then the precedence of the addendum versus the their proposal, which I just couldn't accept any of their, any of their red lines.

So what you're seeing here are my red lines to their red lines. The underlying language is is mine. Destructor language is Layne's counsel's proposal, which, to me, I just I couldn't accept. So I'm still waiting to hear from Layne's counsel on this. I had sent the red line version to them last Wednesday. I haven't heard anything back since then.

I'll I'll go ahead and pick them tomorrow. And my goal is to have this completed by this week.

Jason:

What if there's no agreement? Do you guys have to go to mediation?

Jason:

I wouldn't want to escalate it to mediation at this point. If we can't come to if we can't come to terms on this, it depends on where the negotiations go.

I'm not going to tie up this entire project, because of it. I will say that this agreement does have to control over the Laynes proposal. Otherwise there's just simply no point to doing this. And I think that we'll get over the line on that. I'm confident that we'll come to an agreement on these terms because.

Overall, the the goals that we're trying to meet.

The, the red lines that I saw to this agreement don't make a lot of sense to me. And I think it just wants a discussion which I've tried to have and just haven't had that opportunity. So I think we'll get done. If it doesn't, I may have to I may have to fine tune this a bit and come back.

I don't intend on having this be a long back and forth process. I'd like to get this done so so they can start doing the work.

Jason:

Seems like an important part of the process though.

Jana:

Well, just, you know, with no experience in contract language, just reading what you struck through and what you wrote, they seem to be saying the same thing ultimately, in my opinion.

And I know that's not really you know, for instance, it says a mutually agreed agreed upon. And then the next part that struck through the districts were to select the inspector, subject to Layne's approval. So we're still saying Layne ways in. Absolutely. So to me, that's very similar to the sentence that struck through, which is a mutually agreed upon.

So I feel like we're just using different words truthfully.

Tera:

Well, I think the main caveat in there is that they can only object to them for, if they're if they don't have the right qualification, which I thought your red lines were really good. And I trust that you won't hold up this important project for, just legalese.

I imagine that this is what lawyers do as you guys get together and you, you talk about it. So when we talk about an independent contractor that we're soliciting, do we have one in mind? Do I know that this paid on our behalf?

Nathan:

I know that Layne has one that they've recommended. We'll get those qualifications to Emily and then Emily.

I don't know if we've identified anyone specific yet.

Emily:

Yeah, my. What? I was going to I, I have reviewed the resume and the qualifications of the third party individual, and it seems like he has good qualifications. I, if if the district's okay with it. I was planning to just call that individual directly and ask them some questions to kind of do like a little bit of a reference check on them.

To understand a little bit more about the role that they're expecting to play. And, you know, exactly, sort of, you know, when they're sitting in the room at Baker Hughes facility, what kind of questions or what is their experience serving in that type of role? To make sure that we're really getting a third, a true third party perspective.

Tera:

Right. And Kennedy Jenks can't do that because you have a conflict of interest, since you're our engineer, is that what I'm understanding, or is that one of your engineers?

Emily:

It's not one of our engineers. It's a contractor that's being or it's a sorry. It's someone that's being recommended by Layne. I mean, I.

Jana:

But see, so that's why that sentence to me is like, we're fighting over words. If we're going with who Layne is recommending anyway.

Rene:

Isn't it? If that seems like a conflict.

James:

Yeah. I'm like really puzzled how we can accept a or take a recommendation from Layne. I mean, it's

Paul:

That wasn't my intent when I drafted this.

James:

Okay? It's to me that this fundamentally is bothersome.

You know, it's like agreed.

Jason:

Yeah, I know it's probably a pretty small world, but can't we find somebody else?

Paul:

That's the hope. That's. Yeah, that's the intent of this, of this language is that is exactly what it says. The district will find somebody. Layne can object on certain qualifications. And that's it.

Nathan:

So Emily does. And not to put you on the spot if you don't readily know. I know it's a large organization, but does KJ have somebody on staff with that expertise, or do we need to just kind of broaden our search a little bit?

Emily:

Yeah, I think that's an opportunity that I can certainly look into and see if we have somebody that would, you know, meet those qualifications.

I think that's certainly a possibility. Yeah. And I think, I mean, just for clarity, I mean, I don't disagree with you that the person that Layne proposed, I mean, that seems pretty close to home, but that person does not work for Layne just. But they have their own.

