VIRGIN VALLEY WATER DISTRICT REGULAR BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
OCTOBER 20, 2009

Minutes of a Regular Board Meeting of the Virgin Valley Water District Board held on October 20, 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, Michael “Boomer” Johnson District Chief Hydrologist, 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.
Kenyon Leavitt offered a Prayer and Ted Miller led the pledge.
Public Comment – Don Paff of Bunkerville addressed the Board Members in letter format regarding the hiring of Bingham & Snow as District Legal Counsel.

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

CONSENT AGENDA:

Mike Winters wanted to clarify the minutes on item #10 in that legal counsel for Longview Construction interpreted the newspaper article as stating the District had agreed to the settlement agreement and Mike wanted to make it clear that the motion was not to approve the settlement agreement and that the settlement agreement would not be signed. Eric Wilbanks stated that in item #12, second paragraph, that he believed a board member had originally suggested that the matter of the Barcelona Motorcoach contract be placed on the next agenda and that Bo Bingham had reiterated that the issue could be placed on the next agenda. Eric Wilbanks indicated that he believed John Paul had originally stated that the Barcelona Motorcoach contract should be placed on the next agenda. Eric Wilbanks also indicated that he would like the minutes for item #12 to be corrected if his memory of the events was correct. [After re-listening to the minutes, President John Paul did state that “he imagined that this would be on the next board meeting to take some action if this was still the case”, and Bo Bingham did say ….. “what we would propose is that we would put this on the next agenda and the board can decide to take any action…..”]

Kenyon Leavitt made a motion to approve the consent agenda as listed below with the minutes of the October 6th meeting held off until we know for sure the clarification of item #12. Cecil Leavitt seconded this motion and it was unanimously carried. 4-0

1. Discussion & Action - Approve Agenda

2. Discussion & Action – Approve Minutes from 10/6/09 Regular Board Meeting-Held off until clarification of item #12 at the next meeting.

3. Discussion & Action – Approve Bills Paid - $177,752.39

4. Discussion & Action – Approve Purchase Orders Over $2,500
a. National Auto Tools - $2,900.00 – Maintenance Equipment to Mount & Balance Tires
b. Singer Valve - $16,302.40 – Pressure Reducing Valves for 2009 PRV Project

** End of Consent Agenda**

5. Discussion & Possible Action – Consideration to Purchase Up to Eight (8) Bunkerville Irrigation Shares from Bunk Farms, LLC – Requested by Bunk Farms, LLC

Mike stated that the District received a request from Trent Graves and Duane Magoon, representing Bunk Farms, LLC to sell eight shares of Bunkerville Irrigation water at $80,056.23/share for a total of $640,449.84. Mike added that these shares were currently leased by SNWA as of 10/1/09 for a two year term and Bunk Farms, LLC had received a lease amount of $22,340.48 for the first year of the lease and that this amount could be deducted from the purchasing price for a total of $618,109.36. Preliminary talks with SNWA conclude that they would continue with the lease with the VVWD if these shares are purchased. Cecil explained that we should figure out an amount that Bunk Farms, LLC where they receive the first month lease amount since it was effective October 1st and it will be more toward the end of the month before the District would purchase and the District would only be entitled to 23 months of the lease. Mike asked if you could make a motion not to exceed the $640,000, plus change? Eric Wilbanks stated that we could purchase contingent upon appropriate adjustments. Ted questioned if SNWA was still leasing water and the length of time it would take the District to make their money back if they did lease to SNWA. The GM and other board members stated that we were purchasing an asset and that we could sell the water or we need the water for future needs and we were not trying to re-coup our money. Kenyon further stated that we did not purchase Bob Draskovich’s water because we did not have the funds in the ordinance II account, but if we can purchase water from the 2008 bond, we should purchase all the water we can. Ted stated that we could take the money from the 2008 bond and pay off, or down, debt. John Gleave stated that you can allocate or refund money to the bonds and he explained how it was more flexible than he first thought. Cecil then explained the District’s bond rating and how that could be damaged.

