HomeMy WebLinkAboutAgenda Packet - North Fork Water Company - 04/05/2016
31111 Greenspot Road
Highland, CA 92346
ANNUAL STOCKHOLDERS MEETING
April 5, 2016 - 2:00 p.m.
AGENDA
CALL TO ORDER
PLEDGE OF ALLEGIANCE
1. Approval of Agenda
2. Public Comments
3. Ratify Actions of North Fork Board of Directors for 2015
4. Election of Directors
ADJOURN TO RE-ORGANIZATIONAL MEETING
5. Board Re-Organization
a) Election of Officers:
-President
-Vice President
-Secretary
-Treasurer
6. Ad-Hoc Committees
-Legal Committee Update
-Discussion regarding creation of a CIP Ad-Hoc Committee
7. Financial Statements for FY 2015-16
8. Proposed FY 2016-17 Water Deliveries and Operational Update
9. Proposed FY 2016-17 Budget
ADJOURN
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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
Secretary (909)885-4900 at least 72 hours prior to said meeting.
2015 OFFICERS & DIRECTORS
OFFICERS:
President - James Morales, Jr.
Vice President - Nanette Shelton
Treasurer - Brian Tompkins
Secretary - Justine Hendricksen
DIRECTORS
Christopher Carrillo
Ronald Coats
Ben Coleman
Charles Kiel
James Morales Jr.
Nanette Shelton
Margaret Wright
2015 DIRECTORS
DIRECTORS
Christopher Carrillo
Ronald Coats
Benjamin Coleman
Charles Kiel
James Morales Jr.
Nanette Shelton
Margaret Wright
2015 OFFICERS
OFFICERS:
President - James Morales, Jr.
Vice President - Nanette Shelton
Treasurer - Brian Tompkins
Secretary - Justine Hendricksen
1
STAFF REPORT
DATE: April 5, 2016
TO: BOARD OF DIRECTORS
FROM: JOHN MURA, GENERAL MANAGER
RECOMMENDATION: Staff recommends that the financial statements for FY 2015-16 be
adopted and filed.
BACKGROUND
Section 5.05(c) of the North Fork Water Company Bylaws require that the Treasurer render to the
Board of Directors an accounting of the NFWC’s transactions and financial condition at regular
meetings of the Board. In order to comply with this section of the Bylaws, 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 NFWC’s financial statements as of, and for the twelve months ended, January 31,
2016. The statements are presented in comparative form, prior to current year, in order to identify
significant variances. Notable items are:
• Operating Cash decreased by 35% compared to last year; the available balance is equal
to approximately 8 months of operating expenses.
• Cash Restricted for Capital Projects increased by $61,997 as NFWC has not yet been
billed for the Engineering Analysis and surveying approved for FY 2015-16.
• Legal Expense increased by $47,000 due to the North Fork historical analysis conducted
by Jackson Tidus.
The financial statements were reviewed by the accounting firm of Van Lant & Fankhanel, who
had no findings as a result of their procedures.
ATTACHMENTS
North Fork Financial Statements FY 2015-16
HIGHLAND, CALIFORNIA
for years ending
January 31, 2016 and 2015
North Fork Water Company
FINANCIAL STATEMENTS
A CALIFORNIA CORPORATION
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 – 10
Supplementary Information
Schedule of Property, Plant and Equipment, and
Accumulated Depreciation
One
11 – 12
Schedule of Shareholders Two 13
Statement of Financial Position Comments Three 14 - 15
North Fork Water Company
(A California Corporation)
Organization Data
For the Years Ended January 31, 2016 and 2015
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
James Morales, Jr. President
Ronald Coats Vice President
Brian Tompkins Treasurer
Justine Hendricksen Secretary
DIRECTORS
Charles Kiel Nanette Shelton
Ronald Coats Chris Carillo
James Morales, Jr. Vacancy
Margaret Wright
MANAGER
Under Agreement with East Valley Water District
1
INDEPENDENT ACCOUNTANT’S REVIEW REPORT
To the Board of Directors
North Fork Water Company
Highland, California
We have reviewed the accompanying financial statements of the North Fork Water Company (a
California Corporation), which comprise the statement of financial position as of J anuary 31, 2016 and
2015, and the related statements of activities, changes in shareholders’ equity, and cash flows for the
years then ended, and the related notes to the financial statements. A review includes primarily
applying analytical procedures to management’s financial data and making inquiries of management. A
review is substantially less in scope than an audit, the objective of which is the expression of an opinion
regarding the financial statements as a whole. Accordingly, we do not express such an opinion.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement whether due to fraud or
error.
