HomeMy WebLinkAboutAgenda Packet - North Fork Water Company BOD - 05/21/2020BOARD OF DIRECTORS ANNUAL MEETING(Immediately after the conclusion of the May 21, 2020 Annual Meeting of the Shareholders)
May 21, 2020 - 2:00 PM
In an effort to prevent the spread of COVID-19 and in accordance with Governor Newsom's Executive Order N-25-20 and N-29-20, this meeting is being conducted via teleconference. There will be no public location for attending this meeting in person. Members of the public and Shareholders may listen and provide public comment telephonically. Anyone wishing to join the meeting may do so using the following information:
DIAL: 1-510-338-9438 and enter ACCESS CODE: 626 904 082##
You may also join via webex.com:
MEETING# 626 904 082 and PASSWORD: NF2020
AGENDA
CALL TO ORDER
ROLL CALL OF BOARD ME MBERS
APPROVAL OF AGENDA
DISCUSSION AND POSSIBLE AC TION I TE MS:
1. Amendment of Articles of Incorporation and By-Laws to Reduce the Number
of Directors from Seven to Five
2. Board Re-Organization
a) Election of Officers:
-President
-Vice President
-Secretary
-Chief Financial Officer
-General Manager
3. Approve Minutes of April 2, 2019 Board of Directors Organizational Meeting
4. Report Regarding Status of East Valley Water District Acquisition of Shares
5. Proposed FY 2020-21 Water Deliveries and Operational Update
6. Financial Statements for FY 2019-20
7. Budget and Assessments for FY 2020-21
DIRECTORS' COMMENTS
Link
PUBLIC COMMENTS
Pursuant to Government Code Section 54954.2(a), any request for a disability-related modification or
accommodation, including auxiliary aids or services, that is sought in order to participate in the above-agendized
public meeting should be directed to the North Fork Board Secretary (909)885-4900 at least 72 hours prior to
said meeting.
ADJOURN
STAFF REPORT
Agenda Item #1.
Meeting Date: May 21, 2020
Discussion Item
To: North Fork Water Company Meeting
From: Legal Counsel
Subject: Amendment of Articles of Incorporation and By-Laws to Reduce the Number of Directors from
Seven to Five
RECOMMENDATION:
The five East Valley Water District (EVWD) Directors are nominees to the North Fork Board. The remaining
two Board seats were held by North Fork Shareholders who sold all of their shares to EVWD and
subsequently resigned from the North Fork Board. It is proposed that the number of Directors be reduced
from seven to five. This change requires amending both the Articles of Incorporation and By-Laws. Attached
are proposed resolutions for approval by the Shareholders and the Board to reduce the number of Directors
from seven to five.
BACKGROUND / ANALYSIS:
The Articles of Incorporation (Fifth Article) and By-Laws (Section 3.01) call for a seven member Board of
Directors. Amendments are needed to both the North Fork Articles and By-laws in order to reduce the number
of Directors from seven to five.
DISCUSSION:
The Articles may be amended by approval of the shareholders representing a majority of the outstanding shares
and by a majority of the Board of Directors. (Corporations Code section 902; By-Laws section 2.09.) The
By-Laws may be amended by approval of the shareholders representing a majority of the outstanding shares.
(Corporations Code section 211; By-Laws, sections 1.03, 2.09.) No Board of Directors approval is required
to amend the By-Laws.
FISCAL IMPACT
There is no fiscal impact associated with this agenda item.
ATTACHMENTS:
Description Type
Resolution Resolution Letter
RESOLUTIONS
OF THE
BOARD OF DIRECTORS
OF
NORTH FORK WATER COMPANY
REGARDING THE
APPROVAL OF AN AMENDMENT
TO
THE ARTICLES OF INCORPORATION
WHEREAS, it is deemed to be in the best interests of the Corporation to further amend
the Third Amended Articles of Incorporation, which were originally filed on November 27,
1931, to decrease the number of its directors from seven (7) to five (5);
NOW, THEREFORE, BE IT RESOLVED, that Article Fifth of the Third Amended
Articles of Incorporation of the Corporation is amended to read in full as follows:
FIFTH: That the number of its directors shall be five.
RESOLVED FURTHER, that the foregoing amendment has been approved by the
shareholders, and the that the officers of the Corporation are, and each acting alone is hereby
authorized and directed to execute the Certificate of Amendment of the Third Amended Articles
of Incorporation of the Corporation and to file such Certificate of Amendment with the
California Secretary of State.
NF Minutes 4/2/2019 smg
Draft Pending Approval
NORTH FORK WATER COMPANY
31111 GREENSPOT RD.
HIGHLAND, CA 92346
BOARD OF DIRECTORS ORGANIZATIONAL MEETING April 2, 2019
MINUTES
President Carrillo called the Annual Board of Directors meeting to order at 2:08 p.m.
PRESENT: Ron Coats
Chris Carrillo
Charles Kiel
James Morales Jr.
Phillip Goodrich
David Smith
Ron Arnott
ABSENT: None
EVWD Staff: John Mura
Brian Tompkins
Justine Hendricksen
Jeff Noelte
Shayla Gerber
Patrick Milroy
Allen Williams
Kathy Burke
Brenda VanMeter
Ed King
Martha Duran
Nate Paredes
LEGAL COUNSEL: Michele Staples
STOCKHOLDERS: Ron Arnott
Michael Raley
Fred McNeal
Kenneth Meddock (Representing First American Title)
GUEST(S): Members of the public
NF Minutes 4/2/2019 smg
APPROVAL OF AGENDA
M/S/C (Coats-Kiel) that the April 2, 2019 agenda be approved as submitted.
