HomeMy WebLinkAboutAgenda Packet - North Fork Water Company - 03/20/2017SPECIAL STOCKHOLDERS MEETING
31111 Greenspot Road
Highland, CA 92346
March 20, 2017 - 2:30 PM
AGENDA
CALL TO ORDER
PLEDGE OF ALLEGIANCE
SUMMARY OF SHARES REPRESENTED
ROLL CALL OF BOARD MEMBERS
APPROVAL OF AGENDA
PUBLIC COMMENTS
1. Approve May 17, 2016 special meeting minutes
2. Committee Updates
3. Review proposed revisions to the North Fork Water Company bylaws and
rules of the ditch
4. Discussion regarding RFP proposal to determine value of the North Fork
Water Company shares
5. Review Proposed FY 2017-18 Budget
6. Shareholder Comments
7. Director Comments
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 Secretar y (909)885-4900 at least 72 hour s prior to said
meeting.
STAFF REPORT
Agenda Item #1.
Meeting Date: March 20, 2017
Cons ent Item
To: Bo ard of Direc tors
From: G eneral Manager/CEO
Subject: Approve May 17, 2016 s p ecial meeting minutes
ATTACHMENTS:
Description Type
May 17, 2016 North Fo rk special meeting minutes Backup Material
NF Minutes 5/17/2016 smg
DRAFT Pending Approval
NORTH FORK WATER COMPANY
31111 GREENSPOT RD.
HIGHLAND, CA 92346
SPECIAL STOCKHOLDERS MEETING MAY 17, 2016
MINUTES
President Coats called the Special Stockholders meeting to order at 2:00 p.m. Mr.
Brian Tompkins led the flag salute.
PRESENT: Ron Coats
Chris Carrillo
Charles Kiel
James Morales Jr.
Nanette Shelton
David Smith
Margaret Wright
ABSENT: None
EVWD Staff: John Mura
Brian Tompkins
Justine Hendricksen
Patrick Milroy
Allen Williams
Nate Paredes
Kathy Burke
Shayla Gerber
LEGAL COUNSEL: Michele Staples
STOCKHOLDERS: Robert Hooker
Fred McNeal
Jack Nelson
Christina Moreno
Thomas Hooker
Katherine Monte (Representing Jose Gutierrez)
GUEST(S): Members of the public
APPROVAL OF AGENDA
M/S/C (Shelton-Kiel) that the May 17, 2016 agenda be approved as submitted.
PUBLIC COMMENTS
President Coats declared the public participation section of the meeting open at 2:02
p.m.
NF Minutes 5/17/2016 smg
Mr. Thomas Hooker requested that his comment be deferred until agenda item #4.
There being no further written or verbal comments the public participation section
was closed.
APPROVAL OF ANNUAL STOCKHOLDERS MEETING MINUTES FOR APRIL 7, 2015
Director Wright commented that the minutes reflect she was absent from the
meeting, however, she stated she was in attendance.
The Secretary stated that she would amend the minutes to reflect the time Director
Wright arrived at the meeting.
M/S/C (Morales-Shelton) that the April 7, 2015 Annual Stockholders meeting
minutes be approved as amended.
APPROVAL OF SPECIAL STOCKHOLDERS MEETING MINUTES FOR MAY 12, 2015
M/S/C (Morales-Shelton) that the May 12, 2015 Special Stockholders meeting
minutes be approved as submitted.
APPROVAL OF SPECIAL STOCKHOLDERS MEETING MINUTES FOR MARCH 14, 2016
M/S/C (Morales-Shelton) that the March 14, 2016 Special Stockholders meeting
minutes be approved as submitted.
APPROVAL OF ANNUAL STOCKHOLDERS MEETING MINUTES FOR APRIL 5, 2016
M/S/C (Morales-Shelton) that the April 5, 2016 Annual Stockholders meeting
minutes be approved as submitted.
PROPOSED NORTH FORK WATER COMPANY DELIVERY SCHEDULE
Mr. Milroy, Operations Manager, reviewed the water delivery schedule with the Board.
Mr. Thomas Hooker read an excerpt from a publication regarding the North Fork
historic water rights and Rules of the Ditch. He commented that East Valley Water
District owns 85% of the North Fork Water Company and is a majority shareholder, and
is concerned that East Valley Water District can take away water rights from minority
shareholders. President Coats requested Mr. Hooker speak with the General Manager
and Legal Counsel after the meeting to discuss his concerns in further detail.
Mr. Robert Hooker stated that he believes Mr. Thomas Hooker’s comments to be
prudent and are of importance to the Board of Directors. He raised concerns regarding
excess water not being used by shareholders is being diverted to East Valley Water
District’s treatment plant. President Coats asked that Mr. Hooker meet with the
General Manager and Legal Counsel after the meeting to discuss his concerns in
detail.
The General Manager briefly responded to Mr. Hooker’s concerns.
NF Minutes 5/17/2016 smg
Ms. Staples stated that she does not believe there has been any infringement of the
shareholders’ water rights and commented that under California law, there must be a
continuous use of pre-1914 water rights.
Director Wright questioned why Mr. Hooker’s comment could not be addressed during
the meeting. The General Manager stated that he could briefly respond however, the
item is not on the agenda and no action can be taken. President Coats welcomed
comments from the public, but reminded the public that action cannot be taken.
Katherine Monte, representing Jose Gutierrez’ Trust, thanked Mr. Hooker and Director
Wright for their comments and expressed disappointment that minority shareholder’s
concerns are not being addressed.
M/S/C (Morales-Carrillo) that the Board adopt the proposed North Fork Water
Company delivery schedule as submitted.
ADOPT THE PROPOSED FISCAL YEAR 2016-17 BUDGET, 2016-17 OPERATING
ASSESSMENT OF $25.00 PER SHARE AND 2016-17 CAPITAL ASSESSMENT OF $18.00
PER SHARE
The Treasurer presented an Operational Update and reviewed the proposed Fiscal
Year 2016-17 Budget to the Board
M/S/C (Morales-Shelton) that the Board adopt the proposed fiscal year 2016-17
budget; 2016-17 operating assessment of $25.00 per share, and 2016-17 capital
assessment of $18.00 per share.
Directors Coats, Carrillo, Kiel, Morales, Shelton, Smith and Wright voted yes.
ADJOURN
The meeting was adjourned at 2:40 p.m.
_________________________________
Ronald L. Coats, President
__________________________________
Justine Hendricksen, Secretary
STAFF REPORT
Agenda Item #3.
Meeting Date: March 20, 2017
Disc ussion Item
To: Bo ard of Direc tors
From: G eneral Manager/CEO
Subject: Review p ro p o s ed revis io ns to the North Fork Water Co mp any b ylaws and rules of the ditch
ATTACHMENTS:
Description Type
Jackson Tidus North Fo rk P resentation Bylaws and Rules of
the Ditch P resentation
North Fork Redline Bylaws Backup Material
North Fork Redline Rules of the Ditch Backup Material
NORTH FORK WATER COMPANY:
SPECIAL STOCKHOLDERS MEETING
MARCH 20, 2017
(Agenda Item #3)
Michele A. Staples, Esq.
Eddy R. Beltran, Esq.
1
Proposed Revisions to NFWC
By -laws and Rules of the Ditch
1.Proposed revisions to By-laws
2.Proposed revisions to Rules of the Ditch
2
Proposed Revisions to By-laws
•By-laws were previously approved in 2013
•Proposed revisions generally fall into one of three
categories:
•Revisions for consistency with the California General
Corporation Law
–Mandatory notice and meeting provisions
•Minor corrections and clarifications for consistency
with Articles
•Substantive updates and suggested changes previously
discussed by the Shareholders
–Transfers and leases of water supplies
3
By -laws
(Suggested Changes)
Section 7.16: Clarifies use of water for non-potable
uses besides agricultural irrigation
Section 7.14(f): Authorizes distribution of surplus
water among Shareholders using water
Section 7.17: Authorizes water deliveries to lessees
of shares and land upon approval
•Delegation of approval authority (under Section 7.08)?