Jana:

That matters to me. So I don't think it matters to me that they don't work for Layne.

They're still recommended by Layne.

James:

Exactly. I was kind of with you there.

Leah:

They could be best friends, right?

James:

Yeah, yeah, playing golf on the weekend. Who knows?

Emily:

Yeah. It's like, yeah, we we can support either through a or help the district find somebody to.

Jason:

We definitely need to keep looking.

Paul:

And that is the reason for the language I would say two other things that I just could not budge on or within paragraphs 6D.

Describer:

On screen. Paragraph 6D

(d)Allocation Upon Determination.

If a Determination attributes the Failure predominantly to workmanship or a material defect within the scope of Section 5, Layne shall bear the entire cost of the work performed under the Proposal and shall promptly reimburse the District for any amounts the District has paid.

If a Determination attributes the Failure predominantly to well conditions or operating conditions as described in Section 5, the District shall bear the entire such cost of the work performed under the Proposal and shall promptly reimburse Layne for any amounts Layne has paid. If a Determination attributes the Failure to a combination of such causes,the Parties shall allocate the cost in proportion to the causes so identified.

Paul:

I Layne had amended this to state that they would only reimburse the district for any amounts, that the district has paid for the inspection itself. This is this is beyond the inspection. This this encompasses the entire contract. This proposal for $70,000, not just whatever it cost of district to inspect the issue. That was never the intent of this.

So I wouldn't accept it with that red line. And then lastly, the paragraph 12, Layne's counsel had struck out, and I'm not seeing it here, but they had struck out language where, the addendum would clearly control over the proposal itself, which again, if the addendum doesn't control the of the proposal, there's no point to enter into the addendum to begin with.

So it has to control. So those are the those are the hard line stances I have. I don't think it's going to be a deal breaker.

If if they come back and I have to adjust then then so be it. But there are some hard lines here.

I expect that we can come to a conclusion on this this week. Again, we're very close. It's really just a few terms that we're in disagreement with, but I expect to get this over the finish line soon. All right. Does anybody have any questions of me?

Jason:

No. I think we can move on to your next point.

Paul:

Okay, I know I skipped over the legal report. So I'll just pause for a second. If anybody has questions on the legal report itself before I move to the minutes.

Jason:

Hearing none, I think we can move on.

Paul:

Okay, then that just brings us to the minutes on page 24 is the work session minutes. And on page 28 are the meeting minutes. The board can entertain a motion to accept the minutes.

Board Voting All Speak:

I move to approve both the work session minutes and the regular meeting minutes as presented I second. Great. Having second. We'll go to vote. Jim.

Approve. Tera. Leah. Approve. Jana. Approve. I approve as well. Motion passes. Thanks, everybody.

Paul

Thank you. That is it from legal today.

Jason:

All right. We will go ahead and close out. Item five, the legal counsel status report. And we will open up item number six, the finance report.

Describer:

On screen. Page 35

TO: Board of Directors – Castle Pines North Metropolitan District

FROM: Eric Harris, Elevated Clarity (EC)

DATE: September 28, 2026

RE: Financial Report – September 2026 Board of Directors Meeting

General Fund Activity

2025 Audited Actual

Beginning Funds Available $153,130

Revenues $2,732,485

Total Expenditures $2,361,605

Change in Funds Available $370,880

Ending Funds Available $524,010

2026 Adopted Budget

Beginning Funds Available $197,782

Revenues $2,556,272

Total Expenditures $2,306,227

Change in Funds Available $250,045

Ending Funds Available $447,827

Actual Through 7/31/2026

Beginning Funds Available $524,010

Revenues $1,697,876

Total Expenditures $1,430,565

Change in Funds Available $267,311

Ending Funds Available $791,321

Budget Through 7/31/2026

Beginning Funds Available $197,782

Revenues $1,907,845

Total Expenditures $1,441,078

Change in Funds Available $466,767

Ending Funds Available $664,549

Favorable/(Unfavorable)

Beginning Funds Available $326,228

Revenues $(209,969)

Total Expenditures $10,513

Change in Funds Available $(199,456)

Ending Funds Available $126,772

Molly Janzen, Accountant:

Good evening board. Starting on page 35 you'll find the finance information in this meetings packet.

We begin the memo with a summary of general fund activity. Just a reminder this is July financials and it's not quarterly financials. So we don't go into our annual projections at this point. But just high level summary presented on page 35. Just a reminder that the details behind these numbers are on page 43. So if you want to see the line items that make up revenues and expenditures, you would look on page 43.

