VIRGIN VALLEY WATER DISTRICT REGULAR BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
SEPTEMBER 15, 2009

Minutes of a Regular Board Meeting of the Virgin Valley Water District Board held on September 15, 2009, at the Virgin Valley Water District Office at 3:00 p.m. Attending were President John Paul, Vice-President Kenyon Leavitt, Secretary-Treasurer Cecil Leavitt, and Board Member Ted Miller. Board Member Robert “Bubba” Smith was not present. Also present were Michael Winters General Manager, Eric Wilbanks District Administrative Legal Counsel, John Gleave District CFO and Mary Johnson taking minutes and other interested parties of agenda items.

President John Paul called the meeting to order at 3:00 p.m.
Cecil Leavitt offered a Prayer and Ted Miller led the pledge.
Public Comment – There was no public comment at this time.

Discussion: Board Comments - None
President of Board Comments - None

CONSENT AGENDA:

Ted Miller questioned the invoice from George Benesch and why we were still receiving invoices. Mike Winters explained that George was still working with Boomer handling water rights issues, the Longview litigation and the Vanguard Pipe litigation. Ted stated that he thought we would only use Mr. Benesch if Bingham & Snow authorized. Cecil commented that the Administrative Attorneys, Bingham & Snow, have stated that their expertise is not in water rights or matters dealing with the BLM. John Paul stated that Bingham & Snow were designated as the District’s General Counsel, but that we have not removed Mr. Benesch’s duties as pertaining to the items mentioned by Mr. Cecil Leavitt. John Paul asked Ted if he would like to direct staff to make an item for the next regularly scheduled board meeting for discussion and decision. Ted stated that he would like to do that and he would forward something to Mary to put on the agenda.

Kenyon Leavitt made a motion to approve the consent agenda as listed below. Cecil Leavitt seconded this motion and it was unanimously carried. 4-0

1. Discussion & Action - Approve Agenda

2. Discussion & Action – Approve Minutes from 08/18/09 Regular Board Meeting

3. Discussion & Action – Approve Bills Paid - $1,611,351.28

** End of Consent Agenda**

4. Discussion & Possible Action – Consideration of the Potential Purchase of the Building Presently Owned by Bulloch Brothers Engineering in the Red Cliffs Commercial Center Located at 750 W. Pioneer Blvd., Mesquite, Nevada and Issues Related to Such Potential Purchase, Including, But Not Limited to, the Purchase Price for Such Building; Modifications to Such Building and the Costs of Such Modifications; Use of Such Building and the Virgin Valley Water District’s Existing Facilities and the Potential Purchase of Bulloch Brothers Engineering’s Existing Furnishings in the Building

A letter from Gregory Bulloch, President of Bulloch Brothers Engineering (BBE), was received inquiring if the District would be interested in purchasing their building located at 750 W. Pioneer Boulevard within the Red Cliffs Commercial Center. Mike informed the board that he had been approached by Bulloch Brothers a couple months ago and he spoke with John Paul and Cecil Leavitt and was instructed to obtain an appraisal for the property in question. Mr. Rick Smith performed an appraisal for the District in which the building appraised for 1.7 million dollars. BBE also had an appraisal on the building performed in February of 2008 and were proposing to sell their building to the District for $2,394,000 for 12,000 square feet, and if sold furnished, they would request an additional $200,000. There are currently two tenants within the building paying a combined lease amount of approximately $2,500 per month. Mike Winters again stated that the District’s current building is too small and in need of expansion. John Gleave, District CFO, informed the board that funds have been borrowed and the District is able to spend this money on designated capital improvements. Mike also stated that he had met with Chuck Bentley with Pride Construction regarding modifications to the building to satisfy the District’s needs and these changes could be made for $100,000 or less.

Ted Miller stated that the District currently has a debt of 43 million and the interest on this debt was $327,000 last month. Ted further stated that the bond payments were to be paid by growth and impact fees collected within the last four months would not pay the interest for one month; sales income is down; ¼ cent sales tax is down; and the District had a net profit last year of a negative $809.000 for the past 10 months. Ted also stated that there were over 1,500 finished lots within Mesquite that impact fees had been paid for and that Pulte had that many lots or more and it would be several years before we would be seeing any monies coming in. Ted thought that we should take these funds from the 2008 bond and reduce the District’s debt and that the District would most likely have to have a rate increase in the near future.

