VIRGIN VALLEY WATER DISTRICT REGULAR BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
MARCH 2, 2010

Minutes of a Regular Board Meeting of the Virgin Valley Water District Board held on March 2, 2010, at the Virgin Valley Water District Office at 3:00 p.m. Attending were President John Paul, Vice-President Karl Gustaveson, Secretary-Treasurer Kenyon Leavitt, and Board Members Ted Miller and Mark McEwen. Also present were William “Pete” Peterson Interim General Manager, Eric Wilbanks District Legal Counsel 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 Mark McEwen led the pledge.

Public Comment – Harold Sersland presented a statement to the Board of Directors with questions related to the District’s water supply and is interested in having some verification of the District’s firm culinary water supply that has been approved by the Nevada State Engineer and how much secondary water is available.

Discussion: Board Comments – Kenyon Leavitt stated that a couple weeks ago after we let Mike Winters go, we had a couple board members go to a meeting with our employees and in that meeting there were some comments made that he thinks were very inappropriate and didn’t need to be said. Kenyon further stated that he had spoken to one of the people that were there and he adamantly denied that it was him that had said it, even though that the employees that Kenyon talked to, said that he was definitely the one, or one of them that said it; the employee(s) actually said that both people there said it; “that we fired Mike Winters and if anyone of you have a problem with that, there’s the door”. Kenyon stated that his concern is that this board hires the general manager. This board does not hire the people in the back. That is administrative policy. It is the general manager’s responsibility to take care of those people, not this board; and a comment made like that is completely out of line. Kenyon also stated that was not our intent for them to go there and put any kind of scare tactic or whatever the case may be in these employees. When the employee(s) came to me, they were concerned about their jobs asking if they were the next on the chopping block. Kenyon further commented that the employees of this Water District, a limited number of people that do an excellent job with the manpower that we have, and I think that those people, both in the front and in the back should get an apology and I think that it was completely out of line to make a comment like that.

Mark McEwen stated that this was interesting, because although Kenyon and he had not talked, Mark has prepared comment on exactly the same thing because an employee came to him and said that he was at that meeting where the two board members who were there the day after Mr. Winters was fired and one of the board members said, and this is a quote from the employee, “Mr. Winters was fired last night, anyone who doesn’t like it, there’s the door.” Mark further stated that it doesn’t matter what was said, the remarks were threatening and that essentially whoever made that comment, you were saying if you disagree, leave employment. Mark stated that these types of remarks destroy the cooperation and harmony that we need to move on from the past and that the lines of communication should always be open and dissent should never be discouraged. No matter what was said, employees of that meeting left there feeling like their jobs were threatened and the lines of communication were closed. Mark further stated to the President of the board that he was calling upon him to make an apology, specifically to those employees at that meeting and generally to the employees of the Water District, and Mark also stated the he was calling on all the board members to join in that apology.

Karl Gustaveson stated that he had overheard rumors of the same thing as well, but that he wasn’t there so he couldn’t attest to what was said or what wasn’t said there, but that he totally agrees with what Mark said, absolutely, 100%. Karl further stated that he has spoken to all employees of the water company that he’s seen and has tried to give them some reinforcement and stated that things are going well. Karl further commented that this should have probably been dealt with sooner, if that is in fact, what happened.

Kenyon stated that he did talk to one of the board members that was there and that board member said he was going to take care of it, but that it hadn’t been taken care of and that is why he has brought it up now.

John Paul stated that he was at that meeting and he was certain that there was no intention of that taking place, but if that’s what took place and people had the feeling that they were being threatened, it certainly wasn’t his intention and he apologized for them getting that impression if it was from him or if it was from wherever.

Ted Miller stated that he was the other person at that meeting and if that was what was said, he certainly didn’t hear it that way. Ted further stated that he doesn’t feel he owes an apology to anybody for the words that he said. Ted further stated that he thought very carefully about the words that he was going to say and that’s what he said. Ted further stated that he had spoken with Kenyon about this and if he said he was going to handle it; Kenyon did not understand him correctly. Ted further stated that he didn’t feel he owed anyone an apology.

John Paul reiterated his apology on behalf of the entire board and hopefully the employees do not feel threatened and do not feel that we undermine their position or anything like that.