Article 8: Adds provisions commonly in by-laws for
indemnification, records and reports
4
Proposed Revisions to
Rules of the Ditch
•Last updated in 2009
•Rules may be adopted and amended by NFWC
Board (By-laws sections 7.04 and 7.14)
•Proposed revisions generally fall into one of two
categories:
•Corrections/clarifications for consistency with By-laws
•Substantive updates and suggested changes previously
discussed by the Shareholders
5
Rules of the Ditch
(Suggested Changes)
•Section I.2: Clarifies estimated delivery schedule
and procedures for calculating and allocating
surplus water
•Section I.3: Allows for shut-off valves by
shareholders
•Sections I.7 and 8: Clarifies process for
cancellation of deliveries
•Section III: Adds common provisions to clarify that
Articles and By-laws control, allow for remaining
rules to remain effective if any is invalidated, and
discuss how Rules may be amended
6
BY-LAWS
OF
NORTH FORK WATER COMPANY
(2013Amended 2017)
2
INDEX
TO
BY-LAWS
Page
ARTICLE I. General Provisions ............................................................................................ 51
Section 1.01 Definitions ................................................................................... 51
Section 1.02 Purpose ........................................................................................ 51
Section 1.03 Amendments ............................................................................... 51
Section 1.04 “20132017 Code” ....................................................................... 61
Section 1.05 Provisions of Former By-Laws ................................................. 62
ARTICLE II. Shareholders ..................................................................................................... 72
Section 2.01 General Corporation Law Applicable ........................................ 7
Section 2.022.01 Annual Meeting ................................................................... 72
Section 2.032.02 Special MeetingMeetings .................................................... 72
Section 2.042.03 Place of Meeting .................................................................. 72
Section 2.052.04 Notice of Meeting ............................................................... 72
Section 2.062.05 Form of Notice and Statement of Purpose ..................... 83
Section 2.072.06 Shareholders Entitled to Notice ........................................ 83
Section 2.082.07 Shareholders Entitled to Vote ........................................... 83
Section 2.092.08 Business to be Transacted .................................................. 94
Section 2.102.09 Manner of Voting at Shareholders’ Meeting ................... 94
Section 2.11 2.10 Election of Directors and Cumulative Voting ........... 94
Section 2.122.11 Directors Elected at Special Meeting ............................... 94
Section 2.13 2.12 Inspectors of Elections ............................................... 105
Section 2.142.13 Changing Time of Annual Meeting ................................ 105
Section 2.152.14 Quorum of Shareholders ................................................. 105
ARTICLE III. Directors ....................................................................................................... 116
Section 3.01 General Corporation Law Applicable ...................................... 11
Section 3.023.01 Number .............................................................................. 116
Section 3.033.02 Qualifications and Term................................................... 116
3
INDEX – CONTINUED
Page
Section 3.043.03 Organization Meeting .................................................. 11 6
Section 3.053.04 Regular Meetings .............................................................. 126
Section 3.063.05 Special Meetings ............................................................... 126
Section 3.073.06 Notice of Special Meeting ............................................... 127
Section 3.083.07 Place of Directors’ Meeting ............................................ 127
Section 3.093.08 Waiver of Notice and Consent to Meetings ................. 137
Section 3.103.09 Vacancies ........................................................................... 138
Section 3.113.10 ..................................................................................... Quorum
138
Section 3.123.11 Business to Transacted .................................................... 148
Section 3.133.12 Compensation of Directors ............................................ 148
ARTICLE IV. Notices ........................................................................................................ 158
Section 4.01 Applies to all Notices .............................................................. 158
Section 4.02 By Whom Given, Method of Making, and Signing ............ 159
Section 4.03 Where Notice is to be Mailed ................................................ 159
Section 4.04 Method, Publication and Form ............................................... 15
Section 4.05 No Notice to Person Giving the Same .................................. 16
Section 4.06 Actual Receipt of Notice .......................................................... 16
ARTICLE V. Officers .......................................................................................................... 179
Section 5.01 Number of Officers ................................................................ 179
Section 5.02 The President ......................................................................... 1710
Section 5.03 Vice President ........................................................................ 1810
Section 5.04 Secretary .................................................................................. 1810
Section 5.05 Treasurer ............................................. 18Chief Financial Officer
11
Section 5.06 General Manager ................................................................... 1911
Section 5.07 Duties of Officers May Be Delegated ................................ 1911
ARTICLE VI. Certificates and Transfer of Shares ........................................................ 2011
Section 6.01 By Whom Signed ................................................................... 2011
Section 6.02 Form ........................................................................................ 2012
4
Section 6.03 Registration of Pledge ........................................................... 2012
Section 6.04 Effect of Registration of Pledge .......................................... 2012
5
INDEX – CONTINUED
Page
Section 6.05 Charges and Liens on Shares ............................................ 2113
Section 6.06 No Transfer While Unpaid Liens ........................................... 2213
Section 6.07 Assessments and Liens ............................................................. 2213
Section 6.08 Penalties, Interest and Collection CostCosts ......................... 2213
Section 6.09 Record Holder Liable for Tolls and Charges........................ 2313
ARTICLE VII. Powers of Board of Directors ............................................................ 2414
Section 7.01 Seal .............................................................................................. 2414
Section 7.02 Share Register ...................................................................... 2414
Section 7.03 Financial Reports ................................................................ 2414
Section 7.04 Rules and Regulations .............................................................. 2415
Section 7.05 Transfer Fee............................................................................... 2415
Section 7.06 Compulsory Exchange of Certificates ................................... 2515
Section 7.07 Dismissal of Employees ........................................................... 2515
Section 7.08 Delegation of Powers ............................................................... 2516
Section 7.09 Tolls and Assessments ............................................................. 2616
Section 7.10 Delinquency and Interest ........................................................ 2616
Section 7.11 Penalties ................................................................................. 2616
Section 7.12 Suspension of Services ......................................................... 2616
Section 7.13 Measuring and Diversion Devices ...................................... 2617
Section 7.14 Regulation of Water Service ................................................. 2717
Section 7.15 Extension of Distributing System ....................................... 2718
Section 7.16 Restriction on Water Use .................................................... 2818
Section 7.17 Lease of Shares and Land ........................................................ 18
ARTICLE VIII. General Corporate Matters ................................................................... 19
Section 8.01 Indemnification .............................................................................19
Section 8.02 Maintenance and Inspection of Share Register .................. 19
Section 8.03 Maintenance and Inspection of Bylaws ............................... 19
Section 8.04 Maintenance and Inspection of Other Corporate Records . 19
Section 8.05 Inspection Rights of Directors ................................................ 20
Section 8.06 Annual Report to Shareholders .............................................. 20
1
BY – LAWS
OF
NORTH FORK WATER COMPANY
ARTICLE I.
General Provisions
Section 1.01 Definitions
“Company” means NORTH FORK WATER COMPANY, a corporation that was
incorporated on January 13, 1885, under the laws of the State of California.
“Board” means the board of directors of the Company.
“General Corporation Law” is used herein with the same meaning as in Section 100
of the Corporations Code of California, and as set forth in Division 1 of Title 1 of said
Code, and may be amended from time to time.
“Articles of Incorporation” includes amendments and means the articles of
incorporation as last amended.
The singular includes the plural and the masculine pronoun includes the other
genders.
Section 1.02 Purpose
The purpose of Company is to furnish, supply and distribute water at cost to and for
its shareholders for irrigation purposes in proportion to the number of shares of stock held
by them respectively.
Section 1.03 Amendments
These by-laws may be repealed or amended or new by-laws adopted by (a) the vote of
the shareholders entitled to exercise a majority of the voting power at a meeting of
shareholders, or (b) the written assent of shareholders entitled to exercise a majority of
voting power, filed with the secretary.
Section 1.04 “20132017 Code”
These by-laws as originally adopted, or as subsequently amended, shall be known and
may be referred to as the “20132017 Code of By-Laws of NORTH FORK WATER
COMPANY” and also as the “20132017 Code.”
2
Section 1.05 Provisions of Former By-Laws
The provisions of the 2013 Code that are the same or substantially the same as
provision of the by-laws (called “former by-laws”) that were in effect immediately prior to
the adoption of the 2013 Code shall be deemed and construed as restatements and
continuations thereof and not as new enactments. The 2013 Code shall be effective
immediately upon adoption. All provisions of said former by-laws that are not the same or
substantially the same as provisions of said 2013 Code shall be repealed at the time the 2013
Code becomes effective.
When new by-laws are adopted pursuant to Section 1.03, they shall replace and
supersede all prior by-laws and amendments thereto.
ARTICLE II.
Shareholders
Section 2.01 General Corporation Law Applicable
Except in those particulars and to the extent hereinafter expressly provided for (unless
otherwise inconsistent with applicable law), all provisions (whether mandatory or permissive) of
the General Corporation Law of the State of California, as now or hereinafter existing, are
approved, adopted, and made applicable to the Company; and whenever no express provision is
contained herein with respect to any matter authorized to be regulated, fixed, or established by
or in the by-laws, it is intended to adopt and approve the provisions in said law pertaining
thereto and regulating or providing for the same.
Section 2.022.01 Annual Meeting
Unless changed as provided in Section 2.142.13, a meeting of shareholders to be known as
the annual meeting shall be held each year on the first Tuesday in April at the hour of two o’clock
P.M. for the purpose of electing a board of directors, and other purposes.
Section 2.032.02 Special Meetings
Special meeting of the shareholders for any purpose or purposes whatsoever may be
held at any time upon call made by (a) the president, or (b) the Board by resolution adopted
by majority vote, or (c) written assent of a majority of all acting directors, filed with the
secretary, or (d) written assent of one or more shareholders collectively holding not less than
one-fifthten percent (10%) of the voting power of the Company, filed with the secretary.
Section 2.042.03 Place of Meeting
Unless some other place shall be appointed in any instance or instances as hereinafter
provided, meetings of shareholders, both annual and special, shall be held at the principal
office of the Company.
Authority is hereby conferred upon the Board, by resolution adopted by majority vote of
all its members, or by written assent of a majority of such members filed with the secretary, to
3
fix or designate (and from time to time change) the place for any shareholders’ meeting or
meetings, one or more or all, whether annual or special. Any place so designated shall be not
more that twenty-five miles distant from the principal office, and in such instance said meeting
or meetings shall be held at the place so fixed or designated.
Section 2.052.04 Notice of Meeting
Written notice of each meeting of shareholders, whether annual or special, shall be
given to each shareholder entitled to notice not more than thirty (30) days nor less than five
(5ten (10) nor more than sixty (60) days beforeprior to the meeting in eitherany of the
following ways:
First: By delivering such notice personally: or
Second: By mailing such notice by first class mail, charges prepaid, addressed to
such shareholder at his address appearing on the books of the Company. If no
address appears on the books of the Company, then the notice shall be addressed to
the shareholder at Highland, California.the Company’s principal address; or
Third:By electronic transmission by the Company in compliance with
Corporations Code section 20. Notice shall not be given by electronic transmission
by the Company under this Section 2.04 after either of the following: (1) the
Company is unable to deliver two consecutive notices to the shareholder by that
means, or (2) the inability to so deliver the notices to the shareholder becomes known
to the secretary, any assistant secretary, the transfer agent, or other person
responsible for giving of the notice.
Whenever a shareholder shall in writing give the Company an address for the purpose
of notice, the same shall be deemed the shareholder’s “address appearing on the books of
the company,” as such expression is herein used. One method of service may be used as to
some shareholders and the other as to other shareholders.
Section 2.062.05 Form of Notice and Statement of Purpose
Notice of any meeting shall specify the place, the day and the hour of meeting. In the
case of special meetings the general nature of the business to be transacted shall be stated in
the notice, but. In the case of thean annual meeting need not be stated; provided, however,
when a proposal to amend the Articles of Incorporation is to be voted upon at a meeting,
whether annual or special, notice of that fact shall be given., such notice shall also state those
matters which the Board, at the time of the mailing of the notice, intends to present for
action by the shareholders. Any proper matter may be presented at an annual meeting of
shareholders though not stated in the notice, provided that unless the general nature of a
proposal to be approved by the shareholders relating to the following matters is stated in the
notice or a written waiver of notice, any such shareholder approval will require unanimous
approval of all shareholders entitled to vote:
(i)A proposal to approve a contract or other transaction between the
Company and one or more of its directors or any corporation, firm or association in which
one or more of its directors has a material financial interest or is also a Director;
4
(ii)A proposal to amend the Articles;
(iii)A plan of conversion pursuant to Section 1152 of the General
Corporation Law or a proposal to approve the principal terms of a reorganization as defined
in Section 181 of the General Corporation Law; and
(iv)A proposal to wind up and dissolve the Company.
Section 2.072.06 Shareholders Entitled to Notice
Where notice of any shareholders’ meeting is to be mailed, notice shall be given to those
who appear from the stock records as record holders at 5:00 o’clock P.M. on the day
immediately preceding the day of mailing; and 5:00 o’clock P.M. on the day immediately
preceding the day of mailing is the record date and time for the determination of shareholders
entitled to notice of the meeting.
