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HomeMy WebLinkAboutAgenda Packet - North Fork Water Company - 4/1/2025 (Annual BOD)BOARD OF DIRECTORS ANNUAL MEETING 31111 Greenspot Road, Highland, CA 92346  April 1, 2025 ­ 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 30, 2024 Board of Directors' Organizational Meeting Minutes 4.FY 2025­26 North Fork Delivery Schedule and Operations Update 5.Consider Approval of Financial Statements for FY 2024­25 6.Consider Approval of Budget and Assessments for FY 2025­26 DIRECTORS' COMMENTS 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 1, 2025 ­ 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 30, 2024 Board of Directors' Organizational Meeting Minutes4.FY 2025­26 North Fork Delivery Schedule and Operations Update 5.Consider Approval of Financial Statements for FY 2024­25 6.Consider Approval of Budget and Assessments for FY 2025­26 DIRECTORS' COMMENTS 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 1, 20251 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:General Manager Subject:Consider Approval of April 30, 2024 Board of Directors' Organizational Meeting Minutes RECOMMENDATION: That the Board of Directors approve the April 30, 2024 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 30, 2024 Meeting Minutes Meeting Date: April 1, 2025 Agenda Item #3 Discussion Item NF Minutes 4/30/2024 sma 1 5 7 9 Draft Pending Approval NORTH FORK WATER COMPANY 31111 GREENSPOT RD. HIGHLAND, CA 92346 BOARD OF DIRECTORS ORGANIZATIONAL MEETING April 30, 2024 MINUTES President Goodrich called the Annual Board of Directors meeting to order at 2:09 p.m. PRESENT: Phillip Goodrich James Morales Jr. Chris Carrillo Ronald Coats David Smith ABSENT: None EVWD Staff: Michael Moore Brian Tompkins Justine Hendricksen Patrick Milroy Rudy Guerrero Micah Kennedy Jamie Leon John Drury Shayla Antrim LEGAL COUNSEL: Michele Staples (North Fork Water Company) Boyd Hill (North Fork Water Company) STOCKHOLDERS: East Valley Water District Michael Raley GUEST(S): Jean Cihigoyenetche (EVWD Legal Counsel) Caroline Kiel Ray NF Minutes 4/30/2024 sma 1 5 7 9 APPROVAL OF AGENDA A motion was made by Director Smith, seconded by Vice President Morales that the Board approve the April 30, 2024 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 2:10 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. He also asked why the Brown Act was referenced for a private company. Legal Counsel responded that it is due to the East Valley Water District Board, which must follow the Brown Act, having a quorum in attendance. There being no further written or verbal comments, the public participation section was closed at 2:12 p.m. BOARD RE-ORGANIZATION ELECTION OF OFFICERS A motion was made by Director Carrillo, seconded by Vice President Morales to elect the slate of officers as follows: •James Morales, Jr. be appointed Board President •Ronald L. Coats 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 The Board Secretary announced that President Morales will now take his position as Board President. NF Minutes 4/30/2024 sma 1 5 7 9 APPROVAL OF BOARD OF DIRECTORS ANNUAL MEETING MINUTES FOR APRIL 4, 2023 A motion was made by Director Smith, seconded by Director Goodrich that the Board approve the April 4, 2023 Board of Directors meeting minutes as submitted. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None PROPOSED FY 2024-25 WATER DELIVERIES AND OPERATIONAL UPDATE The Operations Manager presented a proposed water delivery schedule for the Fiscal Year 2024-25 and provided an operational update. He informed the Board about the recent leaks on the Plunge Creek Pipeline and the cleaning of the North Fork intake box. He also discussed the challenges caused by tree roots in the North Fork Pipeline and suggested developing a maintenance program to ensure that the pipeline remains free of tree roots and debris. Shareholder Raley asked what would happen if they were unable to accept water and what would become of the unclaimed water. In response, the General Manager explained that if they couldn't take delivery of the water, it would flow downstream. Raley then inquired whether East Valley Water District would receive credits for the unclaimed water. The General Manager replied that no credits were issued to anyone that year. Director Goodrich inquired about the age of the North Fork Pipeline/Ditch. Mr. Milroy stated that the ditch has been in service since 1885. The General Manager clarified that the concrete pipeline was installed in the canal in the late 80’s and reached approximately half its life expectancy. President Morales asked for clarification regarding the pretreatment process of water and inquired how staff view the inside of the pipelines. Mr. Milroy responded that they perform visual inspections through access points and also by utilizing robots. He clarified that pretreatment consists of clearing debris from the pipeline. A motion was made by Director Coats, seconded by Director Smith that the Board accept the FY 2024-25 Water Deliveries and Operational Update as submitted. