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HomeMy WebLinkAboutAgenda Packet - North Fork Water Company - 05/17/2016SPECIAL STOCKHOLDERS MEETING 31111 Greenspot Road Highland, CA 92346 May 17, 2016 - 2:00 PM AGENDA CALL TO ORDER PLEDGE OF ALLEGIANCE ROLL CALL OF BOARD MEMBERS 1.Approval of Agenda 2.Public Comments 3.Approve the North Fork Meeting Minutes a. April 7, 2015 Annual Stockholders Meeting Minutes b. May 12, 2015 Special Stockholders Meeting Minutes c. March 14, 2016 Special Stockholders Meeting Minutes d. April 5, 2016 Annual Stockholders Meeting Minutes 4.Proposed FY 2016-2017 Water Deliveries and Operational Update 5.Proposed FY 2016-2017 Budget 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 04/07/2015 jph DRAFT Pending Approval NORTH FORK WATER COMPANY 31111 GREENSPOT RD. HIGHLAND, CA 92346 ANNUAL STOCKHOLDERS MEETING APRIL 7, 2015 MINUTES President Morales called the Annual Stockholders meeting to order at 2:00 p.m. Mr. Coats led the flag salute. PRESENT: Chris Carrillo Ron Coats Ben Coleman Charles Kiel James Morales, Jr. Nanette Shelton ABSENT: Margaret Wright EVWD Staff: John Mura Brian Tompkins Justine Hendricksen LEGAL COUNSEL: Jean Cihigoyenetche STOCKHOLDERS: Robert Hooker Caroline Kiel-Ray Fred McNeal Jack Nelson, Yucaipa Valley Water District GUEST(S): Members of the public APPROVAL OF AGENDA The General Manager recommended that agenda items #8 and #9 be discussed after agenda item #13. M/S/C (Coats-Coleman) that the April 7, 2015 agenda be approved with the recommendations made by General Manager. PUBLIC PARTICIPATION President Morales declared the public participation section of the meeting open at 2:02 p.m. There being no written or verbal comments, the public participation section was closed. NF Minutes 04/07/2015 jph APPROVAL OF SPECIAL STOCKHOLDERS MEETING MINUTES FOR MARCH 13, 2015 M/S/C (Shelton-Coats) that the March 13, 2015 Special Stockholders meeting minutes be approved as submitted. RATIFY ACTIONS OF NORTH FORK BOARD OF DIRECTORS FOR 2014 M/S/C (Coats-Coleman) that the actions of the North Fork Board of Directors for 2014 be approved. ELECTION OF DIRECTORS M/S/C (Coats-Coleman) that the slate of Directors for 2015 be Chris Carrillo, Ron Coats, Ben Coleman, Charles Kiel, James Morales Jr., Nanette Shelton and Margaret Wright. ADJOURN TO RE-ORGANIZATIONAL MEETING M/S/C (Coats-Coleman) that the Stockholders meeting be adjourned to the Re- Organizational meeting. _________________________________ James Morales, Jr., President __________________________________ Justine Hendricksen, Secretary NF Minutes 04/07/2015 jph DRAFT Pending Approval NORTH FORK WATER COMPANY 31111 Greenspot Road Highland, CA 92346 ANNUAL RE-ORGANIZATIONAL MEETING APRIL 7, 2015 MINUTES President Morales called the Annual Re-Organizational meeting to order at 2:08 p.m. PRESENT: Chris Carrillo Ron Coats Ben Coleman Charles Kiel James Morales, Jr. Nanette Shelton ABSENT: Margaret Wright EVWD STAFF: John Mura Brian Tompkins Justine Hendricksen LEGAL COUNSEL: Jean Cihigoyenetche STOCKHOLDERS: Robert Hooker Caroline Kiel-Ray Fred McNeal Jack Nelson, Yucaipa Valley Water District GUEST(S): Members of the public BOARD RE-ORGANIZATION ELECTION OF OFFICERS M/S/C (Coleman-Kiel) that James Morales be appointed Board President. M/S/C (Coleman-Kiel) that Nanette Shelton be appointed Vice President. (Shelton abstained from the vote) M/S/C (Coleman-Kiel) that Justine Hendricksen be appointed Secretary. M/S/C (Coleman-Kiel) that Brian Tompkins be appointed Treasurer. NF Minutes 04/07/2015 jph APPOINT REPRESENTATIVES The General Manager stated that there is no need to appoint a representative for the Exchange Plan at this time. Director Kiel stated, that if the need arises, he will volunteer to be the representative on the Exchange Plan. No action taken. RESOLUTION 2015.01 (Bank Signing Authority) M/S/C (Coats-Shelton) that Resolution 2015.01 be approved. The General Manager and staff discussed items 10-13 at this time. FINANCIAL STATEMENTS AND REPORT Mr. Tompkins presented a brief overview of the Financial Statements with the Board. Director Kiel asked what the industry best practice policy on reserves should be for the North Fork Water Company. Mr. Tompkins suggested 3-5 years for North Fork Water Company. OPERATIONAL REPORT The General Manager presented an operational report to the Board of Directors which included: limited water availability for North Fork during non-contract months, Bear Valley obligations, drought regulations that apply to North Fork, operational and environmental challenges, low water levels in Big Bear Lake, State Project Water not being available, work completed on the North Fork Canal, capital expenditures needed, and the challenges we will be facing moving forward. Director Kiel suggested that a meter be placed on the pipe crossing the Santa Ana River to calculate the amount of water being lost in the system. Mr. Williams stated that the pipe would need to have a constant flow in order to measure