Flint Ridge Rural Water District

1 Pioneer Court

Kansas, UK 74347

Important — Please read carefully and retain for future reference.

TO: All Flint Ridge Property Owners
SUBJECT: Flint Ridge Rural Water District

Background: In early 2000 (just over three years ago) the property owners of Flint Ridge voted to form a new rural water district which will take over the operations of the Flint Ridge water system, now operated by the Flint Ridge POA.

While you may not be aware of it, work has been ongoing over that three-year period to get the new rural water formed, properly licensed by the State of Oklahoma and other authorities, to get applications filed for grant money and low interest loans and to see that all the legal requirements were met to get the rural water district operational.

The new rural water district, officially Flint Ridge Rural Water District for Adair & Delaware

Counties, is now operational and as of October 1, 2003, responsibility for all operations of the Flint

Ridge water system will be transferred from Flint Ridge POA to this new rural water district.

This memo will attempt to answer frequently asked questions about the new rural water district and how it will operate.

Question: What are the advantages of creating a rural water district as opposed to continuing to operate as Flint Ridge POA?

Answer: (1) Funding, in the form of grants (a grant is monies that do not have to be repaid) and long-term, low-interest loans is much easier to get through a rural water district. (2) Future additional grants are potentially available to a rural water district that would not be available to Flint Ridge POA. (3) The rural water district board can concentrate exclusively on water whereas the FRPOA board has many different areas of responsibility to worry about. Transferring operations of the water department to a water district will not only make management of the water department easier and more responsive but will also allow the FRPOA more time to address their attention toward the management of other Flint Ridge service areas such as roads, maintenance, golf course and all of the other amenities connected with Flint Ridge.

Question: When is this change effective?

Answer: This change is effective 10/1/03.

Question: You mentioned “upgrades and expansion” of the water system. Can you expand on that?

Answer: The present Flint Ridge water system can process (at maximum) 400K gallons per day, has a storage tank capacity of 175,000 gallons and does not fully serve the two RV parks.

Also, the intake pump is below flood stage of the Illinois River creating major problems during times of high water.

The present treatment plant is outdated, the entire water system has had very minimal maintenance over the past 20 years, the water storage tank is too small and the elevation too low to allow for adequate water pressure to many homes in Flint Ridge.

Question: We are only too aware of the problems. . what will be done to correct these problems?

Answer: Our new rural water district has been cleared for a grant of $956,000 and a 40-year, low-interest loan of $610,600. When received, this money will be used generally as follows:

The capacity of our system will be increased from 400K gallons per day to 1MM gallons per day allowing Flint Ridge to continue our growth into the foreseeable future.

The intake line to the treatment plant will be replaced by a larger line, the present 400K gallon treatment plant will be replaced by a new, more efficient 1MM gallon treatment plant, the existing water storage tank will be cleaned, resealed and repainted, various transmission lines will be replaced by larger lines, a new 160k additional gallon water storage tower will be erected and full Flint Ridge water service will be provided to both RV parks.

The new 160k gallon water storage tower will be located on “high ground” near the “Y” as you enter Flint Ridge through the construction gate.

When this new tower is complete, water pressure problems in Flint Ridge should be a thing of the past.

Question: When can we expect to see something happen?

Answer: As mentioned earlier, a lot of work has been going on “behind the scenes”. Since the water district was formed, grant and loan monies have been approved and substantially all engineering work for the renovation and expansion of the water system has been completed.

As soon as money has actually been made available to us, we will be able to advertise for bids, select a contractor and begin construction.

We hope that actual construction can start in the spring of 2004 with substantial completion being 6 to 9 months after the start date.

Since we are dealing with state agencies, the time of receipt of funds is somewhat beyond our control. I will say that all of the state agencies have been very cooperative and helpful. They are very supportive of this project.

Question: You said the effective date of this changeover is October 1, 2003. What changes can we expect in the near future?

Answer: The attached “addendum” gives you details of all new procedures (that we have been able to anticipate)!!

Question: Whom should we call if we have questions?