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None NF Minutes 4/30/2024 sma 1 5 7 9 FINANCIAL STATEMENTS FOR FY 2023-24 The Chief Financial Officer presented the Financial Report, executive summary, and operating budget to the Board for review. He stated that the cash reserves are at an all-time low. He also stated that litigation and tree-root issues were impacting the budget and causing it to exceed the actuals. A motion was made by Vice President Coats, seconded by Director Goodrich 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 2024-25 The Chief Financial Officer reviewed the proposed operating budget and fiscal year 2024-25 assessments. He stated that significant adjustments were made to Legal Services and Professional Services due to ongoing litigation. He proposed an operating assessment of $23 per share to fund the 2024-25 operating budget and a capital assessment of $17 per share to raise the restricted cash balance in order to fund the Plunge Creek Crossing Project. A motion was made by Director Goodrich, seconded by Vice President Coats that the Board approve the fiscal year 2024-25 operating budget, $23 operating assessment per share, and $17 capital assessment per share. The motion carried by the following: Ayes: Carrillo, Coats, Goodrich, Morales, Smith Noes: None Absent: None DIRECTORS’ COMMENTS President Morales thanked Director Goodrich for his service as Board President of the North Fork Water Company. THE BOARD RECESSED INTO CLOSED SESSION AT 2:47 P.M. THE BOARD RECONVENED AT 3:31 P.M. ANNOUNCEMENT OF CLOSED SESSION ACTION ITEMS Legal Counsel stated that no reportable action was taken in closed session. NF Minutes 4/30/2024 sma 1 5 7 9 ADJOURN The meeting was adjourned at 3:32 p.m. _________________________ James Morales, Jr., President ____________________________ Justine Hendricksen, Secretary Agenda Item #4 April 1, 2025 1 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To: Governing Board Members From: Operations Manager Subject: FY 2025-26 North Fork Delivery Schedule and Operations Update RECOMMENDATION: That the North Fork Water Company Board of Directors accept and file the FY 2025-26 North Fork Delivery Schedule and Operational Update. BACKGROUND / ANALYSIS: The 1885 contract terms established specific water delivery obligations for the North Fork Water Company (Company) shareholders. Delivery obligations are specified as contract and non-contract months. The contract months of June through November are assigned specific delivery obligations and non-contract months receive 25% of the river flow. Water deliveries December through April will be 2.0-2.5 Miner’s Inch (MI) per share. Delivery amounts for June through November will be at the contracted amounts in accordance with the Company’s contract. East Valley Water District (District) is the only shareholder with an active connection to the Company’s pipeline. The District takes delivery of entitled water at their surface water treatment Plant 134. Contract deliveries can be interrupted due to emergencies or weather to protect Company facilities. In the event of a significant rainfall of more than one-half inch, deliveries will automatically be halted. The Company has two events that may interrupt water deliveries in FY 2025-26. First, damage to a pipeline owned by Southern California Edison has prevented water from bypassing the Seven Oaks Dam (Dam). As a result, all water deliveries to the Company must pass through the dam, which occasionally results in poor water quality. When water quality does not meet the required standards, deliveries to shareholders are temporarily interrupted. Second, the Line Fire in 2024 damaged the North Fork Pipeline near Plunge Creek. The Meeting Date: April 1, 2025 Agenda Item #4 Discussion Item Agenda Item #4 April 1, 2025 2 pipeline is currently shut down until it can be repaired, which may disrupt deliveries to shareholders in summer 2025. The chart below shows the proposed month-by-month