So you'll see those subtotals are what what is pulled into the summary report. Revenues totaled $1,697,876, which is about $209,000 below the the budget, the year to date budget. So revenues are coming in a little lower. Expenditures are coming in very close to budget $1,430,565. So $10,513. Under the $1,441,078 year to date budget. Again, just things that we've mentioned before.

When we look at our monthly financials, the software budget and the insurance budget, we know that those went over budget. But as you can see, we're still overall coming in with our expenditures under what we budgeted. So the ending fund balance, that we are looking at at through July 31st is $791,321 compared to the adopted budget for the year of $447,827.

Just a reminder that with general Fund, the property taxes come in in the early part of the year. So you will see the revenue numbers not grow as much as expenditures. So even though right now it looks like that ending fund balance will be significantly higher than what we've budgeted. It will be closer to what we budgeted by the time we get to the end of the year.

Any questions on general fund before we move on?

Jason:

Hearing none, we can move on.

Molly:

So then also included in the memo or just the tables that we give you additional information on, but I'll focus in on the financial information.

Describer:

On screen. Page 37.

Water Enterprise Fund Table - similar to above. (Summary)

Revenues of $4,948,275 (operating and non-operating combined) exceeded the $4,569,810 year-to-date budget by $378,465, led by Water Service Revenue running ahead of budget along with Capital Improvement Fees and Connect Fees. Total expenditures (operating and non-operating combined) of $8,355,721 came in $519,895 under the $8,875,616 year-to-date budget. Two items ran over budget and are worth tracking: Centennial Delivery Charges ($606,767 actual vs. $280,805 budget, $325,962 over, reflecting greater delivered water volume) and Electricity for IPP Pumping Costs ($114,210 vs. $19,980 budget, $94,230 over) — both consistent with a shift toward interconnect water delivery over well pumping this year.

Net of all activity, the change in funds available of $(3,407,446) was $898,360 better than the budgeted $(4,305,806), leaving ending funds available of $39,635,551 — $2,284,399 above the $37,351,152 budget.

Molly:

So on page 37 the Water Enterprise Fund. Again a reminder that on page 45 you can find the details of the Water Enterprise Fund.

This fund both revenues and expenditures are revenues are coming in higher than we anticipated in the budget. Expenditures are coming in lower, with about an $898,000 favorable between those two. We also started the year with a beginning fund balance higher than what we budgeted. So the result as of the end of July is that we're looking at ending funds available of $39,635,551.

Also, I wanted to point out on the water fund, we did include, based on some questions that were asked at the last meeting. Regarding emergency response, repairs and maintenance. So if you look at page 45, which provides the details behind the summary numbers, about three quarters of the way down the page under repairs and maintenance, you will see that we what we did is we looked at what was included in the the repairs and pulled out those pieces that appeared to be emergency response.

So it might not be an exact number, but we will. So we've created a code at this point. And as we talk about moving into 2027, we will try to capture those dollars. The wastewater fund already had an emergency response line item for repairs and maintenance. So we just built that into the water fund as well.

Great. Any questions on that one before we move on? Hearing none. All right. And then finally the wastewater fund. On page 38 of the packet is the summary.

Describer:

On screen. Page 38.

Wastewater Enterprise Fund (Summary)

Revenues of $1,975,519 (operating and non-operating combined) exceeded the $1,864,049 year-to-date budget by $111,470, led by Sewer Service Charges and unbudgeted Connect Fees of $44,502.

Total expenditures (operating and non-operating combined) of $4,707,214 came in $1,185,822 under the $5,893,036 year-to-date budget, as several of the Fund's large capital items (Lift Station Renovations, the Flume Replacement, and the PCWRA Golf Course Improvements Cash Funding) have not yet been fully drawn against their year-to-date budget pace. Within operating expenditures, Collection – Repairs and Maintenance ran $298,427 over budget ($479,043 actual vs. $180,616 budget) — a swing discussed in prior months and the need to continue to evaluate whether the annual budget for this line needs revision.

The change in funds available of $(2,731,695) was $1,297,292 better than the budgeted $(4,028,987). Ending funds available of $2,950,218 remain $1,668,574 ahead of the $1,281,644 budget, all in the unrestricted category (the Fund currently carries no capital-restricted balance).