PUBLIC COMMENTS
President Carrillo declared the public participation of the meeting open at 2:09 p.m.
There being no written or verbal comments the public participation section was closed.
BOARD RE-ORGANIZATION
ELECTION OF OFFICERS
Director Coats moved that the current slate of officers retain their positions:
M/S/C (Coats-Arnott) that Chris Carrillo be appointed Board President.
M/S/C (Coats-Arnott) that David E. Smith be appointed Vice President.
M/S/C (Coats-Arnott) that Justine Hendricksen be appointed Secretary.
M/S/C (Coats-Arnott) that Brian Tompkins be appointed Treasurer.
M/S/C (Coats-Arnott) that John Mura be appointed General Manager.
APPROVAL OF BOARD OF DIRECTORS ANNUAL MEETING MINUTES FOR APRIL 3, 2018
M/S/C (Coats-Smith) that the April 3, 2018 Board of Directors annual meeting
minutes be approved as submitted.
REPORT REGARDING STATUS OF SHARES
Legal Counsel provided a report regarding the status of East Valley Water District
acquisition of additional North Fork Water Company shares. She stated that as of the
date of this meeting, East Valley Water District has acquired and over 90% of the North
Fork Water Company.
Legal Counsel provided information regarding 44 forfeited shares of the North Fork
Water Company. She stated that staff determined 44 shares were forfeited in the 1990’s
for non-payment of assessments; notes reflect the shares were offered for sale to the
highest bidder; and there is no record of there being any bidders. She stated that the
shares should have been canceled under California Corporation law and are now hereby
considered canceled, reducing the number of shares on the books by 44.
NF Minutes 4/2/2019 smg
Legal Counsel responded to a question regarding the identity of the forfeited shares.
She stated that there is no name listed but provided the available information of the
two shares forfeited for non-payment: #1325 for 34 shares, forfeited February 1991;
and #1364 for 10 shares forfeited July 1998.
REPORT REGARDING UPDATED VALUATION OF THE NORTH FORK WATER COMPANY
SHARES PREPARED BY BRIAN J. BRADY & ASSOCIATES
Legal Counsel stated that periodically valuations change, and Dr. Brady was requested
to provide and updated valuation. She stated that the valuation of the North Fork Water
Company reflected a net increase of $30,000 making the value of each share $550,
which represents an increase of $4 per share. She stated that the updated valuation is
valid for six months from January 31, 2019.
Public comment was received regarding who requested the valuation of shares. The
General Manager stated that East Valley Water District asked and paid for the valuation
of shares.
M/S/C (Coats-Goodrich) that the Board accept the updated Appraisal Report as
submitted and to approve the North Fork Water Company valuation of $4,554,000 and
the per-share stock valuation of $550 per share.
FINANCIAL STATEMENTS FOR FY 2018-19
Mr. Brian Tompkins reviewed the Financial Report, executive summary and operating
budget with the Board. He stated that there were no findings in the independent
accountant’s review.
M/S/C (Morales-Coats) that the Board accept and file the Financial Report as
submitted.
PROPOSED FY 2019-20 WATER DELIVERIES AND OPERATIONAL UPDATE
The Chief Financial Officer provided an update on water deliveries and operations to
the Board. He reviewed maintenance activities that had been performed on the North
Fork Canal and Plunge Creek intake. He discussed increases to the Capital Improvement
Program and stated that there is enough in capital replacement reserves to cover the
costs and no need to collect capital improvement assessments.
M/S/C (Morales-Goodrich) that the Board accept the FY 2019-20 Water Deliveries
and Operational Update as submitted.
BUDGET AND ASSESSMENTS FOR 2019-20
NF Minutes 4/2/2019 smg
The Chief Financial Officer reviewed the proposed operating budget and the proposed
fiscal year 2019-20 assessments. He stated that there was a reduction in operating labor
which reduced the annual budget. He stated that staff is proposing the 2019-20
Operating Budget be funded through assessments, at $16 per share, and operating
reserves.
M/S/C (Goodrich-Morales) that the Board approve the proposed 2019-20
operating budget and $16 assessment per share.
GENERAL MANAGER COMMENTS
The General Manager welcomed Director Arnott back to the Board. He thanked the
Wright Family for their contributions to the agricultural community and North Fork
Water Company.
DIRECTORS’ COMMENTS
Director Morales thanked everyone for attending the meeting.
Chairman Carrillo thanked shareholders for attending the meeting.
ADJOURN
The meeting was adjourned at 2:31 p.m.
________________________
Chris Carrillo, President
____________________________
Justine Hendricksen, Secretary
STAFF REPORT
Agenda Item #5.
Meeting Date: May 21, 2020
Discussion Item
To: North Fork Water Company Meeting
From: General Manager/CEO
Subject: Proposed FY 2020-21 Water Deliveries and Operational Update
RECOMMENDATION:
Review the river flow trends to date and the proposed FY 2020-21 water deliveries. Staff recommends approval
of the Proposed FY 2020-21. Delivery Schedule that will continue providing water deliveries during non-
contract months at levels that reflect Santa Ana River flows.
