VIRGIN VALLEY WATER DISTRICT SPECIAL BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
MAY 20, 2010

Minutes of a Special Board Meeting of the Virgin Valley Water District Board held on May 20, 2010, at the Virgin Valley Water District Office at 1:00 p.m. Attending were President John Paul, Vice-President Karl Gustaveson and Board Members Ted Miller and Mark McEwen. Secretary-Treasurer Kenyon Leavitt and Interim General Manager, William “Pete” Peterson were not present. Also present was Michael “Boomer” Johnson Chief Hydrologist arriving at 1:20, Bo Bingham District Legal Counsel, and Mary Johnson taking minutes and other interested parties of agenda items.

President John Paul called the meeting to order at 1:05 p.m.
Karl Gustaveson offered a Prayer and Mark McEwen 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 stated that he had questions on 4A regarding Sundance Helicopters. Karl Gustaveson then asked if they should just pull the entire item “4” because he had questions on both 4A & 4B and hold until Boomer was present to answer questions.

Ted Miller made a motion to approve the consent agenda as listed below with item “4” being pulled and held until Michael Johnson arrives. Karl Gustaveson seconded this motion and it was unanimously carried. 4-0

1. Discussion & Action - Approve Agenda

2. Discussion & Action – Approve Minutes from 5/4/10 Regular Board Meeting

3. Discussion & Action – Approve Bills Paid - $519,893.12

4. Discussion & Action – Approve Purchase Orders Over $2,500
a. Sundance Helicopters – Estimated $9,000 – Site Visits
b. Lincoln County Transfer Fee - $13,925.10 – 1,392.51 AF Pumped from Lincoln County – Pulled and to be heard after Michael Johnson arrives.

** End of Consent Agenda**

5. Discussion & Possible Action – Public Hearing on Tentative Budget and Approval of Final budget for Fiscal Year Ending June 30, 2010

David Waite with Draper & Gleave was present sitting in for John Gleave, District CFO, who was unable to be present and asked the board if they had any specific questions. Karl asked David for an explanation of the budget showing a deficit of six million and even with that number reduced the District will be using 1.3 million dollars of reserve money. David explained that the net cash for the entire year was roughly a negative 200,000. David further stated that the beginning balance of cash in the fiscal year is 1.3 million; less the $195,919, so yes in that way, on a cash side, not on an accrual side, we are budgeting a loss of $200,000, which will eat into our current cash balance. Karl further stated that he was concerned that we were not budgeting on its own merits and we were using reserves. Ted stated that we need to cut $300,000 plus to get out of the red.

John Paul opened the item to the public. Sandra Raymaker commented that she was concerned that the board was approving a budget with a deficit and would the new GM be aware of this when they are hired. George Misnik commented that Mr. Miller’s comment that budgets are a joke and stated that the District should do a strict budget. Karl commented that Government budgets are different than family budgets and that after the new GM is hired he can go through the O&M expenses and make some decisions to change at that point. Ted commented that the District has a 43 million dollar debt that was to be paid from growth, so the District has over $300,000 a month in interest payments.

Mark McEwen commented that he is looking at this from outside the process because of work. He further stated that there has been an external storm with economy and an internal storm that the board has had to deal with, but feels that things will become easier as we work through this and continue to look at with the new GM.

Ted Miller made a motion to approve the final budget for fiscal year ending June 30, 2011 and to continue to work towards getting a better balance by lowering expenses and working with the new general manager to get through this “slump” that we’re going through. Karl Gustaveson seconded this motion and it was unanimously carried. 4-0

6. Discussion & Possible Action – Consideration to Purchase One (1) Mesquite Irrigation Share from Staci Frei – Requested by Staci Frei

The District previously purchased one of Staci’s shares from certificate No. 138 for $65,000 and she was asking to sell the other share from this same certificate. Boomer mentioned that these shares were currently leased by SNWA through 2011 and that we could get cash associated with the lease. Her payment would be assigned to us and SNWA would initiate the paperwork. Boomer further stated that he felt the District should always purchase water if the money is available for future use. There continued to be a discussion regarding the market value of water shares; funds available for purchasing water shares; and monthly payments that the District must make for previously purchased water. After further discussion on estimating how long until the District begins to collect more Ordinance II fees and what the 2008 Bond would be used for, it was thought that it may be better to table this item until more information was presented.

Karl Gustaveson made a motion to table this item until the next meeting. Ted Miller seconded this motion and it was unanimously carried. 4-0

7. Discussion & Possible Action – Consideration to Purchase 2,568 AF from the Lemmon Valley/Stead Areas – Requested by Louis M. Hicks, Advisor Sperry Van Ness/The Kase Group

Boomer stated that this offer had come into Mary and that they had requested to be put on the agenda. Boomer further stated this was located in the Reno area and he had not checked on the validity of the water rights and that it would be environmentally difficult to do anything with this water. Ted questioned if we could purchase and then resell and Boomer stated that you cannot speculate on water.