Molly:

You can see that our actual revenues are coming in higher than what we anticipated. The budget through 7/31. And the expenditures are, are as well. We are still monitoring this particular budget, just because we know that we had some additional maintenance type items that were over budget, creating an over budget situation. But we don't we aren't at that point where we need to modify the budget yet.

So we'll continue to monitor that.

Any questions? I won't go into a lot of detail, but I'm happy to address any questions you might have. And again, reminder on page 47 is where you find the detail behind these summary numbers. And then included the rest of the packet.

Just has your cash and investments again. Just a reminder that we're right on track with what we anticipated in the budgets with our spending. So we are using reserves to fund some of the capital activity that's going on as, as planned. And then you'll see a table on the next page with the accounts payable activity. So on page 39 and then just a listing of our current projects.

And then down at the bottom, just wanted to reiterate what our budget process is looking like this year. We will be providing a 2027 proposed budget to the board by October 15th, likely on that day. We are required to provide that to you. And then shortly after that, just a few days later, is when we'll have the October work session.

And that's where we will spend more time going through the financials and the different line items. We've already started the work with Rene and Nathan on. You know, we are literally going through each line item discussing it, talking about what's captured in that line item, what they see as far as changes. So we're we're doing that dialog right now.

So by the time we are at next month's work session, we will be able to explain to the board where we think we're at with the budget. And then in November. We will do another work session on the budget if we need to, with the goal being to have a rate hearing and budget hearing at that meeting right before Thanksgiving.

Any questions on any of the budget timeline or any of anything in the memo?

Leah:

I have a somewhat related question. I'm curious what water usage looked like over the summer, just given the drought. And you had mentioned that we're bringing in more revenue than expected. And so I was wondering is if that was a piece of it?

I didn't go into all the line items.

Molly:

Yes. So if you look on page 36.

Describer:

On screen. Page 36.

Enterprise Fund Activity

Billed water usage for July 2026 was 115,949,000 gallons and 364,174,000 gallons year-to-date, representing a 4.43% increase over the prior year-to-date period. This is a bar chart which compares 2023, 2024, 2025, and 2026, each month's for each year's Billed water usage in the millions of gallons from January to July. From January to March usage is steady. From April to July each month's usage grows by 20 million gallons on average.

Molly:

You can see there is a chart that kind of shows you the different years and the the amounts billed. Okay. So and I was curious about I think it was June of 2024 why that was so high. So I googled it and it was like a record second highest hottest June on record or something.

So but you can see that. Yeah, we are definitely trending high there. If you look on page. 40.

We don't have our annual projections in here, but just as a, an example, water service revenue based on what we budgeted by the end of July, we would be like at $1.9 million. And we are coming in at one, $2.2 million. So a little bit higher. So that's definitely a component of that. Thank you.

Jason:

Wonderful. Anybody else have any questions for Molly. Okay. Hearing none. Thank you again Molly. These reports are.

So much better and just can't tell you how much we appreciate this. So thank you. We will go ahead and close out item number six then the finance report. And we'll move on to item number seven the district manager's report. Nathan.

Nathan:

Good evening. Board. I did not put any specific agenda items on for tonight. Largely. I just wasn't sure how long the wells were going to take.

And then I will turn it over to Rene for a few minutes. We have been going through the beginning of our tank rehabilitation program. We've been doing some kind of processing and really trying to get a handle on what our options are there. Also, as it relates to the building of a potential new tank, we think we have, and by we, I mean, it's Rene's idea, but Rene has a pretty good idea, or at least a path we can look at that would be pretty advantageous.

So I'll turn it over to him and let you let him walk you through it.

Rene:

Yeah. So,

There is a proposed, or a dedicated tank site at, Coyote Ridge or near Coyote Ridge. I looked at what it would take to build a tank there, and due to the elevations, it would need a pump station. It looks like the intent. Because it has two stub, I was the intent was to take water from the high pressure side and then pump into, into Hidden Point.

And that tank kind of serves Hidden Point. You still have V, so you could still do fire flow into Hidden Point. The other alternative would be to take water from the low side, which would be hidden point, and then pressurize it to about 110 psi and then serve, you know, our zone one. The and I can pull up a map if it helps. Ao that we.

Describer:

On screen. Rene pulls up a map of the CPNMD neighborhoods. Rene explains.

Rene:

Aimes, and then, system pressure zones.

