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HomeMy WebLinkAboutAgenda Packet - North Fork Water Company - 04/30/2024 (Annual BOD)BOARD OF DIRECTORS ANNUAL MEETING 31111 Greenspot Road, Highland, CA 92346  April 30, 2024 ­ 2:00 PM AGENDA CALL TO ORDER ROLL CALL OF BOARD MEMBERS AGENDA 1.Approval of Agenda PUBLIC COMMENTS DISCUSSION AND POSSIBLE ACTION ITEMS 2.Board Re­Organization Election of Officers: President Vice President Secretary Chief Financial Officer General Manager 3.Consider Approval of April 4, 2023 Board of Directors' Organizational Meeting Minutes 4.Consider Approval of Proposed FY 2024­25 Water Deliveries and Operational Update 5.Consider Approval of Financial Statements for FY 2023­24 6.Consider Approval of Budget and Assessments for FY 2024­25 DIRECTORS' COMMENTS RECESS INTO CLOSED SESSION CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [Government Code Section 54956.9(d)(1)] Name of Case: East Valley Water District v. Brucie Cagle, et al., CASE NO. CIVSB 2112619 [Cross­ Complaint: Raley v. North Fork Water Company, et al.] ANNOUNCEMENT OF CLOSED SESSION ACTION ITEMS ADJOURN Pursuant to Government Code Section 54954.2(a), any request for a disability­related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above­ agendized public meeting should be directed to the North Fork Board Secretary (909)885­4900 at least 72 hours prior to said meeting. BOARD OF DIRECTORS ANNUAL MEETING31111 Greenspot Road, Highland, CA 92346 April 30, 2024 ­ 2:00 PMAGENDACALL TO ORDERROLL CALL OF BOARD MEMBERSAGENDA1.Approval of AgendaPUBLIC COMMENTSDISCUSSION AND POSSIBLE ACTION ITEMS2.Board Re­OrganizationElection of Officers:PresidentVice PresidentSecretaryChief Financial OfficerGeneral Manager3.Consider Approval of April 4, 2023 Board of Directors' Organizational Meeting Minutes4.Consider Approval of Proposed FY 2024­25 Water Deliveries and Operational Update 5.Consider Approval of Financial Statements for FY 2023­24 6.Consider Approval of Budget and Assessments for FY 2024­25 DIRECTORS' COMMENTS RECESS INTO CLOSED SESSION CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [Government Code Section 54956.9(d)(1)] Name of Case: East Valley Water District v. Brucie Cagle, et al., CASE NO. CIVSB 2112619 [Cross­ Complaint: Raley v. North Fork Water Company, et al.] ANNOUNCEMENT OF CLOSED SESSION ACTION ITEMS ADJOURN Pursuant to Government Code Section 54954.2(a), any request for a disability­related modification or accommodation, including auxiliary aids or services, that is sought in order to participate in the above­ agendized public meeting should be directed to the North Fork Board Secretary (909)885­4900 at least 72 hours prior to said meeting. Agenda Item #3 April 30, 20241 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager Subject:Consider Approval of April 4, 2023 Board of Directors' Organizational Meeting Minutes RECOMMENDATION: That the Board of Directors approve the April 4, 2023 Board of Directors Organizational meeting minutes as submitted. REVIEW BY OTHERS: This agenda item has been reviewed by Legal Counsel. FISCAL IMPACT: There is no fiscal impact associated with this agenda item. Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Justine Hendricksen Board Secretary ATTACHMENTS: Draft April 4, 2023 Meeting Minutes Meeting Date: April 30, 2024 Agenda Item #3 Discussion Item NF Minutes 4/4/2023 sma 9 2 4 Draft Pending Approval NORTH FORK WATER COMPANY 31111 GREENSPOT RD. HIGHLAND, CA 92346 BOARD OF DIRECTORS ORGANIZATIONAL MEETING April 4, 2023 MINUTES President Goodrich called the Annual Board of Directors meeting to order at 2:13 p.m. PRESENT: Phillip Goodrich James Morales Jr. Chris Carrillo Ronald Coats David Smith ABSENT: None EVWD Staff: Michael Moore Brian Tompkins Justine Hendricksen Jeff Noelte Patrick Milroy Rudy Guerrero Jason Wolf Shayla Antrim Brenda VanMeter John Drury LEGAL COUNSEL: Michele Staples (North Fork Water Company) STOCKHOLDERS: East Valley Water District Michael Raley GUEST(S): Jean Cihigoyenetche (EVWD Legal Counsel) Chris Corr Bill Corr Caroline Kiel Ray Charles Kiel Wayne Brown NF Minutes 4/4/2023 sma 9 2 4 APPROVAL OF AGENDA A motion was made by Director Coats, seconded by Director Smith that the Board approve the April 4, 2023 agenda as submitted. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None PUBLIC COMMENTS The Board Secretary declared the public participation of the meeting open at 2:14 p.m. Mr. Raley requested that the Board refer to his original document provided during the Annual Shareholder meeting and that his public comment be reflected in the minutes. There being no further written or verbal comments, the public participation section was closed at 2:14 p.m. BOARD RE-ORGANIZATION ELECTION OF OFFICERS A motion was made by Director Carrillo, seconded by Director Coats to elect the slate of officers as follows: •Phillip Goodrich be appointed Board President •James Morales Jr. be appointed Vice President •Justine Hendricksen be appointed Secretary •Brian Tompkins be appointed Chief Financial Officer •Michael Moore be appointed General Manager The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None APPROVAL OF BOARD OF DIRECTORS ANNUAL MEETING MINUTES FOR MAY 9, 2022 A motion was made by Director Smith, seconded by Director Coats that the Board approve the May 9, 2022 Board of Directors meeting minutes as submitted. