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HomeMy WebLinkAboutAgenda Packet - North Fork Water Company - 03/13/2015 NORTH FORK WATER COMPANY 31111 Greenspot Road HIGHLAND, CA 92346 ANNUAL STOCKHOLDERS MEETING March 13, 2015 – 10:30 am AGENDA CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS 1. Approval of Agenda 2. Public Comments 3. Approval of Special Stockholders meeting minutes for May 14, 2014 4. Appointment of Directors 5. Presentation from Jean Cihigoyenetche regarding the history and By-Laws of the North Fork Water Company 6. Authorization to retain legal representation for the North Fork Water Company majority share holders ADJOURN --------------------------------------------------------------------------------------------------------------------------------------------------------------- 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. NF Minutes 05/14/2014 etb Subject to approval NORTH FORK WATER COMPANY 31111 GREENSPOT RD. HIGHLAND, CA 92346 SPECIAL STOCKHOLDERS MEETING MAY 14, 2014 MINUTES President Morales called the Special Stockholders meeting to order at 2:02 p.m. Director Wright led the flag salute. PRESENT: James Morales Jr. Matt LeVesque Ron Coats Ben Coleman Charles Kiel Kip Sturgeon Margaret Wright ABSENT: None STAFF: John Mura Mike Maestas Brian Tompkins Justine Hendricksen Mike Henderson Marie Ricci Kathleen Burke Eileen Bateman LEGAL COUNSEL: Steve Kennedy STOCKHOLDERS: Arnold Wright Ron Arnott Caroline Kiel-Ray Linda Spitzer Fred McNeal Robert Hooker Bob Wall, Yucaipa Valley Water District GUEST (S): Members of the Public APPROVAL OF AGENDA M/S (LeVesque-Coats) that the May 14, 2014 agenda be approved. Director Wright recommended that agenda item #4 and #5 be switched in order to discuss the monthly water allocation budget prior to the Budget. NF Minutes 05/14/2014 etb M/S/C (LeVesque-Coats) that the May 14, 2014 agenda be approved as amended. PUBLIC PARTICIPATION President Morales declared the public participation section of the meeting open at 2:04 p.m. Members of the Public and Shareholders stated their concerns regarding water deliveries, pipeline assessments and increases to the operations budget. Shareholders also asked if the Brown Act is applicable to North Fork Board members. There being no further written or verbal comments, the public participation section was closed. APPROVAL OF ANNUAL STOCKHOLDERS MEETING MINUTES FOR APRIL 1, 2014 M/S/C (Wright-Coats) that the April 1, 2014 Stockholders meeting minutes be approved as submitted. PRESENTATION BY STAFF The General Manager/CEO provided a presentation that included the history of North Fork Water Company, the 2009 canal replacement project, current drought conditions, 1885 Bear Valley Contract, historical assessments, operations and finance. He also provided information on the direction of the North Fork Water Company for the next year which consisted of critical system improvements, 2014-15 proposed budget, partnering options with East Valley Water District, proposed delivery allocations, deliveries with purchased water and without purchased water, assessment trends from 2007 through 2015 and assessment options. LEGAL COUNSEL WILL PROVIDE OVERVIEW OF VOTING PROCESS Mr. Kennedy provided an overview of the voting process and stated that in accordance with section 2.10 of the North Fork By-Laws; that a roll call vote and/or a written vote may be necessary to complete the voting process and that votes are based on the number of shares held and shareholders who are present to vote. Item # 5 DISCUSSION AND APPROVAL OF THE FY 2014-15 MONTHLY WATER ALLOCATION BUDGET FOR NORTH FORK WATER COMPANY DELIVERIES The Chief Financial Officer reviewed the proposed budget with the Board, including various assessment options. He provided information that included assessment amounts if North Fork purchased state water and if state water was not purchased. Director Wright inquired about the availability of purchasing state water. NF Minutes 05/14/2014 etb Mr. Kiel requested the amount it would cost per share for 2 inches of water if state water was purchased. He also thanked staff for the research and the information that was provided. The General Manager/CEO stated that Valley