Section 2.082.07 Shareholders Entitled to Vote
Five o’clock P.M. on the fifthtenth day next preceding the day first appointed for the
shareholders’ meeting is hereby fixed as the time for the close of stock books and the
determination of those entitled to vote at the meeting; and, subject to the provisions of law,
only persons in whose names the shares stand on the stock records of the Company at the
close of stock books, as aforesaid, shall be entitled to vote at that meeting or any
adjournment thereof.
No transfer of shares shall be made on the stock records of the Company during the
period elapsing between close of stock books and adjournment of the meeting on the day
first appointed therefor. If a meeting by adjourned to a subsequent date, the stock books
shall open upon adjournment so as to permit transfer but not so as to affect the right of
voting determined as above provided.
Section 2.092.08 Business to be Transacted
At the annual meeting, directors to the number authorized shall be elected, reports of the
affairs of the Company shall be considered, and any other business may be transacted which is
within the powers of the shareholders, including the amendment, repeal and adoption of by-
laws, the approval and ratification of amendments to the Articles of Incorporation, and action
upon or with respect to any or all questions and matter requiring the vote, consent or approval
of the shareholders, or with respect to which the shareholders are permitted to act, subject,
however, to applicable provisions of law requiring notice to the shareholder of special proposals,
including but not limited to the special matters set forth in Section 2.05. At a special meeting,
any business may be transacted of the general nature specified in the notice thereof, but not
otherwise.
Section 2.102.09 Manner of Voting at Shareholders’ Meetings
At meeting of shareholders, all questions other than an election of directors or except
as otherwise expressly provided by statute or by these by-laws shall be determined by
5
majority vote of the shares represented at the meeting, and all voting shall be viva voce
unless a majority in voting power of the shares representedat least one shareholder shall
demand a vote by written ballot.
Section 2.112.10 Election of Directors and Cumulative Voting
In an election of directors the entire number to be elected shall be elected at the same
time and upon a single vote or ballot, and directors shall not be elected separately or in any
number less than the entire number to be elected.
At such election a shareholder may vote for one or more directors but may not cumulate
his votes and cumulative voting shall not be allowed in an election of directors.
If there has been nominated for the office of director more than the number to be
elected, or upon the demand of any shareholder represented at the meeting, or if voting by
mail has been provided for, the election shall be by written ballot, otherwise it shall be viva
voce.
Section 2.122.11 Directors Elected at Special Meeting
Whenever for any reason no election of directors has been had for more than one year, a
Board may be elected at a special meeting of the shareholders called for that (in addition to any
other) purpose, by the person or persons, in the manner, and upon the notice in these by-laws
provided for calling and noticing special meeting of shareholders.
The terms of directors elected at a special meeting shall expire at the same time as though
they had been elected at the annual meeting next preceding such special meeting.
Section 2.132.12 Inspectors of Elections
Inspectors or an inspector of elections may be appointed in the manner and with the
effect provided for in the General Corporation Law, and shall have and exercise the powers
and authority there provided subject to the provisions of law, the by-laws, and the rules and
regulations.
The Board may make and from time to time change rules and regulations for the
conduct of elections or any election, and for voting upon or with respect to any question or
matter submitted to the shareholders for vote, consent or assent.
The Board may by rule or resolution prescribe the form of ballots and may provide
ballots for use of the shareholders at elections or any election or in taking any vote; an may, in
the case of ballots to be used in an election of directors, provide for printing thereon the name
or names of candidates or nominees, and may also provide for voting by mail and for the
nomination of directors prior to the election.
Such rules may in addition to any other matters provide for the time or times and the
method of filing proxies, casting ballots and the tabulation and certification of votes. All
such rules and regulations shall operate impartially, fairly and equally.
Whenever the filing of proxies is limited to a time prior to the meeting, and whenever in
an election of directors the polls are to open or close at a specified time, notice of such
limitation, opening or closing shall be stated in the notice of such meeting.
6
Section 2.142.13 Changing Time of Annual Meeting
The Board may advance or postpone (and thereby change) the time of any annual
meeting (as fixed elsewhere in these by-laws) by not more than sixty (60) days whenever it
shall appear to the Board that such change is necessary or desirable. Such change shall be
effected by resolution adopted by majority vote of the Board or by written assent of a
majority of the members, filed with the secretary prior to giving notice of the meeting, and
thereupon the time for that annual meeting shall be that so fixed by the Board and notice of
the meeting shall be given accordingly.
Section 2.152.14 Quorum of Shareholders
The presence in person or by proxy of the holders of more than fifty percent (50%)
of the shares entitled to vote at any meeting shall constitute a quorum for the transaction of
business, including the election of directors, unless otherwise provided in the Articles.
7
ARTICLE III.
Directors
Section 3.01 General Corporation Law Applicable
Except in those particulars and to the extent hereinafter expressly provided for (unless
otherwise inconsistent with applicable law), all provisions (whether mandatory or permissive) of
the General Corporation Law of the State of California, as now or hereafter existing, are
approved, adopted, and made applicable to the Company; and whenever no express provision
is contained herein with respect to any matter authorized or permitted to be regulated, fixed or
established by or in the by-laws, it is intended to adopt and approve the provisions in said laws
pertaining thereto and regulating or providing for the same.
Section 3.023.01 Number
The number of directors shall be seven.
Section 3.033.02 Qualifications and Term
A director need not be a shareholder. The term of office of a director shall begin
immediately upon his election; and each director so elected shall hold office until his
successor is elected or until he resigns or is removed from office, whichever shall first
transpire.
Section 3.043.03 Organization Meeting
A meeting of the Board (to be known as the “organization meeting”) shall be held
immediately following adjournment of the shareholders’ meeting at which the Board elected for
the purpose of organizing, electing and appointing officers. Any other business may also be
transacted at such meeting. No notice of such organization meeting need be given.
If not held at the time appointed or if reorganization be not effected or completed at
such meeting, the business of reorganization shall be transacted or completed at the first regular
or special meeting held thereafter, and if not then completed, then at any meeting regardless of
when held.
With consent of all the directors such organization meeting may be held at any time.
Attendance at and participation in the proceedings of the meeting shall be deemed such
consent. The consent of any director nonot present or participating shall be written and filed
with the secretary and made a part of the minutes, either before, during, or after the holding
of the meeting.
Section 3.053.04 Regular Meetings
Meetings of the Board (to be known as “regular meetings”) shall be held without call at a
time appointed therefor by resolution adopted by majority vote of the Board. It shall not be
necessary to give notice of regular meetings, nor of the business to be transacted; provided, if the
time for holding regular meetings be changed, written notice of that fact shall be given to those
directors who were absent at the time of the adoption of the resolution effecting the change. If
8
the time appointed for a regular meeting fall upon a legal holiday, it shall be held at the same
hour on the next succeeding business day.
Section 3.063.05 Special Meetings
Special meetings of the Board may be held from time to time upon call by the
president, or if he be absent or be unable or refuse to act, by any vice-president; or secretary,
and it shall be the duty of the president, or if he be absent or be unable or refuse to act, then
of any vice-president or secretary, to call a special meeting upon the written request of two
directors, specifying the purpose; and in the event neither the president nor vice-president
nor the secretary shall call such meeting upon said request, then the same may be called by
said two directors. Any call shall be delivered to the secretary or person whose duty it is to
give notice.
Section 3.073.06 Notice of Special Meeting
Special meetings of the Board shall be held upon four (4) days’ notice by mail or
forty-eight (48) hours’ notice delivered personally or by telephone including a voice
messaging system or by electronic transmission by the Company.
Notice of special meetings of the Board specifying the time and place of meeting
shall be given each director not later than on the day next before the day of the meeting, in
any one of the following ways, to wit:
First:By personal delivery of written notice of the meeting; or
Second:By sending written notice of the meeting by mail, fax, or electronic
transmission; provided, said written notice shall be mailed or sent in sufficient time to
permit its receipt on the day next before the meeting in the ordinary course of
transmission; or,
Third:By leaving written notice of the meeting at the residence or place of
business of the director to be served with some person residing or regularly employed
there; or,
Fourth:Verbally or by word of mouth, including therein telephoning directly and
personally to the director to be notified from and by the person whose duty it is to give
notice, when intended as notice of meeting by the person giving the same.
Section 3.083.07 Place of Directors’ Meetings
Meetings of the Board, whether regular or special, shall be held at such place within the
State of California as has been designated from time to time by resolution of the Board or by
written consent of all members of the Board; and, in the absence of such designation shall be
held at the principal office of the Company.
Section 3.093.08 Waiver of Notice and Consent to Meetings
Directors may waive any and all provisions of law and of these by-laws, in respect of call,
notice and place of meetings or any of them, and may consent to the holding of any meeting
without call and notice or either of them and without regard to the place where held; and any
director may waive call, notice and place of meeting, or any of them, in respect of himself and
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may consent to the holding of any meeting without call and notice, or either of them, and
without regard to the place where held.
Any regular or special meeting of directors held with or upon the unanimous consent or
approval of all the members of the Board (and attended by not less than a quorum) shall be valid
without regard to call and notice or either of them and without regard to the place where held,
and the proceedings of any such meeting shall be valid and constitute the act of acts of the
Board as fully and conclusively as though taken and had at a meeting duly called and noticed and
held at the place duly appointed therefor. Attendance at and participation in the proceedings of
any meeting (attended and participated in by not less than a quorum), without objection to the
regularity or sufficiency of or lack of call and notice or either or the place where held, shall
constitute and be a waiver in respect of such matters and an irrevocable consent to the holding
of such meeting on the part of and by each director so attending and participating without
objection.
Such herein authorized or referred to waiver and consent or either of any director not
present at such meeting may be made or given either before, during or after the meeting, and
may be made and evidenced in any of the following ways, to wit:
(a)In writing filed with the secretary either before, during or after the meeting;
(b)Subscribing at the foot of the minutes of such meeting an approval of such
minutes;
(c)Approval without objection of the minutes of such meeting at a subsequent
meeting of the Board attended by the director who was absent from the first
mentioned meeting and whose waiver or consent is to be secured.
Section 3.103.09 Vacancies
Any vacancy in the office of director, however created or arising, may be filled by a
majority of the remaining directors though less than a quorum; and the shareholders may fill
any vacancy nonot filled by the directors.
Section 3.113.10 Quorum
A majority of the authorized number of directors shall be necessary to constitute a
quorum for the transaction of business; and, unless otherwise required by law or these bylawsby-
laws, every act or decision done or made by a majority of the directors present at a meeting duly
held at which a quorum is present shall be regarded as the act of the Board. Interested directors
may be counted in determining the presence of a quorum at a meeting of the Board or a
committee thereof which authorizes, approves or ratifies a contract or transaction. Approval
of the Company’s indemnification of a director or other person shall be made only if
authorized in the specific case upon a determination that indemnification of the agent is
proper approved in the manner authorized by subdivision (e) of Corporation Code Section
317.