Accountant’s Responsibility
Our responsibility is to conduct the review engagement in accordance with Statements on Standards
for Accounting and Review Services promulg ated by the Accounting and Review Services Committee
of the AICPA. Those standards require us to perform procedures to obtain limited assurance as a basis
for reporting whether we are aware of any material modifications that should be made to the financial
statements for them to be in accordance with accounting principles generally accepted in the United
States of America. We believe that the results of our procedures provide a reasonable basis for our
conclusion.
Accountant’s Conclusion
Based on our review, with the exception of the matter described in the next section, we are not aware
of any material modifications that should be made to the accompanying financial statements in order for
them to be in accordance with accounting principles generally accepte d in the United States of America.
Known Departure From Accounting Principles Generally Accepted in the United States of
America
As indicated in the AICPA’s Audit & Accounting Guide for State and Local Governments, and also in
the AICPA’s Audit & Accounting Guide for Not-for-Profit Entities, entities are considered “governmental”
if there is “appointment (or approval) of a controlling majority of the members of the organization’s
governing body by officials of one or more state or local governments .” If an entity is considered
governmental, it is subject to generally accepted accounting principles for state and local governments.
2
Based on the above definition, North Fork Water Company would be considered a governmental
agency, and should follow reporting standards of the Governmental Accounting Standards Board
(GASB). However, the accompanying financial statements were prepared in accordance with the
Financial Accounting Standards Board Accounting Standards Codification, rather than the GASB
standards. The effects of this departure from accounting principles generally accepted in the United
States of America on financial position, results of operations, and cash flows have not been determined.
Other Matter
Supplementary Information
Our review was made primarily for the purpose of expressing a conclusion that there are no material
modifications that should be made to the financial statements in order for them to be in conformity with
accounting principles generally accepted in the United States of America. The schedules listed as
supplementary information in the table of contents are presented for purposes of additional analysis
and are not a required part of the basic financial statements. They are the representation of
management. We have reviewed the supplementary information, and, based on our review, we are not
aware of any material modifications that should be made to such information in order for it to be in
accordance with the applicable financial reporting framework . We have not audited the supplementary
information and, accordingly, do not express an opinion on such information.
Loma Linda, California
March 14, 2016
3
2016 2015
Current Assets
Cash 104,217$ 160,494$
Cash - Restricted for Capital Projects 120,801 59,804
Prepaid Expenses 15,956 15,967
Receivables
Assessments 1,794 5,133
Total Current Assets 242,768 241,398
Property, Plant, and Equipment
Improvements - Fencing 2,840 2,840
Pipelines and Valves 2,797,998 2,797,998
Construction In Progress 10,563 -
Less: Accumulated Depreciation (464,115) (409,272)
Total Property, Plant, and Equipment 2,347,286 2,391,566
Other Assets
Water Rights - January 31, 1952 655,611 655,611
Total Other Assets 655,611 655,611
Total Assets 3,245,665$ 3,288,575$
Current Liabilities
Accounts Payable 16,571$ 69,858$
Accrued Liabilites - 69
Total Current Liabilities 16,571 69,927
Shareholders' Equity
Capital Stock Authorized 7,200 Shares - 7,156 Issued
and Outstanding at $100 Stated Value 715,600 715,600
Additional Paid-In Capital 526,626 538,652
Contributed Capital 1,646,308 1,684,154
Retained Earnings 340,560 280,242
Total Shareholders' Equity 3,229,094 3,218,648
Total Liabilities and Shareholders' Equity 3,245,665$ 3,288,575$
See accompanying notes and Independent Accountants' Review Report.
LIABILITIES AND SHAREHOLDERS' EQUITY
North Fork Water Company
(A California Corporation)
Statements of Financial Position
For the Years Ended January 31, 2016 and 2015
ASSETS
4
2016 2015
Revenues
Water Sales -$ -$
ExpensesRepairs and Maintenance
Labor and Equipment 30,021 39,061
Contracted 7,440 8,051
Administration 13,913 7,633
Accounting Fees 2,000 2,000
Legal 76,813 29,664
Materials and Supplies 125 29
Property Taxes 28,575 29,411
Insurance 4,016 4,863
Depreciation 54,843 54,838
Total Expenses 217,746 175,550
Loss from Operations (217,746) (175,550)
Other Income
Interest - 74
Total Other Income - 74
Excess of Expenses over Revenues before
Provision for Income Taxes (217,746) (175,476)
Provision for Income Taxes
State Income Taxes 800 800
Excess of Expenses over Revenues before Contributions (218,546) (176,276)
Contributions
Shareholder Assessments 228,992 193,212
Change in Equity 10,446$ 16,936$
See accompanying notes and Independent Accountants' Review Report.
