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HomeMy WebLinkAboutAgenda Packet - North Fork Water Company - 04/04/2023 (Annual BOD)BOARD OF DIRECTORS ANNUAL MEETING 31111 Greenspot Road, Highland, CA 92346  April 4, 2023 ­ 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 May 9, 2022 Board of Directors' Organizational Meeting Minutes 4.Consider Approval of Proposed FY 2023­24 Water Deliveries and Operational Update 5.Consider Approval of Financial Statements for FY 2022­23 6.Consider Approval of Budget and Assessments for FY 2023­24 DIRECTORS' COMMENTS RECESS INTO CLOSED SESSION 7.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 [Cross­Complaint: 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 4, 2023 ­ 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 May 9, 2022 Board of Directors' Organizational Meeting Minutes4.Consider Approval of Proposed FY 2023­24 Water Deliveries and Operational Update 5.Consider Approval of Financial Statements for FY 2022­23 6.Consider Approval of Budget and Assessments for FY 2023­24 DIRECTORS' COMMENTS RECESS INTO CLOSED SESSION 7.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 [Cross­Complaint: 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 4, 20231 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager Subject:Consider Approval of May 9, 2022 Board of Directors' Organizational Meeting Minutes RECOMMENDATION: That the Board of Directors approve the May 9, 2022 Board of Directors Organizational meeting minutes as submitted. REVIEW BY OTHERS: This agenda item has been reviewed by Administration. 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 May 9, 2022 Meeting Minutes Meeting Date: April 4, 2023 Agenda Item #3 Discussion Item NF Minutes 5/9/2022 sma Draft pending approval NORTH FORK WATER COMPANY 31111 GREENSPOT RD. HIGHLAND, CA 92346 BOARD OF DIRECTORS ORGANIZATIONAL MEETING May 9, 2022 MINUTES President Smith called the Annual Board of Directors meeting to order at 2:18 p.m. PRESENT: David Smith Phillip Goodrich Chris Carrillo Ronald Coats James Morales Jr. ABSENT: None EVWD Staff: John Mura Brian Tompkins Justine Hendricksen Jeff Noelte Kelly Malloy Patrick Milroy Shayla Antrim Mike Hurst Ryan Ritualo Ed King Brenda VanMeter Kerrie Bryan John Drury LEGAL COUNSEL: Michele Staples (North Fork Water Company) STOCKHOLDERS: East Valley Water District Michael Raley GUEST(S): Jean Cihigoyenetche (EVWD Legal Counsel) Members of the public APPROVAL OF AGENDA A motion was made by Director Coats, seconded by Director Carrillo that the Board approve the May 9, 2022 agenda as submitted. NF Minutes 5/9/2022 sma 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 2:19 p.m. Mr. Raley requested that the Board refer to his original document provided during the Annual Shareholder meeting as his public comment and be reflected in the minutes. There being no further written or verbal comments the public participation section was closed at 2:19 p.m. BOARD RE-ORGANIZATION ELECTION OF OFFICERS A motion was made by Director Carrillo, seconded by Director Coats that the current slate of officers be 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 •John Mura be appointed General Manager The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None The Board Secretary announced that President Goodrich will take his position as President. APPROVAL OF BOARD OF DIRECTORS ANNUAL MEETING MINUTES FOR APRIL 6, 2021 A motion was made by Vice President Morales, seconded by Director Coats that the Board approve the April 6, 2021 Board of Directors meeting minutes as submitted. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None NF Minutes 5/9/2022 sma PROPOSED FY 2022-23 WATER DELIVERIES AND OPERATIONAL UPDATE The Operations Manager provided an update on water deliveries and operations to the Board. Shareholder Raley asked a question regarding water deliveries and agreements between North Fork Water Company shareholders and East Valley Water District. Mr. Charles Kiel commented that he is pleased with the agreement he made with East Valley Water District and the ease of using the water through a meter. He asked a question regarding Weir 10 pertaining to water flowing downslope. A motion was made by Director Coats, seconded by Director Smith that the Board accept the FY 2022-23 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 2021-22 The Chief Financial Officer reviewed the Financial Report, executive summary and operating budget with the Board. A motion was made by Vice President Morales, seconded by Director Smith 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 BUDGET AND ASSESSMENTS FOR 2022-23 The Chief Financial Officer reviewed the proposed operating budget and fiscal year 2022-23 assessments. He stated that staff