Section 3.123.11 Business to be Transacted
It shall not be necessary to state in any notice whether of a regular or special meeting
the nature of the business to be transacted thereat, and any business that the Board may have
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transacted at a regular meeting may be transacted with like effect at a special meeting, unless
otherwise provided by law.
Section 3.133.12 Compensation of Directors
Directors shall not receive compensation for their services at meetings of the Board
unless its payment has been first authorized. At the annual meeting, the shareholders may fix the
compensation of directors for the ensuing year, which may be for all services or for attending
meetings only, and may be a stated amount for each meeting attended or a salary. Should the
shareholders fail to fix such compensation, it may be fixed by resolution adopted by vote of not
less than two-thirds of the authorized number of directors. A director may be allowed fair
remuneration to be fixed or approved by the Board for services other than attending meetings
when no compensation therefor has been fixed. A director shall be allowed his reasonable
expenses when engaged in the business of the Company, to be audited, allowed and paid as
other claims against the Company.
ARTICLE IV.
Notices
Section 4.01 Applies to All Notices
Except as in conflict with law or other provisions of these by-laws, the provisions of this
article are intended to and shall apply to all notices required or permitted to be given, including
notice of shareholders’ meetings, directors’ meeting and assessments.
Section 4.02 By Whom Given, Method of Making and Signing
Notices shall be given by the secretary or by an assistant-secretary if such assistant be so
directed by either the secretary, the president, or the Board. If the person whose duty it is to
give any notice shall fail or refuse so to do, then it shall be given by any person thereto directed
by the president or the Board; or in the event of a called meeting, it may be given (in the event
of such refusal) by the one directed so to do by the person or persons calling the meeting.
Whenever a written notice is required to be given or is given under these by-laws or pursuant to
any provision of law, it may be made by any method appropriate for such purpose, including
longhand writing, printing, stamping, typing, facsimile transmission, electronic transmission, or
by one or more or all such methods, or in part by one method and in other parts by another or
other methods.
No notice need be actually signed or subscribed by the hand of the person giving it,
and in lieu of actual signing, the name of such person may be made by the method used in
making any other portion of the notice, or by any method by which any portion of the
notice might be made, as hereinbefore provided.
Section4.03 Where Notice is to be Mailed
When resort is had to giving any notice by mail, such notice shall be deposited in the
United States Post Office at Highland, California, or in a United States Post Office within not
more than fifty (50) miles from said principal office, with postage thereon prepaid and directed
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to the person to be served at the address of such person, if such address appears on the records
of the Company; and if same does not appear on such records, then addressed to such person at
Highland, Californiathe Company’s principal address. The notice shall be deemed to have been
deposited in said Post Office if delivered to a letter carrier making mail deliveries from said Post
Office, or when deposited in a letter box or other mail receptacle from which mail is regularly
collected from said Post Office.
Section 4.04 Method, Publication and Form
The Board shall have power, subject to provisions of law or of these by-laws
specifically regulating the matter, from time to time and at any time, to determine and order,
with respect to notices or any notice as follows:
(a) Where two or more methods are available, which method shall be used and use of
one method as to one or more persons to be served and another method or
methods as to others;
(b) The newspaper in which publication is to be made;
(c) The date or dates of publication;
(d) The form and contents of the notice;
(e) The date of mailing of the notice.
If the time has arrived when the person charged with the duty desires to give notice and
the board has failed to determine any of the above, the same shall then be determined by such
person; and the power reserved to and conferred upon the Board, as above stated, shall be
exercised and the determination made by the person giving the notice.
Section 4.05 No Notice to Person Giving the Same
Where the person giving any notice shall belong to the class entitled to notice, no notice
need be mailed to or otherwise served upon such person, and it shall be conclusively presumed
that service of the notice has been made personally upon that person.
Section 4.06 Actual Receipt of Notice
Whenever any person (whether shareholder, director or other) shall be entitled to any
notice, actual receipt by such person of any writing intended as a special or specific notice to
such person, or of any written or printed notice used or intended for use generally as or for
notice to the class of which the person is a member, shall constitute and be notice of the
contents of such writing and due and sufficient service of such notice, regardless of how or in
what manner served or how or in what manner or by whom delivery was made, or how or in
what manner or from whom it was received; and no other or further notice need be given or
service made, and such person shall be deemed to have waived any irregularity or omission in
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respect of such notice and service, unless written protest specifying the grounds of
insufficiency or the nature of the omission be immediately filed with the Company.
ARTICLE V.
Officers
Section 5.01 Number of Officers
The officers of the Company (herein called “regular officers”) shall be elected by the
directors and shall be a president, a vice-president, a secretary, a treasurerchief financial officer and
a general manager. The Board may also appoint one or more additional vice-presidents, one or
more assistant-secretaries, one or more assistant-treasurersassistant chief financial officers, and
such other officers as the Board deems desirable for the transaction of the business of the
Company. The president and the vice-president shall be members of the Board, and if either shall
cease to be a director at any time, he shall, ipso facto, cease to be such president or vice-president.
No other of said officers need be members of the Board. Any two or more of said officers, except
those of president and secretary, may be held by the same person. Regular officers shall be elected
annually at the organization meeting of the Board, or whenever the Board shall determine;
provided, they may always be elected whenever a vacancy exists. Other officers may be elected at
any meeting of the Board. Unless sooner removed by the Board, or unless he resigns of becomes
or is disqualified, an officer shall hold office until his successor is chosen and qualified. Any
officers, whether elected or appointed by the Board, may be removed at any time by the
affirmative vote of a majority of the whole Board, and each officer shall take and hold office
subject to the right of removal by the Board.
Section 5.02 President
The president shall be the chief executive officer of the Company and as such shall:
(a)Preside at all meetings of shareholders and directors. Such shall not prevent him
from voting upon any question either at a shareholders’ meeting or as a director at
a directors’ meeting;
(b)Unless otherwise directed by the Board, sign as president all deeds and
instruments in writing which have been first approved or authorized by the
Board;
(c) Have, subject to advice of the Board, general and active supervision of the
business and affairs of the Company, and shall have power to cause the orders
and resolutions of the Board to be carried into effect.
Section 5.03 Vice-President
The vice-president shall, in the absence or disability of the president, perform the
duties and exercise the powers of the president and shall perform such other duties as the
Board shall prescribe.
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Section 5.04 Secretary
The secretary shall:
(a)Attend all meetings of the Board and all meetings of the shareholders and record
all votes and minutes of all proceedings in a book (to be known as the “minute
book”) to be kept for that purpose. He shall perform like duties for the standing
committees when required;
(b)Keep the corporate seal of the Company and books of blank certificates of stock,
fill out and countersign all certificates issued, and affix the corporate seal to all
papers requiring a seal;
(c)Keep proper account books and such records and books pertaining to the issuance
and transfer of shares as may be required by law, or these by-laws, or as the Board
shall prescribe, and discharge such other duties as pertain to his office, or which may
be required by law, or by these by-laws, or by the Board.
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Section 5.05 Treasurer Chief Financial Officer
The treasurerchief financial officer shall:
(a) Have custody of the corporate funds and securities and keep full and accurate
account of receipts and disbursements in books belonging to the Company, and
deposit all moneys and other valuable effects in the name and to the credit of the
Company in such depositories as may be designated by the Board;
(b)Disburse the funds of the Company as may be ordered by the Board, taking proper
vouchers for such disbursements, and render to the president and Board, at the
regular meetings of the Board, or whenever the Board may require it, and account of
all his transactions as treasurerchief financial officer and of the financial condition of
the Company; provided, the Board may prescribe the manner in which funds shall be
withdrawn from and paid out by any depository;
(c)Give the Company a bond if required by the Board in a sum and with one or more
sureties satisfactory to the Board for the faithful performance of the duties of his
office, and for the restoration to company, in case of death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the Company.
Section 5.06 General Manager
The general manager shall be at all times subject to direction of the Board; and, subject to
such direction, he shall take charge of, control, look after and attend to the maintenance of all
property, the distribution and delivery of water, the hiring of, discharging of, and performance of
duties and or by the employees, the billing and collection of water charges, and the observance
of the rules and regulations. He shall perform such other duties as pertain to the office of
general manager of as may be prescribed by the Board.
Section 5.07 Duties of Officers May be Delegated
In case of the absence of any officer of the Company, or for any other reason that the
Board may deem sufficient, the Board may delegate for the time being, one or more or all of
the powers or duties of such officer to any other officer or to any director, provided a
majority of the entire Board concur therein.
ARTICLE VI.
Certificates and Transfers of Shares
Section 6.01 By Whom Signed
Certificates for shares shall be signed by the president or vice-president and by the
secretary or an assistant-secretary if such assistant be thereto authorized by the Board.
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Section 6.02 Form
Subject to the provisions of law and these by-laws, certificates for shares shall be of such
form and device as the Board may direct.
The person to whom issued shall be denominated therein as the “record holder.”
A voluntary encumbrance of the shares is herein called a “pledge.”
The person in whose name a pledge of shares may be registered shall be known as the
“registered pledgee.”
Each certificate shall be issued and held upon and subject to all of the conditions and
provisions thereon stated, all of which shall be binding upon the record holder, the registered
pledgee (if and) and any transferee or person claiming an interest in the shares, or any of them
evidenced thereby.
Section 6.03 Registration of Pledge
Upon satisfactory evidence of a pledge, the Company shall note the transaction (with
the name of the pledgee) on its books, or on the share certificate. One or more pledges may
be so registered, their priority being indicated by the expressions “first pledgee”, “second
pledgee” and so forth.
Section 6.04 Effect of Registration of Pledge
When any pledge has been so registered, the shares shall be held, rights in respect
thereof exercised and the pledge released or transferred upon and subject to the provisions,
and in the manner and with the effect, as follows:
The record holder shall be deemed the shareholder as regards the Company, and as
such shall represent the shares and exercise all rights, vote, consent and assent in respect
thereof, and be entitled to receive the water allocated to such shares.
The rights and interest of the record holder and of any successor and the title to such
shares may be transferred upon the books of the Company and a new certificate issued
subject to the pledge without the act, consent or endorsement of the pledgee.