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith NF Minutes 4/4/2023 sma 9 2 4 Noes: None Absent: None PROPOSED FY 2023-24 WATER DELIVERIES AND OPERATIONAL UPDATE The Operations Manager provided a proposed FY 2023-24 water delivery schedule and an operational update to the Board. He stated that many former shareholders have been converted from weir deliveries to traditional meters, making deliveries more efficient. He stated that the next year's focus will be the replacement of the Plunge Creek Crossing Pipeline. Cleaning of the intake box is an annual maintenance activity performed by staff. Shareholder Raley made three comments/questions. He inquired about 2022 water delivery data, asked if water deliveries were placed in the canal, and asked about water entitlements/contracts with previous shareholders and the delivery of pressurized water. The General Manager responded that the presentation provides projections not past delivery data. Vice President Morales inquired about the vandalism of the Plunge Creek Crossing Pipeline. A motion was made by Director Coats, seconded by Vice President Morales that the Board accept the FY 2023-24 Water Deliveries and Operational Update as submitted. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None FINANCIAL STATEMENTS FOR FY 2022-23 The Chief Financial Officer reviewed the Financial Report, executive summary, and operating budget with the Board. A motion was made by Director Carrillo, seconded by Vice President Morales that the Board accept and file the Financial Report as submitted. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None NF Minutes 4/4/2023 sma 9 2 4 BUDGET AND ASSESSMENTS FOR 2023-24 The Chief Financial Officer reviewed the proposed operating budget and fiscal year 2023-24 assessments. He stated that costs have gone down substantially due to closing weirs and EVWD’s purchase of additional shares, and a significant adjustment has been made to legal services due to pending litigation. He stated that staff is proposing the 2023-24 operating budget be funded through an operating assessment of $16 per share, and no capital assessments are proposed. A motion was made by Director Coats, seconded by Vice President Morales that the Board approve the fiscal year 2023-24 operating budget and $16 assessment per share. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None DIRECTORS’ COMMENTS Vice President Morales thanked everyone for attending the meeting and for the work performed by staff. THE BOARD RECESSED INTO CLOSED SESSION AT 2:44 P.M. THE BOARD RECONVENED AT 3:19 P.M. ANNOUNCEMENT OF CLOSED SESSION ACTION ITEMS Legal Counsel stated that no reportable action was taken in closed session. ADJOURN The meeting was adjourned at 3:20 p.m. _________________________ Phillip R. Goodrich, President ____________________________ Justine Hendricksen, Secretary Agenda Item #4 April 30, 20241 1 0 7 9 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager/CEO Subject:Consider Approval of Proposed FY 2024-25 Water Deliveries and Operational Update RECOMMENDATION: That the Board of Directors review and approve the proposed FY 2024-25 Delivery Schedule and Operational Update. BACKGROUND / ANALYSIS: The 1885 contract terms established specific water delivery obligations to the North Fork Water Company (Company) shareholders during contract and non-contract periods. The contract months of June through November are assigned specific delivery obligations and non-contract months receive 25% of the river flow. DISCUSSION January through April Shareholders received 2.5 Miner’s Inch (MI) per share, and May is estimated at 2.5 MI. Delivery amounts for June through November will be at the contracted amounts, per the North Fork contract agreement. Most North Fork customers that have converted to the new water meter delivery method are using less water than the old weir delivery method. In the event of a significant rainfall of more than one-half inch, deliveries will automatically be halted. When water quality is compromised, water is not taken down the pipeline to protect the pipeline from large quantities of sedimentation. If a customer would like to continue their scheduled delivery following a rain fall, customers may contact East Valley Water District Operations Division to resume their regularly scheduled delivery. In addition, deliveries may be halted due to circumstances beyond the Company’s control because of San Bernardino County Flood Control, Southern California Edison, or another outside event. Staff will be sure to maintain communication with shareholders that may be impacted by unexpected delivery disruptions. Meeting Date: April 30, 2024 Agenda Item #4 Discussion