Mark McEwen asked for one last comment and wanted to make it very clear with the employees present that all his phone numbers are always available to any employee for any concerns that they may have.

President of Board Comments - None

CONSENT AGENDA:

John Paul requested that item 5b, if not the entire item 5 be pulled from the consent agenda and discussed separately. Eric Wilbanks stated that Bo wanted some changes made to the minutes of the special meeting on February 22, 2010 and the minutes of item 2, on this agenda, of the closed session on February 2, 2010. Eric stated that it would probably be easier if these were tabled and revised and put back on the agenda for approval at the next board meeting.

Karl Gustaveson made a motion to approve consent agenda items 1 and 4 and bring back items 2 and 3 at the next meeting and move items 5 to the first item on the regular agenda.

Kenyon questioned the motion and asked if there were some changes on the 16th minutes, which there were none.

Karl Gustaveson restated his motion to approve consent agenda items 1, 2 and 4 and bring back item 3 at the next meeting and to move items 5 to the first item on the regular agenda. Kenyon Leavitt seconded this motion and it was unanimously carried. 5-0

1. Discussion & Action - Approve Agenda – Item 3 removed and to be brought back at the next meeting and item 5 to be the first item on the regular agenda

2. Discussion & Action – Approve Minutes from 02/16/2010 Regular Board Meeting

4. Discussion & Action – Approve Bills Paid - $459,022.37

** End of Consent Agenda**

5. Discussion & Action – Approve Purchase Orders Over $2,500
A. Legacy Construction - $6,360.00 – Electric Gate Opener for Scenic Arsenic Site
B. Mountainland - $3,122.36 – Reservoir Maintenance Required by Health Dept.

Karl commented that he thought that there was some confusion regarding the Legacy gate because it was on an earlier invoice with another item and it was not paid off of that invoice so the $6,360 is an outstanding amount for the electric gate which is actually at another arsenic location than the other invoice, so they actually invoiced two different jobs on one invoice, but there doesn’t seem to be a problem with paying this. Karl further stated that in regards to the other item required by the Health Department, we had a vendor in there, Mountainland for $3,122.36 and we are actually going to utilize Scholzen Products as opposed to the Mountainland at $2,739.64; so we are going to substitute Scholzen Products for the Mountainland on that one.

Kenyon asked Pete if we were just waiting on more bids on this or what was the deal on this. Pete explained that Steve got the number from Mountainland for this and then it occurred to him to get more bids and he did and that’s why it came late. Kenyon stated that he just wanted to make one comment and that we be careful when we do that so it doesn’t look like we’re shopping prices.

Karl Gustaveson made a motion to approve purchase orders for Legacy Construction for $6,360.00 for electric gate opener for Scenic Arsenic Site and Scholzen Products for $2,739.64 for reservoir maintenance required by the Health Department. Kenyon Leavitt seconded the motion and it unanimously carried. 5-0

6. Discussion & Possible Action – Consideration to Approve Revised and Amended Minutes from 2/2/10 Closed Session Meeting

Karl stated that he asked that this be pulled off, and that he was the one who had them pulled off the first time, and that he is still concerned with some of the words used in this particular set of minutes because they reflect an estimate or a guess of what an individual is thinking as opposed to what the individual said. Karl further stated that he would still like our attorney to look at this one more time and that they need to reflect exactly what was said and not what people assume someone might be thinking and ask that these be reviewed by counsel and brought back at the next meeting.

Karl Gustaveson stated that you could consider that his motion in that the minutes of the 2/2/10 closed session meeting be reviewed by counsel and brought back at the next meeting with the corrections he had outlined. Mark McEwen seconded this motion and it was unanimously carried. 5-0

7. Discussion & Possible Action – Consideration to Approve Engagement Letter from Hinton Burdick to Perform Annual Audit for Fiscal year Ending June 30, 2010

Morris Peacock, representing Hinton Burdick, stated that he had inadvertently forgotten to include the peer review as stated in their engagement letter. Morris explained the peer review in that they have to have their audit reviewed by an outside auditing firm and that is done every three years. Morris also stated that the only thing outstanding on last year’s work is that they need to finalize the single audit report, which he has with him, and it needs a signature, whether it be John or the interim general manager. Karl stated that we have an interim general manager for that purpose.