Ted Miller made a motion to not consider purchasing 2,568 AF of water from the Lemmon Valley/Stead Areas. Mark McEwen seconded this motion and it was unanimously carried. 4-0

8. Discussion & Possible Action – Consideration to Determine an Amount and Approve a Travel Reimbursement to General Manager Candidate(s) for Personal Interview with the Board if Coming from Out of Town

Karl stated that in the telephone interviews, it was asked of each applicant if they were willing to come to Mesquite for a personal interview at their own expense if the District didn’t provide any funds, and every one answered “yes” immediately, so this was really not an issue.

The item died for a lack of a motion.

9. Discussion & Possible Action – Consideration to Approve Reimbursement to Michael Winters for Dental Claims not Covered by Best Life – Requested by Kaye Winters

Mary informed the board that she had spoke with Kaye and Pete had spoke with Mike and neither would be at the board meeting, but that they didn’t want the item pulled from the agenda. Bo stated that he had reviewed various documents regarding the issue of termination and could find nothing specific stated about insurance benefits. John Paul asked if we obligated ourselves to pay three (3) months of insurance coverage. Bo stated that we had not unless Mark’s intent was that when he made the motion on February 2nd and Bo continued to read the motion made by Mark on February 2nd. John Paul questioned Mark and asked if his intent was to continue insurance also and Mark stated that he did not. His intent was that Mike Winters receive three (3) month’s severance pay. Karl commented that if the dental service was pending, we may be obligated, but since service occurred after termination, we were not obligated to pay.

Mark McEwen made a motion to not approve reimbursement to Michael Winters for dental claims not covered by Best Life as requested by Kaye Winters. Karl Gustaveson seconded the motion and it was unanimously carried. 4-0

10. Discussion & Possible Action – Consideration to Allow the Pulte Group to Transfer Three (3) Meters Paid for in Other Areas for Landscaping and Never Installed to the Tanner Cove Subdivision – Requested by Pulte Group

Mary explained that the Pulte Group paid for these three meters for landscaping, but that they have never been installed at any location and that these were not for residences where they become real property and according to the District’s Rules & Regulations cannot be moved. Bo stated that the board should be aware that there is language in the District’s Rules & Regulations that states meters are non-transferrable and remain with the property; but so there is no confusion, we may want to explain why this is different. Karl stated that these meters were designated to common areas and not deeded lots where they would not be able to be transferred.

Karl Gustaveson made a motion approving to allow the Pulte Group to transfer three (3) meters paid for in other areas and intended to be used for landscaping and not homes; but never installed to the Tannery Cove Subdivision. Mark McEwen seconded the motion and it was carried unanimously. 4-0

11. Discussion & Possible Action – Consideration of the Status of the VVWD Ranney Well Project and the Status of a Possible Grant for Such Project. Possible Action may Include Direction to Continue Working with the Bureau of Reclamation, Possible Entering into a New Agreement Before the Existing Agreement Expires in June 2010, and Taking Other Necessary Steps to Complete the Project and Obtain the Grant – Requested by Karl Gustaveson

Karl stated that another concern he has is capital projects and funding and this project was budgeted to be paid from the 2008 Bond and he would like an update as to where we are and whether we actually need this. Boomer commented that the actual agreement we have with the BOR does not expire until September 30, 2010. Boomer stated that he is working on a cooperative agreement for funds as established by congress. Boomer further stated that costs associated with the purchase of property was not in the first agreement and by entering into a new cooperative agreement with BOR we can bring in the costs of the property; the five acres on Riverside and we will receive credit for that purchase. Different entities fiscal years’ were discussed. Karl asked how important this was to us and why we were doing it. Bo stated that the budgeted costs of this project were 3.2 million and BOR would fund up to 1.3 million leaving a shortfall that the District would be required to fund and this would come from the 2008 Bond.

Boomer explained how this project came about from 2002 and being partnered with SNWA scheduled at Half-Way Wash and since SNWA is able to wheel water through the Colorado River, SNWA is no longer interested in Half-Way Wash. Boomer further stated that this would be for use in the future.

There continued to be a lengthy discussion regarding time-frame; membrane filtering; the location and able to recharge and bank water; diverting water and possibility of other governmental
agencies involvement.

Bo stated that a number of things needed to be done before the September 30th deadline. From the BOR standpoint, some things that need done are updating the project map, partial budget summary level and testing. Bo further stated this will take time; and to also keep in mind how much money has been spent to date.

Karl stated that he felt we should move ahead and do the things that the BOR has stated that we need to do and to look for additional monies to help fund projects.

John Paul opened the item for public comment. Ted had questioned whether this was part of the rate study and Mike Chandler informed the board that this was not part of the rate study, but could be part of the Master Plan Study. Mr. Chandler further commented on costs for treating the Virgin River water. Robert “Bubba” Smith commented on the water purchased by the District and its future use and costs associated with treatment of the water. John Paul commented on seasonal water and if we are to use seasonal water we will need a spot to “park” it. Mark asked about costs in the new fiscal year if we move forward and Boomer stated that we would have some environmental fees, probably no more than $100,000.