North Fork Water Company
(A California Corporation)
Statements of Activities
For the Years Ended January 31, 2016 and 2015
5
Cumulative
Common Stock Additional Excess of Total
Issued and Paid-in Contributed Revenue Over Shareholders'
Outstanding Capital Capital Expenses Equity
Balance, January 31, 2015 715,600$ 538,652$ 1,684,154$ 280,242$ 3,218,648$
Shareholder Assessments 228,992 228,992
Excess of Expenses
Over Revenues (218,546) (218,546)
Allocate Depreciation (12,026) (37,846) 49,872 -
Balance, January 31, 2016 715,600$ 526,626$ 1,646,308$ 340,560$ 3,229,094$
Cumulative
Common Stock Additional Excess of Total
Issued and Paid-in Contributed Revenue Over Shareholders'
Outstanding Capital Capital Expenses Equity
Balance, January 31, 2014 715,600$ 550,678$ 1,722,000$ 213,434$ 3,201,712$
Shareholder Assessments 193,212 193,212
Excess of Expenses
Over Revenues (176,276) (176,276)
Allocate Depreciation (12,026) (37,846) 49,872 -
Balance, January 31, 2015 715,600$ 538,652$ 1,684,154$ 280,242$ 3,218,648$
See accompanying notes and Independent Accountants' Review Report.
January 31, 2015
January 31, 2016
North Fork Water Company
(A California Corporation)
Statements of Changes in Shareholders' Equity
For the Years Ended January 31, 2016 and 2015
6
2016 2015
Cash Flows from Operating Activities
Cash Paid for Services and Materials (216,248)$ (58,706)$
Interest received - 156
Income Taxes Paid (800) (1,600)
Net Cash used by Operating Activities (217,048) (60,150)
Cash Flows from Financing Activities
Contributions from Shareholders to Pay Suppliers 232,331 192,163
Payments Received on Promissory Notes - 1,884
Net Cash Provided by Financing Activities 232,331 194,047
Cash Flows from Investing Activities
Acquisition and Construction of Assets - (35,643)
Net Cash used for Investing Activities - (35,643)
Net Increase in Cash 4,720 98,254
Cash, Beginning of Year 220,298 122,044
Cash, End of Year 225,018$ 220,298$
Reconciliation of Excess of Expenses over
Revenues to Net Cash Used By Operating Activities
Excess of Revenue over (under) Expenses (218,546)$ (176,276)$
Adjustments:
Depreciation 54,843 54,838
(Increase) Decrease in:
Prepaid Expenses 11 2,494
Interest Receivable - 82
Increase (Decrease) in:
Accounts Payable and Accrued Liabiities (53,356) 59,512
Taxes Payable - (800)
Net Cash used by Operating Activities (217,048)$ (60,150)$
See accompanying notes and Independent Accountants' Review Report.
North Fork Water Company
(A California Corporation)
Statements of Cash Flows
For the Years Ended January 31, 2016 and 2015
7
North Fork Water Company
(A California Corporation)
Notes to Financial Statements
For the Years Ended January 31, 2016 and 2015
NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Nature of Operations
North Fork Water 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 fair 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, 2016
and 2015 state franchise taxes were $800.
Use of Estimates
The preparation of financial statements in conformity with 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.
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.
8
North Fork Water Company
(A California Corporation)
Notes to Financial Statements
For the Years Ended January 31, 2016 and 2015
NOTE 2 - RELATED PARTY TRANSACTIONS
As of January 31, 2016, East Valley Water District owned 82% of the outstanding shares of the
Company. The Company and East Valley Water District have certain officers and directors in common.
East Valley Water District performed substantially all of the repairs and maintenance of the Company's
water distribution system.