water delivery schedule excluding required shutdowns mentioned above: 2025 Delivery Schedule Month Miner’s Inch Day (MID) River Flow CFS NF Share CFS NF Miner’s Inch Miner’s Inch per Share January 2025 (Actual) ¼ of Santa Ana River 40 10 500 2.0 February 2025 (Actual) ¼ of Santa Ana River 48 12 600 2.4 March 2025 (Actual) ¼ of Santa Ana River 48 12 600 2.5 April 2025 (Estimate) ¼ of Santa Ana River 48 12 600 2.5 May 2025 (Estimate) ¼ of Santa Ana River 48 12 600 2.5 June 2025 500 40 10 500 2.0 July 2025 600 48 12 600 2.5 August 2025 600 48 12 600 2.5 September 2025 550 44 11 550 2.3 October 2025 450 36 9 450 1.9 November 2025 400 32 8 400 1.6 December 2025 (Estimate) ¼ of Santa Ana River 40 10 500 2.0 Agenda Item #4 April 1, 2025 3 Pipeline and Access Repairs: The District operates and maintains the North Fork facilities on behalf of the Company and monitors the North Fork pipeline for leaks and repairs them as necessary. The North Fork Intake Box is cleaned annually for optimal operation. The North Fork pipeline at Plunge Creek required a temporary repair in 2024 to enable water delivery. The repair required 10 feet of new steel pipe to be installed with a cost of $16,800. Subsequently, the Line Fire further damaged the pipeline which requires additional repairs in the same area. The North Fork pipeline near Highland Avenue, and east of Amber Street has experienced blockages in the past due to tree root intrusion into the pipeline. Staff inspected the pipeline and observed evidence of root intrusion in Winter 2024. The pipeline will continue to be monitored in FY 2025-26 to determine if root maintenance and repairs are necessary. REVIEW BY OTHERS: This agenda item has been reviewed by East Valley Water District staff. FISCAL IMPACT: There is no fiscal impact associated with this agenda item. Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ___________________________ Patrick Milroy Operations Manager ATTACHMENTS: FY 2025-26 Water Deliveries and Operational Update Presentation FY 2025-26 WATER DELIVERIES AND OPERATIONAL UPDATE April 1, 2025 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 2025 WATER DELIVERIES MONTH ALLOTMENT (MINER’S INCHES PER DAY) ALLOTMENT PER SHARE (MINER’S INCHES) January (Actual)500 2.0 February (Actual)600 2.4 March (Actual)600 2.5 April (Estimate)600 2.5 May (Estimate)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 LINE FIRE/PLUNGE CREEK PIPE CROSSING CUT OUT 10 FEET OF PIPE TO REPAIR LEAK PIPE REPAIR •10 feet of new steel pipe •$16,800 PLUNGE CREEK QUOTES TO REPLACE 36 INCH ABOVE GROUND PIPE Quotes •Merlin Johnson Construction $310,000 •WEKA $454,825 •TK Construction $846,000 NORTH FORK INTAKE BOX BEFORE CLEANING NORTH FORK INTAKE CLEANED OUT •Staff identified overgrown palm trees on Highland Avenue between Surrey Lane and Amber Street PIPELINE INVESTIGATION PIPELINE INVESTIGATION •Summer 2023 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 INSPECTED NOVEMBER 2024 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 1, 20251 1 3 6 3 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:Chief Financial Officer Subject:Consider Approval of Financial Statements for FY 2024-25 RECOMMENDATION: That the Board of Directors approve the financial statements for FY 2024-25. 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. 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, 2025. 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 23%, from $63,398 to $48,781, primarily due to higher-than-expected outside services costs (detailed below). Staff aims to maintain a cash balance between $60,000 and $80,000 as a buffer for unexpected expenses and will work to restore the balance to that target range. •Cash – Restricted for cash increased from $77,695 in the prior year to $199,347, driven by the $17 per share assessment for capital projects. •There were no additions to Property, Plant and Equipment during the year. Statement of Activities •Legal expenses came in below budget, as the Company made adjustments after exceeding the prior year's budget by more than 60%. The Company remains engaged in two legal disputes: one involving outstanding shareholders and Meeting Date: April 1, 2025 Agenda Item #5 Discussion Item Agenda Item #5 April 1, 20252 1 3 6 3 another concerning a property owner’s challenge to the alignment of a water transmission pipeline. •Contracted repairs and maintenance costs exceeded the budget by more than 63% due to the Company covering half the cost of repairing the 36” Plunge Creek leak following the Line Fire. •Despite a 166% increase in the professional services budget compared to the prior year, actual spending for FY2024-25 still exceeded the budget by 159%. The overage is primarily due to continued surveying costs related to the pipeline alignment dispute 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. Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Brian Tompkins Chief Financial Officer ATTACHMENTS: Presentation-NF Financial Statements North Fork Financial Statements FY 2024-25 FINANCIAL STATEMENTS FY 2024-25 April 1, 2025 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 $ 48,781 Cash - Restricted for Capital Projects 199,347 Fixed Assets / Water Rights 3,515,862 Less: Accumulated Depreciation (965,460) Other Assets 13,813 TOTAL ASSETS $ 2,812,343 Liabilities $ 39,315 Shareholder Equity 2,773,028 TOTAL LIABILITIES & EQUITY $ 2,812,343 STATEMENT OF ACTIVITIES BUDGET ACTUAL Operating Labor / Equipment - EVWD $ 14,000 $ 9,046 Contract Maintenance 9,000 14,679 Legal Services 100,000 97,005 Other Professional Services 8,000 20,762 Administration 3,000 1,814 Materials & Supplies 100 321 Insurance 5,900 8,860 Property, Franchise Taxes 25,000 23,032 Depreciation 0 55,837 Operating Expenses $ 165,000 $ 231,356 Shareholder Assessment - Operating 114,496 164,588 Shareholder Assessment - Capital 0 121,652 Change In Equity - Increase $ 54,884 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, 2025 and 2024 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 James Morales, Jr. Ronald Coats 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, 2025 and 2024 2025 2024 ASSETS Current Assets Cash $48,781 $63,398 Cash - Restricted for Capital Projects Prepaid Expenses Assessments Receivable Total Current Assets 199,347 13,583 230 77,695 12,072 67 261,941 153,232 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 (965,460) 1,894,791 (909,623) 1,950,628 Other Assets Water Rights - January 31, 1952 655,611 655,611 Total Assets $2,812,343 $ $ 2,759,471 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts Payable $39,315 39,315 41,327 41,327Total Current Liabilities Balance, January 31, Capital Stock Authorized 7,200 Shares - 7,156 Issued and Outstanding at $100 Stated Value Additional Paid-In Capital 715,600 418,392 715,600 430,418 Contributed Capital Retained Earnings 1,305,694 333,342 1,343,540 228,586 Total Shareholders' Equity 2,773,028 2,718,144 Total Liabilities and Shareholders' Equity $2,812,343 $2,759,471 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, 2025 and 2024 2025 2024 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 9,046 14,679 - 1,814 2,770 17,992 97,005 321 22,232 8,860 55,837 230,556 11,550 22,154 - 3,175 2,680 16,085 82,258 25 23,735 5,370 55,837 222,869 Insurance Depreciation Total Expenses Loss from Operations (230,556)(222,869) Provision for Income Taxes State Income Taxes 800 800 Excess of Expenses over Revenues before Contributions (231,356)(223,669) Contributions Shareholder Assessments - Operating Shareholder Assessments - Capital 164,588 121,652 114,496 - Change in Equity $54,884 $(109,173) 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, 2025 and 2024 January 31, 2025 Cumulative Excess of Revenue Over Shareholders' Common Stock Additional Contributed Capital Total Issued and Outstanding Paid-in Capital (Grant)Expenses $ 228,586 286,240 Equity $ 2,718,144 286,240 Balance, January 31, 2024 Shareholder Assessments $715,600 $ 430,418 $ 1,343,540 Excess of Expenses Over Revenues (231,356) 49,872 (231,356) -Allocate Depreciation (12,026)(37,846) Balance, January 31, 2025 $715,600 $ 418,392 $ 1,305,694 $ 333,342 $ 2,773,028 January 31, 2024 Cumulative Excess of Revenue Over Shareholders' Expenses $ 287,887 114,496 Common Stock Additional Contributed Capital Total Issued and Outstanding Paid-in Capital (Grant)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 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, 2025 and 2024 2025 2024 (131,139) Cash Flows from Operating Activities Cash Paid for Services and Materials $(178,242) (800) $ Income Taxes Paid (800) Net Cash used by Operating Activities (179,042)(131,939) Cash Flows from Financing Activities Contributions from Shareholders to Pay Suppliers Net Cash Provided by Financing Activities 286,077 286,077 115,887 115,887 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 107,035 141,093 (16,052) 157,145 Cash, End of Year $ $ 248,128 $ $ 141,093 Reconciliation of Excess of Expenses over Revenues to Net Cash Used By Operating Activities Excess of Revenue over (under) Expenses (231,356)(223,669) Adjustments: Depreciation Expense CIP Project 55,837 - 55,837 - (Increase) Decrease in: Prepaid Expenses (1,511)133 Increase (Decrease) in: Accounts Payable and Accrued Liabilities Income Taxes Payable (2,012) - 35,760 - Net Cash used by Operating Activities $(179,042)$(131,939) See accompanying notes and Independent Accountants' Review Report. 