Kenyon Leavitt made a motion to purchase eight (8) shares at $80,056.23 per share from Bunk Farms, LLC and that the General Manager work out with them regarding the lease agreement with SNWA and also added on to that we continue on with the lease agreement with SNWA for the duration of the two years. Cecil Leavitt seconded this motion and it was carried by a vote of 3-1 with Ted Miller opposed. 3-1

6. Discussion & Possible Action – Consideration to Purchase Thirty-Five (35) Bunkerville Irrigation Shares from Cresent Hardy – Requested by Cresent Hardy

Mike stated that this was the same as the last item in regards to a lease with SNWA and the purchase price was $80,056.23/share or $2,801,968.05 and with the lease amount deducted in would only be 2.7 million total. Duane Magoon stated that he did not think that Cresent’s shares were leased by SNWA. There was further discussion regarding the price of water and how it has changed through the years. Duane Magoon spoke and stated that he had just spoken with Cresent Hardy on the telephone and he did not lease his shares to the SNWA.

Kenyon Leavitt made a motion to purchase thirty-five (35) Bunkerville Irrigation shares from Cresent Hardy for $80,056.23 per share. Cecil Leavitt seconded this motion and it was passed by a vote of 3 to 1 with Ted Miller opposed. 3-1

7. Discussion & Possible Action – Consideration of Handling of, and Operation Under, Ordinance II Agreement with Barcelona Motorcoach, LLC Following Breaches of Said Agreement by Barcelona Motorcoach, LLC

Eric Wilbanks stated that the back-up materials provided summarized the situation. Basically the payments that were to be made under the Ordinance II agreement thus far have been late and in addition, the Deed of Trust to be provided against the property and it was to be executed along with the initial agreement and recorded and that was not done until mid October, so there have been multiple breaches. Mr. Mike Kennedy stated that he did not receive the final draft of the agreement until after 5:00 p.m. on August 31, 2009. Mr. Kennedy stated that after he reviewed the agreement he sent a check without an executed agreement and his understanding was that there was no specific date as which the Deed of Trust was to be recorded and did not think that they were in breach of the contract. He further stated they were acting in good faith and would continue to do so and that he was giving his assurance that future payments would be received at the District on time. John Paul asked for counsel’s opinion. Eric Wilbanks wanted to clarify a couple issues raised by Mr. Kennedy that he was correct on the initial agreement and it was not finalized until approximately the 1st or 2nd of September. As far as the execution of the Deed of Trust, the agreement itself specified that the Deed of Trust was to be executed contemporaneously with the agreement, so there was a deadline set within the agreement. After Eric realized that this document had not been provided, he left a few voice messages with Mr. Kennedy checking up on the status and this was followed up by e-mail and we did finally get a copy of the Trust Deed. The one that has been recorded is not actually the one that Bingham & Snow office drafted and believes that the Trust Deed that Bingham & Snow drafted would be more preferable for the District and would provide more protection for the District and they would want to file this Trust Deed if the District wishes to continue with the contract. Mr. Kennedy commented that he has been in touch with the title company and they are awaiting the Trust Deed prepared by Bingham & Snow and when received they will replace it with the one that is filed now. There was further discussion as to when they required water and that both parties actually having been at fault for delays.

Cecil Leavitt made a motion that the Ordinance II Agreement with Barcelona Partners, LLC be reinstated as written with the two different violations taken into consideration and that the payment is due October 31, 2009 for October’s payment and if the payment is not received by 5:00 on the 31st of October; the violation then carries through with the terminology and the penalty for the agreement as it is written. Kenyon Leavitt seconded this motion and it was unanimously carried. 4-0

8. General Manager’s Report

Mike had not included a written report. Mike informed the board that he would have an item on the next agenda for the board to consider regarding having moved the emergency generator from well #30 to well #31 and now it will not start due to rats having chewed through the wiring. Mike further stated that he has been given a quote of over $100,000 to repair the generator, but he would like them to come here and pick up the generator and have them check it out before any repairs are done and he is also looking at other alternatives.
Mike Chandler was present and updated the board on the arsenic plants stating that all five sites were operational; and that the seven day test at the Hardy Way Site has been completed.

9. Hydrologist’s Report

Michael had not included a written report. He informed the board that he had attended the Virgin River Water Shed meeting and tour and that they had gone from Cedar Pockets to Halfway Wash where tilapia was found where we were planning on putting the Ranney Collector. Boomer further informed the board that he would have the aqua guard treatment on the next agenda for approval. Well #31 production has dropped off and he would like to pull and do pump maintenance before this well is needed for peak production. Well #30 has been running since September 29th. The Bureau of Reclamation is looking at amending the agreement at Halfway Wash.

10. Public Comment

There was no public comment at this time.

11. Adjournment

President John Paul adjourned the meeting at 4:20 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: 2009-10-20 (.pdf 20K)