So the the yellow zone is our primary zone. We reduce pressure to serve hidden point there at a lower area. So if we don't do that, they would have 150 psi in their lines. And we boost to the purple zone cause they are higher. If so, the the dilemma that happens is, if you're serving from the low pressure zone to the high pressure zone, you would still need these PRVs for backup.

You essentially pump yourself in a loop and we're just, moving water in a circle. If you go from the high side, cut the head and then pump into the low pressure zone, you're essentially building a tank to serve Hidden Point. And at that size, that doesn't help the rest of the distribution system. So the.

Jana:

Wait really fast. So if hidden point is lower, then why can't it just be gravity fed?

Rene:

It is just through PRVs.

Jana:

I must know what is PRV?

Rene:

Pressure reducing valve.

Jana:

So you just have to to knock it down some sort of come in to hot right. Okay.

Jason:

And Rene to when we talked about this second tank going in, there wasn't part of it to make our system so that we're not we wouldn't have to do,

If we lost pressure in in our current system, we wouldn't have to necessarily do a boiler advisory boiler because we would have water that could be brought in from that bank. Yeah. So is that not on the table anymore?

Rene:

So to to have full redundancy at that location, we would need and full redundancy, meaning both our tanks are offline.

We would need a really large pump station to feed the entire distribution system from that tank. And so that would be a four and a half MGD pump station, similar to the interchange pump station, which would sit mostly doing nothing.

Nathan:

We we we do have, for lack of a better term, kind of a workaround to make sure that we don't lose that through this, like series of projects.

We wouldn't lose that backup capability. So we'd still be able to feed the district from the pump station. It's just without a tank and a separate pump station that we'd be looking at doing it. So that's been considered.

Rene:

So the to help protect our wells, we need large amounts of storage that we're constantly feeding through. We draw it down during, you know, when everybody turns on their sprinkler system, and then we slowly build it back up, draw it down. The more storage we have, the, the more operational flexibility that gives us. So the proposed solution, is so right now we have a 2 million gallon tank that's tank one and a 1.5 million gallon tank.

That's tank two. We are we in the process of rehabbing them. The quotes came back about $1 million each. To get in there, drain them, get in there and fix the spalling concrete, coat them and put them back in service. We also have a vault in tank one that's very rough.

Tera:

These are the ones up by the country club.

Rene:

Correct? Correct.

Describer:

On screen. Rene describes an overlay proposal on the map of where the tanks will be placed and how they will be connected.

Rene:

So the idea is if we put a 4 million gallon tank, which is significantly larger than our current tanks, adjacent to tank two, and build out a parallel line until we have, you know, a connection here and then abandoned tank one. The reason for abandonment mostly is for benefit of the of the golf club. To entice them to let us build another tank, a very large tank.

We have spoken with the golf course. They're very interested in this idea. This as the golf course, the country club built out, this location became more, obtrusive to them, especially this line. So they have plans they want to build in this area, but they can't because of our infrastructure. So they are very interested in a potential new, bigger tank here.

This would give us a combined 5.5 million gallons of storage compared to the three and a half we have now, and we're hoping that that would give us the operational flexibility, to run the wells low and slow continuously. So as the summer picks up, we turn one on. We don't turn it off until the end of the season.

You know, if we can avoid it.

James:

I mean, just real quick. And this is optimal from a standpoint where we don't need a huge amount of pumping and everything else. Yeah. So. So this would all gravity flow into the system. The only pump station we have is the one we currently have.

James:

Just down at the bottom of monarchy. Okay. And the total required water worst case per day is what?

Because I know the ones down at the bottom of the hill are throttled or choked. They have a capable of like 8 million gallons a day or something like that. But you had them choked down for purposes of being able to measure that water down there. I know there's separate con, you know, separate things, but what their total water needs.

Nathan:

So our max demand is right around 4.2 million gallons.

James:

And you just said five and a half. Yep. Okay. So that's that's a significant enough cushion. Even if we had a leak somewhere or a blowout.

Rene:

Yeah. So it would give us a 24 hours. So a leak that's, you know, the fire or whatever the, you know, so we can be fire flow now, as it is, it would give us 24 hours of storage during those peak demands.

So we were actually workshopping some worst case scenarios. We're thinking, high winds, power go out, goes out. They turn off power currently, which is something we can address. We don't have generator on the wells. So we would have to float. You know, we would have 24 hours until we really needed another supply. And this assumes the connection with Highlands Ranch is off and our wells are off, which are on different grids or different companies.