7 North Fork Water Company (A California Corporation) Notes to Financial Statements January 31, 2025 and 2024 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, 2025 and 2024 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, 2025 and 2024 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, 2025, 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, 2025, East Valley Water District owned 99.93% 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, 2025 and January 31, 2024: • East Valley Water District paid the Company operating and capital assessments of $285,880 and $114,352, respectively. • The Company paid East Valley Water District for labor, administration, and use of vehicles in the amounts of $10,860 and $14,725, respectively. NOTE 3 - DEPARTURE FROM US GAAP As noted in Note 2, East Valley Water District owns 99.93% 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, 2025 and 2024 NOTE 4 - PROPERTY, PLANT, AND EQUIPMENT A summary of changes in property, plant and equipment follows: Fixed Assets Balance Balance January 31, 2024 Additions Deletions January 31, 2025 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, 2024 Balance January 31, 2025AdditionsDeletions Distribution System P ipe line s Ditch Diversion Boxes Valves $(902,466) (3,657) (660) (906,783) $(55,676) (95) (66) (55,837) $- - - - $(958,142) (3,752) (726) (962,620) Improvements Fencing - North Fork Intake (2,840) (909,623) 1,950,628 - (55,837) (55,837) - - - (2,840) (965,460) 1,894,791 Total Accumulated Depreciation Total Fixed Assets, Net $ $ $ $ $ $ $ $ 10 North Fork Water Company (A California Corporation) Notes to Financial Statements January 31, 2025 and 2024 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 August 600 600 September 550 October 450 November 400 December through May ¼ Flow of Santa Ana River 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 $23 per share and capital assessments were set $17 per share for the year ended January 31, 2025. NOTE 7 - SUBSEQUENT EVENTS In the preparation of these financial statements, the Company considered subsequent events through March 26, 2025, 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, 2025 January 31, 2025 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 20 $23,860 67,610 3,657 5,281 20,249 $837 - 95 179 750 $24,697 67,610 3,752 5,460 20,999 Ditch Diversion Boxes Canals - 36" Pipeline Canal Replacement (La Tourette) Canal Replacement (Plunge Creek Syphon to Cram School) Pipeline Replacement 11 19 22 1999 68,937 68,937 24 34,487 1,380 35,867 90' of 26" Pipeline (behind Walmart) Pipeline Replacement 16" Pipeline (Highland Avenue) Canal Replacement 2002 2004 9,941 3,010 9,941 3,010 26 28 4,577 1,260 199 60 4,776 1,320 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 34.5 36 723,144 6,812 49,872 524 773,016 7,336 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 39 9 6,870 660 687 66 7,557 726 80' of 30" - SAR Xing at 7 Oaks Dam 2017 59,413 59,413 42 8,316 1,188 9,504 2,857,411 2,857,411 906,783 55,837 962,620 Improvements: Security Fencing - NF Intake Totals 2003 2,840 $ 2,860,251 2,840 $ 2,860,251 0 2,840 $ 909,623 2,840 $ 965,460$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, 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 -- 13 North Fork Water Company (A California Corporation) Schedule of Shareholders January 31, 2025 Schedule Two Number of SharesShareholderCertificate Number(s) East Valley Water District Michael & Patricia Raley 7,151.00 1414 5.00 Total 7,156.00 14 North Fork Water Company (A California Corporation) Schedule Three Statement of Financial Position Comments January 31, 2025 and 2024 CURRENT ASSETS Current assets consisted of the following: 2025 248,128 2024 141,093Cash in C hecking P repaid Insurance P repaid Taxes $ $ $ $ 4,599 8,984 230 2,418 9,654 67Assessments Receivable Tota ls 261,941 153,232 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: 2025 17,992 2024 11,585 Accounts P ayable Contract Services Labor and Burden Legal - December & January Landscaping State Income Tax EVW D Insurance Reimbursement Total Accounts P ayable $ $ $ $ 2,532 6,347 1,400 - 11,044 