NOTE 3 - PROPERTY, PLANT, AND EQUIPMENT
A summary of changes in property, plant and equipment follows:
Balance Balance
January 31, 2015 Additions Deletions January 31, 2016
Distribution System
Pipelines $ 2,791,959 $ - $ - $ 2,791,959
Ditch Diversion Boxes 4,729 - - 4,729
Valves 1,310 - - 1,310
2,797,998 - - 2,797,998
Improvements
Fencing – North Fork Intake 2,840 - - 2,840
Total $ 2,800,838 $ - $ - $ 2,800,838
Balance Balance
January 31, 2014 Additions Deletions January 31, 2015
Distribution System
Pipelines $ 2,756,316 $ 35,643 $ - $ 2,791,959
Ditch Diversion Boxes 4,729 - - 4,729
Valves 1,310 - - 1,310
2,762,355 35,643 - 2,797,998
Improvements
Fencing – North Fork Intake 2,840 - - 2,840
Total $ 2,765,195 $ 35,643 $ - $ 2,800,838
9
North Fork Water Company
(A California Corporation)
Notes to Financial Statements
For the Years Ended January 31, 2016 and 2015
NOTE 4 - ANNUAL SHAREHOLDER ASSESSMENTS
Annual shareholder operating assessments were set at $22.00 per share for the year ended January 31,
2016. In addition, a capital replacement assessment of $10 per share was levied to pay for pipeline
replacement and to establish a replacement reserve.
NOTE 5 – CONSTRUCTION COMMITMENTS
The board approved capital projects for the period ended January 31, 2016. The commitment remaining
to contractors as of January 31, 2016 is $15,105. The capital project is related to the evaluation and
improvement of the Plunge Creek Pipeline.
NOTE 6 - SUBSEQUENT EVENTS
In the preparation of these financial statements, the Company considered subsequent events through
March 14, 2016, which is the date these financial statements were issued.
10
SUPPLEMENTARY INFORMATION
Schedule One
Page 1 of 2
January 31, 2016
Date Beginning Ending Remaining Beginning Ending
Acquired Balance Balance Life Years Balance Provision Balance
Canal Replacements 1995 41,862$ 41,862$ 29 16,327$ 837$ 17,164$
Canals - 1/2 interest Various 67,610 67,610 67,610 - 67,610 Ditch Diversion Boxes 1985 4,729 4,729 20 2,802 95 2,897 Canals - 36" Pipeline 1995 8,958 8,958 28 3,670 179 3,849 Canal Replacement (La Tourette) 1997 37,511 37,511 31 13,499 750 14,249 Canal Replacement (Plunge Creek
Syphon to Cram School)1999 68,937 68,937 33 22,067 1,380 23,447 Pipeline Replacement
90' of 26" Pipeline
(behind Walmart)2002 9,941 9,941 35 2,786 199 2,985
Pipeline Replacement
16" Pipeline (Highland Avenue) 2004 3,010 3,010 37 720 60 780
Canal Replacement
36" Pipeline - SAR to
Plunge Creek Sandbox)2009 2,493,592 2,493,592 43.5 274,296 49,872 324,168
Pipeline Replacement
50' of 30" DIP - Highland at
VFW Hall 2011 26,205 26,205 45 2,096 524 2,620 Pipeline Replacement
220' of 24" - SAR Xing to Turnout 2014 34,333 34,333 48 687 687 1,374 6" Gate Valve (Wier 17)2014 1,310 1,310 18 66 66 132
2,797,998 2,797,998 406,626 54,649 461,275 Improvements:
Security Fencing - NF Intake 2003 2,840 2,840 0 2,646 194 2,840 Totals 2,800,838$ 2,800,838$ 409,272$ 54,843$ 464,115$
Construction in Progress 2016 - 10,563 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
For the Years Ended January 31, 2016 and 2015
11
Schedule One
Page 2 of 2
January 31, 2015
Date Beginning Ending Remaining Beginning Ending
Acquired Balance Balance Life Years Balance Provision Balance
Canal Replacements 1995 41,862$ 41,862$ 30 15,490$ 837$ 16,327$
Canals - 1/2 interest Various 67,610 67,610 67,610 - 67,610 Ditch Diversion Boxes 1985 4,729 4,729 21 2,707 95 2,802 Canals - 36" Pipeline 1995 8,958 8,958 29 3,491 179 3,670 Canal Replacement (La Tourette) 1997 37,511 37,511 32 12,749 750 13,499 Canal Replacement (Plunge Creek
Syphon to Cram School)1999 68,937 68,937 34 20,687 1,380 22,067 Pipeline Replacement
90' of 26" Pipeline
(behind Walmart)2002 9,941 9,941 36 2,587 199 2,786
Pipeline Replacement
16" Pipeline (Highland Avenue) 2004 3,010 3,010 38 660 60 720
Canal Replacement
36" Pipeline - SAR to
Plunge Creek Sandbox)2009 2,493,592 2,493,592 44.5 224,424 49,872 274,296
Pipeline Replacement
50' of 30" DIP - Highland at
VFW Hall 2011 26,205 26,205 46 1,572 524 2,096 Pipeline Replacement
220' of 24" - SAR Xing to Turnout 2014 - 34,333 49 - 687 687 6" Gate Valve (Wier 17)2014 - 1,310 19 - 66 66
2,762,355 2,797,998 351,977 54,649 406,626 Improvements:
Security Fencing - NF Intake 2003 2,840 2,840 1 2,457 189 2,646 Totals 2,765,195$ 2,800,838$ 354,434$ 54,838$ 409,272$
See accompanying notes and Independent Accountants' Review Report.