Ted Miller commented stating that he thought a good business practice as well as due diligent to our employees and our rate payers, in this particularly economic time, prices are going down, not up. Ted further stated that it may behoove us to send out an RFP; stating that most states require and is surprised that Nevada would allow you to do audits that long in a row. Morris stated that is not required because it is a professional service.

Kenyon stated that by the time you get that done, we would be behind the eight ball waiting to get this in place and that if we want to next time do an RFP then we do that prior to March. Kenyon further stated that we get audited every year and according to State Statutes, this is the time of year you approve someone to conduct your audit for the fiscal year ending June 30th of the current year and that now is not the time to do. Kenyon further stated to Ted that if you want to get an RFP before next March, you put it in the budget cycle or place on an agenda around June to go out for RFP’s for auditing firms to conduct an audit, but that you cannot get a price because it is a professional service.

Morris stated that the increase was $300 for a $14,000 engagement and appreciates the fact that you want to consider doing an RFP and that they would certainly be happy to respond to an RFP along with others at whatever time the District decides to do that. Morris further stated that if you’d like us to go forward this year because we’re under the deadline to approve this, he was willing to take the $300 extra for this year off and do it for the same price as last year and that this was part of the reason where they kept it where it is because of the economic times.

John Paul stated that he thought that one of the questions raised, and it was a good one, with the national economy going down the way it has, it seems like everybody is touched by it and prices are softening or evaporating for different services. John further stated that he thought the intention brought forward was to check on what prices we could get, but that would be difficult to do with a
professional service contract.

Morris stated that the interesting thing with professional services is that there are several different RFP’s out there and that they would even be willing to help the District get the format because it’s not like buying a truck. Morris further stated that they obviously “bid” on quite a few proposals for audits and sometimes they are low bidder and don’t get them and sometimes they are in the middle and get them and that they should be awarded on recommendations by calling other people and learning how they work and the quality of the audit firm.

John Paul questioned Morris that in over the years that we have had you doing this, has there ever been a problem or a backlash with anybody with the work, and was informed that there hasn’t been.

Karl stated that professional services are different because it is not like bidding on a piece of pipe and you are bidding on somebody you have confidence in and has the ability to do the job properly and do it right; however, Karl further stated that he didn’t think what Mr. Miller said should be discounted either. Karl stated that as far as this year is concerned, because of where we are, and not in just this particular instance, but in everything we are doing, we are going to want to review everything we’ve been doing in the past and look at all possibilities and he doesn’t have a problem in his mind going along with Hinton Burdick this year, but next year just so that we have a sense of comfort; that we are doing the right thing for the rate holders; and that we are getting an appropriate price. Karl further stated that is why the State Statutes does not require for professional services to have to be bid for that purpose.

Morris commented that while the economy might dictate that costs should be going down, new standards that they must comply with on the audit side, and unfortunately, time has actually gone up.

Kenyon Leavitt made a motion to approve Engagement Letter from Hinton Burdick to perform annual audit for fiscal year ending June 30, 2010. John Paul seconded the motion.

Mark McEwen questioned the motion and stated that Mr. Peacock has offered to do the work for the same price as last year and asked if we wanted to consider that in the motion. Karl further stated that if you were going to amend the motion that he would also like to see in the motion that this is put in a tickler file and brought back in July for us to consider at that point and time if we want to send it out for an RFP. John Gleave stated that might be a little early and we may want to wait until October or later until after the audit has been presented.

Kenyon Leavitt amended his motion to approve Engagement Letter from Hinton Burdick to perform annual audit for fiscal year ending June 30, 2010 for the cost of $14,600 for the regular audit and $3,750 for the single audit if required and that we put on the agenda in October to put out an RFP. John Paul seconded the amended motion and it was passed by a vote of 4-1 with Ted Miller opposed.

John Paul called for a vote on the original motion and it was passed by a vote of 4-1 with Ted Miller opposed.

8. Discussion – Discuss Water Line Breakage Issues at Falcon Mesa Business Park and the Virgin Valley Water District’s Responsibility for the Repair of Such Lines – Requested by Falcon Mesa Business Park Owners Association

John Cox representing the Falcon Mesa Business Park Owners Association stated that they have incurred some pretty good costs due to issues with defective pipe and the owners do not understand why they are having to make such repairs when they are before the meter. Mr. Cox further stated that they had received a letter dated June 24, 2009 stating that they were responsible to repair the supply line within the property before the meters.