BACKGROUND / ANALYSIS:
The 1885 contract terms established specific water delivery obligations to the North Fork Water Company
(Company) shareholders during contract and non-contract periods. The contract months of June through
November are assigned specific delivery obligations and non-contract months receive 25% of the river flow.
During FY 2019-20 monthly water deliveries during non-contract months were estimated for upcoming months
based on previous San Bernardino Valley Water Conservation District flow reports.
DISCUSSION
In January Shareholders received 2.1 Miner’s Inch (MI) per share, February, 1.9 MI, and March, 1.7 MI. April,
1.7 MI and May, 1.9 MI. Delivery amounts for June through November will be at the contracted amounts, per
the North Fork contract agreement. The flow amounts reported for this year indicate that the Santa Ana River is
flowing above average due to the recent rains.
In the event of a significant rain fall of more than one half inch, deliveries will automatically be halted. When
water quality is compromised, water is not taken down the ditch to protect the ditch from large quantities of
sedimentation. If a customer would like to continue their scheduled delivery following a rain fall, customers may
contact East Valley Water District Operations Division to resume their regularly scheduled delivery. In addition,
deliveries may be halted due to circumstances beyond the Company’s control because of San Bernardino
County Flood Control, Southern California Edison, or another outside event. Staff will be sure to maintain
communication with shareholders that may be impacted by unexpected delivery disruptions.
Recommended by:
John Mura
General Manager/CEO
Respectfully submitted:
Patrick Milroy
Operations Manager
The chart below shows the proposed month by month water delivery schedule:
REVIEW BY OTHERS:
This agenda item has been reviewed by the Administration, Finance, and Operations departments.
FISCAL IMPACT
There is no fiscal impact associated with this agenda item.
ATTACH M E N TS:
Description Type
P resentation P resentation
WATER DELIVERIES &
OPERATIONAL UPDATE
May 21, 2020
WATER DELIVERIES
MONTH ALLOTMENT
(MINER’S INCHES PER DAY)
ALLOTMENT PER SHARE
(MINER’S INCHES)
January -May 25% of Santa Ana River Flow
June 500 2.0
July 600 2.5
August 600 2.5
September 550 2.5
October 450 2.3
November 400 1.9
December 25% of Santa Ana River Flow
2020-21 PROJECTED WATER DELIVERIES
MONTH ALLOTMENT
(MINER’S INCHES PER DAY)
ALLOTMENT PER SHARE
(MINER’S INCHES)
January (Actual)500 2.1
February (Actual)470 1.9
March (Actual)400 1.7
April (Actual)425 1.7
May (Actual)450 1.9
June 500 2.0
July 600 2.5
August 600 2.5
September 550 2.3
October 450 1.9
November 400 1.6
December (Estimate)25%of River Flow 1.0
WEIR 40 PRIOR TO ABANDONMENT
•Located on the South-Side of Highland Avenue, West of Boulder
WEIR 40 OVERFLOWING
•Result of Homeless Throwing
Trash in North Fork Manholes
WEIR 40 ABANDONMENT
•No Longer Needed
•Corrected Vandalism Which Caused
Overflowing Issue
CAPITAL IMPROVEMENT PROGRAM
CAPITAL IMPROVEMENT
PROJECT
REVISED
BUDGET EXPENDITURES BUDGET
REMAINING
Plunge Creek Crossing $ 50,000 $ 5,281 $ 44,719
Facility Abandonments 130,000 20,743 109,257
TOTAL $ 180,000 $ 26,024 $ 153,976
CAPITAL IMPROVEMENT
PROJECT
PROJECT
BUDGET
RECOMMENDED
REVISIONS REVISED BUDGET
Plunge Creek Crossing $ 130,000 $ (80,000) $ 50,000
Facility Abandonments 50,000 80,000 130,000
TOTAL $ 180,000 $ 0 $ 180,000
Recommended Revisions to the CIP Budget
STAFF REPORT
Agenda Item #6.
Meeting Date: May 21, 2020
Discussion Item
To: North Fork Water Company Meeting
From: General Manager/CEO
Subject: Financ ial Statements for FY 2019-20
RECOMMEND ATION:
Staff recommends that the financ ial statements for FY 2019-20 be adopted and filed.
BACKGROUND / ANALYSIS:
Section 5.05(c) of the North Fork Water Company (Company) B-Laws require that the Treasurer render to
the Board of Directors (Board) an accounting of the Company’s transactions and financial condition at
regular meetings of the Board. In order to comply with this section of the By-Laws, annual financial
statements are prepared by staff, reviewed by an independent accounting firm, and presented to the
Board at each annual shareholders' meeting.
DISCUSSION
Attached are the Company’s financ ial statements as of, and for the twelve months ended, January 31, 2020. The
statements are presented in comparative form, prior to current year, in order to identify s ignificant variances.
Notab le items are:
Statement of Financial Position
Operating Cash decreased by 11% from $141,726 to $126,091 representing use of the Operating
Reserve.
Cash - Restricted for Capital Projects decreased by 11% from $180,878 to $160,135 due to cost
incurred for the Weir Abandonment.
Assessment receivables decreased from $15,309 to $9,191 because East Valley Water District
acquired 427.14 shares and resolved any outstanding assessment balance due.