North Fork Water Company
(A California Corporation)
Schedule of Property, Plant and Equipment, and Accumulated Depreciation
For the Years Ended January 31, 2016 and 2015
Property, Plant and Equipment Accumulated Depreciation
12
Schedule Two
Number of
Shareholder Certificate Number(s)Shares
Linda Spitzer 1391 4.00
Arnott Poulty Ranch 1316 138.00
Arnott Brothers Enterprises 1341 55.00
Gailen & Helen Arnott 1129 66.67
William Buster 1057 8.00
Brucie Cagle 1373 4.00
Calvary Chapel 1375 72.50
29300 Baseline Partners, LLC 1123, 1124 48.00
Richard Christianson 1148 3.00
East Valley Water District 5,904.49
Christina Moreno 1379 8.50
Nigel C. Smith 1378 3.00
Jose Gutierrez 1308 9.00
Thomas Hooker 1384 17.00
Robert Hooker 1383 17.00
First American Title 1381 36.00
Garland Kemper 1154 50.00
Kiel Family Trust 1126, 1165, 1258, 1328 143.00
Fred McNeal 1156, 1246, 1248 43.20
McNeal, Duckworth McNeal, Inc.1360 6.80
Helen Merritt 1390 2.00
Beverly Rich 708 5.00
Luis E. & Jacqueline R. Curiel 1382 3.50
Michael & Patricia Raley 1218 5.00
Wright Family Trust 1362 465.67
Yucaipa Valley W. D.1392 37.67
Total 7,156.00
See accompanying notes and Independent Accountants' Review Report.
North Fork Water Company
(A California Corporation)
Schedule of Shareholders
For the Years Ended January 31, 2016 and 2015
13
Schedule Three
Page 1 of 2
See accompanying Independent Accountants’ Review Report.
North Fork Water Company
(A California Corporation)
Statement of Financial Position Comments
For the Years Ended January 31, 2016 and 2015
CURRENT ASSETS
Current assets consisted of the following:
2016 2015
Cash in Checking $ 225,018 $ 220,298
Prepaid Insurance 1,670 1,678
Prepaid Taxes 14,286 14,289
Assessments Receivable 1,794 5,133
Interest Receivable - -
Note Receivable - Due Within One Year - -
Totals $ 242,768 $ 241,398
WATER RIGHTS
There is an agreement dated May 23, 1895, 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.
14
Schedule Three
Page 2 of 2
See accompanying Independent Accountants’ Review Report.
North Fork Water Company
(A California Corporation)
Statement of Financial Position Comments
For the Years Ended January 31, 2016 and 2015
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 $54,843 computed at established rates using the straight-line
method.
CURRENT LIABILITIES
Current liabilities consisted of the following:
2016 2015
Accrued Liabilities
Accounts Payable
Labor and Burden $ - $ 26,640
Legal – January - 2,958
Landscaping - 590
Pipeline Replacement - 34,333
EVWD Insurance Reimbursement 4,008 4,027
Gate Valve – Wier 17 - 1,310
Independent Accountant’s Review Fee 2,000 -
Construct Payment – Plunge Creek Pipeline 10,563 -
Total Accounts Payable 16,571 69,858
Accrued Liabilities - 69
Income Taxes Payable - -
Total Current Liabilities $ 16,571 $ 69,927
15
1
STAFF REPORT
DATE: APRIL 5, 2016
TO: BOARD OF DIRECTORS
FROM: JOHN MURA, GENERAL MANAGER
RECOMMENDATION: Review the river flow trends to date and the proposed FY 2016-17 water
deliveries.
BACKGROUND
The 1885 contract terms established specific water delivery obligations to the North Fork Water
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. In an effort to increase accuracy and accountability, beginning FY 2015-
16, monthly water deliveries during non-contract months were based on the actual flow reported
from San Bernardino Valley Water Conservation District daily flow reports. This real-time
delivery methods allows for adjustments up or down to reflect the varying river level.
DISCUSSION
California is still experiencing a severe drought despite recent rains. These conditions greatly
impact the Santa Ana River flows, and ultimately the availability of water for deliveries. In order
to better understand the impacts of the drought on the NFWC it is helpful to review the San
Bernardino Water Conservation District Santa Ana River flow reports.