the water; this is not the case with the North Fork system. Director Wright would like to know if East Valley Water District (East Valley) is not receiving its full allotment of water per share, then what happens to the water flowing down the steam when shareholders do not take their allotment; is East Valley taking this water and receiving extra water. Director Kiel stated that Bear Valley is responsible for deliveries based on their contract and if they are receiving extra water above the contract amount they should be paying for it. Information only. NF Minutes 04/07/2015 jph DISCUSSION REGARDING PROPOSED 2015 WATER DELIVERY SCHEDULE Mr. Duckworth asked if the District has calculated the total amount of water needed for the 17 shareholders versus the amount of shares being used, and if there is excess water can the shareholders divide it among themselves. He also stated that if there is excess water there is no need to purchase supplemental water; he would like to know the legalities of renting excess shares to other shareholders. Director Kiel suggested that North Fork deliver the water that is available and not purchase supplemental water at this time. Mr. Hooker would like legal counsel to review the legalities of renting shares and provide an update at a future meeting. No action taken. PROPOSED 2015-16 BUDGET The General Manager and Mr. Tompkins reviewed the proposed budget with the Board including: operating expenses, capital expenditures, proposed funding, and proposed assessments. The General Manager stated that the information presented today is for review and discussion purposes only, and a special meeting has been scheduled for May 12, 2015, 2:00 p.m. to take action on the items discussed today. Ms. Kiel-Ray asked if the assessments could be paid in two increments when invoiced. Director Kiel requested a comparison slide be added to next year’s budget presentation regarding assessments. No action taken. AD-HOC COMMITTEE UPDATE (LEGAL) Director’s Kiel and Carrillo provided an update regarding the interview process to select a firm to represent North Fork Water Company. The committee will interview potential candidates and make recommendations to the Board at a future meeting. Information only. DISCUSSION REGARING THE CREATION OF ADDITIONAL AD-HOC COMMITTEE’S (GRANT/CAPITAL IMPROVEMENT PROVEMENT PROGRAM) Director Kiel suggested an Ad-Hoc Committee be created to review capital projects and funding opportunities. The Board requested that this item be deferred and brought back for discussion at a future meeting. No action taken. NF Minutes 04/07/2015 jph ADJOURN The meeting adjourned at 3:47 p.m. _________________________ James Morales, Jr., President ___________________________ Justine Hendricksen, Secretary NF Minutes 5/12/2015 cnc DRAFT Pending Approval NORTH FORK WATER COMPANY 31111 GREENSPOT RD. HIGHLAND, CA 92346 SPECIAL STOCKHOLDERS MEETING MAY 12, 2015 MINUTES President Morales called the Special Stockholders meeting to order at 2:01 p.m. Director Carrillo led the flag salute. PRESENT: Chris Carrillo Ron Coats Ben Coleman Charles Kiel James Morales Jr. Nanette Shelton Margaret Wright ABSENT: None EVWD Staff: John Mura Brian Tompkins Justine Hendricksen Tom Holliman Cecilia Contreras LEGAL COUNSEL: Jean Cihigoyenetche STOCKHOLDERS: Robert Hooker Fred McNeal Jack Nelson Christina Moreno GUEST(S): Members of the public APPROVAL OF AGENDA M/S/C (Coats-Coleman) that the May 12, 2015 agenda be approved as submitted. PUBLIC COMMENTS President Morales declared the public participation section of the meeting open at 2:03 p.m. There being no written or verbal comments the public participation section was closed. NF Minutes 5/12/2015 cnc ADOPT AND FILE THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JANUARY 31, 2015 Mr. Tompkins reviewed the Financial Statements with the Board; that the document was reviewed by an accounting firm with no findings; that the total shareholder’s equity was $3.2 million for the year. He stated that the North Fork Water Company was able to accomplish the capital projects that were in the budget and excess funds were placed into reserves. Mr. Tompkins also reviewed the Independent Account Review, Statement of Financial Position, Statement of Activities, Statement of Changes in Shareholders’ Equity, Statement of Cash Flows, Schedule of Shareholders, and the Statement of Financial Position comments. Director Wright would like to know if North Fork Water Company is a California Corporation or a Mutual Company and about the change in liabilities from the previous year. She also asked questions regarding the Plunge Creek Replacement Project. Mr. Tompkins clarified that there were additional reimbursements to East Valley Water District that were paid at the end of the year which caused the change in liabilities. He also stated that the Plunge Creek Replacement Project was completed and came in under the budget. M/S/C (Coleman-Shelton) that the financial statements for the year ended