Recommended by:
John Mura
General Manager/CEO
Respectfully submitted:
Brian Tompkins
Treasurer
Statement of Activities
Weir Abandonments – Although these costs were budgeted and paid out of the Capital Reserve,
the work did not result in acquisition of a new capital asset, therefore costs are being expense in the
current year.
Other Professional Services – this line item includes costs for the Company’s share of the cost to
update the Exchange Plan Agreement conducted by the San Bernardino Valley Water Conservation
District.
The financial statements were reviewed by the accounting firm of CliftonLarsonAllen LLC (CLA), who had no
findings as a result of their review procedures.
REVIEW BY OTHERS:
This agenda item has been reviewed by the Administration and Finance departments.
FISCAL IMPACT
There is no fiscal impact associated with this agenda item.
ATTACHMENTS:
Description Type
Presentation Presentation
North Fork Financial Statement FY 2019-20 Backup Material
FINANCIAL STATEMENTS
FY 2019-20
May 21, 2020
FINANCIAL STATEMENTS &
REPORTS
•Annual Financial Report
•Review Company’s Financial Position and
Results of Operations
•Instrument of Financial Disclosure
INDEPENDENT
ACCOUNTANT’S
REVIEW
NO FINDINGS
STATEMENT OF FINANCIAL POSITION
Assets
Cash $ 126,091
Cash –Restricted for Capital Projects 160,135
Fixed Assets / Water Rights 3,515,862
Less: Accumulated Depreciation (686,275)
Construction In Progress 5,281
Other Assets 26,302
TOTAL ASSETS $ 3,147,396
Liabilities $ 10,357
Shareholder Equity 3,137,039
TOTAL LIABILITIES & EQUITY $ 3,147,396
STATEMENT OF ACTIVITIES
BUDGET ACTUAL
Operating Labor / Equipment -EVWD $ 17,000 $ 9,417
Contract Maintenance 11,000 7,150
Weir Abandonment Expense 0 20,743
Legal Services 50,000 55,051
Other Professional Services 4,700 10,431
Administration 14,200 10,220
Materials & Supplies 100 1,301
Insurance 3,500 3,674
Property, Franchise Taxes 32,500 31,865
Depreciation 0 55,837
Operating Expenses $ 133,000 $ 205,689
Shareholder Assessment -Operating 0 114,532
Change In Equity -Decrease $ 133,000 $ 91,157
HIGHLAND, CALI F O R NIA
fo r years ending
January 31, 2020 and January 31, 2019
FINANCIAL STATEMENTS
North Fork Water Company
A C ALI F O R NIA CORPO RATION
Table of Contents
Schedule Page
Organization Data 1
Independent Accountants’ Review Report 2 - 3
Statements of Financial Position 4
Statements of Activities 5
Statements of Changes in Shareholders' Equity 6
Statements of Cash Flows 7
Notes to Financial Statements 8 – 11
Supplementary Information
Schedule of Property, Plant and Equipment, and
Accumulated Depreciation
One
12 – 13
Schedule of Shareholders Two 14
Statement of Financial Position Comments Three 15 - 16
North Fork Water Company
(A California Corporation)
Organization Data
January 31, 2020 and 2019
1
DATE AND STATE OF INCORPORATION 1885 - California
DURATION OF CHARTER Perpetual Existence
NATURE OF BUSINESS
Water Company Located in Highland, California
DATE OF EXEMPTION LETTER September 13, 1964
OFFICERS
Chris Carrillo President
David Smith Vice President
Brian Tompkins Treasurer
Justine Hendricksen Secretary
DIRECTORS
Charles Kiel Phillip Goodrich
Ronald Coats Chris Carrillo
James Morales, Jr. David Smith
Ron Arnott
MANAGER
Under Agreement with East Valley Water District
2
3
2020 2019
Current Assets
Cash 126,091$ 141,726$
Cash - Restricted for Capital Projects 160,135 180,878
Prepaid Expenses 17,111 16,578
Assessments Receivable 9,191 15,309
Total Current Assets 312,528 354,491
Property, Plant, and Equipment
Improvements - Fencing 2,840 2,840
Pipelines and Valves 2,857,411 2,857,411
Construction In Progress 5,281 5,281
Less: Accumulated Depreciation (686,275) (630,438)
Total Property, Plant, and Equipment 2,179,257 2,235,094
Other Assets
Water Rights - January 31, 1952 655,611 655,611
Total Other Assets 655,611 655,611
Total Assets 3,147,396$ 3,245,196$
Current Liabilities
Accounts Payable 10,357$ 17,000$
Total Current Liabilities 10,357 17,000
Shareholders' Equity
Capital Stock Authorized 7,200 Shares - 7,156 Issued
and Outstanding at $100 Stated Value 715,600 715,600
Additional Paid-In Capital 478,522 490,548
Contributed Capital 1,494,924 1,532,770
Retained Earnings 447,993 489,278
Total Shareholders' Equity 3,137,039 3,228,196
Total Liabilities and Shareholders' Equity 3,147,396$ 3,245,196$
See accompanying notes and Independent Accountants' Review Report.