Since January, shareholders have received 1.2 miners inch per share, and will continue to receive
that amount during the month of April. May delivery amounts will be calculated as that period
San Bernardino Water Conservation District Santa Ana River Flow Report
Month
2012 Average
Daily River
Flows (CFS)
2013 Average
Daily River
Flows (CFS)
2014 Average
Daily River
Flows (CFS)
2015 Average
Daily River
Flows (CFS)
2016 Average
Daily River
Flows (CFS)
January 33 23 19 18 19
February 37 30 15 18 14
March 46 31 22 22 TBD
April 114 45 41 47 TBD
May 43 4 18 18 TBD
June 29 41 10 10 TBD
July 22 13 8 6 TBD
August 20 13 8 8 TBD
September 22 16 7 16 TBD
October 22 16 9 14 TBD
November 18 14 12 20 TBD
December 21 20 14 20 TBD
2
approaches, and will be posted on www.eastvalley.org. During the contract period, water deliveries
are set as stated below.
In the event of a significant rain fall of more than one half inch, deliveries will automatically be
halted in order to keep the low quality water out of the system and to allow for the ground to absorb
the rain fall. If a customer would like to continue their scheduled delivery immediately following
a rain fall, there is a procedure in place for them to contact the East Valley Water District
Operations Division. In addition, deliveries may be halted due to circumstance beyond NFWC’s
control as a result of San Bernardino County Flood Control, Southern California Edison, or other
outside event. Staff will be sure to maintain communication with shareholders that may be
impacted by unexpected delivery disruptions.
Staff recommends approval of the Proposed FY 2016-17 Delivery Schedule that will continue
providing water deliveries during non-contract months at levels that reflect actual Santa Ana River
flows.
Proposed FY 2016-17 Delivery Schedule
Month
Miners Inch Day
(MID)
Est. River
Flow CFS
NF Share
CFS
NF Miners
Inch
Miners
Inches
per Share
January (Actual) ¼ of Santa Ana River 22 5.5 275 1.2
February (Actual) ¼ of Santa Ana River 22 5.5 275 1.2
March (Actual) ¼ of Santa Ana River 22 5.5 275 1.2
April ¼ of Santa Ana River 22 5.5 275 1.2
May ¼ of Santa Ana River TBD TBD TBD TBD
June 500 500 2.0
July 600 600 2.5
August 600 600 2.5
September 550 550 2.3
October 450 450 1.9
November 400 400 1.6
December ¼ of Santa Ana River TBD TBD TBD TBD
1
STAFF REPORT
DATE: APRIL 5, 2016
TO: BOARD OF DIRECTORS
FROM: JOHN MURA, GENERAL MANAGER
RECOMMENDATION: Review and approve the proposed FY 2016-17 Budget.
BACKGROUND
The development of the budget continues to consider the impacts of an enduring drought, an
outdated delivery system, and components of the delivery infrastructure that are deteriorated and
at risk of causing significant water losses. The following operating and capital budgets are
presented for consideration.
DISCUSSION
Operating Budget
The Operating Budget funds routine operations, repair, and maintenance for the NFWC. As such,
staff has compiled the following proposed budget for FY 2016-17:
Item
2015/16
Budget
2015/16
Actual
2016/17
Proposed
Operations Labor 45,400 28,791 32,000
Administrative Labor 10,000 13,788 11,000
Director's Fee 100 125 200
Contract Services 23,000 7,440 15,000
Purchased Water 0 0 0
Materials & Supplies 1,000 125 500
Professional Services 2,000 2,000 2,200
Legal Services 30,000 76,813 85,000
Equipment Charges 8,000 1,230 6,000
Property / Franchise Taxes 30,000 29,375 30,000
General Insurance 4,100 4,016 4,100
TOTAL $ 153,600 $ 163,703 $ 186,000
One significant variance noted in comparing budget to actual costs in the prior year, is the
significant spending for legal services. The NFWC’s new law firm, Jackson Tidus, spent
significant time researching the history of the North Fork canal, including governance and water
rights, and the rights of shareholders to lease or transfer shares. The legal work is expected to
continue into FY 2016-17, with a number of additional questions from shareholders anticipated.
2
Accordingly, staff has proposed an increase in the legal services budget to $85,000 for FY 2016-
17.
Costs in the proposed operating budget divided by 7,156 shares is equal to $25 per share.