January 31, 2015 be adopted and filed as submitted. PROPOSED NORTH FORK WATER COMPANY DELIVERY SCHEDULE The General Manager mentioned that there will be changes to the North Fork Water Company delivery schedule and has been working with staff to create the revised schedule for contract months and non-contract months. Mr. Henderson, Water Production Superintendent, reviewed the schedule with the Board; that during non-contract months, December thru May, there is not enough water to provide to the shareholders and the water quality is a concern. Mr. Henderson stated that during the contract months, June thru November, water will continue to be delivered on the existing schedule and East Valley will work with shareholders on how much is needed; that during non-contract months shareholders may receive a minimal amount or no water at all depending on the water levels in the river. Mr. Henderson stated that with the continuation of the drought, this problem will only become worse. He is proposing a change in daily delivery start times from 6:00 a.m. to after 11:00 a.m.; that the later time will allow the District to receive the daily river water level report from the Conservation District and adjust water deliveries accordingly. The General Manager stated that East Valley will provide the daily river water levels on its website for shareholders to access. NF Minutes 5/12/2015 cnc M/S/C (Coats-Coleman) that the Board adopt the proposed North Fork Water Company delivery schedule as submitted. ADOPT THE PROPOSED FISCAL YEAR 2015-16 BUDGET, 2015-16 OPERATING ASSESSMENT OF $22.00 PER SHARE AND 2015-16 CAPITAL ASSESSMENT OF $10.00 PER SHARE M/S/C (Coats-Coleman) that the Board adopt the proposed fiscal year 2015-16 budget; 2015-16 operating assessment of $22.00 per share, and 2015-16 capital assessment of $10.00 per share. Directors Carrillo, Coats, Coleman, Kiel, Morales, Shelton voted yes. Director Wright voted no. AD-HOC COMMITTEE UPDATE No reports at this time. CONSIDER GENERAL COUNSEL APPOINTMENT FOR THE NORTH FORK WATER COMPANY M/S/C (Wright-Carrillo) that the Board appoint Michele Staples from Jackson, DeMarco, Tidus and Peckenpaugh as General Counsel for the North Fork Water Company. AUTHORIZE THE EAST VALLEY WATER DISTRICT TO EXECUTE MODIFICATIONS TO RIGHT OF WAY EASEMENTS AND RELATED ACTIVITIES ON AN AS NEEDED BASIS M/S/C (Coats-Coleman) that the Board authorize East Valley Water District to execute modifications to right-of-way easements and related activities as needed. Directors Carrillo, Coats, Coleman, Morales, Shelton, Wright voted yes. Director Kiel abstained from the vote. ADJOURN The meeting was adjourned at 3:13 p.m. _________________________________ James Morales, Jr., President __________________________________ Justine Hendricksen, Secretary NF Minutes 3/14/2016 sg DRAFT Pending Approval NORTH FORK WATER COMPANY 31111 GREENSPOT RD. HIGHLAND, CA 92346 SPECIAL STOCKHOLDERS MEETING MARCH 14, 2016 MINUTES President Morales called the Special Stockholders meeting to order at 3:00 p.m. Director Coats led the flag salute. PRESENT: Charles Kiel Margaret Wright James Morales, Jr. Nanette Shelton Ron Coats ABSENT: Chris Carrillo EVWD Staff: John Mura Brian Tompkins Justine Hendricksen Shayla Gerber Kathleen Burke Nate Paredes Brenda VanMeter Jean Cihigoyenetche, EVWD legal counsel LEGAL COUNSEL: Michele Staples STOCKHOLDERS: Robert Hooker Fred McNeal Tom Hooker David Raley John Duckworth Caroline Kiel Ray GUEST (S): Members of the Public Ms. Hendricksen stated that the North Fork Board of Directors currently has one vacancy. APPROVAL OF AGENDA M/S/C (Coats-Shelton) that the March 14, 2016 agenda be approved as submitted. NF Minutes 3/14/2016 sg PUBLIC PARTICIPATION President Morales declared the public participation section of the meeting open at 3:04 p.m. There being no written or verbal comments, the public participation section was closed. HISTORICAL ANALYSIS OF THE NORTH FORK WATER COMPANY The General Manager/CEO stated the Legal Ad-Hoc Committee appointed Ms. Michele Staples, of Jackson Tidus, as the North Fork Water Company attorney and that she will be presenting her findings of the North Fork Water Company historical analysis. Ms. Staples introduced herself and provided a brief biography which included that she has been a lawyer for 27 years, teaches water law at Chapman University and represents agricultural businesses, developers and public and private water suppliers on water rights issues. She described the difference between a mutual water company and a public water agency. She reviewed following North Fork Water Company governing documents: 1. Articles of Incorporation 2. Bylaws 3. North Fork Canal Rules of Operation Ms. Staples reviewed the number of Directors required, the current Board composition, and election procedures; stating that, under the bylaws, each director seat is elected by the holder of the majority of the shares; that EVWD owns 82% of the shares. She answered water rights questions that