39,315 3,771 18,803 1,365 - 5,803 41,327 15 Agenda Item #6 April 1, 20251 1 3 6 4 NORTH FORK WATER COMPANY AGENDA STAFF REPORT To:Governing Board Members From:Chief Financial Officer Subject:Consider Approval of Budget and Assessments for FY 2025-26 RECOMMENDATION: That the Board of Directors review and adopt the proposed FY 2025-26 Operating Budget of $169,000 with an Operating Assessment of $23.50 per share and Capital Budget of $155,000 with a Capital Assessment of $0.00 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 1, 2025 Agenda Item #6 Discussion Item Agenda Item #6 April 1, 20252 1 3 6 4 The Operating Budget proposed for fiscal year 2025-26 is shown below with prior year budget and actual numbers (excluding depreciation, a non-cash expense) for comparison: Item 2024-25 Adopted 2024-25 Actual 2025-26 Proposed Operations Labor $ 10,000 $ 6,591 $ 10,000 Equipment Charges 4,000 2,455 4,000 Contracted Maintenance 9,000 14,679 9,000 Administrative Labor 3,000 1,814 3,000 Professional Services 8,000 20,762 8,500 Legal Services 100,000 97,005 100,000 Materials & Supplies 100 321 500 Property / Franchise Taxes 25,000 23,032 25,000 General Insurance 5,900 8,860 9,000 TOTAL $ 165,000 $ 175,519 $ 169,000 In the table above, staff proposes minor budget adjustments to Professional Services and Materials/Supplies, while recommending a significant increase to the General Insurance budget. East Valley Water District experienced a 90% increase in Property and Liability insurance costs for FY 2024-25, rising from $1.16 million in FY 2023-24 to $2.2 million in the current year. Of this total, NFWC covers a proportionate 0.5% share. In March 2025, we received a letter from our policyholder indicating a minor increase for next year, which we have incorporated into the FY 2025-26 budget. Additionally, we did not adjust Contract Services, despite exceeding the budget by 63%, as this overage was due to the Plunge Creek pipe crossing repair. For FY 2025-26, staff proposes funding the Operating Budget through an operating assessment of $23.50 per share. This assessment would generate $168,166, which is slightly below the $169,000 in proposed expenses for the operating budget. Capital Improvements Currently, one capital project is being proposed for funding consideration in the NFWC Capital Improvement Plan: •Plunge Creek Crossing – The purpose of this project is to repair leaks in the North Fork pipeline as it crosses Plunge Creek. A pipe repair was completed during FY 2023-24; however, East Valley Water District is now proposing to allocate funds for the designing and construction of a permanent solution to the issue. As a joint owner of the pipeline, NFWC is expected to contribute to this effort. The Plunge Creek Crossing project is estimated to require at least a $155,000 contribution from NFWC to initiate the design and construction of a long-term fix. Currently, the restricted cash balance for capital projects stands at $199,347, which is sufficient to cover the cost. Therefore, staff is not proposing an additional capital assessment at this time. Agenda Item #6 April 1, 20253 1 3 6 4 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 $169,000 with shareholder operating assessments of $168,166. Recommended by: ____________________________ Michael Moore General Manager Respectfully submitted: ____________________________ Brian Tompkins Chief Financial Officer ATTACHMENTS: Presentation-NF Budget and Assessments FY 2025-26 BUDGET AND ASSESSMENTS April 1, 2025 PROPOSED 2025-26 BUDGET DESCRIPTION ADOPTED 2024-25 BUDGET PROPOSED 2025-26 BUDGET OPERATING EXPENSES Operating Labor/Equipment -EVWD $ 14,000 $ 14,000 Contract Services 9,000 9,000 Legal Services 100,000 100,000 Materials & Supplies 100 500 Administration 3,000 3,000 Other Professional Services 8,000 8,500 Insurance 5,900 9,000 Property/Franchise Taxes 25,000 25,000 TOTAL OPERATING EXPENSES $ 165,000 $ 169,000 PROPOSED 2025-26 OPERATING ASSESSMENTS $23.50 2025-26 ASSESSMENTS DESCRIPTION PROPOSED 2025-26 BUDGET Operating Expenses $ 169,000 TOTAL PROPOSED EXPENSES $ 169,000 Proposed Funding - 7,156 Shares Operating Assessment - $23.50 per share $ 168,166 Operating Cash - Current Balance $48,781 834 TOTAL FUNDING $ 169,000 PROPOSED 2025-26 CAPITAL ASSESSMENT $0 CAPITAL ASSESSMENTS DESCRIPTION PROPOSED 2025-26 BUDGET Proposed Projects Replace 36” Aboveground Pipe at Plunge Creek $ 155,000 Cash Restricted for Capital Projects Beginning Balance $ 199,347 Proposed Capital Assessment - $0 per share 0 Ending Balance $ 44,347