District was able to bank enough water to purchase over the next 2 years; that East Valley Water District will continue doing its best for North Fork’s interests. Mr. Arnott expressed his appreciation to East Valley Water District for providing water for North Fork use and stated that he would vote for the purchase of state water. The Engineering Manager provided an overview of critical system improvements that need to be completed and the bidding process for construction. Shareholders discussed the possibility of dividing the assessments into two payments. Item #4 DISCUSSION AND APPROVAL OF FY 2014-15 BUDGET, DIRECTOR’S FEES, AND ASSESSMENTS FOR NORTH FORK WATER COMPANY M/S (LeVesque-Coleman) to approve the purchase of $150,000 of state water. Director’s LeVesque and Coleman withdrew their motions. Director Sturgeon requested to defer this item to the next meeting and encouraged the Board to consider payment plan options for assessments. M/S/C (Coleman-Kiel) that the Board adopt the $27/share and to provide an optional payment plan for shareholders to make two equally divided payments due in June and August. Roll Call Vote or Written ballot from each shareholder Ms. Linda Spitzer Yes Ms. Christina Moreno Not Present Arnott Poultry Ranch Yes Arnott Brothers Enterprises Yes Mr. & Mrs. Gailen & Helen Arnott Yes Mr. William C. Buster, Jr. Not Present Mr. Brucie Cagle Yes Calvary Chapel Not Present Mr. Robert Christianson Not Present Mr. Richard Christianson Not Present Mr. Luis E. & Ms. Jacqueline R. Curiel Not Present East Valley Water District Yes Mr. Jose Gutierrez Yes First American Title Not Present Mr. Thomas Edward Hooker Yes Mr. Robert Willard Hooker Yes Mr. Ross B. Jones Yes NF Minutes 05/14/2014 etb Garland Kemper Yes Kiel Trust Yes Mr. Fred McNeal Yes McNeal, Duckworth & McNeal, Inc. Yes Ms. Helen Meritt Not Present Ms. Beverley Rich Not Present Mr. & Ms. Linden & Margaret Riddle Not Present Mr. Nigel C. Smith Not Present Mr. & Ms. Michael & Patricia Raley Not Present The Wright Family Trust Yes Yucaipa Valley W.D. Yes The General Manager/CEO reviewed the motion that was taken to establish rates and budgets; he encouraged the Board to consider changes to the By-Laws for budget purposes and stated that we will be scheduling additional meetings to keep everyone informed as we move forward. Director Wright thanked staff for providing the figures that were presented for review this evening. ADJOURN The meeting was adjourned at 4:52 p.m. _________________________________ James Morales, Jr., President __________________________________ Justine Hendricksen, Secretary 1885 to Present North Fork  Water  Company y NFWC was formed by original shareholders in January,  1885 y One of  the earliest Mutual  Water  Companies formed in  California.  North Fork  Water   Company Original  Articles of   Incorporation for NFWC filed  in 1885 via handwritten  document.  This document set forth the  purposes for forming the  North Fork Water  Company NORTH FORK  WATER  COMPANY y NFWC created to regulate distributions of  Santa Ana River  water from Santa Ana Canyon to the San Bernardino  Mountains y Primary purpose of  forming NFWC was to acquire and  maintain the North Fork  Ditch for present and future use.  y NFWC sought to improve and keep in repair the North  Fork  Ditch. y NFWC also created to regulate the distributions of  water  flowing in the North Fork  Ditch and to distribute the water  to stockholders of  NFWC for irrigation and domestic uses.  North Fork  Water  Company y Original parties who created NFWC traded their water  rights and privileges to appropriated Santa Ana River  flow for shares of  stock in NFWC. y These rights stemmed from the earliest diversion right  at the Mouth of  the Canyon y In essence, original stockholders traded their  preexisting water rights to create infrastructure and  security. y This also created a mechanism to apportion  maintenance and repair of  the North Fork  Ditch  amongst the shareholders. North Fork  Water  Company y NFWC Articles of  incorporation created a Board of   Directors to oversee the corporation. y Original Board of  Directors of  NFWC: y George Miller of  San Bernardino y Seth Marshall of  San Bernardino y G.W. Beattie