When a pledge has been so registered, and the address of the pledgee appears on the
books or records of the Company, the Company will not sell or forfeit the pledged shares for
nonpayment of an assessment unless at least ten (10) days prior to such sale or forfeiture there is
mailed to such pledgee at said address of the pledgee, or in lieu thereof, delivered to the pledgee
at the Company’s principal office address, a copy of the notice of assessment given with respect
to such assessment, or in lieu of such copy, a notice stating the fact of the assessment and the
time and place for the sale of forfeiture of delinquent shares. The Company shall also deliver to
the pledgee in the same manner notice of any denial of the right to receive water and any
forfeiture of the shares to the Company.
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The pledgee shall not be personally liable for the payment of tolls, water charges, or
assessments, unless payment thereof has been assumed or guaranteed by the pledgee, or
service rendered upon or to the order of the pledgee.
The interest and rights of the pledgee, as such, may be transferred on the records of
the Company and a new certificate issued (upon cancellation of the old) showing the new
pledgee, or a pledge may be released without the act, consent or endorsement of the record
holder or of anyone appearing to be the owner of said shares.
Section 6.05 Charges are Liens on Shares
Each charge or toll for water delivered to or for the record holder of any shares by virtue
of or in respect or ownership of such shares is a lien against said shares from the time when
furnished until paid. Said lien may be foreclosed in the manner which is at the time of foreclosure
provided by law of the State of California and the Articles for foreclosure of a pledge. Notice of
the time and place appointed for the sale of any shares upon foreclosure of such lien shall be
mailed to the record holder of said shares at the address of such record holder as it then appears
upon the books of the Company, and if no address appears, then mailed to said record holder at
Highland, Californiathe Company’s principal office address. No demand for payment or other
notice of sale to the record holder or to any person appearing by the records of the Company to
have an interest in said shares need be given other than as hereinbefore provided. At any such
sale or sales, the Company may bid and purchase.
Section 6.06 No Transfer While Unpaid Liens
No transfer of the shares of the Company can or will be made on the books of the
Company while any assessment, charge or tooltoll there-against remains or is unpaid.
Section 6.07 Assessments and Liens
The Board shall provide that each certificate shall bear on its face a statement that the
shares evidenced thereby are assessable and subject to liens and personal action and suit, and
also such other provisions in connection therewith as the Board deems proper, subject to
the law, the Articles of Incorporation, and these by-laws.
Section 6.08 Penalties, Interest and Collection Costs
Each shareholder shall be liable for payment of and shall pay to the Company, upon
demand, all expenses incurred by the Company in collecting or enforcing payment from such
shareholder of any delinquent assessment, charge, toll or other indebtedness. Included in such
expenses are attorneys’ fees in any proceeding for the enforcement of any lien herein provided
for, or the collection of such indebtedness, whether by court action or otherwise, and all
expenses of any sale.
All penalties on delinquent assessments, interest on overdue charges, tolls or other
indebtedness, and expenses of collection, as above provided for, shall be added to the principal
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debt, and shall become and be a lien upon and against the shares and be secured thereby and
enforced in the same manner and with the same effect as the principal debt.
Whenever elsewhere in these by-laws or in the share certificates the term assessment,
charge or toll shall be used, such term shall be deemed to include, in each and every instance
whenever such construction is possible or permissible, all penalties, interest and collection
expenses pertaining to such assessment, charge or toll, or attaching, accruing or resulting from
the nonpayment thereof when due.
Section 6.09 Record Holder Liable for Tolls and Charges
The record holder of any shares shall be entitled to the delivery of all water
apportioned to such shares, subject to suspension or discontinuance, as herein provided, and
shall be personally liable for the payment of all tolls, charges, interest, costs and penalties in
respect of or on account of such shares during the time the same are registered in his name
on the books of the Company.
ARTICLE VII.
Powers of Board of Directors
The Board, subject to restrictions of law, the Articles of Incorporation, and these
bylawsby-laws, shall exercise all of the powers of the Company; and without prejudice to or
limitation upon its general powers, the Board shall have and is hereby given full power and
authority, in its unlimited discretion (to be exercised by resolution adopted by majority vote of
all members of the Board members present at a meeting duly held at which a quorum is present,
whether denominated a rule or regulation of otherwise), in respect of the matters and as
hereinafter set forth, to wit:
Section 7.01 Seal
To adopt, use and change a corporate seal of form and device approved by the
Board; provided, there shall be set forth on said seal, the name of the Company and the
State and date of incorporation. Said seal shall be affixed to the share certificates and such
other instruments as the Board shall direct.
Section 7.02 Share Register
To prescribe the form and provide for keeping a share register and records pertaining
to the issuance, registration and transfer of shares.
Section 7.03 Financial Reports
To prescribe the form and provide for making and giving financial statements and
reports to the shareholders in accordance with generally accepted accounting standards.
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Section 7.04 Rules and Regulations
To adopt, repeal, modify, from time to time change, and enforce all rules and
regulations not inconsistent with the laws of the State of California, or the Articles of
Incorporation, or these by-laws, by the Board deemed essential or desirable for the
management or conduct of the Company’s business and affairs, or the exercise of the
Board’s powers. Said rules and regulations may in addition to any other things provided for
and regulate any matter in this article referred to and which is authorized to be determined
by the Board.
Section 7.05 Transfer Fee
To provide for the payment of and fix the amount of a transfer fee for the transfer of
shares upon the books of the Company; provided, such transfer fee shall not exceed ______
dollars ($__.00) for each new certificate issued.
Section 7.06 Compulsory Exchange of Certificates
To require the respective holders of outstanding share certificates, or of any of such
certificates, to surrender and exchange them for new certificates within a period to fixed by the
Board, not less than thirty (30) days from the giving of notice, whenever the Articles of
Incorporation have been amended in any way affecting the statements contained in the
outstanding share certificates, or whenever it becomes desirable for any reason in the
discretion of the Board to cancel any outstanding share certificate and issue a new certificate
therefor conforming to the rights of the holder. In any order requiring such surrender and
exchange, the Board may provide that no holder of any such certificate ordered to be
surrendered shall be entitled to vote or to receive any water or exercise any of the other rights
of the shareholders of record until he shall have complied with such order, but such order
shall only operate to suspend such rights after notice and until compliance. Notice of such
order shall be given in the manner prescribed in these by-laws for notice of meetings of
shareholders. Such duty of surrender may also be enforced by action at law; and any
shareholder having the ability, or other person having the possession and control, refusing or
failing to surrender and exchange any certificate in accordance with the order of the Board
shall be liable to the Company for all damages incurred by it from such refusal or failure,
including reasonable attorneys’ fees incurred by the Company in enforcing such duty.
Section 7.07 Dismissal of Employees
To dismiss any employee of the Company (whether regular or temporary) and terminate
his employment regardless of the period of employment, whether express or implied, without
liability on the Company other than for compensation for services actually performed to the
time of dismissal and pro-rated (if that be necessary) at the rate provided for in the contract, or
otherwise agreed upon or payable; and regardless of whether so stated in the contract, or at the
time of hiring, the power of the Board to dismiss an employee of the Company as herein
provided shall be deemed a part of every employment and every contract of employment with
20
the Company, whether such contract of employment be written or verbal; and no officer,
manager, superintendent, or other representative of the Company shall have any authority to
employ any person other than upon and subject to the right of the Board to terminate such
employment with the Company at any time without liability resulting therefrom; provided, the
Board shall have power to waive such right of dismissal in any hiring by the Company for a
period of not in excess of one year when the contract is in writing and shall contain an express
waiver of this provision and shall have been expressly authorized by resolution of the Board.
Section 7.08 Delegation of Powers
To delegate to any zanjero, superintendent, or other employee or agent of the
Company the enforcement of the rules and regulations of the Company and the
determination of all matters of a ministerial nature.
Section 7.09 Tolls and Assessments
To fix and from time to time change, the charges or tolls payable for water furnished
or other service rendered; and to levy, collect, and enforce assessments against the shares of
stock.
It shall lie within the power of the Board to determine what part of the revenue of
the Company shall be raised by assessments and what part by tolls or ratescharges and what
amount or items shall be charged to current operating expenses and what to permanent
additions or betterments.
Section 7.10 Delinquency and Interest
To provide the time when tolls, charges, and accounts shall be due and when
delinquent, and for the payment of interest on past due tolls, charges and accounts at the
rate of not to exceed ten percent (10%) per annum.
Section 7.11 Penalties
To provide for the imposition and enforcement of a penalty for violation of the rules and
regulations of the Company not exceeding in any instance the sum of _______ Dollars
($_____.00).
Dollars ($_____.00).
Section 7.12 Suspension of Services
To provide for the suspension of water service and for discontinuance of water
delivery for violation of the rules and regulations or for failure to pay any charges, tolls,
assessments, costs, interest, penalties or other sums payable to the Company, and the time
when and the conditions upon which such delivery or service shall be resumed. Such
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discontinuance may be solely with respect to the delinquent shares, or with respect to all
shares of the shareholder, whether delinquent or not.
Section 7.13 Measuring and Diversion Devices
To provide for, determine and fix the location and installation of the measuring gates,
hydrants, weirs, and meters for turning out or measuring the water to which the respective
shareholders may be entitled, and that no gate, hydrant, weir or meter shall be installed or
changed without the consent and approval of the Board, and that each such gate, hydrant, weir
or meter shall be installed and/or maintained at the expense of the shareholder or shareholders
using the same. Any such appliance shall be under the control of the Company and be deemed a
part of the Company’s distributing system.
No shareholder, by virtue of the ownership of any share, shall be entitled to connect
with the distributing system used by the Company for delivery of water, or to take water
therefrom, except with the consent and upon and subject to the rules and regulations of the
Company pertaining thereto; and the Company reserves and shall have full control over all
storing, distributing, measuring and diversion appliances, and over all water until it shall have
been actually released or delivered to the shareholder.
Section 7.14 Regulation of Water Service
ToSubject to Section 6.05 hereof, to provide, determine and fix, at such time or times
and in such manner as the Board shall determine, and to change, any or all of the following
with respect to delivery of water, to wit:
(a)The amount of water available for distribution to the shareholders, and the amount
apportioned for and to be delivered to each share for any season, year, or period of
time. In making such determination, the Board shall take into consideration all
factors by them deemed relevant, and their determination in good faith shall be
conclusive upon each and every shareholder;
(b)The time when delivery shall begin and end each season or year;
(c)The times during the season when delivery is to be made, and for delivery in
heads upon recurring periods, and the amount delivered at any time, and the
minimum and maximum number of shares in respect of which delivery will be
made at on place or at one time;
(d)The notice required for and conditions under which delivery is to be made;
(e)That any stockholder not taking the water allotted to his shares at the time
provided therefor shall forfeit or lose his right to the delivery of that water.