is proposing the 2022-23 operating budget be funded through a combination of assessments, at $10 per share, and operating cash on hand. Shareholder Raley made a comment regarding the figure of costs per share. He inquired about a new connection to the weir to receive water deliveries. The General Manager responded to Shareholder Raley’s comments. A motion was made by Vice President Morales, seconded by Director Smith that the Board approve the fiscal year 2022-23 operating budget and $10 assessment per share. NF Minutes 5/9/2022 sma The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None DIRECTORS’ COMMENTS No comments from the Board at this time. THE BOARD RECESSED INTO CLOSED SESSION AT 2:51 P.M. THE BOARD RECONVENED AT 3:26 P.M. ANNOUNCEMENT OF CLOSED SESSION ACTION ITEMS Legal Counsel stated that with respect to agenda item #7, no reportable action was taken in closed session. ADJOURN The meeting was adjourned at 3:26 p.m. _________________________ Phillip R. Goodrich, President ____________________________ Justine Hendricksen, Secretary Agenda Item #4 April 4, 20231 7 3 6 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager Subject:Consider Approval of Proposed FY 2023-24 Water Deliveries and Operational Update RECOMMENDATION: That the Board of Directors review and approve the proposed FY 2023-24 Delivery Schedule and Operational Update. BACKGROUND / ANALYSIS: The 1885 contract terms established specific water delivery obligations to the North Fork Water Company shareholders during contract and non-contract periods. There are a total of 7,156 shares with 99.87% being owned by East Valley Water District (EVWD). The contract months of June through November are assigned specific delivery obligations and non-contract months receive 25% of the Santa Ana River flow. Meeting Date: April 4, 2023 Agenda Item #4 Discussion Item Agenda Item #4 April 4, 20232 7 3 6 DISCUSSION The table below shows the proposed month by month water delivery schedule for FY 2023-24. Proposed FY 2023-24 Delivery Schedule Month Total Allocations Miner’s Inch Day (MID) River Flow CFS NF Share CFS NF Miner’s Inch Miner’s Inch per Share January 2023 ¼ of Santa Ana River 16 4.00 199 0.86 February 2023 ¼ of Santa Ana River 25 6.25 312 1.2 March 2023 ¼ of Santa Ana River 25 6.25 350 1.4 April 2023 ¼ of Santa Ana River 22 5.50 350 1.4 May 2023 ¼ of Santa Ana River 20 5.00 287 1.2 June 2023 500 500 2.0 July 2023 600 600 2.5 August 2023 600 600 2.5 September 2023 550 550 2.3 October 2023 450 450 1.9 November 2023 400 400 1.6 December 2023 (Estimate) ¼ of Santa Ana River 17 4.25 211 0.90 Operational Update: Last year staff focused time and energy on converting North Fork customers from the old inefficient weir delivery water method and made conversions to new modern metered deliveries. The old weirs that were no longer needed were removed and abandoned from the ditch. The focus this year has been the aboveground portion of the North Fork Pipe that crosses over Plunge Creek. This pipe continues to be a concern that often gets graffitied and vandalized. Staff believes leaks occur on the pipe due to both age of the pipe and vandalism. Next budget year the Engineering Department will design a plan to replace the Plunge Creek crossing. One alternative that will be evaluated is having the pipeline go under the Creek. Staff also performed cleaning and maintenance on the North Fork intake box. This critical structure delivers Santa Ana River water down the North Fork ditch to EVWD’s Surface Water Treatment Plant 134. The intake box receives raw water that is dirty and has not been through the treatment process. Staff determines the best time of year to stop water flows and complete maintenance on an annual cycle. Over time the structure becomes overgrown with weeds and dirt and must be Agenda Item #4 April 4, 20233 7 3 6 cleaned out to ensure the structure operates properly. 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 item. Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Patrick Milroy Operations Manager ATTACHMENTS: Presentation WATER DELIVERIES AND OPERATIONAL UPDATE April 4, 2023 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 2023 WATER DELIVERIES MONTH ALLOTMENT (MINER’S INCHES PER DAY) ALLOTMENT PER SHARE (MINER’S INCHES) January 199 0.86 February 312 1.2 March 350 1.4 April 350 1.4 May 287 1.2 June 500 2.0 July 600 2.5 August 600 2.5 September 550 2.3 October 450 1.9 November 400 1.6 December (Estimate)25%of River Flow 0.9 NORTH FORK PIPE EAST OF PLUNGE CREEK NORTH FORK PIPE CROSSING PLUNGE CREEK PLUNGE CREEK LEAKS PLUNGE CREEK REPAIR NORTH FORK INTAKE BOX BEFORE CLEANING NORTH FORK INTAKE BOX CLEANING NORTH FORK INTAKE CLEANED OUT Agenda Item #5 April 4, 20231 7 3 7 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager Subject:Consider Approval of Financial Statements for FY 2022-23 RECOMMENDATION: That the Board of Directors approve the financial statements for FY 2022-23. 