LIABILITIES AND SHAREHOLDERS' EQUITY
North Fork Water Company
(A California Corporation)
Statements of Financial Position
January 31, 2020 and 2019
ASSETS
4
2020 2019
Revenues
Water Sales -$ -$
Expenses
Repairs and Maintenance
Labor and Equipment 9,417 14,616
Contracted 7,150 9,750
Weir Abandonments 20,743 -
Administration 10,220 14,920
Accounting Fees 2,400 2,000
Other Professional Services 8,031 -
Legal 55,051 38,441
Materials and Supplies 1,301 92
Property Taxes 31,065 30,270
Insurance 3,674 3,106
Depreciation 55,837 55,837
Total Expenses 204,889 169,032
Loss from Operations (204,889) (169,032)
Other Income
Interest - -
Total Other Income - -
Excess of Expenses over Revenues before
Provision for Income Taxes (204,889) (169,032)
Provision for Income Taxes
State Income Taxes 800 800
Excess of Expenses over Revenues before Contributions (205,689) (169,832)
Contributions
Shareholder Assessments - Operating 114,532 143,120
Shareholder Assessments - Capital - -
Change in Equity (91,157)$ (26,712)$
See accompanying notes and Independent Accountants' Review Report.
North Fork Water Company
(A California Corporation)
Statements of Activities
January 31, 2020 and 2019
5
Cumulative
Common Stock Additional Excess of Total
Issued and Paid-in Contributed Revenue Over Shareholders'
Outstanding Capital Capital Expenses Equity
Balance, January 31, 2019 715,600$ 490,548$ 1,532,770$ 489,278$ 3,228,196$
Shareholder Assessments 114,532 114,532
Excess of Expenses
Over Revenues (205,689) (205,689)
Allocate Depreciation (12,026) (37,846) 49,872 -
Balance, January 31, 2020 715,600$ 478,522$ 1,494,924$ 447,993$ 3,137,039$
Cumulative
Common Stock Additional Excess of Total
Issued and Paid-in Contributed Revenue Over Shareholders'
Outstanding Capital Capital Expenses Equity
Balance, January 31, 2018 715,600$ 502,574$ 1,570,616$ 466,118$ 3,254,908$
Shareholder Assessments 143,120 143,120
Excess of Expenses
Over Revenues (169,832) (169,832)
Allocate Depreciation (12,026) (37,846) 49,872 -
Balance, January 31, 2019 715,600$ 490,548$ 1,532,770$ 489,278$ 3,228,196$
See accompanying notes and Independent Accountants' Review Report.
January 31, 2019
January 31, 2020
North Fork Water Company
(A California Corporation)
Statements of Changes in Shareholders' Equity
January 31, 2020 and 2019
6
2020 2019
Cash Flows from Operating Activities
Cash Paid for Services and Materials (156,228)$ (109,202)$
Income Taxes Paid (800) (800)
Net Cash used by Operating Activities (157,028) (110,002)
Cash Flows from Financing Activities
Contributions from Shareholders to Pay Suppliers 120,650 129,875
Net Cash Provided by Financing Activities 120,650 129,875
Cash Flows from Investing Activities
Acquisition and Construction of Assets - -
Net Cash used for Investing Activities - -
Net Increase (Decrease) in Cash (36,378) 19,873
Cash, Beginning of Year 322,604 302,731
Cash, End of Year 286,226$ 322,604$
Reconciliation of Excess of Expenses over
Revenues to Net Cash Used By Operating Activities
Excess of Revenue over (under) Expenses (205,689)$ (169,832)$
Adjustments:
Depreciation 55,837 55,837
(Increase) Decrease in:
Prepaid Expenses (533) (667)
Increase (Decrease) in:
Accounts Payable and Accrued Liabilities (6,643) 4,660
Net Cash used by Operating Activities (157,028)$ (110,002)$
See accompanying notes and Independent Accountants' Review Report.
North Fork Water Company
(A California Corporation)
Statements of Cash Flows
January 31, 2020 and 2019
7
North Fork Water Company
(A California Corporation)
Notes to Financial Statements
January 31, 2020 and 2019
8
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Operations
North Fork Water Company (the Company) is a mutual water company. The Company's primary purpose
is to secure surface water from the Santa Ana River and other available sources for delivery to its
shareholders in accordance with its delivery schedules and rules and regulations.
Capitalization Policy
The Company’s capitalization basis is cost if assets are purchased or constructed and acquisition value if
assets are contributed.
Depreciation of Plant and Equipment
The carrying values of plant and equipment are depreciated over the estimated useful lives of the assets
using the straight-line method.
Provision for Income Taxes
The Company is exempt from federal income taxes under Section 501(c)(12) of the Internal Revenue
Code. Therefore, no provision for federal income taxes is reflected in the financial statements.
State franchise tax is computed at the current corporate rate. For the fiscal years ended January 31, 2020
and 2019 state franchise taxes were $800.
Use of Estimates
The preparation of financial statements in conformity with United States generally accepted accounting
principles requires management to make estimates and assumptions that affect certain reported amounts
and disclosures. Accordingly, the actual results could differ from those estimates.
North Fork Water Company
(A California Corporation)
Notes to Financial Statements
January 31, 2020 and 2019
9
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES – continued
Cash and Cash Equivalents
For purposes of the statement of cash flows, the North Fork Water Company considers cash and cash
equivalents as short term, highly liquid investments that are both readily convertible to known amounts
of cash and so near their maturity that they present insignificant risk of changes in value because of
changes in interest rates. Cash equivalents have an original maturity date of three months or less from the
date of purchase.