were in response to letters sent to shareholders last year. She reviewed respective water rights of shareholders and North Fork Water Company; she found that shareholders conveyed water rights to North Fork Water Company, there was no re-conveyance of water rights back to the shareholders, that in 1931 the shareholders amended the Articles of Incorporation to expand the North Fork Water Company’s corporate powers. Ms. Staples described the basis of North Fork Water Company’s water rights and shareholders’ rights to water deliveries based on number of shares, reviewed contracts for coordinated deliveries, and went over the Seven Oaks Accord agreement for a spreading program. Ms. Staples gave a brief overview of North Fork Water rights issues, stating that North Fork Water Company’s pre-1914 appropriative water rights have been acknowledged in agreements with Bear Valley, Big Bear Mutual Water District, and San Bernardino Valley Municipal Water District, and in order to maintain these rights, there needs to be continuous reasonable and beneficial use of the water. She recommended to amend the Bylaws to allow all sub-potable water uses and also to clarify that transfers of unused water are allowed among shareholders and establish standards and procedures for approving and reporting which would help document the continuous beneficial use and prevent against argument that pre-1914 water right is being reduced by non-use. She reviewed the allowable uses of water delivered to NF Minutes 3/14/2016 sg shareholders, shareholders’ rights to sell and transfer their water rights, and made recommendations regarding the sale and lease of shares including adopting standards and procedures for approving and reporting lease of shares and for offsets related to sale of shares, and documenting that North Fork shareholders are successors to the original shareholders who conveyed their water rights in exchange for water deliveries at cost. She stated that the water company cannot be run in a way to profit shareholders. Ms. Staples recommended that the North Fork Water Company’s corporate documents be updated and that inconsistencies among them be reconciled. Ms. Staples recommended that the Board consider appointing a working group to prepare amendments for next year’s Annual North Fork Water Company Meeting. Director Wright would like to know what she could do with shares that are not being used. Mr. Mura stated that shares could be sold to EVWD, shareholders or developers, but that they must have access to the ditch or additional options available to use the water. Director Kiel asked for Ms. Staples’ input as to how other water companies deal with the sale of shares. Ms. Staples suggested that water company shares could, for example, be sold along with the land to a developer who could use the water deliveries to supply irrigation water to sell water to a homeowners association for non-potable water use such as irrigation of common areas. Another idea would be to sell the shares to the domestic water provider in the area (such as East Valley Water District) and possibly receive credit against the connection fee on their water bill and receive their water through domestic pipelines. Director Kiel stated that not many properties are connected to the North Fork system. Ms. Staples stated that typically the need to upgrade the water company to make them compatible to the water system usually incurs a cost and it may be possible to create a different rate structure. Mr. Mura stated that it is possible to provide a separate meter on the property of the shareholder and monitor the intake of water, providing a dual system. Mr. Mura stated that there are many options to consider and that the shareholders have access to the water and the water company holds the rights to the Santa Ana River surface water. President Morales asked the public if there were any questions regarding the presentation. Mr. Tom Hooker questioned if it was possible for Bear Valley owners, on the North Fork side, to receive water through the North Fork system and vice versa. Mr. Mura stated EVWD will look into the legal requirements and possibilities, that it was a great suggestion. Ms. Lisa McComber asked whether or not North Fork shares could be used south of the Santa Ana River. Ms. Staples replied that they must have access to the weir. Ms. Caroline Kiel Ray thanked the Board for considering the concerns of the minority shareholders and the approval of Ms. Staples as legal counsel for the North Fork Water Company. She thanked Ms. Staples for her very detailed and informational presentation. She asked if family trusts, which indicated successor trustees, met the same requirement of ownership as a deed of sale. Ms. Staples replied that since NF Minutes 3/14/2016 sg shares are considered real property it would, but there would need to be a process for the water company to track the transfer of shares to successor owners. Mr. John Duckworth, who introduced himself as a minority