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, 2023. The statements are presented in comparative form, prior to current year, in order to identify significant variances and deviations from expected results. Staff’s comments are below: Statement of Financial Position •Operating Cash decreased by 48% from $154,374 to $79,452, most of the decrease was anticipated and/or planned. The prior year balance of $154,374 was artificially high due to $40,000 in accounts payable at the end of last year. Once those vendors were paid, the cash balance dropped to approximately $115,000. In addition, last year’s operating assessment of $10 per share did not cover budgeted expenses, by design, in order to reduce operating cash on hand by an additional $20,000. Staff will try to maintain this cash balance within a target range of $80,000 to $100,000 going forward. •Cash – Restricted for Capital Projects of $77,694 did not change during the year as no capital expenditures were incurred. •Assessment receivables balance of $1,458 is payable by East Valley Water District as the result of acquiring shares two years ago. Payment should have been received from the Meeting Date: April 4, 2023 Agenda Item #5 Discussion Item Agenda Item #5 April 4, 20232 7 3 7 District during the year but was overlooked; payment has been received subsequent to January 31, 2023. •There were not additions to Property, Plant and Equipment during the year. Statement of Activities •Weir Abandonments – no work was performed to repair or abandon water delivery weirs in the 2022-23 fiscal year as in the prior year. •Legal fees were more than twice the amount budgeted as the Company was pulled into legal proceedings between shareholders involved in the eminent domain process. 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. Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Brian Tompkins Chief Financial Officer ATTACHMENTS: 1. Presentation 2. North Fork Financial Statements FY 2022-23 FINANCIAL STATEMENTS FY 2022-23 April 4, 2023 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 $ 79,450 Cash –Restricted for Capital Projects 77,695 Fixed Assets / Water Rights 3,515,862 Less: Accumulated Depreciation (853,786) Other Assets 13,663 TOTAL ASSETS $ 2,832,884 Liabilities $ 5,567 Shareholder Equity 2,827,317 TOTAL LIABILITIES & EQUITY $ 2,832,884 STATEMENT OF ACTIVITIES BUDGET ACTUAL Operating Labor / Equipment -EVWD $ 14,000 $ 13,370 Contract Maintenance 8,000 8,678 Legal Services 25,000 54,281 Other Professional Services 2,900 2,680 Administration 3,000 2,803 Materials & Supplies 100 0 Insurance 8,000 4,344 Property, Franchise Taxes 30,000 26,276 Depreciation 0 55,837 Operating Expenses $ 91,000 $ 168,269 Shareholder Assessment -Operating ($10)71,560 71,560 Change In Equity -Decrease $ 96,709 Table of Contents Schedule Page Organization Data 1 Independent Accountants’ 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, 2023 and 2022 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, 2023 and 2022 2023 2022 ASSETS Current Assets Cash $79,450 $154,373 Cash - Restricted for Capital Projects Prepaid Expenses Assessments Receivable Total Current Assets 77,695 12,205 1,458 77,695 12,732 1,458 170,808 246,258 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 (853,786) 2,006,465 (797,949) 2,062,303 Other Assets Water Rights - January 31, 1952 655,611 655,611 Total Assets $2,832,884 $ $ 2,964,172 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $5,567 5,567 40,146 40,146Total Current Liabilities Balance, January 31, Capital Stock Authorized 7,200 Shares - 7,156 Issued and Outstanding at $100 Stated Value Additional Paid-In Capital 715,600 442,444 715,600 454,470 Contributed Capital Retained Earnings 1,381,386 287,887 1,419,232 334,724 Total Shareholders' Equity 2,827,317 2,924,026 Total Liabilities and Shareholders' Equity $2,832,884 $2,964,172 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, 2023 and 2022 2023 2022 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 13,370 8,678 - 2,803 2,680 - 54,281 - 25,476 4,344 55,837 167,469 12,745 7,800 82,440 2,212 2,600 - 20,905 25 28,959 7,314 55,837 220,837 Insurance Depreciation Total Expenses Loss from Operations (167,469)(220,837) Provision for Income Taxes State Income Taxes 800 800 Excess of Expenses over Revenues before Contributions (168,269)(221,637) Contributions Shareholder Assessments - Operating 71,560 92,995 Change in Equity $(96,709)$(128,642) 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, 2023 and 2022 January 31, 2023 Cumulative Excess of Revenue Over