As of January 31, 2020, the Company had $36,226 deposited with financial institutions that were in excess
of federal depository insurance limits. The federal deposit insurance limit is $250,000.
NOTE 2 - RELATED PARTY TRANSACTIONS
As of January 31, 2020, East Valley Water District owned 96% of the outstanding shares of the Company.
The Company and East Valley Water District have certain officers and directors in common.
The following related party transactions occurred for the years ending January 31, 2020 and January 31,
2019:
East Valley Water District paid the Company operating and capital assessments of $105,410.56
and $118,130
The Company paid East Valley Water District for labor and administration of $19,637 and $29,536
NOTE 3 – DEPARTURE FROM US GAAP
As noted in Note 2, East Valley Water District owns 96% of the Company and may appoint (or approve)
a controlling majority of the members of the Company’s governing board. Under the AICPA’s Audit and
Accounting Guide for State and Local Governments, this characterizes the Company as a governmental
entity and therefore subject to the financial reporting standards required by the Governmental Accounting
Standards Board (GASB). The accompanying financial statements were prepared in accordance with the
reporting requirements of the Financial Accounting Standards Board (FASB) which represents a known
departure from US GAAP.
North Fork Water Company
(A California Corporation)
Notes to Financial Statements
January 31, 2020 and 2019
10
NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT
A summary of changes in property, plant and equipment follows:
Balance Balance
January 31, 2019 Additions Deletions January 31, 2020
Distribution System
Pipelines 2,851,372$ -$ -$ 2,851,372$
Ditch Diversion Boxes 4,729 - - 4,729
Valves 1,310 - - 1,310
2,857,411 - - 2,857,411
Improvements
Fencing – North Fork Intake 2,840 - - 2,840
Construction In Progress
Pipeline Replacement 5,281 - - 5,281
Tota l 2,865,532$ -$ -$ 2,865,532$
Balance Balance
January 31, 2018 Additions Deletions January 31, 2019
Distribution System
Pipelines 2,851,372$ -$ -$ 2,851,372$
Ditch Diversion Boxes 4,729 - - 4,729
Valves 1,310 - - 1,310
2,857,411 - - 2,857,411
Improvements
Fencing – North Fork Intake 2,840 - - 2,840
Construction In Progress
Pipeline Replacement 5,281 - - 5,281
Tota l 2,865,532$ -$ -$ 2,865,532$
North Fork Water Company
(A California Corporation)
Notes to Financial Statements
January 31, 2020 and 2019
11
NOTE 5 - ANNUAL SHAREHOLDER ASSESSMENTS
Annual shareholder operating assessments were set at $16 per share for the year ended January 31, 2020.
No capital assessments were levied during the year.
NOTE 6 - SUBSEQUENT EVENTS
In the preparation of these financial statements, the Company considered subsequent events through
March 30, 2020, which is the date these financial statements were issued.
THIS PAGE IS LEFT BLANK
INTENTIONALLY
SUPPLEMENTARY INFORMATION
Schedule One
Page 1 of 2
January 31, 2020
Date Beginning Ending Remaining Beginning Ending
Acquired Balance Balance Life Years Balance Provision Balance
Canal Replacements 1995 41,862$ 41,862$ 25 19,675$ 837$ 20,512$
Canals - 1/2 interest Various 67,610 67,610 67,610 - 67,610
Ditch Diversion Boxes 1985 4,729 4,729 16 3,182 95 3,277
Canals - 36" Pipeline 1995 8,958 8,958 24 4,386 179 4,565
Canal Replacement (La Tourette) 1997 37,511 37,511 27 16,499 750 17,249
Canal Replacement (Plunge Creek
Syphon to Cram School)1999 68,937 68,937 29 27,587 1,380 28,967
Pipeline Replacement
90' of 26" Pipeline
(behind Walmart)2002 9,941 9,941 31 3,582 199 3,781
Pipeline Replacement
16" Pipeline (Highland Avenue) 2004 3,010 3,010 33 960 60 1,020
Canal Replacement
36" Pipeline - SAR to
Plunge Creek Sandbox)2009 2,493,592 2,493,592 39.5 473,784 49,872 523,656
Pipeline Replacement
50' of 30" DIP - Highland at
VFW Hall 2011 26,205 26,205 41 4,192 524 4,716
Pipeline Replacement
220' of 24" - SAR Xing to Turnout 2014 34,333 34,333 44 3,435 687 4,122
6" Gate Valve (Wier 17)2014 1,310 1,310 14 330 66 396
Pipeline Replacement
80' of 30" - SAR Xing at 7 Oaks Dam 2017 59,413 59,413 47 2,376 1,188 3,564
2,857,411 2,857,411 627,598 55,837 683,435
Improvements:
Security Fencing - NF Intake 2003 2,840 2,840 0 2,840 2,840
Totals 2,860,251$ 2,860,251$ 630,438$ 55,837$ 686,275$
Construction in Progress Various 5,281$ 5,281$ 0 - - -
See accompanying notes and Independent Accountants' Review Report.