Pete explained that this project, like many others in town, when built was going to be for separate businesses and they wanted to be able to individually meter their businesses and we allowed them to do that for the purpose of everyone paying their own water bill. Pete further stated that the service line for the District ends at the backflow device, which is their property line and anything inside that belongs to the owner/association.

Mr. Cox stated that there is no common area and it goes across numerous property owners, which should have an easement.

Pete again stated that our service is delivered to them through the backflow device and every business in town is responsible inside their property lines and the backflow device is the cutoff.

Jay Hills, owner of a couple of the buildings within the project stated that there are 16 separate buildings and that they have had 5 buildings with leaks and that their understanding from Legacy Construction was that they had no choice in the pipe that was laid.

Kenyon Leavitt stated that the District’s responsibility ends at the curb and the VVWD cannot go past the property line.

There continued to be a lengthy discussion regarding the placement of the meters, the property line ending at the backflow device; the water breaks within the property; the District not responsible past the backflow device; and the association of the business park being responsible from the backflow device to the meters.

John Paul called for a point of order. Karl asked everyone to take a deep breath and step back and requested to talk about the pipe because there were comments made about the type of pipe; that they had to buy the pipe from the District or we told them what they had to use. Mr. Hills interrupted and stated that he thought it was the same pipe that the District had a lawsuit on. Karl continued and stated what he was trying to say was that we didn’t purchase that pipe or install that pipe; the developer purchased and installed it and all the District did was give them the specs on what type of pipe was required. The specs state what type of pipe is required, but not what manufacturer you must purchase the pipe from.

Eric Wilbanks asked to clarify a few things. First, Eric stated that Karl addressed the specifications issue exactly correct when he said that the District’s specifications state you must use a certain type of pipe that meets certain criteria like pressure issues or whatever that may be, but as far as saying you must purchase this particular brand of pipe from a certain manufacturer is not something the District would do. Eric further stated that because you may have purchased some faulty pipe, means you made the same mistake as the District did as far as buying some pipe that has caused some costs. Eric stated that they were more than welcome to investigate what type of pipe was used and compare to see if it was the same pipe the District is involved with this lawsuit. Eric continued and stated that as far as the responsibility for the breakage and the leakage they are experiencing, most likely your development between the backflow device and the meters is pipe that lies within common areas where you all pay for common area expenses. John Cox stated that there was no common area, but when questioned, stated that they do pay monthly fees to the association but that they are out of money. Eric stated that usually by-laws, CCR’s, and that type of things for that type of project account for collecting all the fees you need for upkeep and maintenance, reserved funds and if yours does not do that, it is unfortunate for you, but that is not the District’s issue and the rules and regulations that govern this particular issue pertaining to the District stops at the backflow device and anything beyond there is the owners’ or associations’ responsibility.

John Cox stated that he has contacted other water districts and that they would not have allowed a condominium project to be designed like this and continued to state that he feels that it is the District’s responsibility up to their individual meters and Eric again tried to explain that it was still not the VVWD’s responsibility beyond the backflow device and that it would be the responsibility of their Owner’s Association from the backflow device to their meters.

Jay Hills stated that they are taking responsibility, but what they are saying is the pipe is defective when it should last up to 40 years and would like to rectify it and they don’t want the VVWD to ante up, but asked what would be their recourse.
Eric tried to explain that their recourse might be to have their association contact their own legal counsel. Mr. Hills stated that there would be a lawsuit and Eric stated that their lawsuit would probably go back to the pipe manufacturer. Mr. Hills asked if it is the same pipe that the Water District is having trouble with, could they not be added to that lawsuit. Eric stated that may be a possibility, but as far as making that determination, that is something that he doesn’t think we are going to be able to solve and discuss in this particular meeting. Eric further stated that if they wanted to obtain legal counsel and have someone contact Bingham & Snow and Mr. Hills again interrupted and stated that means there will be a lawsuit and that the District would be named. Eric explained that obtaining counsel didn’t automatically mean litigation. Eric further stated that if their association wanted to be advised of what their legal rights are and who they might have recourse against, they should obtain their own attorney to give them that type of advise because Eric couldn’t give it to them nor could the VVWD board. Eric also stated that if they wanted to appoint a representative of the association to contact them (Bingham & Snow/District’s legal counsel) to see if they would be able to join the lawsuit and what that might entail, the District may be willing to entertain that.