Shareholders' Common Stock Additional Contributed Capital Total Issued and Outstanding Paid-in Capital (Grant)Expenses $ 334,724 71,560 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 January 31, 2022 Cumulative Excess of Revenue Over Shareholders' Expenses $ 413,494 92,995 Common Stock Additional Contributed Capital Total Issued and Outstanding Paid-in Capital (Grant)Equity $ 3,052,668 92,995 Balance, January 31, 2021 Shareholder Assessments $715,600 $ 466,496 $ 1,457,078 Excess of Expenses Over Revenues (221,637) 49,872 (221,637) -Allocate Depreciation (12,026)(37,846) Balance, January 31, 2022 $715,600 $ 454,470 $ 1,419,232 $ 334,724 $ 2,924,026 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, 2023 and 2022 2023 2022 (130,884) Cash Flows from Operating Activities Cash Paid for Services and Materials $(145,683) (800) $ Income Taxes Paid - Net Cash used by Operating Activities (146,483)(130,884) Cash Flows from Financing Activities Contributions from Shareholders to Pay Suppliers Net Cash Provided by Financing Activities 71,560 71,560 93,510 93,510 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 (74,923) 232,068 (37,374) 269,442 Cash, End of Year $ $ 157,145 $ $ 232,068 Reconciliation of Excess of Expenses over Revenues to Net Cash Used By Operating Activities Excess of Revenue over (under) Expenses (168,269)(221,637) Adjustments: Depreciation Expense CIP Project 55,837 - 55,837 - (Increase) Decrease in: Prepaid Expenses 527 5,716 Increase (Decrease) in: Accounts Payable and Accrued Liabilities Income Taxes Payable (34,578) - 28,400 800 Net Cash used by Operating Activities $(146,483)$(130,884) See accompanying notes and Independent Accountants' Review Report. 7 North Fork Water Company (A California Corporation) Notes to Financial Statements January 31, 2023 and 2022 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, 2023 and 2022 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, 2023 and 2022 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, 2023, 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, 2023, 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, 2023 and January 31, 2022: • East Valley Water District paid the Company operating and capital assessments of $71,470 and $92,599, respectively. • The Company paid East Valley Water District for labor, administration, and use of vehicles in the amounts of $16,173 and $14,956, 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, 2023 and 2022 NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT A summary of changes in property, plant and equipment follows: Fixed Assets Balance Balance January 31, 2022 Additions D e le tions January 31, 2023 Distribution System P ipelines Ditch D ive rsion 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, 2022 Balance January 31, 2023AdditionsD e le tions Distribution System P ipelines Ditch D ive rsion Boxes Valves $(791,114) (3,467) (528) (795,109) $(55,676) (95) (66) (55,837) $- - - - $(846,790) (3,562) (594) (850,946) Improvements Fencing - North Fork Intake (2,840) (797,949) 2,062,302 - (55,837) (55,837) - - - (2,840) (853,786) 2,006,465 Total Accumulated D epreciation Total Fixed Assets, Net $ $ $ $ $ $ $ $ 10 North Fork Water Company (A California Corporation) Notes to Financial Statements January 31, 2023 and 2022 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 D ivide " 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 $10 per share for the year ended January 31, 2023. 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 March 17, 2023, 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, 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 $-$-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, 2022 January 31, 2022 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 23 $21,349 67,610 3,372 4,744 17,999 $837 - 95 179 750 $22,186 67,610 3,467 4,923 18,749 Ditch Diversion Boxes Canals - 36" Pipeline Canal Replacement (La Tourette) Canal Replacement (Plunge Creek Syphon to Cram School) Pipeline Replacement 14 22 25 1999 68,937 68,937 27 30,347 1,380 31,727 90' of 26" Pipeline (behind Walmart) Pipeline Replacement 16" Pipeline (Highland Avenue) Canal Replacement 2002 2004 9,941 3,010 9,941 3,010 29 31 3,980 1,080 199 60 4,179 1,140 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 37.5 39 573,528 5,240 49,872 524 623,400 5,764 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 42 12 4,809 462 687 66 5,496 528 80' of 30" - SAR Xing at 7 Oaks Dam 2017 59,413 59,413 45 4,752 1,188 5,940 2,857,411 2,857,411 739,272 55,837 795,109 Improvements: Security Fencing - NF Intake Totals 2003 2,840 $ 2,860,251 2,840 $ 2,860,251 0 2,840 $ 742,112 2,840 $ 797,949$55,837 -Construction in Progress Various $5,281 $-0 -- 13 North Fork Water