I don't know the grids the same, but I don't know how they do that on that end.

Jana:

How does this affect the relationship with the Highlands Ranch water and the current? So we'd still be on that same relationship?

Nathan:

Yep. Okay. Yep. No impact.

James:

Okay. I mean, this sounds optimal. The only thing if you abandon tank one, what's our responsibility there?

Do we have to backfill that in or are they going to just do that when they want to put something there?

Rene:

I would I would just fill it in and, and abandon the line. And if they wanted to do something more in construct on that, I think that would be part of their scope to maybe demo a wall so that they can build their own wall.

James:

Okay. So you just fill it with sand or something.

Rene:

Probably, hopefully spoils from the oh dig in the other tank okay. Right. Depending on cut fill quantities.

James:

It's like a cut and fill thing.

Nathan:

But okay then for some of the emergency considerations and back up. So one of the issues that we're that will still be addressed or would need to be addressed as part of this is the 18 inch line that leaves the treatment plant.

So that was one of the reasons that we were looking at putting a tank on. The other end of the system was because of that section of line goes down. We lose our redundancy and then pairing, or at least following it isn't constructible right now. We have a water line that we've done a really quick field inspection with both the contractor and Kennedy Jenks.

So right now we're tentatively calling it the what if line. But if we ran a water line from, you can kind of see our two tanks that there are two water lines, there's our backwash supply tank and then the 24 inch. So if we ran a line from their back up through this is HOA 2 owned open space and tied it in there, that would eliminate that single point of failure 18 inch line.

And then also make running a parallel line with it constructible at some point. So we'd be able to get out of that single point of failure problem that we have right now with that line. And then the kind of follow up idea to that is worst case scenario, both of those lines are cut. We don't have access to the tanks.

The only source of water that we have to the interconnect is the interconnect pump station. We could build even a portable skids that would allow us to basically connect high pressure overboard stations. So we could go to each individual pressure zone, connect a PRV that's preset for that location, and then turn on the interconnect pump station with the idea that we're meeting the pressure in that zone, and then any excess water would be dumped on the ground or overboard.

So it's not a it's not an ideal solution in terms of like water waste, but this is would be our last line of defense. We have lost both of our tanks for some reason. The water treatment plan is also down. Both of these lines are down. We'd have that kind of like fourth line. If all else fails, then we can do we can do this.

And so with all of that in play, it really kind of addresses all of the reliability concerns. It's a little bit of a faster project. It's on a site that's more constructible. It saves us from building a new pump station. There are a lot of really strong benefits to going this direction, or at least making at least exploring the feasibility of it.

Tera:

And what's your estimate of cost and time? When are we looking at this?

Rene:

So the village just built a 2 million gallon tank for 4 million. For $4 million. We're looking at a 4 million gallon tank. It's not going to be double, but, we also have some line work associated with it. Here, that would need to be constructed.

So 5 to 6, 5 to 6, six, seven?

Nathan:

With also with the advantage of we don't spend $1 million to rehab tank one. Yeah. So you get that, you get to save that.

Rene:

And we probably save $1 million on a pump station that would be required at the other tank location,

Nathan:

But also has significantly higher like ongoing maintenance needs.

James:

And this is almost pure gravity, right. Or is 100%. I mean, that in itself is more reliable just using gravity. The only the only caveat, or the only issue I ever had with putting both of your tanks immediately adjacent to each other bugs me a little bit. And I think you got to think about that just slightly. See if, you know, you got to beef up protections or, make it so a fault can't get from one side to the other.

I don't know, you know, you know, contamination, you know, any kind of runoff. Simple stuff. But I think you just got to think it through, and.

Rene:

Yeah. And we have a meeting scheduled with the representatives from the country club. They were proposing, going as far east as possible. So potentially here, which is about the same distance we currently have with our tanks.

The biggest constraint is that they need to be at the same elevation. That way they can float together. Yeah. Which we can build up and, you know, you know, dress up, put some trees, and, it wouldn't really be obstruct, obstructing views that way. So, so, yeah, we'll, we'll look closely as, as separating them.

James:

What Is that spot right there? It almost looks like a sandpiper.

Nathan:

As near as we can tell. That is the area that the golf course moves piles of dirt from one side of the lot to the other.

James:

Okay, so nothing important.