Item Agenda Item #4 April 30, 20242 1 0 7 9 The chart below shows the proposed month by month water delivery schedule: 2024 Delivery Schedule Month Miner’s Inch Day (MID) River Flow CFS NF Share CFS NF Miner’s Inch Miner’s Inch per Share January 2024 (Actual) ¼ of Santa Ana River 48 12 600 2.5 February 2024 (Actual) ¼ of Santa Ana River 48 12 600 2.4 March 2024 (Actual) ¼ of Santa Ana River 48 12 600 2.5 April 2024 (Actual) ¼ of Santa Ana River 48 12 600 2.5 May 2024 (Estimate) ¼ of Santa Ana River 48 12 600 2.5 June 2024 500 40 10 500 2.0 July 2024 600 48 12 600 2.5 August 2024 600 48 12 600 2.5 September 2024 550 44 11 550 2.3 October 2024 450 36 9 450 1.9 November 2024 400 32 8 400 1.6 December 2024 (Estimate) ¼ of Santa Ana River 40 10 500 2.0 Pipeline and Access Repairs: Staff monitors Plunge Creek for leaks and repairs them as necessary. The North Fork Intake Box is cleaned out annually for optimal operation. This process requires emptying the intake box, and then removing any debris that is found. EVWD discovered a manhole overflow on the south side of Highland Avenue, and east of Amber Street, which they investigated. The manhole inspection revealed a pipe completely blocked with palm tree roots, which prevented water from moving through the North Fork pipeline. Staff identified overgrown palm trees on Highland Avenue between Surrey Lane and Amber Street and created an access point to begin root removal. Agenda Item #4 April 30, 20243 1 0 7 9 After cleaning, the successful max flows were 7.75 million gallons per day (MGD). The root removal is a temporary fix and staff anticipates flow restrictions may occur due to future growth and root expansion. A new North Fork access has been installed to assist with future inspections of the pipeline and an alarm has been installed to monitor flows and alert staff to prevent overflow events. Next Steps: •Staff are developing a maintenance plan to inspect the North Fork pipe from Seven Oaks Dam to Plant 134. •Staff are working with consultants to develop the best plan to repair or replace the pipe along the frontage of 28573 Highland Avenue. •Staff is assessing pretreatment of North Fork water before entering Plant 134 to utilize maximum flows when water quality is poor relative to the current plant design. •Engineering will evaluate possible replacement options for the Plunge Creek crossing. REVIEW BY OTHERS: This agenda item has been reviewed by the Administration, Finance, and Operations Departments. FISCAL IMPACT: There is no fiscal impact associated with this agenda item. Agenda Item #4 April 30, 20244 1 0 7 9 Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Brian Tompkins Chief Financial Officer ATTACHMENTS: PM Presentation-Water Deliveries and Operational Update WATER DELIVERIES AND OPERATIONAL UPDATE April 30, 2024 WATER DELIVERIES MONTH ALLOTMENT (MINER’S INCHES PER DAY) ALLOTMENT PER SHARE (MINER’S INCHES) January -May 25% of Santa Ana River Flow June 500 2.0 July 600 2.5 August 600 2.5 September 550 2.3 October 450 1.9 November 400 1.6 December 25% of Santa Ana River Flow 2024 WATER DELIVERIES MONTH ALLOTMENT (MINER’S INCHES PER DAY) ALLOTMENT PER SHARE (MINER’S INCHES) January 600 2.5 February 600 2.4 March 600 2.5 April 600 2.5 May 600 2.5 June 500 2.0 July 600 2.5 August 600 2.5 September 550 2.3 October 450 1.9 November 400 1.6 December (Estimate)25%of River Flow 2.0 WEIR 3 REMOVAL –MEDITERRA PROJECT PLUNGE CREEK LEAKS NORTH FORK INTAKE BOX BEFORE CLEANING NORTH FORK INTAKE BOX CLEANING NORTH FORK INTAKE CLEANED OUT NORTH FORK INTAKE CLEANED OUT PLUNGE CREEK SANDBOX •October 19, 2022, a Valley District delivery valve malfunctioned •EVWD requested 2,000 gallons per minute (GPM) •Delivery system was stuck open delivering approximately 10,000- 12,000 GPM •Increase in water delivery caused an overflow event along the North Fork Pipe and adjacent manholes OVERFLOW OF NORTH FORK PIPELINE NORTH FORK INSPECTION BOX •Overflowed south side of Highland Avenue and east of Amber Street MANHOLE AND INSPECTION BOX REPAIRS NORTH FORK CANAL PIPELINE BLOCKAGE INVESTIGATION PIPELINE INVESTIGATION •Two entry points were made to inspect pipeline •Inspection revealed a pipe completely blocked with palm tree roots •No water flows could move through the North Fork pipeline due to the root intrusion PIPELINE INVESTIGATION •Staff identified overgrown palm trees on Highland Avenue between Surrey Lane and Amber Street PIPELINE SERVICE REPAIR – ACCESS POINT PIPELINE SERVICE REPAIR •After access point was created, staff pumped remaining water to begin root removal •Water removal further revealed pipeline was blocked with tree roots, mud and debris TREE ROOT REMOVAL PROCESS TEMPORARY REPAIRS & TESTING •After cleaning successful max flows were tested •12 cubic feet per second •5400 gallons per minute •7.75 million gallons per day •Root removal is a temporary fix and staff anticipate flow restrictions can occur due to future growth and root expansion NEW ACCESS MANHOLE INSTALLED •New North Fork access installed to assist with