Company (A California Corporation) Schedule of Shareholders January 31, 2023 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, 2022 and 2021 CURRENT ASSETS Current assets consisted of the following: 2023 157,145 2022 232,068Cash in Checking P repaid Insurance P repaid Taxes $ $ $ $ 1,985 10,220 1,458 1,564 11,168 1,458Assessments Receivable Totals 170,808 246,258 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: 2023 2022 34,283 Accounts P ayable Contract Services $- - - $ $ Labor and Burden Legal - January Landscaping 659 - 650- State Income Tax 800 800 EVWD Insurance Reimbursement Total Accounts P ayable 4,767 5,567 3,754 40,146$ 15 Agenda Item #6 April 4, 20231 7 3 9 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager Subject:Consider Approval of Budget and Assessments for FY 2023-24 RECOMMENDATION: That the Board of Directors review and adopt the proposed FY 2023-24 Operating Budget of $114,000 and an Operating Assessment of $16 per share. No Capital Budget or Capital Assessments are proposed. 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 4, 2023 Agenda Item #6 Discussion Item Agenda Item #6 April 4, 20232 7 3 9 The Operating Budget proposed for fiscal year 2023-24 is shown below with prior year budget and actual numbers (excluding depreciation, a non-cash expense) for comparison: Item 2022-23 Adopted 2022-23 Actual 2023-24 Proposed Operations Labor $ 11,000 $ 10,732 $ 11,000 Equipment Charges 3,000 2,638 3,000 Contracted Maintenance 8,000 8,678 9,000 Administrative Labor 3,000 2,803 3,000 Professional Services 2,900 2,680 3,000 Legal Services 25,000 54,281 50,000 Materials & Supplies 100 -- Property / Franchise Taxes 30,000 26,276 30,000 General Insurance 8,000 4,344 5,000 TOTAL $ 91,000 $ 112,432 $ 114,000 As shown in the table, staff is proposing minor adjustments to Contract Maintenance, Professional Services and Insurance, and a significant adjustment to Legal Services. Legal costs were $29,281 over budget in 2022-23 due to a cross-complaint filed in court against the Company. Since that complaint is still pending, staff is proposing an increased budget for fiscal year 2023-24. Staff proposes that the 2023-24 Operating Budget be funded through operating assessments of $16 per share. An assessment of this amount would provide $114,496, slightly more than the $114,000 of expenses in the proposed operating budget. The proposed budget and assessments would result in an operating cash balance of approximately $80,000 at the end of the fiscal year. Capital Improvements The NFWC Capital Improvement Program (CIP) has two capital projects, 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 is currently no funding available to this project as the future relevance of the entire pipeline came into question with the idea of building an East End Treatment Plant. 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. Staff recommends that restricted capital funds totaling $77,695 be transferred from the Facility Abandonment project. •Facility Abandonments – The purpose of this project is to effectively and safely abandon weirs, pipes, and other open facilities that are no longer needed. No work was performed in FY 2022-23, and there is no immediate need for additional work in the near future, so staff recommends that $77,695 held for this project instead be earmarked for the Plunge Creek Crossing project for fiscal year 2023-24. Agenda Item #6 April 4, 20233 7 3 9 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 $114,000 and shareholder assessments of $114,496. Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Brian Tompkins Chief Financial Officer ATTACHMENTS: Presentation BUDGET AND ASSESSMENTS April 4, 2023 PROPOSED 2023-24 BUDGET DESCRIPTION ADOPTED 2022-23 BUDGET PROPOSED 2023-24 BUDGET OPERATING EXPENSES Operating Labor/Equipment -EVWD $ 14,000 $ 14,000 Contract Services 8,000 9,000 Legal Services 25,000 50,000 Materials & Supplies 100 - Administration 3,000 3,000 Other Professional Services 2,900 3,000 Insurance 8,000 5,000 Property/Franchise Taxes 30,000 30,000 TOTAL OPERATING EXPENSES $ 91,000 $ 114,000 PROPOSED 2023-24 ASSESSMENTS $16 2023-24 ASSESSMENTS $0 CAPITAL ASSESSMENTS DESCRIPTION PROPOSED 2023-24 BUDGET Proposed Expenses Operating Expenses $ 114,000 Capital Expenditures 0 TOTAL PROPOSED EXPENSES $ 114,000 Proposed Funding -7,156 Shares Operating Assessment -$16 per share $ 114,496 Operating Cash -Current Balance $79,452 - Capital Assessment 0 TOTAL FUNDING $ 114,496 CAPITAL IMPROVEMENT PROGRAM RECOMMENDED REVISIONS TO CAPITAL RESERVE (RESTRICTED CASH) CAPITAL IMPROVEMENT PROJECT FUNDS – BEGINNING PROPOSED REVISION FUNDS - ENDING Plunge Creek Crossing $ 0 $ 77,695 $ 77,695 Facility Abandonments 77,695 (77,695)0 TOTAL $ 77,695 $ 0 $ 77,695