Capital Improvements
Prior to adoption of the FY 2015-16 budget, a preliminary review of the distribution system noted
that old pipes at Plunge Creek, and at the Santa Ana River crossing, are deteriorated and leaking,
resulting in a significant loss of water. Staff proposed, and the Board approved, an Engineering
Study to determine the best course of action for repairing the pipes and ensuring uninterrupted
water deliveries to shareholders. In addition, staff proposed contracting for survey work to mark
the exact alignment of the North Fork pipeline across undeveloped property. Total cost of these
items to the NFWC was $46,000.
The preliminary draft of the Engineering Analysis has been completed, and options for
rehabilitation of each of the pipelines presented.
Options for the Santa Ana River crossing include:
• Replacing the existing pipe with a new 30 inch pipe
o $167,000 + design and environmental permitting
• Slip lining the existing pipe with a 24 inch PVC pipe
o $180,000 + design
Replacing the pipe would include environmental permitting, which could take up to 9 months, and
would also require further evaluation of the pipeline’s structural supports. For these reasons, staff
is proposing slip lining the existing pipe with 24 inch PVC pipe.
Options for the Plunge Creek Crossing include:
• Lining the existing 30 inch pipe with an epoxy spray
o $320,000 + design
• Cure In Place Pipe lining
o $120,000 + design and environmental permitting
• Replace existing pipe with a 30 inch buried pipe
o $140,000 + design and environmental permitting
Replacing the pipe would include environmental permitting taking up to nine months, and some
vendors expressed concern that limited access to the site could impede mobilization of the heavy
equipment needed to install a Cured in Place lining solution. For these reasons, staff proposes
lining the existing pipe with an epoxy spray.
3
The estimated costs of the options proposed by staff are:
• Santa Ana River Crossing pipeline liner - $180,000 plus $26,000 design
• Plunge Creek siphon epoxy liner - $320,000 plus $44,000 design
East Valley Water District would split the total cost of $570,000 with the NFWC, so the impact to
each entity for these projects would be $285,000. The design work and effect on assessments
would make it difficult to complete both projects in a single year. Staff is proposing the following
timeline for project completion this scheduled includes work that started in FY 2015-16.
The total needed over three years for the proposed capital projects is $331,000. Building on the
FY 2015-16 capital assessment of $10 per share, staff proposes to collect the remaining funds
needed in FY 2016-17 and FY 2017-18 as follows:
Capital Assessments
FY 2015-16 - $10 per share 71,560
FY 2016-17 - $18 per share 128,808
FY 2017-18 - $19 per share 135,964
Total Funding $ 336,332
To continue funding the proposed capital projects in accordance with the funding plan above, a
Capital Replacement assessment of $18 per share is proposed to provide $128,808 in FY 2016-17.
Item
FY 2015-16
Budget
FY 2016-17
Proposed
FY 2017-18
Projected
Engineering Analysis 30,000
NF Pipeline Surveying 16,000
Pipeline - SAR Crossing Design 13,000
Pipeline - SAR Crossing Construction 90,000
Plunge Creek Siphon - Design 22,000
Plunge Creek Siphon - Construction 160,000
TOTAL $ 46,000 $ 125,000 $ 160,000
APRIL 5, 2016
ANNUAL
SHAREHOLDERS
MEETING
FINANCIAL STATEMENTS & REPORTS
•Annual Financial Report
–Review Company’s
Financial Position and
Results of Operations
–Instrument of Financial
Disclosure
2
INDEPENDENT
ACCOUNTANT’S
REVIEW
NO FINDINGS
EXECUTIVE SUMMARY OF FINANCIAL STATEMENTS
Assets
Cash $ 104,217
Cash –Restricted for Capital Projects 120,801
Fixed Assets/Water Rights 3,002,897
Other Assets 17,750
TOTAL ASSETS 3,245,665
Liabilities $ 16,571
Shareholder Equity 3,229,094
TOTAL LIABILITIES & EQUITY $ 3,245,665
2015-16 Expenses