(f)That water forfeited pursuant to Section 7.14(e) shall become “surplus water” and
upon approval by the Board shall be delivered for use by shareholders who have
declared a need for the water, but shall not be delivered to lessees of shares.
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Section 7.15 Extension of Distributing System
To provide and determine the place or places where, and the points to which, the water
distributing system, or any other system, service, or appliances, of the Company shall be located
or extended. The holding of shares of the Company shall confer no right upon the shareholder
to have any pipeline, water conduit, or other appliance of the Company enlarged or extended
without the consent of the Board; and the Board shall at all times be the exclusive judge of the
necessity and expediency of constructing, enlarging, changing, and extending the water
distribution system or other appliances of the Company, and such expediency and necessity shall
at all times be determined by the and subject to the sole and uncontrolled discretion of the
Board.
Section 7.16 Restriction on Water Use
The water system of the Company is designed to serve water for agricultural use and
not for domestic use. Water distributed through it is and will be subject to contamination and
may at any time or place be unfit for human consumption. Therefore, unless properly treated
in accordance with all applicable legal requirements, water delivered by the Company may be
used for agricultural and other non-potable uses, but shall not be used for domestic purposes.
“Domestic purposes” means the direct use of water from the Company’s water system for
normal household uses, e.g., drinking, cooking, bathing, and the filling of swimming pools. In
case of violation of this section, water may be withheld by the Company from any shareholder
guilty of such violation, and such withholding may be made and continue under any or all
shares owned by such shareholder until such shareholder shall assure to the Board to its
satisfaction (whether by written agreement, construction of physical work tending to prevent
domestic use or treat the water delivered by the Company, or otherwise) that such shareholder
will not use water to be delivered by the Company for domestic purposes unless said water will
be properly treated.
Section 7.17 Lease of Shares and Land
(a)The Company may deliver water at cost to any lessee of its shares where the lease is
in writing, signed by the owner of the shares and the lessee thereof and approved
by the Board.
(b)The Company may deliver water at cost to any land leased by a shareholder to a
person not a shareholder of the Company, provided the lease is in writing, signed
by the shareholder and the lessee of the land and approved by the Company.
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ARTICLE VIII.
General Corporate Matters
Section 8.01 Indemnification.
The Company will, to the maximum extent permitted by the General Corporation
Law, have power to indemnify each of its agents against expenses, judgments, fines,
settlements, and other amounts actually and reasonably incurred in connection with any
proceeding arising by reason of the fact that any such person is or was an agent of the
Company, and will have power to advance to each such agent expenses incurred in
defending any such proceeding to the maximum extent permitted by that law. An “agent”
of the Company includes any person who is or was a director, officer, employee, or other
agent of the Company, or is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint venture, trust, or other
enterprise, or was a director, officer, employee, or agent of a corporation that was a
predecessor corporation of the Company or of another enterprise serving at the request of
such predecessor corporation.
Section 8.02 Maintenance and Inspection of Share Register
The Company shall keep at its principal office a record of the names and addresses of
all shareholders and the number of shares held by each shareholder. The record of
shareholders shall be open to inspection on the written demand of any shareholder or holder
of a voting trust certificate at any time during usual business hours for a purpose reasonably
related to the holder’s interests as a shareholder or holder of a voting trust certificate. Any
inspection and copying under this Section 8.02 may be made in person, by an agent or
attorney of the shareholder or holder of a voting trust certificate making the demand.
Section 8.03 Maintenance and Inspection of By-laws
The Company shall keep at its principal office the original or a copy of these by-laws
as amended to date. These by-laws shall be open to inspection by any shareholder during
regular office hours.
Section 8.04 Maintenance and Inspection of Other Corporate Records
The minutes of proceedings of the Shareholders, Board, committees of the Board,
and the accounting books and records shall be kept at the principal office of the Company
or at such other place or places as designated by the Board. The minutes shall be kept in
written form, and the accounting books and records shall be kept either in written form or in
a form capable of being converted into written form. Such minutes and accounting books
and records shall be open to inspection on the written demand of any shareholder or holder
of a voting trust certificate at any time during usual business hours for a purpose reasonably
related to the holder’s interests as a shareholder or holder of a voting trust certificate. Any
25
inspection and copying under this Section 8.04 may be made in person, by an agent or
attorney of the shareholder or holder of a voting trust certificate making the demand.
Section 8.05 Inspection Rights of Directors
A director shall have the absolute right during regular office hours to inspect all
books, records and documents of every kind, and the physical properties of the Company.
This inspection by a director may be made in person or by an agent or attorney, and the
right of inspection includes the right to copy and make extracts of documents.
Section 8.06 Annual Report to Shareholders
For so long as there are fewer than one hundred (100) shareholders of the Company,
the requirement of an annual report to shareholders referred to in Corporations Code
Section 1501 is expressly waived. However, nothing in this provision shall be interpreted as
prohibiting the Board from issuing annual or other periodic reports to the shareholders, as
the Board considers appropriate.
26
NORTH FORK WATER COMPANY
WRITTEN ASSENT OF SHAREHOLDERS TO
2013 CODE OF BY-LAWS
We, the undersigned shareholders of NORTH FORK WATER COMPANY, a
California corporation, severally holding the number of shares stated in the column to the right
opposite our respective signatures, and collectively holding not less than two-thirds of the
outstanding shares of the corporation and being collectively entitled to exercise not less than
two-thirds of the voting power in the corporation, do hereby assent to , approve and adopt the
foregoing by-laws (therein and hereinafter referred to as the “20132017 Code”) as and for the
by-laws of said corporation. This assent may be signed in any number of counterparts. Each
shall be deemed an original and all shall constitute one instrument.
When signed by shareholders collectively entitled to exercise no less than two-thirds
of the voting power, this assent shall be filed with the secretary of the corporation who shall
thereupon execute and attach his certificate showing the number of shares assenting and the
number of shares outstanding. Upon execution of such certificate, said 20132017 Code shall
become effective.
NAMES AND SIGNATURES DATE OF NUMBER OF
OF SHAREHOLDERS SIGNING SHARES
__________________________ _________ _________
__________________________ _________ _________
27
NORTH FORK WATER COMPANY
CERTIFICATE OF SECRETARY TO 20132017 CODE OF BY-LAWS
I, , Secretary of NORTH FORK WATER COMPANY, a corporation, hereby certify
that foregoing 20132017 Code of By-laws and Written Assent of Shareholders were received
and filed by me as such secretary upon the date of this certificate; that at the time or times
said assent was signed and at this time, the number of issued shares of the corporation was
and is 7200; that said assent was signed by shareholders collectively holdingshares; that the
shareholders signing said assent
collectively held more than two-thirds of the issued shares and collectively were and are
authorized to exercise more than two-thirds of the total voting power of and in said
corporation; that said assent and this certificate are attached to the original of said 20132017
Code.
IN WITNESS WHEREOF, I have hereunto set my hand as such secretary and
affixed the seal of said corporation this _______ day of , 20132017.
_____________________________
Secretary, North Fork Water Company
1345600.11345600.4
North Fork Canal Rules of Operation
The North Fork Canal is a conduit for delivering surface water (raw,
untreated) to North Fork Water Company and Bear Valley Mutual
Water Company Shareholders. The canal begins at the North Fork
Divide, more recently referred to as the Southern California Edison
Powerhouse #3 Afterbay, and continues mostly west to its termination at
the southeast corner of Highland Avenue and Palm Avenue. In the
event that State Water Project water is used in lieu of Santa Ana River
water, there is a connection for receiving project water approximately
one-half mile west of the North Fork Intake Sandbox. There were
originally fifty-five (55) individually numbered irrigationwater
connections in the form of weir boxes, however, only fifteen (15) of
those connections are currently active.
In order to maintain the North Fork Canal and its historic operation
as a viable facility for the benefit of all Shareholders, the following
“Rules of the Ditch” have been outlined hereadopted by the North Fork
Water Company Board of Directors in accordance with Sections 7.04
and 7.14 of the By-Laws to clarify the North Fork Irrigationwater
delivery process.
I. Rules of the Ditch
1.) Each year at the North Fork Annual Board of Directors
Meeting following the Annual Meeting of the Shareholders,
the North Fork Zanjero will submit for approval the
following:
A.) A Delivery Schedule, outlining the daily deliveries that
will be made throughout the next irrigation season.
B.) A recommendation for aAn Estimated DeliveryA.)
Schedule outlining the estimated delivery rate, in
Miners’ Inch Days (MID), toper share which will
1345994.11345994.4
apply for the next irrigation season.12 months. The
Estimated Delivery Schedule is not a guarantee of
deliveries and is subject to change throughout the
next 12 months.
C.) A recommendation for a designated period of time toB.)
accomplish any repairs or maintenance required for the
continuous operation of the Canal during the next
irrigation season (Generally 2-4 weeks, between February
1, and March 31.). *During periods of drought conditions,
the Canal may not be shutdown at all from one irrigation
season to the next.
D.) An operations report of the last irrigationC.)
season and any recommendations for the next
irrigation season12 months.
1345994.11345994.4
2)Every 15th day of the month (or the first business day after the 15th day
of the month if the 15th day is a Saturday, Sunday or holiday), the
Zanjero will calculate the water initially allocated per share for the
following month. The Zanjero will contact all Shareholders that
received water delivery the previous month and inform them of their
respective initial allocation for the next month. At that time, each
Shareholder may request a reduction in its water allocation for the
next month, or notify the Zanjero of its need for additional water the
next month. The Zanjero shall calculate the amount of “Surplus
Water” available for the next month by adding: (1) the amount of
reductions in scheduled water allocations requested by Shareholders,
and (2) the amount of water forfeited by Shareholders that do not
receive water deliveries. The Zanjero shall apportion the Surplus Water
for the next month among the Shareholders who notified the Zanjero
of their need for Surplus Water and the allocation shall be on a pro
rata basis calculated as follows: each Shareholder shall receive a
percentage of the Surplus Water equal to the number of shares held by
it divided by the number of shares held by all Shareholders who
notified the Zanjero of their need for Surplus Water. Surplus Water
shall not be delivered to lessees of shares.
2.) 3)All irrigationwater deliveries to Shareholders shall be made to a
measuring device, usually a weir, and will be adjusted to the
appropriate flow rate by the Canalero only. Any adjustments must be
done by the Canalero and will be determined by the Canalero. Once
the water has passed over the weir (or alternate measuring device), the
water and the transmission facilities (pipeline or flume) are the
responsibility of the respective Shareholder receiving the delivery.