Property, Plant and Equipment Accumulated Depreciation
North Fork Water Company
(A California Corporation)
Schedule of Property, Plant and Equipment, and Accumulated Depreciation
January 31, 2020
12
Schedule One
Page 2 of 2
January 31, 2019
Property, Plant and Equipment Accumulated Depreciation
Date Beginning Ending Remaining Beginning Ending
Acquired Balance Balance Life Years Balance Provision Balance
Canal Replacements 1995 41,862$ 41,862$ 26 18,838$ 837$ 19,675$
Canals - 1/2 interest Various 67,610 67,610 67,610 - 67,610
Ditch Diversion Boxes 1985 4,729 4,729 17 3,087 95 3,182
Canals - 36" Pipeline 1995 8,958 8,958 25 4,207 179 4,386
Canal Replacement (La Tourette) 1997 37,511 37,511 28 15,749 750 16,499
Canal Replacement (Plunge Creek
Syphon to Cram School)1999 68,937 68,937 30 26,207 1,380 27,587
Pipeline Replacement
90' of 26" Pipeline
(behind Walmart)2002 9,941 9,941 32 3,383 199 3,582
Pipeline Replacement
16" Pipeline (Highland Avenue) 2004 3,010 3,010 34 900 60 960
Canal Replacement
36" Pipeline - SAR to
Plunge Creek Sandbox)2009 2,493,592 2,493,592 40.5 423,912 49,872 473,784
Pipeline Replacement
50' of 30" DIP - Highland at
VFW Hall 2011 26,205 26,205 42 3,668 524 4,192
Pipeline Replacement
220' of 24" - SAR Xing to Turnout 2014 34,333 34,333 45 2,748 687 3,435
6" Gate Valve (Wier 17)2014 1,310 1,310 15 264 66 330
Pipeline Replacement
80' of 30" - SAR Xing at 7 Oaks Dam 2017 59,413 59,413 48 1,188 1,188 2,376
2,857,411 2,857,411 571,761 55,837 627,598
Improvements:
Security Fencing - NF Intake 2003 2,840 2,840 0 2,840 2,840
Totals 2,860,251$ 2,860,251$ 574,601$ 55,837$ 630,438$
Construction in Progress Various 5,281$ 5,281$ 0 - - -
See accompanying notes and Independent Accountants' Review Report.
North Fork Water Company
(A California Corporation)
Schedule of Property, Plant and Equipment, and Accumulated Depreciation
January 31, 2019
13
Schedule Two
Number of
Shareholder Certificate Number(s)Shares
Linda Spitzer 1391 4.00
William Buster 1057 8.00
Brucie Cagle 1373 4.00
Calvary Chapel 1375 72.50
Richard Christianson 1148 3.00
East Valley Water District 6,872.83
Christina Moreno 1379 8.50
Nigel C. Smith 1378 3.00
Santiago Avina 1308 9.00
First American Title 1381 36.00
Fred McNeal 1156, 1246, 1248 43.20
McNeal, Duckworth McNeal, Inc.1360, 1406, 1413 40.80
Michelle Beresford 1402 5.00
Luis E. & Jacqueline R. Curiel 1382 3.50
Michael & Patricia Raley 1414 5.00
Yucaipa Valley W. D.1362 37.67
Total 7,156.00
See accompanying notes and Independent Accountants' Review Report.
North Fork Water Company
(A California Corporation)
Schedule of Shareholders
January 31, 2020
14
Schedule Three
Page 1 of 2
See accompanying notes and Independent Accountants’ Review Report.
15
North Fork Water Company
(A California Corporation)
Statement of Financial Position Comments
January 31, 2020 and 2019
CURRENT ASSETS
Current assets consisted of the following:
2020 2019
Cash in Checking 286,226$ 322,604$
Prepaid Insurance 2,624 2,219
Prepaid Taxes 14,487 14,359
Assessments Receivable 9,191 15,309
Totals 312,528$ 354,491$
WATER RIGHTS
There is an agreement dated May 23, 1885, between North Fork Water Company and Bear Valley Land and
Water Company (now Bear Valley Mutual Water Company) that provides for delivery of water to North Fork
Water Company as follows:
Month Day Inches
June 500
July 600
August 600
September 550
October 450
November 400
December through May ¼ Flow of Santa Ana
River at a point known
as "The Divide "
The water deliveries in the period June through November may be reallocated between months, but no more
than 600 day inches are to be delivered in any one month.
Water rights, as summarized above, have been valued at $655,611, which is the difference between the par
value of the capital stock outstanding and the value of the remaining assets at January 31, 1952.
Schedule Three
Page 2 of 2
See accompanying notes and Independent Accountants’ Review Report.
16
North Fork Water Company
(A California Corporation)
Statement of Financial Position Comments
January 31, 2020 and 2019
PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant and equipment, and accumulated depreciation is shown in Schedule One.
The value of the one-half interest in canals was the appraised value in 1940, with subsequent additions being
valued at cost.
The provision for depreciation amounted to $55,837 computed at established rates using the straight-line
method.
CURRENT LIABILITIES
Current liabilities consisted of the following:
2020 2019
Accrued Liabilities
Accounts Payable
Labor and Burden 1,525$ 2,027$
Legal - January 1,884 8,998
Landscaping 650 650
EVWD Insurance Reimbursement 6,298 5,325
Total Accounts Payable 10,357$ 17,000$
STAFF REPORT
Agenda Item #7.
Meeting Date: May 21, 2020
Discussion Item
To: North Fork Water Company Meeting
From: General Manager/CEO
Subject: Budget and Assessments for FY 2020-21
RECOMMENDATION:
Review and adopt the proposed FY 2020-21 Budget.