shareholder, stated that he uses his shares for irrigation purposes on his property, he asked if anything might prevent that in the future. Mr. Mura replied that shareholders may not be extracting as much from their shares as they may be able to obtain; that shareholders need to find ways to facilitate uses in the future. Mr. Duckworth questioned whether or not North Fork Water Company was at any risks. Mr. Mura discussed the importance of understanding that California has enacted laws due to conservation efforts that may come into play in the future, and shareholders need to recognize these may become a burden on North Fork. Director Kiel stated that it would be beneficial to have a shutoff valve on the property of the shareholder to eliminate excess runoff, allowing more water for those down from the weir. Mr. Tom Hooker stated that some shareholders are using only a fraction of the water they have rights to; he asked where the water goes if shareholders do not take their portion of water. Mr. Mura stated that it either stays in the ditch or goes to the EVWD treatment plant. Mr. Ron Arnott questioned from what source North Fork shareholders received water in past years during non-contract months when water was sparse due to drought. Director Kiel recalled that it was normal to take less water during those months. Director Wright asked where the water comes from during months where water is unusable due to severe thunderstorms. Mr. Mura stated that EVWD would backstop water allocations to shareholders if North Fork water was unusable by either providing ground water from EVWD or purchasing state water. President Morales stated that he feels there is no need for another board meeting prior to the meeting in April; that it would be appropriate to appoint an Ad-Hoc committee to discuss shareholder issues. Director Kiel felt it would be good to have the agenda set and the budget out before the next meeting. Mr. Mura informed the Board that he would get the agenda out a week prior to the next board meeting; that the Board may not adopt the budget at the annual meeting in April, but schedule another meeting after that to adopt the budget; that the meeting in April can be used to review the budget before adopting it. Information only. The Secretary stated that the next annual shareholders meeting is scheduled Tuesday, April 5, 2016 at 2:00 p.m. ADJOURN The meeting was adjourned at 4:19 p.m. _________________________________ James Morales, Jr., President NF Minutes 3/14/2016 sg __________________________________ Justine Hendricksen, Secretary NF Minutes 4/5/2016 sg DRAFT Pending Approval NORTH FORK WATER COMPANY 31111 GREENSPOT RD. HIGHLAND, CA 92346 ANNUAL STOCKHOLDERS MEETING APRIL 5, 2016 MINUTES President Morales called the Annual Stockholders meeting to order at 2:04 p.m. Mr. Ron Coats led the flag salute. The Board took a recess at 2:06 p.m. The Board reconvened the meeting at 2:08 p.m. PRESENT: Ronald Coats Charles Kiel James Morales, Jr. Nanette Shelton Margaret Wright ABSENT: Christopher Carrillo EVWD Staff: John Mura Brian Tompkins Jose Martinez Justine Hendricksen Nate Paredes Kathleen Burke Shayla Gerber Jean Cihigoyenetche, EVWD legal counsel LEGAL COUNSEL: Michele Staples STOCKHOLDERS: Arnold Wright (720 represented shares) Cristina Moreno Robert Hooker Fred McNeal Caroline Kiel Ray David Raley Jack Nelson, Yucaipa Valley Water District EVWD (5,904 shares) GUEST(S): Members of the Public NF Minutes 4/5/2016 sg Ms. Hendricksen stated that the North Fork Board of Directors currently has one vacancy. APPROVAL OF AGENDA M/S/C (Wright-Coats) that the April 5, 2016 agenda be approved as submitted. PUBLIC PARTICIPATION President Morales declared the public participation section of the meeting open at 2:09 p.m. Mr. Robert Hooker asked that the Board consider running North Fork water through the East Valley Water District processing plant and shareholders could then receive their shares through the EVWD domestic system. There being no further written or verbal comments, the public participation section was closed at 2:11 p.m. RATIFY ACTIONS OF NORTH FORK BOARD OF DIRECTORS FOR 2015 M/S/C (Coats-Shelton) that the actions of the North Fork Board of Directors for 2015 be approved. ELECTION OF DIRECTORS M/S/C (Shelton-Coats) that David Smith fill the vacant position on the North Fork Board. M/S/C (Wright-Coats) that the slate of Directors for 2015 be James Morales, Jr., Nanette Shelton, Ron Coats, Chris Carrillo, Charles Kiel, Margaret Wright and David Smith. ADJOURN TO RE-ORGANIZATIONAL MEETING M/S/C (Coats – Shelton) that the Stockholders meeting be adjourned to the Re- Organizational meeting. _________________________________ James Morales, Jr., President __________________________________ Justine Hendricksen, Secretary NF Minutes 4/5/2016 sg Draft Pending Approval NORTH FORK WATER COMPANY 31111 GREENSPOT ROAD HIGHLAND, CA 92346 ANNUAL RE-ORGANIZATIONAL MEETING APRIL 5, 2016 MINUTES The Annual Re-Organizational meeting was