future inspection of the pipeline •Alarm installed to monitor flows and alert staff preventing overflow events NEXT STEPS •Developing a maintenance plan to inspect the North Fork pipe from Seven Oaks Dam to Plant 134 •Working with consultants to develop the best plan to repair or replace the pipe along the frontage of 28573 Highland Avenue •Assessing pretreatment of North Fork water before entering Plant 134 to utilize max flows when water quality is poor relative to current plant design Agenda Item #5 April 30, 20241 1 0 7 9 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager Subject:Consider Approval of Financial Statements for FY 2023-24 RECOMMENDATION: That the Board of Directors approve the financial statements for FY 2023-24. BACKGROUND / ANALYSIS: Section 5.05(c) of the North Fork Water Company (Company) Bylaws require that the Treasurer render to the Board of Directors (Board) an accounting of the Company’s transactions and financial condition at regular meetings of the Board. In order to comply with this section of the Bylaws, annual financial statements are prepared by staff, reviewed by an independent accounting firm, and presented to the Board at each annual shareholders’ meeting. Attached are the Company’s financial statements as of, and for the twelve months ended, January 31, 2024. The statements are presented in comparative form, prior to current year, to identify significant variances and deviations from expected results. Staff’s comments are below: Statement of Financial Position •Operating Cash decreased by 20% from $79,450 to $63,398 due to higher than expected outside services costs explained in the following paragraphs. Staff tries to maintain a cash balance of $80,000 to $100,000 to serve as a buffer when unexpected costs do arise, and will work to return the balance to that target range going forward. •Cash – Restricted for Capital Projects of $77,694 did not change during the year as no capital expenditures were incurred. •There were no additions to Property, Plant and Equipment during the year. Meeting Date: April 30, 2024 Agenda Item #5 Discussion Item Agenda Item #5 April 30, 20242 1 0 7 9 Statement of Activities •Weir Abandonments – No work was performed to repair or abandon water delivery weirs in the 2023-24 fiscal year as in the prior year. •Legal fees were more than 60% above the amount budgeted as the Company was engaged in two legal disputes, one involving two shareholders, and the other with a property owner over the alignment of one of the Company’s water transmission pipelines. •Contracted repairs and maintenance fees were more than 145% above the amount budgeted due to unexpected costs required to clear roots from major water transmission line services on the water main near Highland Avenue. •Professional services fees were more than 525% above the amount budgeted as the Company had unexpected surveying costs related to the pipeline alignment mentioned above. The financial statements were reviewed by the accounting firm of Rogers, Anderson, Malody & Scott (RAMS), who had no findings as a result of their review procedures. REVIEW BY OTHERS: This agenda item has been reviewed by the Administration and Finance Departments. FISCAL IMPACT: There is no fiscal impact associated with this agenda item. Agenda Item #5 April 30, 20243 1 0 7 9 Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Brian Tompkins Chief Financial Officer ATTACHMENTS: 1. Presentation 2. North Fork Financial Statements FY 2023-24 FINANCIAL STATEMENTS FY 2023-24 April 30, 2024 FINANCIAL STATEMENTS AND REPORTS •Annual Financial Report •Review Company’s Financial Position and Results of Operations •Instrument of Financial Disclosure INDEPENDENT ACCOUNTANT’S REVIEW NO FINDINGS STATEMENT OF FINANCIAL POSITION Assets Cash $ 63,398 Cash – Restricted for Capital Projects 77,695 Fixed Assets / Water Rights 3,515,862 Less: Accumulated Depreciation (909,623) Other Assets 12,139 TOTAL ASSETS $ 2,759,471 Liabilities $ 41,327 Shareholder Equity 2,718,144 TOTAL LIABILITIES & EQUITY $ 2,759,471 STATEMENT OF ACTIVITIES BUDGET ACTUAL Operating Labor / Equipment - EVWD $ 14,000 $ 11,550 Contract Maintenance 9,000 22,154 Legal Services 50,000 82,258 Other Professional Services 3,000 18,765 Administration 3,000 3,175 Materials & Supplies 0 25 Insurance 5,000 5,370 Property, Franchise Taxes 30,000 24,535 Depreciation 0 55,837 Operating Expenses $ 114,000 $ 223,669 Shareholder Assessment - Operating ($16)71,560 114,496 Change In Equity - Decrease $ 109,173 Table of Contents Schedule Page Organization Data 1 Independent Accountant’s Review Report Statements of Financial Position Statements of Activities 2 - 3 4 5 6Statements of Changes in Shareholders' Equity Statements of Cash Flows 7 Notes to Financial Statements 8 - 11 Supplementary Information Schedule of Property, Plant and Equipment, and Accumulated Depreciation One Two 12 - 13 14Schedule of Shareholders Statement of Financial Position Comments Three 15 i North Fork Water Company (A California Corporation) Organization