John Paul stated that he felt that there should be a full board before any decision was made on a matter of this importance and recommended tabling this item.

Kenyon Leavitt wanted to clarify something Ted had said and stated that even if the District reduced their debt with the $13 million by paying down bonds, we would still have to pay interest on the bonds. John Gleave stated that the District was paying 4.7% interest on the 2008 bond and you could not pay off bond directly, you would have to put it to some other type of investment, and it would earn 1 or 2%. It would be a loss of some type. You would reduce your debt service, but you would still have to pay the 4.7% interest. Mike Winters further commented that a new law has been passed and you cannot buy bond insurance for projects under $100 million and you would lose your AAA rating. Cecil questioned John Gleave regarding the District’s debt, fixed assets, percentage of increases on the rate payers and financially you have to look at more than just the liability, but you also have an asset. Mike Winters stated that the board needed to make a decision and that he has not heard anything from Bubba and didn’t know his feelings, but thought that the board should go ahead and vote and John Paul stated that he would be willing to go ahead and vote on this item today if that is what the other board members would like. Kenyon further stated that he had the same concerns as before about building or buying a building and that it is the timing and he feels that the bond money should be used for other capital improvement projects as the recharge system and drilling wells.

John Paul opened the item to the public. Ron Larsen with Mesa Construction wanted to hear from Eric Roberts with SH Architecture and also stated that the cost of construction has dropped 30 to 40 % and they, as others, spent money to meet specific criteria to meet the needs of the VVWD and this was not comparing apples to apples and they should have a chance to rebid. There was further discussion and comments heard from the public, Eric Roberts, Mike Winters and board members.

Kenyon Leavitt made a motion not to pursue the purchase of the building presently owned by Bulloch Brothers Engineering. Ted Miller seconded this motion and it was carried by a vote of 3 to 1 with Cecil Leavitt opposed. 3-1

5. Discussion & Possible Action – Consideration of the Construction of a New Building to Serve as the Virgin Valley Water District’s Administration and Construction Offices and Related Issues, Including, But Not Limited to, the Design of Such Building; the Location of Such Building; the Possible Acquisition of Land for Such Building; the Construction of Such Building on Land Presently Held by the Virgin Valley Water District in Bunkerville, Nevada; the Potential Sale of the Building Presently Occupied by the Virgin Valley Water District; and Solicitation and Review of Bids for the Construction of Such a Building

Kenyon Leavitt stated that once again we have kicked this dog over and over again and with his last motion, this just carries on and it is just not the time to build a building. Cecil Leavitt stated that if we voted no for spending 2.5 million on a building then we certainly would not want to spend up to 4 million or more on building a building.

Cecil Leavitt made a motion not to do anything with this item at this time and that we put the building to bed, period. Ted Miller seconded this motion.

John Paul opened the item to public comment. Larry Swensen with Westland Construction stated that you could re-bid the project and that you could build what you wanted for half the amount. Other comments were made regarding the Bunkerville site and that now was not the time for government to sit on money because it would bring jobs.

John Paul called for a vote on the motion and it was carried unanimously. 4-0

6. General Manager’s Report

Mike had not included a written report. Mike stated that the last arsenic plant was just about complete and was scheduled to start up next week and that the water coming from the plants was well below the .10 ppb. Mike further stated that Boomer was up at well #30 and that was why he was not present and hopefully they would be starting well #30 by the end of the week. Mike also informed the board that he would not be present for the first meeting in October. Mike explained the correspondence regarding Southern Nevada Health District and if a sample came back bad and that additional testing would be required going back to the source, which of course would be more expensive.

7. Hydrologist’s Report

Michael had not included a written report nor was he present.

8. Public Comment

Joe Bowler asked if the board was not buying any water since they did not purchase Bob Draskovich’s water shares and was informed that the board does not have a policy not to buy and that they would consider buying on an individual basis. Kraig Hafen commented on the irrigation water and Mike Chandler stated that they were preparing to put the Hardy Way Arsenic Site on line and offered a field trip to the board members of the arsenic plants.

9. Adjournment

President John Paul adjourned the meeting at 4:23 p.m.

The minutes of this meeting have been tape-recorded and will remain on file in the District office for a one-year period for public examination.

• Board Meeting Minutes: 2009-09-15 (.pdf 24K)