called to order by President Morales at 2:13 p.m. PRESENT: Ronald Coats Charles Kiel James Morales, Jr. Nanette Shelton David Smith Margaret Wright ABSENT: Christopher Carrillo EVWD STAFF: John Mura Brian Tompkins Jose Martinez Justine Hendricksen Nate Paredes Kathleen Burke Shayla Gerber Jean Cihigoyenetche, EVWD legal counsel LEGAL COUNSEL: Michele Staples STOCKHOLDERS: Arnold Wright Cristina Moreno Robert Hooker Fred McNeal Caroline Kiel Ray David Raley Jack Nelson, Yucaipa Valley Water District GUEST(S): Members of the Public BOARD RE-ORGANIZATION ELECTION OF OFFICERS M/S/C (Smith-Coats) that Ronald Coats be appointed Board President. M/S/C (Smith-Coats) that Christopher Carrillo be appointed Vice President. NF Minutes 4/5/2016 sg The General Manager asked the Board to consider re-electing Justine Hendricksen as Secretary and Brian Tompkins as treasurer due to the admirable job they have done in the past with North Fork Water Company. M/S/C (Wright-Smith) that Justine Hendricksen be appointed Secretary. M/S/C (Wright-Smith) that Brian Tompkins be appointed Treasurer. AD-HOC COMMITTEES M/S/C (Shelton-Wright) that Christopher Carrillo and Charles Kiel be appointed as the North Fork Representatives on the Legal Ad-Hoc Committee with no alternate representative. Mr. Mura stated that with the shareholders’ desire to consider running North Fork water through the EVWD treatment facility, Capital Improvements Projects (CIP) would need to be considered in the budget due to the costs that need to be paid over time. Mr. Mura recommended that the Board appoint a CIP Ad-Hoc Committee to review the costs associated with projects and make recommendations to the Board. M/S/C (Morales-Shelton) that the Board appoint a CIP Ad-Hoc Committee to review the process and make recommendations to the Board regarding Capital Improvements Projects for the North Fork Water Company, and that Director Kiel, Director Smith and Mr. Ron Arnott be appointed to the committee. FINANCIAL REPORT Mr. Brian Tompkins presented a brief overview of the Financial Report. He notated that the legal fees exceeded the budget due to the North Fork historical analysis that needed to be conducted. M/S/C (Morales-Shelton) that the Board accept the Financial Report as submitted. PROPOSED FY 2016-17 WATER DELIVERIES AND OPERATIONAL UPDATE Mr. Patrick Milroy presented an Operational Update; he reviewed repair and maintenance activities that had been performed on the North Fork Canal; he addressed the repairs needed to the Plunge Creek Pipeline and the pipeline replacement that is needed to the Santa Ana River Crossing. The Treasurer reviewed Capital Improvements Projects: the Santa Ana River Crossing pipeline replacement and the Plunge Creek Pipeline repair; he presented options for repair, stating pros and cons of each, and gave recommendations for the projects. Mr. Patrick Milroy explained water deliveries and described the difference between contract months versus non-contract month deliveries. Mr. Allen Williams discussed the 2016-2017 projected water deliveries and gave a detailed explanation of how water delivery amounts are calculated; that shareholders may visit the portal on the East Valley Water District website to access how much water they will receive for the NF Minutes 4/5/2016 sg month. Mr. Williams stated that the river flow is slowly decreasing over time and the drought is affecting the river flow. Information only. PROPOSED 2016-17 BUDGET The Treasurer stated that Operating Expenses and the proposed assessments per share were reviewed by legal counsel. He stated the increase in the proposed budget was due to the proposed Capital Improvement Project costs and the legal services that would be needed to review those projects. He stated the proposed assessment would be $43 per share: operating assessment = $25/share and replacement expenditures = $18/share. Director Morales questioned the various options under the Capital Improvement Projects and the pros and cons of each. Director Kiel expressed his concerns for the need to make the Plunge Creek Crossing pipe vandal proof. Mr. Hooker questioned the strength of the pipe and asked whether the Board should consider new pipe over the epoxy spray coating. Mr. Mura stated that it would take 30 to 40 years to get the EIR approved and would cost millions of dollars; he stated that epoxy was the lowest cost and widely used in the industry, that damaged pipe would be repaired and the epoxy coating would then be used. Mr. Mura responded to a question presented by Mr. Ron Arnott regarding the $103,000 shareholder cost of the proposed capital improvement project; he stated that East Valley Water District owns 50% of the pipeline and North Fork shareholders own the other 50%; that the $103,000 would be divided among all shareholders: EVWD at 82% and minority shareholders at 18%. Director Wright expressed her concern about not having the minutes from last year available for review. Mr. Mura informed the Board that