Data January 31, 2024 and 2023 DATE AND STATE OF INCORPORATION 1885 - California DURATION OF CHARTER NATURE OF BUSINESS Perpetual Existence Water Company Located in Highland, California DATE OF EXEMPTION LETTER OFFICERS September 13, 1964 Phillip Goodrich James Morales, Jr. Brian Tompkins Justine Hendricksen President Vice President Chief Financial Officer Secretary DIRECTORS David Smith Ronald Coats James Morales, Jr. Phillip Goodrich Chris Carrillo MANAGER Under Agreement with East Valley Water District 1 2 3 North Fork Water Company (A California Corporation) Statements of Financial Position January 31, 2024 and 2023 2024 2023 ASSETS Current Assets Cash $63,398 $79,450 Cash - Restricted for Capital Projects Prepaid Expenses Assessments Receivable Total Current Assets 77,695 12,072 67 77,695 12,205 1,458 153,232 170,808 Property, Plant, and Equipment Improvements - Fencing 2,840 2,857,411 - 2,840 2,857,411 - Pipelines and Valves Construction In Progress Less: Accumulated Depreciation Total Property, Plant, and Equipment (909,623) 1,950,628 (853,786) 2,006,465 Other Assets Water Rights - January 31, 1952 655,611 655,611 Total Assets $2,759,471 $ $ 2,832,884 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $41,327 41,327 5,567 5,567Total Current Liabilities Balance, January 31, Capital Stock Authorized 7,200 Shares - 7,156 Issued and Outstanding at $100 Stated Value Additional Paid-In Capital 715,600 430,418 715,600 442,444 Contributed Capital Retained Earnings 1,343,540 228,586 1,381,386 287,887 Total Shareholders' Equity 2,718,144 2,827,317 Total Liabilities and Shareholders' Equity $2,759,471 $2,832,884 See accompanying notes and Independent Accountants' Review Report. 4 North Fork Water Company (A California Corporation) Statements of Activities For the years ended January 31, 2024 and 2023 2024 2023 Revenues Water Sales $-$- Expenses Repairs and Maintenance Labor and Equipment Contracted Weir Repairs / Abandonments Administration Accounting Fees Other Professional Services Legal Materials and Supplies Property Taxes 11,550 22,154 - 3,175 2,680 16,085 82,258 25 23,735 5,370 55,837 222,869 13,370 8,678 - 2,803 2,680 - 54,281 - 25,476 4,344 55,837 167,469 Insurance Depreciation Total Expenses Loss from Operations (222,869)(167,469) Provision for Income Taxes State Income Taxes 800 800 Excess of Expenses over Revenues before Contributions (223,669)(168,269) Contributions Shareholder Assessments - Operating 114,496 71,560 Change in Equity $(109,173)$(96,709) See accompanying notes and Independent Accountants' Review Report. 5 North Fork Water Company (A California Corporation) Statements of Changes in Shareholders' Equity For the years ended January 31, 2024 and 2023 January 31, 2024 Cumulative Excess of Revenue Over Shareholders' Common Stock Additional Contributed Capital Total Issued and Outstanding Paid-in Capital (Grant)Expenses $ 287,887 114,496 Equity $ 2,827,317 114,496 Balance, January 31, 2023 Shareholder Assessments $715,600 $ 442,444 $ 1,381,386 Excess of Expenses Over Revenues (223,669) 49,872 (223,669) -Allocate Depreciation (12,026)(37,846) Balance, January 31, 2024 $715,600 $ 430,418 $ 1,343,540 $ 228,586 $ 2,718,144 January 31, 2023 Cumulative Excess of Revenue Over Shareholders' Expenses $ 334,724 71,560 Common Stock Additional Contributed Capital Total Issued and Outstanding Paid-in Capital (Grant)Equity $ 2,924,026 71,560 Balance, January 31, 2022 Shareholder Assessments $715,600 $ 454,470 $ 1,419,232 Excess of Expenses Over Revenues (168,269) 49,872 (168,269) -Allocate Depreciation (12,026)(37,846) Balance, January 31, 2023 $715,600 $ 442,444 $ 1,381,386 $ 287,887 $ 2,827,317 See accompanying notes and Independent Accountants' Review Report. 6 North Fork Water Company (A California Corporation) Statements of Cash Flows For the years ended January 31, 2024 and 2023 2024 2023 (145,683) Cash Flows from Operating Activities Cash Paid for Services and Materials $(131,139) (800) $ Income Taxes Paid (800) Net Cash used by Operating Activities (131,939)(146,483) Cash Flows from Financing Activities Contributions from Shareholders to Pay Suppliers Net Cash Provided by Financing Activities 115,887 115,887 71,560 71,560 Cash Flows from Investing Activities Acquisition and Construction of Assets Net Cash used for Investing Activities - - - - Net Increase (Decrease) in Cash Cash, Beginning of Year (16,052) 157,145 (74,923) 232,068 Cash, End of Year $ $ 141,093 $ $ 157,145 Reconciliation of Excess of Expenses over Revenues to Net Cash Used By Operating Activities Excess of Revenue over (under) Expenses (223,669)(168,269) Adjustments: Depreciation Expense CIP Project 55,837 - 55,837 - (Increase) Decrease in: Prepaid Expenses 133 527 Increase (Decrease) in: Accounts Payable and Accrued Liabilities Income Taxes Payable 35,760 - (34,578) - Net Cash used by Operating Activities $(131,939)$(146,483) See accompanying notes and Independent Accountants' Review Report. 