Each respective Shareholder, for its convenience or use, may install a
shut-off valve on its side of the weir to control the flow of water to its
premises. The responsibility to install, operate, maintain, replace and
repair said shut-off valve is that of the Shareholder, at its sole expense.
The North Fork Water Company disclaims any and all liability for any
damage or loss associated with a shut-off valve installed on a
Shareholder’s side of the weir and said liability shall be fully borne by
the respective Shareholder.
1345994.1
3.) 4)All irrigationwater deliveries shall be made by the Canalero per the
approved “Delivery Schedule”. Each delivery is for a twenty-four (24)
hour period, beginning between 7:00a.m. and 9:00a.m., and ending 24
hours later.
4.) 5)There is a minimum delivery requirement of ten (10) Miners’ Inch
Days per delivery. A delivery of less than 10 MID cannot be
accurately measured, and will not be allowed.
5.) 6)No irrigationwater deliveries shall be pumped out of the North Fork
Canal, or otherwise withdrawn by individual Shareholders.
6.) 7)Any irrigationwater delivery can be cancelled by the notification of the
Zanjero Zanjero for cause such as unavailable source water,
emergency shutdown or heavy downpours of rain, by notification to
the affected Shareholder(s) at least forty-eight (48) hours in advance
(unlessof the scheduled delivery (notice will not be provided if an
emergency shutdown is required) of the scheduled delivery. If an
irrigation. If a delivery is cancelled (or is the result of unavailable
source water, or heavy downpours of rain), that irrigationthat water
delivery will NOT be made up. The North Fork Delivery Schedule can
notcannot be altered, as it is designed to accommodate allotted TOTAL
daily deliveries, pursuant to the May 23, 1885 Contract
Agreementagreement and the related June 27, 1885 supplemental
agreement with Bear Valley Land and Water Co. (now known as Bear
Valley Mutual Water Company) and several individuals.
7.) 8)A Shareholder may cancel a scheduled delivery by notifying the
Zanjero at least one (1) business day in advance. Per Section 7.14
of the North Fork By-Laws, said notification to the Zanjero results
in a forfeiture of the Shareholder’s right to the delivery of that
water and the water delivery will NOT be made up. After a
shareholder has cancelled their delivery, or in the case of heavy rains
causing deliveries to be cancelled, it is the responsibility of the
individual Shareholders to contact the North Fork Zanjero with a
request to resume deliveries on their next scheduled delivery dates.
1345994.1
Such notification to the Zanjero must be made no later than one (1)
business day before the scheduled delivery date.
8.) 9)The North Fork Canalero shall set the TOTAL daily flow rate of the
Canal (Santa Ana River sourcewatersource water) at the North Fork
Canal Intake Sandbox 100” Weir at 7:00 a.m. each day. In the event
that State Water Project water is the sourcewatersource water, the
Canalero will verify the flowrate in the Canal at the Plunge Creek
Sandbox 100” Weir at 7:00 a.m. each morning.
1345994.1
9.) 10)It is the responsibility of the Canalero to check and clean all grates
(trash
racks) daily, to prevent damage from occurring due to plugging of pipe
and overflowing.
10.) 11)Each Shareholder with an authorized connection to the North Fork
Canal has just as much right to their delivery as any other
Shareholder on their respective delivery date.
11.) 12)In all disputes, the North Fork Zanjero’s decision will be adhered
to until such time as the North Fork Board of Directors can review
and bring to resolution.
12.) 13)As stated in the North Fork By Laws, water delivered from the
Canal is for agricultural purposes and other non-potable uses, and
is NOT to be used for “domestic potable water AT ANY
TIME!purposes” unless properly treated in accordance with all
applicable legal requirements.
II. Definitions:
Zanjero:
The Chief Operator of the North Fork Canal, responsible for
the operation of the North Fork Canal, and under the direction
of the Board of Directors.
Canalero:
Shift Operator for the North Fork Canal, under the directions of
the
Zanjero.
Weir:
A device for measuring flows across a fixed blade to determine an
accurate flowrate. The North Fork system uses some Parshall
1345994.1
Weirs and some Cipoletti Weirs.
Fred J. Stafford,
North Fork Canal Zanjero, 1989-2009
III. Miscellaneous Provisions
1) Relationship to Articles and By-Laws. These Rules are intended to
supplement the Company’s Articles of Incorporation and By-Laws. In
the event of a conflict between the Articles or By-Laws and any of
these Rules, the provisions of the Articles and By-Laws shall control.
2) Savings Clause. If any provision of these Rules is for any reason held
to be invalid by a court of law, such determination shall not affect the
validity of the remaining portions of these Rules which shall remain
binding and enforceable against the Shareholders of the Company.
3) Amendments to Rules. These Rules may be changed and amended
from time to time by appropriate action of the Board. .
Passed and adopted this ___ day of ________, 2017 by the North Fork Water
Company Board of Directors.
1345994.1
STAFF REPORT
Agenda Item #4.
Meeting Date: March 20, 2017
Disc ussion Item
To: Bo ard of Direc tors
From: G eneral Manager/CEO
Subject: Dis c us s ion regard ing RFP p ro pos al to d etermine value o f the No rth F o rk Water Company s hares
ATTACHMENTS:
Description Type
Jackson Tidus North Fo rk P resentation RFP to Appraise
Value of Share s P resentation
Draft Scope of Work fo r NFWC Shares Appraisal Backup Material
NORTH FORK WATER COMPANY:
SPECIAL STOCKHOLDERS MEETING
MARCH 20, 2017
(Agenda Item #4)
Michele A. Staples, Esq.
Eddy R. Beltran, Esq.
1
Request for Proposal for
Consultant to Appraise
Value of NFWC Shares
•Valuation of shares is proposed to respond to
Shareholder questions about the value of NFWC
shares for investment planning and estate
planning
•Technical assistance needed to value shares
2
Scope of Work
•Summarize the condition of NFWC’s existing
water system
•Summarize NFWC’s assets and liabilities
•Determine the current value of NFWC on a per
share basis
•Prepare letter report and Appraisal Summary
Statement
3
Recommended RFP Recipients
1)Brian J. Brady
•Represented minority shareholder in Elsinore Valley
Municipal Water District /Meeks & Daly Water
Company transaction
2)David Hayward (Hayward Consulting)
•Prepared appraisal of Apple Valley Ranchos Water
Company for Town of Apple Valley
3)Steve Johnson (Stetson Engineers)
•Water system and water rights evaluation and
appraisal expert
4
Proposed Next Steps
•Request for Proposal to be prepared for Board
consideration
•Legal Ad Hoc Committee to conduct consultant
interviews
•Engage consultant to value shares
•Report share valuation to Legal Ad Hoc Committee
•Report share valuation at Special Shareholder
meeting
5
DRAFT
INTRODUCTION
North Fork Water Company (NFWC) is seeking proposals from qualified professional water
system and water rights appraisers to provide professional consulting, appraisal and valuation
services to aid NFWC in determining the fair market value of its shares. The Scope of Work does
not include expert testimony or other litigation support.
BACKGROUND
NFWC is a non-profit mutual water company located in Highland, California. There are currently a
total of 26 NFWC shareholders holding 7,156 shares in the company, with East Valley Water District
(EVWD) owning 82% of the shares (5,904 total). EVWD manages the NFWC.
NFWC holds pre-1914 appropriative water rights to Santa Ana River water supplies in trust for its
shareholders. NFWC owns a water delivery system including 50% ownership interest in the North
Fork Canal, as well as pipelines, diversion weir boxes and valves. The North Fork Canal is
approximately 6 miles in length and runs in an east-west direction, beginning generally near the
outlet of the Southern California Edison SAR #3 Hydroelectric Plant located at the Seven Oaks Dam
and ending near the cross streets of Highland Avenue and Palm Avenue in Highland, California.
NFWC’s water system’s transmission and distribution pipelines are primarily comprised of steel and
ductile pipe. NFWC’s water system does not include any surface water storage reservoirs.
The NFWC water system receives water delivered by Bear Valley Mutual Water Company under
agreements originally entered in 1885 and affirmed by the January 17, 1977, stipulation and judgment
entered by the San Bernardino Superior Court in Big Bear Municipal Water District v. North Fork Water
Company, et al. NFWC delivers water to a total of approximately 12 connections serving
shareholders and lessees of their shares. NFWC’s Board of Directors establishes the amounts and
schedules of its water deliveries to shareholders and their lessees. The NFWC water system is not
designed for domestic use, and water delivered by NFWC cannot be used for domestic purposes without
treatment.
The amount of water NFWC is entitled to receive under the 1885 agreements includes monthly
distributions during the June-November time period totaling approximately 3,800 acre-feet per year (afy),
and one-quarter of the annual river flow during the period of December thru May. According to annual
reports published by the Big Bear Watermaster from 2010-2015, the average annual water delivery to
NFWC during that period totaled approximately 2,300 afy.
NFWC has one class of shares. In order for shareholders to obtain water delivery, access to the North
Fork Canal and an approved measuring device/weir is required. Most of NFWC’s shareholders do not
receive water delivery from NFWC.
This Request for Proposals seeks a valuation of NFWC, including its water system and water rights, to aid
NFWC in valuing its shares.
MANDATORY SERVICE SPECIFICATIONS
The appraiser must have experience in valuing private and/or public water suppliers.
SCOPE OF WORK
The selected appraiser will provide appraisal/valuation of NFWC’s water system and water
rights as described below:
1) Summarize the condition of NFWC’s existing system using NFWC’s water system
inventory and maps, photographs, field visits, inspection reports, and results of interviews
with people familiar with existing water system equipment and operation.
2) Summarize NFWC’s assets and liabilities using: Appraiser’s summary of condition of
existing system prepared under Task 1 above; NFWC summary of water rights; Big Bear
Watermaster and East Valley Water District reports showing Bear Valley Mutual Water
Company’s deliveries to North Fork Canal; property profiles and property appraiser
reports (by others if applicable); NFWC’s Articles of Incorporation, Bylaws, Rules of the
Ditch and current shareholder roll; NFWC current financial statement.
3) Determine the current value of NFWC on a per share basis. The NFWC valuation will be
broken down into categories such as facilities, equipment, water rights, etc.
4) Prepare letter report containing Appraiser’s assumptions, sources of information, work
product and summary of current value of the NFWC. Twelve (12) hard bound copies of
the report are to be provided as well as electronic files.
5) Adhere to appraisal practices as required to conform to the Uniform Standards of
Professional Appraisal Practice (USPAP).
6) Prepare an Appraisal Summary Statement to assist NFWC staff in communicating the
appraisal results to NFWC shareholders.
7) Maintain timely communication with the assigned NFWC staff.