Ms. Hendricksen will re-write the minutes as they were lost due to a computer crash earlier in the year; and that the last meetings minutes will be available by the next meeting. Ms. Lisa McComber expressed her concern for access to the last meeting presentation and minutes. Mr. Mura informed her that they would be available at the next board meeting. Director Kiel suggested that it would be easier to understand the costs to shareholders if they were implemented into the budget presentation, and asked what was considered a fiscal year. Legal counsel informed the Board that the fiscal year for North Fork is February to January. Mr. Mura stated that the proposed 2016-17 budget will be deferred until the next scheduled meeting and that the Board needs to find more cost effective ways to run the water company and the need to look at long term costs more closely. Mr. Mura stated that the date of the next meeting will be determined next week and a notice will be sent to shareholders regarding the meeting. NF Minutes 4/5/2016 sg ADJOURN The meeting was adjourned at 3:12 p.m. ________________________ Ronald L. Coats, President ____________________________ Justine Hendricksen, Secretary STAFF REPORT Agenda Item #4. Meeting Date: May 17, 2016 Disc ussion Item To: Bo ard of Direc tors From: G eneral Manager/CEO Subject: Propos ed FY 2016-2017 Water Deliveries and Operatio nal Upd ate RECOMMENDATION: Adopt the p ropos ed FY 2016-17 water d eliveries . BACKGROUND / ANALYSIS: The 1885 c o ntract terms es tablis hed spec ific water delivery o b ligations to the North Fork Water Company s hareho ld ers d uring contrac t and non-contrac t periods. The c o ntract months o f June through No vemb er are as s igned s p ecific d elivery obligatio ns and no n-c o ntract mo nths receive 25% o f the river flow. In an effort to inc reas e ac curacy and ac countability, sinc e F Y 2015-16, monthly water deliveries during no n-c o ntrac t mo nths were based on the ac tual flo w reported fro m San Bernard ino Valley Water C o ns ervation District d aily flo w rep o rts. This real-time d elivery methods allows for ad justments up or d o wn to reflect the varying river level. Since January 2016, s hareholders have rec eived 1.2 miners inc h p er share, and will c o ntinue to receive that amo unt during the month o f May. During the contrac t period, water deliveries may fluctuate, s o lo ng as they do not exceed 600 day inches in any o ne mo nth. In the event of a s ignificant rain fall of more than one half inc h, d eliveries will automatically b e halted in o rd er to keep the low quality water o ut of the s ys tem and to allo w fo r the ground to absorb the rain fall. If a c us tomer would like to c ontinue their s ched uled delivery immed iately following a rain fall, there is a proc ed ure in p lac e fo r them to contac t the Eas t Valley Water Dis tric t Operatio ns Divis ion. In addition, d eliveries may b e halted d ue to c ircums tance beyo nd NFWC’s control as a result of S an Bernard ino Co unty Flood Co ntrol, Southern California Edison, o r o ther outside event. Staff will b e s ure to maintain c o mmunic ation with s hareho ld ers that may b e impac ted by unexp ected delivery d is rup tions . Staff rec o mmends appro val of the FY 2016-17 Delivery Sc hedule that will c o ntinue provid ing water deliveries d uring non-co ntrac t months at levels that reflec t ac tual S anta Ana River flows . P ro p o s ed FY 2016-17 Delivery S ched ule Mo nth Miners Inch Day (MID) Es t. River Flow CFS NF Share CFS NF Miners Inch Miners Inc hes per Share January (Actual)¼ of Santa Ana R iver 22 5.5 275 1.2 February (Actual) ¼ of Santa Ana R iver 22 5.5 275 1.2 March (Actual)¼ of Santa Ana R iver 22 5.5 275 1.2 April ¼ of Santa Ana R iver 22 5.5 275 1.2 May ¼ of Santa Ana R iver 22 5.5 275 1.2 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 R iver 20 5 249 1.0 STAFF REPORT Agenda Item #5. Meeting Date: May 17, 2016 Disc ussion Item To: Bo ard of Direc tors From: G eneral Manager/CEO Subject: Propos ed FY 2016-2017 Bud get RECOMMENDATION: Adopt the p ropos ed FY 2016-17 Bud get as pres ented. Adopt a 2016-17 op erating as s es s ment of $25 p er s hare; adopt a 2016-17 capital assessment of $18 p er s hare. BACKGROUND / ANALYSIS: Staff presented a proposed b udget fo r the North Fork Water Co mpany 2016-17 fis c al year at the annual s toc kho ld ers meeting o n Ap ril 5, 2016. As no req ues ts to change any budget line items were rec eived fro m the Bo ard o r other s hareholders in attend anc e, s taff is res ub mitting the 2016-17 bud get for Board cons ideratio n and ap p ro val. Op erating Bud get The Op erating Budget fund s routine operatio ns , repair, and maintenanc e for the NFWC. As s uch, s taff has compiled the fo llo wing p ro p o s ed bud get for F Y 2016-17: Item 2015/16 Budget 2016/17 Proposed Op erations Lab o r 45,400 32,000 Adminis trative Labor 10,000 11,000 Direc tor's Fee 100 200 Contrac t Services 23,000 15,000 Purc has ed Water 0 0 