7 North Fork Water Company (A California Corporation) Notes to Financial Statements January 31, 2024 and 2023 NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations North Fork Water Company (the Company) is a mutual water company. The Company's primary purpose is to secure surface water from the Santa Ana River and other available sources for delivery to its shareholders in accordance with its delivery schedules and rules and regulations. Basis of Accounting The financial statements are presented in accordance with Financial Accounting Standards Board (FASB) using the accrual basis of accounting. Capitalization Policy The Company’s capitalization basis is cost if assets are purchased or constructed and acquisition value if assets are contributed. Depreciation of Plant and Equipment The carrying values of plant and equipment are depreciated over the estimated useful lives of the assets using the straight-line method. Provision for Income Taxes The Company is exempt from federal income taxes under Section 501(c)(12) of the Internal Revenue Code. Therefore, no provision for federal income taxes is reflected in the financial statements. State franchise tax is computed at the current corporate rate. For the fiscal years ended January 31, 2024 and 2023 state franchise taxes were $800. Use of Estimates The preparation of financial statements in conformity with United States generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, the actual results could differ from those estimates. 8 North Fork Water Company (A California Corporation) Notes to Financial Statements January 31, 2024 and 2023 NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – continued Cash and Cash Equivalents For purposes of the statement of cash flows, the North Fork Water Company considers cash and cash equivalents as short term, highly liquid investments that are both readily convertible to known amounts of cash and so near their maturity that they present insignificant risk of changes in value because of changes in interest rates. Cash equivalents have an original maturity date of three months or less from the date of purchase. As of January 31, 2024, the Company’s balance of funds on deposit with financial institutions did not exceed the federal depository insurance limit of $250,000. NOTE 2 - RELATED PARTY TRANSACTIONS As of January 31, 2024, East Valley Water District owned 99.87% of the outstanding shares of the Company. The Company and East Valley Water District have certain officers and all Board directors in common. The following related party transactions occurred for the years ending January 31, 2024 and January 31, 2023: • East Valley Water District paid the Company operating and capital assessments of $114,352 and $71,470, respectively. • The Company paid East Valley Water District for labor, administration, and use of vehicles in the amounts of $14,725 and $16,173, respectively. NOTE 3 - DEPARTURE FROM US GAAP As noted in Note 2, East Valley Water District owns 99.87% of the Company and appoints (or approve) a controlling majority of the members of the Company’s governing board. Under the AICPA’s Audit and Accounting Guide for State and Local Governments, this characterizes the Company as a governmental entity and therefore subject to the financial reporting standards required by the Governmental Accounting Standards Board (GASB). The accompanying financial statements were prepared in accordance with the reporting requirements of the Financial Accounting Standards Board (FASB) which represents a known departure from US GAAP. 9 North Fork Water Company (A California Corporation) Notes to Financial Statements January 31, 2024 and 2023 NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT A summary of changes in property, plant and equipment follows: Fixed Assets Balance Balance January 31, 2023 Additions Deletions January 31, 2024 Distribution System P ipe line s Ditch Diversion Boxes Valves $ $ 2,851,372 4,729 1,310 2,857,411 $ $ - - - - $- - - - $2,851,372 4,729 1,310 2,857,411 Improvements Fencing - North Fork Intake 2,840 - - - - 2,840 Total Fixed Assets 2,860,251 $$2,860,251 Accumulated Depreciation Balance January 31, 2023 Balance January 31, 2024AdditionsDeletions Distribution System P ipe line s Ditch Diversion Boxes Valves $(846,790) (3,562) (594) (850,946) $(55,676) (95) (66) (55,837) $- - - - $(902,466) (3,657) (660) (906,783) Improvements Fencing - North Fork Intake (2,840) (853,786) 2,006,465 - (55,837) (55,837) - - - (2,840) (909,623) 1,950,628 Total Accumulated Depreciation Total Fixed Assets, Net $ $ $ $ $ $ $ $ 10 North Fork Water Company (A California Corporation) Notes to Financial Statements January 31, 2024 and 2023 NOTE 5 - WATER RIGHTS There is an agreement dated May 23, 1895, between North Fork Water Company and Bear Valley Land and Water Company (now Bear Valley Mutual Water Company) that provides for delivery of water to North Fork Water Company as follows: Month Day Inches June 500 July 600 August 600 September October 550 450 November 400 December through May ¼ Flow of Santa Ana River at a point known as "The Divide" The water deliveries in the period June through November may be reallocated between months, but no more than 600 day inches are to be delivered in any one month. Water rights, as summarized above, have been valued at $655,611, which is the difference between the par value of the capital stock outstanding and the value of the remaining assets at January 31, 1952. NOTE 6 - ANNUAL SHAREHOLDER ASSESSMENTS Annual shareholder operating assessments were set at $16 per share for the year ended January 31, 2024. No capital assessments were levied during the year. NOTE 7 - SUBSEQUENT EVENTS In the preparation of these financial statements, the Company considered subsequent events through April 10, 2024, which is the date these financial statements were issued. 