of  San Bernardino y L.C. Waite  of  Riverside y John Stone of  Riverside The Board is charged with governing the North Fork  Water   Company and ensuring that the North Fork  Ditch remained   able to service the water needs of  Stockholders North Fork  Water  Company y Initial place of  business for NFWC was located in San  Bernardino. y Articles were eventually amended to move NFWC’s  principal place of  business to Highland, Ca.  y The Board typically met in the Directors’ Room at the First  Bank of  Highland y NFWC remains centered in Highland to this day. North Fork  Water  Company y Initial amount of  capital stock offered were 480 shares  priced at $100 per share. y Each 20 shares of  stock entitled the holder to 1 hour of   full flow from the North Fork  Ditch every 10 days.  y Water  delivered to points of  diversion along the main  ditch. y The bed and courses of  the ditch are to remain  unchanged unless ¾ of  the capital stockholders vote to  approve changes.  North Fork  Water   Company Method of delivery:  Water  shall be  delivered to those  entitled or their  points of diversion  along the main  ditches owned  by  the corporation   All gates constructed   along the main ditch  shall be under full  control  of  the  corporation.  North Fork  Water  Company y NFWC Articles of  Incorporation state that no changes  can be made to the bed of  the North Fork  Ditch  without ¾ consent of  stockholders. y No changes to Ditch are authorized beyond  ordinary/usual repairs y Further, the method of   water distribution shall not be  changed without ¾ consent of  stockholders.  North Fork  Water  Company y Bylaws state that holding shares of  Company confers  no right on shareholders to have any pipeline, conduit  or other appliance enlarged or extended without Board  consent.  y Further, the Board is the sole and exclusive judge of   necessity and expedience as applied to physical  changes made to the North Fork  Ditch. North Fork  Water  Company y Rules of  the Ditch state that the water delivered is to  be used for agricultural purposes and not for domestic  potable water.  y However, circumstances have changed with  development; originally there were 55 irrigation  connections along the ditch and now approximately 15  remain active.  y Rules of  the Ditch also forbids individual shareholders  from pumping out or otherwise withdrawing their  deliveries. North Fork  Water  Company y However, the Bylaws state that water delivered by  NFWC may be used for agricultural or domestic use: y SO LONG AS water used for domestic purposes is  treated for contamination in accordance with all legal  requirements.  y Thus the Rules of  the Ditch and Bylaws for NFWC are in  conflict.  North Fork  Water  Company y Original NFWC Articles of   Incorporation  allowed  deliveries of  water to be used for agricultural or  domestic uses. y However, in 1931 the Articles were amended  to  provide: y “The purpose for which (NFWC) is formed are: y To  furnish, supply, and distribute water at cost, to and for its  stockholders, for domestic, irrigation, and all other useful  purposes, in proportion to the number of  shares of  such  stock held by them respectively.  y The phrase “other useful purposes” is never defined. North Fork  Water  Company y To  summarize: Rules of  the Ditch, Bylaws, and Articles  of  Incorporation provide differing purposes for which  the water may be used: y Rules of  the Ditch provide that delivered water can be  used for agricultural purposes only. y Bylaws provide that delivered water can be used for  agricultural purposes or for domestic purposes so long  as any water used for domestic purposes is properly  treated. y Articles of  Incorporation provide that delivered water  may be used for domestic purposes, irrigation purposes,  or all other useful purposes What Does This Mean Today? y The uncertainty of  the language creates several issues  moving forward: y 1: What can shareholders do with the water delivered to  them? y 2: What rights do the shareholders have to sell or lease  water to third parties? y 3: How shall the inconsistencies between the Articles,  Bylaws and Rules of  the Ditch be reconciled? y 4: Should the Company retain separate legal counsel?