Materials & Sup p lies 1,000 500 Profes s ional S ervic es 2,000 2,200 Legal S ervic es 30,000 85,000 Equip ment Charges 8,000 6,000 Property / Franchis e Taxes 30,000 30,000 General Insuranc e 4,100 4,100 TOTAL $ 153,600 $ 186,000 As previo usly d is cus s ed , s ignific ant fund s have been b udgeted for legal services as the C o mp any’s legal counsel continues to wo rk o n a tas k list develo p ed b y the Board. In additio n, the Operating Lab o r bud get has b een d ecreased by 30% as ac tual labor in 2015-16 was s ignificantly lower than b udgeted. Item Total Estimated Costs NFWC FY 2016-17 Proposed Capital Budget Pipeline - S AR C ro s s ing Des ign 26,000 13,000 Pipeline - S AR C ro s s ing Co nstruc tion 180,000 90,000 Plunge Creek S ip hon - Design 44,000 22,000 TOTAL $ 250,000 $ 125,000 Costs in the propos ed o p erating b udget d ivid ed by 7,156 shares is eq ual to $25 per s hare. Capital Impro vements Staff has proposed that the leaking p ipe at the S anta Ana R iver c ro s s ing b e ad d res s ed in fis c al year 2016-17. Two optio ns were pres ented in an engineering analys is completed in Marc h 2016. T hose are: · R ep lacing the exis ting p ip e with new 30” p ip e - $167,000 plus $25,000 d es ign · S lip lining the existing pipe with 24 inc h PVC - $180,000 plus $26,000 design Replac ing the pipe wo uld includ e enviro nmental p ermitting, whic h c o uld take up to 9 months at an und etermined cost, and wo uld als o req uire further evaluatio n of the p ip eline’s s truc tural sup p o rts . For thes e reas o ns, staff is propos ing s lip lining the exis ting p ip e with 24 inc h PVC pipe. Staff als o reviewed o p tions p res ented in the Engineering analys is for the p ro ject to rep air the leaking pipe at the Plunge Creek S ip hon. The following three optio ns were p res ented : · S p raying ep o xy on interior of exis ting pipe - $320,000 p lus $44,000 design · A c ure-in-plac e liner for interior o f exis ting p ip e - $120,000 p lus $18,000 d es ign · R ep lacing the exis ting p ip e with und erground p ip e - $140,000 p lus $21,000 d es ign These o p tions will req uire further investigatio n, pos s ibly b y an ad-ho c Capital Improvement Committee, b ecaus e o f s ite ac cess, p ermitting, and other issues , so staff has pro p o s ed that only design c o s ts be budgeted in 2016-17; costs fo r c ons tructio n will b e deferred until fis cal year 2017-18. Des ign c os ts fo r ep o xy spraying o f $44,000 were us ed fo r bud geting purp o s es . The c os ts ab o ve are total es timated costs to b e s p lit evenly between No rth Fork Water Company and Eas t Valley Water Dis tric t. Therefore, for the to tal costs proposed for FY 2016-17, the impac t to eac h agenc y would be $125,000. Staff recommends that the Bo ard ad o p t the 2016-17 o p erating bud get fo r $186,000 and the 2016-17 c ap ital b udget for $125,000. In order to fund thes e budgets , staff rec ommend s adoptio n of the fo llo wing as s es s ments fo r 2016-17. Op erating As s es sment $25 p er share Capital As s es s ment $18 per s hare As in previo us years , staff reques ts autho rization to o ffer s hareho ld ers the optio n of p aying assessment in two eq ual installments , with the firs t d ue July 5, 2016 and the s econd due Oc tob er 3, 2016. MAY 17, 2016 SPECIAL SHAREHOLDERS MEETING WATER DELIVERIES WATER DELIVERIES •Rights under the 1885 Contract Terms 3 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 2016-17 PROJECTED WATER DELIVERIES 4 MONTH ALLOTMENTS (MID)ALLOTMENTS PER SHARE(MI) February 275 1.2 March 275 1.2 April 275 1.2 May 275 1.2 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 1.0 January 25%of River Flow 1.0 BUDGET & ASSESSMENTS ENGINEERING ANALYSIS •Repair Alternatives •Recommendations •Cost Estimates •Schedule •Environmental Requirements 6 Preliminary Design Report PLUNGE CREEK SIPHON SANTA ANA RIVER CROSSING SANTA ANA RIVER CROSSING •Riveted steel pipe •Installed in the 1930’s •Constant leaks 7 10 GALLONS PER HOUR LOST 650 LINEAR FEET PLUNGE CREEK PIPELINE REPAIR 8 •Protect Infrastructure •Eliminate Water Waste •Address Vandalism •Permanent Solution 36-INCH PIPELINE 200 LINEAR FEET 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 $25,000 $217,000 Option 2 Slip line existing $180,000 $26,000 0 $206,000 Plunge Creek Crossing $44,000 $44,000 Proposed Projects Total $250,000 •Recommended Budget –North Fork share (1/2) of proposed project costs $125,000 –Per share cost $ 17.50 FY 2016-17 CAPITAL PROJECT PROPOSED 2016-17 BUDGET 10 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 ASSESSMENTS 11 DESCRIPTION ACTUAL 2015-16 BUDGET & ASSESSMENTS PROPOSED 2016-17 BUDGET & ASSESSMENTS Proposed Funding Operating Expenses $ 153,600 $ 186,000 Replacement Expenditures $ 46,000 $ 125,000 TOTA L PROPOSED FUNDING $199,600 $ 311,000 Proposed Assessments –7,156 Shares Operating Assessment $22 per share $25 per share Capital Assessment $10 per share $18 per share TOTAL ASSESSMENTS $32 per share $43 per share