8) Create files and maintain all records for a period of seven (7) years.
9) Attend NFWC Board, Committee and/or Shareholder meetings, when requested.
STAFF REPORT
Agend a Item #5.
Meeting Date: Marc h 20, 2017
Dis cus s io n Item
To: Board of Directo rs
From: General Manager/CEO
Subject: Review Pro p o s ed FY 2017-18 Bud get
RECOMMENDATION:
Review the prop o s ed FY 2017-18 Bud get.
BACKGROUND / ANALYSIS:
Each year at the North F o rk Water Co mp any (Co mp any) annual s hareholder’s meeting, staff p resents propo s ed
o perating and capital budgets that predic t the cost of s ervice d elivery fo r the upc o ming year, includ ing rep airs to
c o mp o nents of the Comp any’s water d is tributio n s ys tem that are very o ld and deterio rated .
T he 2017-18 propos ed b udgets continue to fund adminis trative efforts to d efine the rights and value associated
with s hares held b y s hareho lders with d ivers e needs , and to c o ntinue to s earch fo r the mo st c ost-effec tive
method for rep airing two s ec tions of pipe that span river/c reek b eds.
DISCUSSION
Operating Budget
T he Op erating Budget fund s ro utine op erations, rep airs , and maintenance for the Co mpany water delivery
s ys tem. It also pays fo r adminis trative s ervices such as rec o rd -keep ing and legal s ervices , to keep sharehold ers
info rmed ab o ut meetings , financ es and s hareholder rights and o b ligations.
T he Operating Bud get p ro p o s ed fo r fis cal year 2017-18 is sho wn b elo w:
Item
2016/17
Adopted
2016/17
Actual
2017/18
Proposed
Op eratio ns Lab o r $ 32,000 $ 18,923 $ 25,000
Administrative Labor 11,000 9,033 16,000
Equip ment Charges 6,000 753 6,000
Direc tor's F ee 200 125 200
Contract S ervices 15,000 8,150 11,000
Materials & S up p lies 500 357 500
Profes s io nal Servic es 2,200 2,200 2,200
Legal S ervices 85,000 83,637 95,000
Property / F ranchis e Taxes 30,000 29,126 30,000
General Ins uranc e 4,100 4,060 4,100
TOTAL $ 186,000 $ 156,364 $ 190,000
Operating labor and Co ntrac t Servic es have been d ec reas ed as ac tual cos ts for 2016-17 were significantly lower
than the amounts bud geted. Adminis trative Lab o r has b een inc reased due to an expec ted inc rease in antic ipated
level o f effort assis ting legal c o unsel in their res earch of C o mpany d o cuments and rec ords. T he b udget fo r legal
s ervices has also inc reased to $95,000, as legal couns el c o ntinues to investigate the his tory, governanc e and
rights related to owners hip in the No rth Fork Water C o mpany, and b egins an effo rt to d etermine the value o f
s hares .
Staff p ro p o s es that the 2017-18 Op erating Bud get be fund ed thro ugh a c omb ination o f operating as s es sments , at
$23 per share, and operating reserves . Thes e two s o urc es would p ro vide $164,588 and $25,412, res pec tively.
Cap ital Improvements
Santa Ana River Crossing - T he p rio r year Capital Bud get includ ed $103,000 for d es ign and cons truc tion
c o s ts to repair the p ip eline cros s ing the S anta Ana River. The approved metho d o f repair invo lved s lip lining the
exis ting pipeline to avoid disturbing the riverbed with c onstruc tio n equip ment, which would involve s ignific ant
p ermitting issues.
In Decemb er, s taff p ro posed an alternate method fo r completing this rep air at the Engineering Committee
meeting. This method involves using a c rane to lo wer a new s ec tion o f pipe into place while s till being able to
avo id d is turbing the river-bed. T he es timated c o s t to the Comp any fo r this method is $38,500, a s avings o f
$64,500.
Plunge Creek Crossing - The p rior year Capital Budget als o inc luded $22,000 to begin the des ign fo r rep airs
to the Plunge Creek c ro s s ing. An engineering ass es s ment cond ucted in 2015 es timated that the total cos ts fo r
this project wo uld be b etween $140,000 and $350,000. T he Bo ard direc ted s taff to c ontinue to look for mo re
c o s t-effective s olutions.
In acc ordanc e with Bo ard directio n, s taff is als o propo s ing an alternative approac h fo r this p ro jec t. Rather than
replac ing o r c oating the entire pip e, staff p ro poses to make minor repairs to the pipe as need ed, and then
reinfo rc e conc rete armo ring aro und the p ip e. The es timated c o st to the Co mp any for this project is $40,000, a
s avings o f at leas t $30,000.
T he to tal es timated cos t to North Fork Water Comp any for the two p rojec ts ab ove wo uld b e $78,500. As
Cap ital Asses s ments c ollec ted last year were $125,000, no additional fund s are need ed in fis c al year 2017-18.
Recommended by:
Jo hn Mura
General Manager/CEO
Res p ec tfully s ub mitted :
Brian To mpkins
Chief Financial Offic er
Ho wever, s taff is rec o mmend ing that the p reviously ado p ted bud gets fo r the two projects be amend ed as
follows :
Item
Project
Budgets
Proposed
Amendments Amended Budgets
Pipeline - S AR Cros s ing $ 103,000 $ (42,000)$ 61,000
Pipeline - P lunge Creek Cro s sing 22,000 42,000 64,000
TOTAL $ 125,000 $ 0 $ 125,000
Sinc e the current pro jects are funded, with appro ximately 60% contingenc y, and there are no new p ro jec ts b eing
p ropos ed , s taff is not recommending a Capital As s essment for FY 2017-18.
ATTACHMENTS:
Description Type
NFWC Presentation Presentation
MARCH 20, 2017
ANNUAL
SHAREHOLDERS’
MEETING
ENGINEERING
UPDATE
SANTA ANA RIVER CROSSING
•Riveted Steel Pipe
•Installed in the 1930s
•Continual Leaks
3
10 GALLONS
PER HOUR LOST
650 LINEAR FEET
SANTA ANA RIVER CROSSING
Project Construction Design Construction
Management Total Cost
Replace 30 inch pipeline $ 52,000 $10,000 $15,000 $77,000
FY 2016-17 CAPITAL PROJECT
4
$38,500
ESTIMATED
SHAREHOLDER
COST
PLUNGE CREEK PIPELINE REPAIR
5
•Protect Infrastructure
•Eliminate Water Waste
•Address Vandalism
36-INCH
PIPELINE
200 LINEAR FEET
Plunge Creek Siphon
Option Construction Design Construction
Management Total Cost Construction
1 Repair Existing Pipe /
Reinforce Concrete Armor $ 50,000 $ 10,000 $ 20,000 $ 80,000
2 Cure in place 120,000 18,000 0 138,000
3 Replace existing 140,000 21,000 TBD 161,000
FY 2017-18 CAPITAL PROJECT
6
$40,000
ESTIMATED
SHAREHOLDER
COST
OPTION 1
RECOMMENDED
PROJECT
BUDGET &
ASSESSMENTS
8
2016-17 OPERATING BUDGET TO ACTUAL
BUDGET ACTUAL
Operating Labor/Equipment-EVWD $ 38,000 $ 19,676
Contract Services 17,200 10,350
Legal Services 85,000 83,637
Materials & Supplies 500 357
Administration 11,200 9,158
Insurance 4,100 4,060
Property, Franchise Taxes 30,000 29,126
$ 186,000 $ 156,364
Depreciation -54,649
$ 186,000 $ 211,013
2016-17 Assessments ($25 per Share)178,900 178,900
NET $ (7,100)$ (32,113)
PROPOSED 2017-18 BUDGET
9
DESCRIPTION ADOPTED 2016-17
BUDGET
PROPOSED 2017-18
BUDGET
OPERATING EXPENSES
Operating Labor/Equipment -EVWD $ 38,000 $ 31,000
Contract Services 17,200 13,200
Legal Services 85,000 95,000
Materials & Supplies 500 500
Administration 11,000 16,000
Director Fees 200 200
Insurance 4,100 4,100
Property/Franchise Taxes 30,000 30,000
Total Operating Expenses $ 186,000 $ 190,000
CAPITAL EXPENDITURES $ 125,000 $ 0
CAPITAL IMPROVEMENT PROGRAM
10
ADOPTED CAPITAL IMPROVEMENT PROGRAM
YEAR BUDGET
CURRENT
YEAR
COSTS
COSTS
-TO-
DATE
North Fork Pipeline Surveying 2015-16 $ 16,000 $ 14,599 $ 14,599
Engineering Assessment 2015-16 30,000 14,424 24,987
Santa Ana River Crossing 2016-17 103,000 1,720 (1)1,720
Plunge Creek Crossing 2016-17 22,000 0 0
TOTALS $ 171,000 $ 30,743 $ 41,306
(1) Does not Include encumbrance of Merlin Johnson contract for $25,800
REVISED CAPITAL IMPROVEMENT PROGRAM
11
ADOPTED CAPITAL IMPROVEMENT PROGRAM
YEAR BUDGET
CURRENT
YEAR
COSTS
COSTS
-TO-
DATE
North Fork Pipeline Surveying 2015-16 $ 16,000 $ 14,599 $ 14,599
Engineering Assessment 2015-16 30,000 14,424 24,987
Santa Ana River Crossing 2016-17 61,000 1,720 (1)1,720
Plunge Creek Crossing 2016-17 64,000 0 0
TOTALS $ 171,000 $ 30,743 $ 41,306
(1) Does not Include encumbrance of Merlin Johnson contract for $25,800
TOTAL PROGRAM BUDGET REMAINS THE SAME
PROPOSED 2017-18 ASSESMENTS
12
DESCRIPTION PROPOSED 2017-18 BUDGET
Proposed Expenses
Operating Expenses $ 190,000
Capital Expenditures 0
TOTA L PROPOSED EXPENSES $ 190,000
Proposed Funding -7,156 Shares
Operating Assessment -$23 per share $ 164,588
Operating Reserves 25,412
Capital Assessment 0
TOTAL FUNDING $ 190,000
$23
2017-18
ASSESSMENTS
$0
CAPITAL
ASSESSMENTS
13
CASH PROJECTION
OPERATING CAPITAL
RESERVE TOTAL
Balance -January 31, 2017 $ 160,084 $ 218,866 $ 378,950
Proposed 2017-18 Assessment 164,588 0 164,588
Proposed 2017-18 Expenditures (190,000)(78,500)(268,500)
Projected Balance –January 31, 2018 $ 134,672 $ 140,366 $ 275,038