Nathan:

Yeah, yeah, they had some plans to do to incorporate like a, like a smaller nine hole course that would have gone through there, but that doesn't seem to they're much more excited about getting the existing tank out of the way than any potential impacts there.

Jana:

And then timing. Did you say that part? I'm sorry.

Rene:

So we're thinking this would go out to, on an RFP to get engineering design services next year, and then construction the year after that. And we're thinking an alternative delivery method might be beneficial for.

James:

You don't want to just send it out now. I mean, collect that stuff

Rene:

We we can put together.

Request for proposal right now and then,

James:

I really just think of budgetary only. I mean, you kind of just be upfront with the people and just say, you know, we want to do this the following year, but we're looking for budgetary estimate and get 1 or 2, you know, just

Jana:

So you think budgetary for construction, the whole job.

Just so you're saying design because so.

James:

Well design and construction. Oh okay. I mean you had a better feel than I would for that kind of stuff. But a lot of times we just tell vendors at my place, we want to do this. It's not going to happen next year. Basically, tell them that nothing they give us is going to be, you know, held against them basically.

And we just say we just need a rough number for what you think this might cost so we can put it in our budget, you know, that kind of thing. That's all I was talking about is so we have a number to work with. Is it, you know, a million, 2 million, 3 million, that kind of thing or whatever.

That right number is.

Nathan:

We we do have a leg up on some information to that can help us get there a little bit faster? The country club actually just did an engineer design survey for their property that they are willing to give us. So, it's at least high enough quality that we've got to get, you know, get some feasibility.

There will be some easements that we need to procure. We'll have to talk to the village, but I think we can get there.

Jana:

And do we have budget for the design for 2027?

Nathan:

We are planning on including that in the budget. Yeah.

James:

Okay. And what is that tank look like? Diameter and depth. Go for it. I mean, you could do the math really quick but.

Rene:

No, the, the depth I think would be around 20ft.

Okay. And that would match existing. Making it deeper could be a thing. Making it taller is not because then we'd overflow. Then your levels are in diameter. Radius would be about 95ft. So 190

James:

Okay that's a big tank. It's a big big. And how much delta elevation. There's between two in this new tank. You think that you talked about building an up or something.

Rene:

Yeah. So there's a hill. The current tank is built up on a on a hill. I would ask ten feet maybe. Probably.

James:

Okay. It's not crazy. Yeah. Okay. The concern that you would hit them with this and then show them a or you know, what it would look like, and it'd be this huge mound sticking out like a wart.

Rene:

Yeah. Well and we've, we've shared a diagram with a proposed radius so they know it's going to be a big tank. And that we need the elevation. So they're aware more or less that it's a big tank and a big mound.

James:

Yeah. Just didn't you know, they seem like you're being good neighbors and you don't want to surprise them with something, you know,

Rene:

But they they're very excited about being able to build on the former tank one side.

So I think that's worth a lot to them, you know, putting up with a big tank and construction project.

Jason:

So. Any other questions?

So was that the entirety of your presentation? Yes okay. All right. Well we will go ahead and close out. Item number seven. The district manager's report. And we'll move to item number 13 or number eight, the operations and engineering report.

Nathan:

If the board has any questions I'm happy to answer them. Otherwise we can move to director's matters.

James:

The only question I had I know it's been delayed and I thought I read it in here. When we're going to have the, you know, the water treatment plant, open house kind of day, I thought I saw it when I read through it.

Nathan:

Yeah. We're targeting, early spring, probably right around spring break time. The good news on that one, a quick update.

I think that we have a path forward that will not involve excavating the floor. So we're moving forward with that, and that'll, it won't change the timing of the open house, but it'll make it'll create a large amount of comfort that we'll be able to hit it easily.

Tera:

So the only question with the, as you're furthering discussions about the tank is, is the underpass that they want to do, is that with that golf club or is it with the other golf club?

So is that all part of the same discussion or is.

Rene:

Oh man, no I don't. I think that's what the that's what the other golf club club. Okay.

Jason:

Okay. Any other questions. All right. Hearing none we'll go ahead and close out. Item number eight the operations and Engineering report. And we'll move to item nine. Director's matters. Do any of the directors have anything to like to talk about?

They're all kind of quiet, so I guess not. We will go ahead and close item nine, Director's Matters, and we will move to item ten. Adjourned the meeting. Thank you everyone.