Answer: The Flint Ridge Rural Water District office is located in the main office building of Flint Ridge. The address:

Flint Ridge Rural Water District for

Adair & Delaware Counties

No. 1 Pioneer Court

Kansas OK 74347

Phone # 597-2350

If you have any questions, you should contact:

Steven Dulaney

597-2350 — Office

597-2538 — Residence

Very Important:

Any questions about this correspondence should be directed to Steven Dulaney at the above phone numbers.

After 10/1/03 (the transfer date) all questions about water should be directed to Steven Dulaney.

Very Important

Do not call Flint Ridge POA with questions about this memorandum.

After 10/1/03, do not call Flint Ridge POA about any problems with the water system. This will only delay the process.

Call Steven Dulaney

Flint Ridge Rural Water District

597-2350

Good luck to all of us!!

On behalf of the Board

C

C. Gene Quarles, Chairman

P.S. Your water bill for September service, which you will receive (or have already received) in October, should be paid to Flint Ridge POA as in the past.

Beginning with your November payment (for service delivered after October 1), your payment will be to Flint Ridge Rural Water District.

ADDENDUM

BENEFIT UNIT: “A”

1) Oklahoma Rural Water District Development By-Laws mandate establishment of Benefit Unit for subscription to each existing metered water user.

2) Benefit Unit is established to raise capital for reserves for debt service and operational costs.

3) Flint Ridge Rural Water District Board of Directors sets cost for Benefit Units.

4) Flint Ridge Rural Water District has established initial offering of Benefit Unit price at

$300.00 per subscriber.

5) Existing metered subscribers will be credited toward the price of the Benefit Unit.

6) The credit shall fall into three credited categories:

1. Original connection fee of $150

2. Connection fee with meter cost of $200

3. Connection fee with meter cost of $500

7) Credit will be based on these categories with no cash refunds.

8) First subscription offering of Benefit Unit will be available on October 1, 2003 and continue for 60 days, expiring on December 1, 2003.

9) If Benefit Unit has not been purchased by December 1, 2003, water service will be disconnected until Benefit Unit is purchased.

10) A fee of $40 will be charged for the meter lockout.

11) A fee of $40 will be charged for meter reconnect.

12) After initial offering, the Benefit Unit will be increased substantially.

13) On November 1, 2003, a rate change mandated by Rural Water Development based on their formula for operational and debt service.

New rates:

First 1,000 gallons (minimum) base $ 26.00 per month

All usage over 1,000 gallons 3.10 per thousand

14) Benefit Units and all information available at Flint Ridge Rural Water District office located on east front of Flint Ridge POA office. Phone number 918-597-2350.

WATER USER AGREEMENT

1) After purchase of Benefit Unit, each subscriber shall be required to sign a water user agreement.

2) No cost for water user agreement on initial offering.

BENEFIT UNIT “B”

• 1) RV Park I and RV Park H have never been charged for water connection fees; therefore, no credits can be applied to Benefit Unit price.

2) Benefit Unit subscription will not become mandatory until after water meter installation.

3) Water meter installation is not anticipated until a future date.

4) Subscriber will have 60 days to purchase Benefit Unit after water meter installation.

5) Price of Benefit Unit is $300 per subscriber

6) Subscriber is identified as owner of a lot in RV Park land Has of October 1, 2003.

7) Each water user must purchase Benefit Unit.

8) Effective November 1, 2003, Flint Ridge Rural Water District mandates water rate change to all water users. A base rate of $26 per 1,000 and $3.10 per 1,000 thereafter.

9) RV Parks I and II will not be charged for water usage, only base rate of $26 per month.

10) Water usage and base rate of $26 will become effective with meter installation and purchase of Benefit unit.

11) In accordance with Flint Ridge Rural Water District by-law, rules, regulations and Board of Directors policy, effective November 1, 2003, part-time water use will be eliminated. Part-time user will be converted to full-time user.

12) A fee of $40 will be charged for disconnect (cap water line) service.

13) A fee of $40 will be charged for reconnect (hook up water line) of service.

14) Property owners as of November 1, 2003 are covered under initial offering of price for Benefit Unit.

15) After initial offering, Benefit Unit will be increased substantially.