Repairs & Maintenance $ 37,461
Property Taxes 28,575
Other General &Administrative 97,667
Depreciation 54,843
Total 218,546
2015-16 Assessments 228,992
Change in Shareholder Equity $ 10,446
OPERATING BUDGET TO ACTUAL
BUDGET ACTUAL
Water Purchases --
Operating Labor $ 45,400 $ 28,791
Contract Services 23,000 7,440
Equipment Charges 8,000 1,230
Materials & Supplies 1,000 125
Administration 10,100 13,913
Insurance 4,100 4,016
Property , Franchise Taxes 30,000 29,375
Professional Services 32,000 78,813
Depreciation --
$ 153,600 $ 163,703
2015-16 Assessments ($22)157,432 157,432
Increase in Operating Reserve $ 3,832 $ (6,271)
CAPITAL REPLACEMENTS BUDGET TO ACTUAL
BUDGET ACTUAL
Engineering Analysis $ 30,000 $ 10,563
Surveying –NF Pipeline Alignment 16,000 0
46,000 10,563
2015-16 Assessments ($10)71,560 71,560
Increase $ 25,560 $ 60,997
Balance on Contracts 27,182
Net Increase $33,815
OPERATIONAL
UPDATE
2015/16 NORTH FORK CANAL WORK
•Repair and Maintenance Activities
–Plunge Creek Siphon Temporary Repair Patch
–Repaired Road on Red Hill and Lid at Weir #10
–Cleaned and Repaired Sand Box after Bay
–Trimmed Trees at Plunge Creek
–Repaired Metal Sheet at Weir #3
–Repaired Chain Link Fence to Access Plunge Creek
•Vandalism is a Continued Point of Concern Near
Plunge Creek
7
ENGINEERING ANALYSIS
•Repair Alternatives
•Recommendations
•Cost Estimates
•Schedule
•Environmental
Requirements
8
Preliminary Design Report
PLUNGE
CREEK
SIPHON
SANTA ANA
RIVER
CROSSING
PLUNGE CREEK PIPELINE REPAIR
9
•Protect Infrastructure
•Eliminate Water Waste
•Address Vandalism
•Permanent Solution
36-INCH
PIPELINE
200 LINEAR FEET
SANTA ANA RIVER CROSSING
•Riveted steel pipe
•Installed in the 1930’s
•Constant leaks
10
10 GALLONS
PER HOUR LOST
650 LINEAR FEET
PIPELINE SURVEY
•Identify Pipeline Location
•Set Monuments for
Identification
•Between Sand Box and
Calvary Chapel
11
FY 2016-17 CAPITAL PROJECT EVALUATION
Crossing Option Pipe costs Design
Costs Permitting Total Cost
Santa Ana River Crossing
Option 1 Replace pipeline $167,000 $25,000 TBD $192,000
Option 2 Slip line existing 180,000 26,000 0 206,000
•Recommended Option 2
–Shareholder cost would be $103,000
FY 2016-17 CAPITAL PROJECT
FY 2017-18 CAPITAL PROJECT EVALUATION
Crossing Option Pipe costs Design
Costs Permitting Total Cost
Plunge Creek Siphon
Option 1 Epoxy spray $320,000 $44,000 $ 0 $364,000
Option 2 Cure in place 120,000 18,000 0 138,000
Option 3 Replace existing 140,000 21,000 TBD 161,000
•Recommended Option 1
–Shareholder cost would be $182,000
FY 2017-18 CAPITAL PROJECT
WATER
DELIVERIES
WATER DELIVERIES
•Rights under the 1885 Contract Terms
15
MONTH ALLOTMENT
(MINER’S INCHES PER DAY)
ALLOTMENT
PER SHARE
(MINORS INCHES)
February to May 25% of Santa Ana River Flow
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 &January 25% of Santa Ana River Flow
CHANGES IN SANTA ANA RIVER FLOWS
0
10
20
30
40
50
60
2012
2013
2014
2015
2016
16
2016-17 PROJECTED WATER DELIVERIES
17
MONTH ALLOTMENTS (MID)ALLOTMENTS PER
SHARE(MI)
February 275 1.2
March 275 1.2
April 275 1.2
May 25%of River Flow TBD
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 25%of River Flow TBD
January 25%of River Flow TBD
BUDGET &
ASSESSMENTS
PROPOSED 2016-17 BUDGET
19
DESCRIPTION ADOPTED 2015-16
BUDGET
PROPOSED 2016-17
BUDGET
OPERATING EXPENSES
Operating Labor/Equipment -EVWD 53,400 38,000
Contract Services 25,000 17,200
Legal Services 30,000 85,000
Materials & Supplies 1,000 500
Administration 10,000 11,000
Director Fees 100 200
Insurance 4,100 4,100
Property Taxes 30,000 30,000
Total Operating Expenses $153,600 $186,000
CAPITAL EXPENDITURES $ 46,000 $125,000
PROPOSED 2016-17 ASSESMENTS
20
DESCRIPTION PROPOSED 2016-17 BUDGET
Proposed Funding
Operating Expenses $ 186,000
Replacement Expenditures 125,000
TOTA L PROPOSED FUNDING $ 311,000
Proposed Assessments –7,156 Shares
Operating Assessment $25 per share
Replacement Expenditures $18 per share
TOTAL ASSESSMENT $43 per share