There continued to be an ongoing lengthy discussion regarding the set up of the complex; easements; property owner’s responsibility only from the meter and not the backflow device; developments being master metered; the defective pipe and the lawsuit being public information.

John Paul stated that he wanted to clarify one thing because it was mentioned that it was the District’ product and wanted to make it clear that we did not manufacture the product.

John Cox again and again stated that he wants the District to take responsibility from the backflow device to the meters, which is on private property, and was again told that was not going to happen.

After further discussion going over and over the same topics John Paul closed the item.

9. Discussion & Possible Action – Consideration to Appoint the Board President or Such Other Person as the Board May Designate to Represent the Virgin Valley Water District at the Annual Meetings of the Mesquite Irrigation Company and the Bunkerville Irrigation Company and to Vote the Virgin Valley Water District’s Shares in the Mesquite Irrigation Company and the Bunkerville Irrigation Company at Such Annual Meetings

John Paul stated that he would be willing to do so as long as he was notified.

Kenyon Leavitt made a motion to appoint the President of the Board of Directors to vote the District’s shares at the Bunkerville Irrigation Company’s and the Mesquite Irrigation Company’s annual meetings. Ted Miller seconded the motion and it was carried unanimously. 5-0

10. Interim General Manager’s Report

Pete had included a written report of his activities informing the board that Bowen & Collins have requested to move one of the PRV’s and that this had been taken care of. Pete also informed the board that Travis at Bulloch Brothers Engineering had contacted him and asked if they could change the PRV station on Canyon Crest and Horizon because after the final grade was achieved, the cover over the 16” line was slightly less than it should be and their solution was to pour a concrete block over the bedded pipe to protect it; otherwise the solution would be to dig up the line and adjust it, having Pulte development out of water for an extended period, re-disinfecting and flushing the pipe at a much higher cost, so he allowed Pride Contractors to pour the concrete.

The State of Nevada conducted their normal sanitary survey on February 2, 2010 and there were a number of minor deficiencies which are being corrected.

Pete also stated that he had arranged a meeting with Thatcher Chemicals for a strategy to reduce freight charges as they relate to chemical deliveries.
Pete also wanted to make sure the board was still allowing the policy of purchases over $2,500 as it relates to meters, chemicals, water testing and monthly bills. The board expressed that they were inclined to continue with this policy.

Ted Miller wanted the public to know that Mr. Peterson had included a written response to the boards’ action of increasing his salary 10% in the interim until a new general manager was hired and stated that he was respectfully declining the increase.

Also, Pete asked for direction as far as sending plans to Erik Beyer for red-lining as they come in and the board stated that we should continue this.

11. Hydrologist’s Report

Boomer had not included a written report and was not present because of other commitments. Karl asked John Paul if he wanted to comment to the public about the situation before the State Legislator and our hydrologist’s involvement. John Paul stated that the Nevada State Legislation was called into a special session by the Governor to mainly close a gap of $900 million and he also introduced an amended session regarding the Nevada Supreme Court’s ruling on SNWA and other entities pertaining to water permits and water applications pending and filed. The Nevada Supreme Court did not like the answers given by the Nevada Lower Courts so they made a statement and sent it back to be worked out by the lower courts. This is what Governor Gibbons is trying to remedy at the Legislation level instead of taking it back to the Supreme Court or the lower court and in the meantime the Supreme Court was asked to reconsider the entire affair. It is now in one of three places: the legislations’ hands; the Nevada Supreme Court; or back to the lower courts. The Legislation met in a special session this past weekend and our hydrologist along with our lobbyist Randy Robison and legal counsel in attendance representing our position. They didn’t actually come out with a “fix” at the legislative session so it may come back to a second special session or it may be reconsidered by the Nevada Supreme Court or the lower courts.

Eric stated that be believed at this point, is what happens is, there was direction from the State Legislation for the State Engineer’s office to take comment from various parties as far as what should be an appropriate fix from different entities.

12. Public Comment

There was no public comment at this time.

13. Adjournment

President John Paul adjourned the meeting at 4:30 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: 2010-03-02 (.pdf 33K)