11 THIS PAGE IS LEFT BLANK INTENTIONALLY SUPPLEMENTARY INFORMATION North Fork Water Company (A California Corporation) Schedule One Page 1 of 2 Schedule of Property, Plant and Equipment, and Accumulated Depreciation January 31, 2024 January 31, 2024 Property, Plant and Equipment Accumulated Depreciation Date Acquired Beginning Balance Ending Balance Remaining Life Years Beginning Balance Ending BalanceProvision Canal Replacements Canals - 1/2 interest 1995 Various 1985 1995 1997 $41,862 67,610 4,729 8,958 37,511 $41,862 67,610 4,729 8,958 37,511 21 $23,023 67,610 3,562 5,102 19,499 $837 - 95 179 750 $23,860 67,610 3,657 5,281 20,249 Ditch Diversion Boxes Canals - 36" Pipeline Canal Replacement (La Tourette) Canal Replacement (Plunge Creek Syphon to Cram School) Pipeline Replacement 12 20 23 1999 68,937 68,937 25 33,107 1,380 34,487 90' of 26" Pipeline (behind Walmart) Pipeline Replacement 16" Pipeline (Highland Avenue) Canal Replacement 2002 2004 9,941 3,010 9,941 3,010 27 29 4,378 1,200 199 60 4,577 1,260 36" Pipeline - SAR to Plunge Creek Sandbox) Pipeline Replacement 50' of 30" DIP - Highland at VFW Hall 2009 2011 2,493,592 26,205 2,493,592 26,205 35.5 37 673,272 6,288 49,872 524 723,144 6,812 Pipeline Replacement 220' of 24" - SAR Xing to Turnout 6" Gate Valve (Wier 17) Pipeline Replacement 2014 2014 34,333 1,310 34,333 1,310 40 10 6,183 594 687 66 6,870 660 80' of 30" - SAR Xing at 7 Oaks Dam 2017 59,413 59,413 43 7,128 1,188 8,316 2,857,411 2,857,411 850,946 55,837 906,783 Improvements: Security Fencing - NF Intake Totals 2003 2,840 $ 2,860,251 2,840 $ 2,860,251 0 2,840 $ 853,786 2,840 $ 909,623$55,837 -Construction in Progress Various $-$-0 -- 12 North Fork Water Company (A California Corporation) Schedule One Page 2 of 2 Schedule of Property, Plant and Equipment, and Accumulated Depreciation January 31, 2023 January 31, 2023 Property, Plant and Equipment Accumulated Depreciation Date Acquired Beginning Balance Ending Balance Remaining Life Years Beginning Balance Ending BalanceProvision Canal Replacements Canals - 1/2 interest 1995 Various 1985 1995 1997 $41,862 67,610 4,729 8,958 37,511 $41,862 67,610 4,729 8,958 37,511 22 $22,186 67,610 3,467 4,923 18,749 $837 - 95 179 750 $23,023 67,610 3,562 5,102 19,499 Ditch Diversion Boxes Canals - 36" Pipeline Canal Replacement (La Tourette) Canal Replacement (Plunge Creek Syphon to Cram School) Pipeline Replacement 13 21 24 1999 68,937 68,937 26 31,727 1,380 33,107 90' of 26" Pipeline (behind Walmart) Pipeline Replacement 16" Pipeline (Highland Avenue) Canal Replacement 2002 2004 9,941 3,010 9,941 3,010 28 30 4,179 1,140 199 60 4,378 1,200 36" Pipeline - SAR to Plunge Creek Sandbox) Pipeline Replacement 50' of 30" DIP - Highland at VFW Hall 2009 2011 2,493,592 26,205 2,493,592 26,205 36.5 38 623,400 5,764 49,872 524 673,272 6,288 Pipeline Replacement 220' of 24" - SAR Xing to Turnout 6" Gate Valve (Wier 17) Pipeline Replacement 2014 2014 34,333 1,310 34,333 1,310 41 11 5,496 528 687 66 6,183 594 80' of 30" - SAR Xing at 7 Oaks Dam 2017 59,413 59,413 44 5,940 1,188 7,128 2,857,411 2,857,411 795,109 55,837 850,946 Improvements: Security Fencing - NF Intake Totals 2003 2,840 $ 2,860,251 2,840 $ 2,860,251 0 2,840 $ 797,949 2,840 $ 853,786$55,837 -Construction in Progress Various $5,281 $-0 -- 13 North Fork Water Company (A California Corporation) Schedule of Shareholders January 31, 2024 Schedule Two Number of SharesShareholderCertificate Number(s) Brucie Cagle East Valley Water District Michael & Patricia Raley 1373 1414 4.00 7,147.00 5.00 Total 7,156.00 14 North Fork Water Company (A California Corporation) Schedule Three Statement of Financial Position Comments January 31, 2024 and 2023 CURRENT ASSETS Current assets consisted of the following: 2024 141,093 2023 157,145Cash in Checking Prepaid Insurance Prepaid Taxes $ $ $ $ 2,418 9,654 67 1,985 10,220 1,458Assessments Receivable Totals 153,232 170,808 PROPERTY, PLANT AND EQUIPMENT A summary of property, plant and equipment, and accumulated depreciation is shown in Schedule One. The value of the one-half interest in canals was the appraised value in 1940, with subsequent additions being valued at cost. The provision for depreciation amounted to $55,837 computed at established rates using the straight-line method. CURRENT LIABILITIES