BACKGROUND / ANALYSIS:
Each year at the North Fork Water Company (NFWC or Company) annual shareholders’ meeting, staff
presents proposed operating and capital budgets that predict the cost of service delivery for the upcoming year,
including repairs to components of the Company’s water distribution system.
DISCUSSION
Operating Budget
The Operating Budget funds routine operations, repairs, and maintenance for the Company water delivery
system. It also pays for administrative services such as record-keeping and legal services, to keep shareholders
informed about meetings and finances. The Operating Budget proposed for fiscal year 2020-21 is shown below
with prior year budget and actual numbers for comparison:
Item
2019-20
Adopted
2019-20
Actual
2020-21
Proposed
Operations Labor $ 11,000 $ 5,805 $ 7,000
Equipment Charges 6,000 3,612 4,000
Contracted Maintenance 11,000 7,150 10,000
Administrative Labor 14,200 10,220 12,000
Professional Services 4,700 4,875 4,700
Legal Services 50,000 55,051 26,000
Exchange Plan Agrmt Update 0 5,556 0
Materials & Supplies 100 1,301 100
Property / Franchise Taxes 32,500 31,865 32,500
General Insurance 3,500 3,674 3,700
TOTAL $ 133,000 $ 129,109 $ 100,000
The budget for Operating Labor and Equipment Charges has again been reduced, to a combined $11,000, as
actual costs for 2019-20 were substantially lower than last year’s budget of $17,000. The primary reason for this
is Field staff spent less time operating weirs as shareholders sold their shares to East Valley Water District and
those that still desired water deliveries are now being served by the District’s pipeline distribution system. The
budget for legal services has also decreased as most of the research into the history of the Company and work
on governing documents has been completed.
Staff proposes that the 2020-21 Operating Budget be funded through a combination of operating assessments,
at $13 per share, and operating cash on hand. These two sources would provide $93,028 and $6,972,
respectively. The draw on operating cash will leave a projected balance of approximately $125,000.
Capital Improvements
The NFWC Capital Improvement Program (CIP) has two open capital projects, described below:
Plunge Creek Crossing - The purpose of this project is to repair leaks in the North Fork pipeline as it
crosses Plunge Creek. The recommended method for repair is to make minor repairs to the pipe as
needed, and then reinforce concrete armoring around the pipe. The Board previously authorized a budget
of $130,000 for this project, however, with most irrigators having sold their shares or having been
transitioned to the District’s distributions system, and the District’s Plant 134 taking a majority of water
deliveries from the State Water Project, staff is developing an alternate recommendation for the Plunge
Creek crossing. There were no costs incurred on the project during 2019-20, and no plans to incur costs
in 2020-21.
Facility Abandonments - The purpose of this project is to effectively and safely abandon weirs, pipes,
and other open facilities that are no longer needed for Company operations. During fiscal year 2019-20,
Merlin Johnson Construction was contracted to abandon weir 40 located on the south side of Highland
Ave., just west of Boulder Ave. The cost for this work was $20,743 out of $50,000 previously authorized
by the Board.
The table below presents CIP activity during 2019-20:
In the upcoming year staff recommends contracting with Merlin Johnson Construction to abandon an additional
five weirs at an estimated cost of $22,000 each. With $29,257 remaining in the Facility Abandonment budget,
staff requests authorization to transfer $80,000 from the Plunge Creek Crossing budget to complete the weir
abandonments needed.
The table below presents staff’s proposed revisions to the CIP project budgets:
Recommended by:
John Mura
General Manager/CEO
Respectfully submitted:
Brian Tompkins
Treasurer
If the revision to the CIP project budget is approved, the current Capital Reserve balance of $160,135 is
sufficient to pay for work to be completed next year. Accordingly, staff is not recommending a capital
assessment for fiscal year 2020-21.
REVIEW BY OTHERS:
This agenda item has been reviewed by the Administration, Finance, and Operations departments.
FISCAL IMPACT
Adoption of the Operating Budget as presented authorizes operating expenses of $100,000 for fiscal year 2020-
21 and does not change authorized expenditures from capital reserves.
ATTACHMENTS:
Description Type
Presentation Presentation
BUDGET & ASSESSMENTS
May 21, 2020
PROPOSED 2020-21 BUDGET
DESCRIPTION ADOPTED 2019-20
BUDGET
PROPOSED 2020-21
BUDGET
OPERATING EXPENSES
Operating Labor/Equipment -EVWD $ 17,000 $ 11,000
Contract Services 11,000 10,000
Legal Services 50,000 26,000
Materials & Supplies 100 100
Administration 14,200 12,000
Other Professional Services 4,700 4,700
Insurance 3,500 3,700
Property/Franchise Taxes 32,500 32,500
Total Operating Expenses $ 133,000 $ 100,000
CAPITAL EXPENDITURES $ 0 $ 0
PROPOSED 2020-21 ASSESSMENTS
DESCRIPTION PROPOSED 2020-21
BUDGET
Proposed Expenses
Operating Expenses $ 100,000
Capital Expenditures 0
TOTA L PROPOSED EXPENSES $ 100,000
Proposed Funding -7,156 Shares
Operating Assessment -$13 per share $ 93,028
Operating Cash -Current Balance $ 132,250 6,972
Capital Assessment 0
TOTAL FUNDING $ 100,000
$13
2020-21
ASSESSMENTS
$0
CAPITAL
ASSESSMENTS