Current liabilities consisted of the following: 2024 11,585 2023 Accounts Payable Contract Services Labor and Burden Legal - January Landscaping State Income Tax $ $ $- - - 3,771 18,803 1,365 - 5,803 41,327 - 800 EVWD Insurance Reimbursement Total Accounts Payable 4,767 5,567$ 15 Agenda Item #6 April 30, 20241 1 0 8 0 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager/CEO Subject:Consider Approval of Budget and Assessments for FY 2024-25 RECOMMENDATION: That the Board of Directors review and adopt the proposed FY 2024-25 Operating Budget of $165,000 with an Operating Assessment of $23 per share and Capital Assessment of $17 per share. BACKGROUND / ANALYSIS: Each year at the North Fork Water Company (NFWC or Company) annual shareholders’ meeting, staff presents proposed operating and capital budgets that predict the cost of service delivery for the upcoming year, including repairs to components of the Company’s water distribution system. DISCUSSION Operating Budget The Operating Budget funds routine operations and maintenance for the Company water delivery system. It also pays for administrative services such as record-keeping, legal services, and property taxes. Meeting Date: April 30, 2024 Agenda Item #6 Discussion Item Agenda Item #6 April 30, 20242 1 0 8 0 The Operating Budget proposed for fiscal year 2024-25 is shown below with prior year budget and actual numbers (excluding depreciation, a non-cash expense) for comparison: Item 2023-24 Adopted 2023-24 Actual 2024-25 Proposed Operations Labor $ 11,000 $ 7,634 $ 10,000 Equipment Charges 3,000 3,916 4,000 Contracted Maintenance 9,000 22,154 9,000 Administrative Labor 3,000 3,175 3,000 Professional Services 3,000 18,765 8,000 Legal Services 50,000 82,258 100,000 Materials & Supplies -25 100 Property / Franchise Taxes 30,000 24,535 25,000 General Insurance 5,000 5,370 5,900 TOTAL $ 114,000 $ 167,832 $ 165,000 In the table above staff proposes significant adjustments to Legal Services and Professional Services, both increases related to the dispute with a property owner over access to, and maintenance on, a Company water main. In order to support the Company’s position, unexpected surveying costs will be incurred, and both parties have filed complaints with the courts which will require increased legal services. In addition, the Company is involved in a dispute between two shareholder groups, also requiring legal services. Staff proposes to fund the 2024-25 Operating Budget through operating assessments of $23 per share. An assessment of this amount would provide $164,588, slightly less than the $165,000 of expenses in the proposed operating budget. Capital Improvements There is currently one capital project being proposed for funding consideration in the NFWC Capital Improvement Plan. That project is described below: •Plunge Creek Crossing – The purpose of this project is to repair leaks in the North Fork pipeline as it crosses Plunge Creek. There was no work performed in FY 2023-24, however EVWD is now proposing to include funds in this budget for design work to solve the leaky pipe issue. As half owner of the pipe, NFWC should contribute toward this design effort. The Plunge Creek Crossing project would likely require at least a $200,000 contribution from the North Fork Water Company in order to begin design and get the project ‘shovel ready’. Currently, Cash restricted for capital projects has a balance of $77,695, so staff is proposing a capital assessment of $17 per share in order to raise the Agenda Item #6 April 30, 20243 1 0 8 0 restricted cash balance to $193,347. REVIEW BY OTHERS: This agenda item has been reviewed by the Administration, Finance, and Operations Departments. FISCAL IMPACT: Adoption of the Operating Budget as presented authorizes operating expenses of $165,000 with shareholder operating assessments of $164,588 and capital assessments of $121,652. Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Brian Tompkins Chief Financial Officer ATTACHMENTS: Presentation BUDGET AND ASSESSMENTS April 30, 2024 PROPOSED 2024-25 BUDGET DESCRIPTION ADOPTED 2023-24 BUDGET PROPOSED 2024-25 BUDGET OPERATING EXPENSES Operating Labor/Equipment - EVWD $ 14,000 $ 14,000 Contract Services 9,000 9,000 Legal Services 50,000 100,000 Materials & Supplies -100 Administration 3,000 3,000 Other Professional Services 3,000 8,000 Insurance 5,000 5,900 Property/Franchise Taxes 30,000 25,000 TOTAL OPERATING EXPENSES $ 114,000 $ 165,000 PROPOSED 2024-25 OPERATING ASSESSMENTS $23 2024-25 ASSESSMENTS DESCRIPTION PROPOSED 2024-25 BUDGET Operating Expenses $ 165,000 TOTAL PROPOSED EXPENSES $ 165,000 Proposed Funding - 7,156 Shares Operating Assessment - $23 per share $ 164,588 Operating Cash - Current Balance $63,398 412 TOTAL FUNDING $ 165,000 PROPOSED 2024-25 CAPITAL ASSESSMENT $17 CAPITAL ASSESSMENTS DESCRIPTION PROPOSED 2024-25 BUDGET Proposed Projects Plunge Creek Crossing TBD Cash Restricted for Capital Projects Beginning Balance $ 77,695 Proposed Capital Assessment - $17 per share 121,652 Ending Balance $ 199,347