Mark McEwen made a motion to direct staff to continue working with the Bureau of Reclamation with the possibility of entering into a new agreement before the existing agreement expires on September 30, 2010. Karl Gustaveson seconded the motion and it was passed unanimously. 4-0

12. Discussion & Possible Action – Consideration of the Status of Well 30 and What Actions may be Necessary to Bring Well 30 into Production. Possible Action may Include Direction to VVWD Staff to take Appropriate Steps to Bring Well 30 into Production – Requested by Karl Gustaveson

Karl stated that he has been studying the District’s well information and discovered that there has not been much production with Well #30; it’s the District’s most expensive well drilled and he wondered if the well would not produce and just wanted to be brought up to speed. Karl further stated that Boomer had called him and brought him up to speed, but that the rest of the board should be caught up also. Boomer informed the board that the well was drilled in 2000; we went through a serious of submersible pumps approximately every two years; and a very high horse power pump is used to bring the water up to the surface. Boomer further stated that he has met with the insurance company and that they may pay a portion of costs due to the pump failure. Boomer continued and stated that because we have to cycle that well, and because we did not use a Variable Frequency Drive (VFD), it comes on at one speed and that pulls in a lot of sand. We looked at a VFD, but at the time, the cost was not in the ballpark and we did not put one on. Knowing that well #31 is a bigger producing well and we do not have the issues with the horse power, it is cheaper to produce that volume of water so we don’t run #30 right now. We will wait until it heats up and the intent is to turn #30 on and leave it on. Water quality of the wells was discussed and costs of a new VFD. Boomer went into hydrological information as to why the well was drilled where it was.
 

The item was opened to the public and Bob Draskovich suggested that Boomer pursue buying a VFD pump.

Item died for a lack of a motion.

13. Discussion & Possible Action – Consideration and an Informal Assessment of VVWD’s Possible Future Communication Needs. Possible Action may Include Steps that may be Taken Now in Order to Prepare for Future Communication Needs – Requested by Karl Gustaveson

Karl felt that this item needed to be reviewed one more time since Metro, Highway Patrol and the County will have an Interlocal agreement with the City on their tower and they would be paying for all upgrades necessary and make it available to other governmental agencies; and knowing that there would be limited space on the tower; that we may want to reserve space now. Karl thought that they would aid us in doing a quick assessment and possibly have them look at what we have and what we may need in the future.

Boomer commented that the District needs to make sure that under the agreement our communication is first and foremost protected and that no interruption occurs to our wells, arsenic treatment plant and radio system and that security issues are handled and to make sure our communication remains intact at that location.

Bo stated that he had drafted changes to the agreement per the board’s direction and that the agreement is more protective to the District and the security aspects will be governed by Homeland Security and the other entities involved would be responsible for this. Bo also stated that he forwarded the changes to the City and that there will be a meeting next Tuesday. Bo further stated that he felt that the purpose of this item was to assess what our needs are and to determine whether or not we need to include in that agreement if there will be a specific spot in the tower for our use now, so we don’t have to revisit this matter in the future.

The item was opened to the public and Tim Hacker, City Manager, stated that there was a lot to talk about next Tuesday and further stated that this was a City facility first and foremost and they were willing to work with the Water District, but if the District’s communications needs have changed dramatically, this was never intended to be a 50/50 split. Tim further stated that he was not at the last meeting and Chief Hughes has a different recollection of what occurred from what is proposed in the agreement sent from District legal counsel.

Bo stated that he had reviewed the agreement and at the last meeting he had his notepad in front of him and he informed the board what changes he proposed and thought were warranted and the board agreed with every one of them. Bo further stated if there were other discussions that we needed to have, then we needed to have them. The City does not want to identify what entities are coming on the tower and Bo thinks that potentially this may create some legal implications for the District. Bo stated that there is some ways that we can work this out and that we can have the City fully responsible and the City must provide that contract to whatever governmental entities are coming onto the tower and acknowledging that they’ve seen the contract and realize that they cannot interfere with the District’s communication.

It was discussed that the District still needs to assess our needs and determine if we need a space on the tower. Mark McEwen stated that he would interface with the County/Consultants personally and report back at the next meeting.

4. Discussion & Action – Approve Purchase Orders Over $2,500
a. Sundance Helicopters – Estimated $9,000 – Site Visits
b. Lincoln County Transfer Fee - $13,925.10 – 1,392.51 AF Pumped from Lincoln County

Boomer explained that we have gauges at high elevations and you can only reach a couple of the sites by helicopter and it is $1,800 per hour and estimated to take 5 hours to complete. We do this twice a year, in May and October. It is a budgeted item. It was discussed if some other helicopter service may be cheaper. Boomer stated that he could go out for an RFP for the next site visit.

Mark McEwen made a motion to approve the purchase orders over $2,500 and to approve May’s visit, but to look at a RFP for the next visit on item 4a and to approve paying $13,925.10 to Lincoln County on item 4b. Ted Miller seconded this motion and it was unanimously carried. 4-0

14. Interim General Manager’s Report

Pete was not present due to arsenic plant problems. He had included a written report stating that he had gotten an accurate replacement costs for our complete piping infrastructure in response to a request from legal counsel to provide this information to POOL PACT so that they can come up with an estimate for coverage.

15. Hydrologist’s Report

Michael had not included a written report in the packet, but handed out his report to the board members at the meeting. Boomer stated that he has been preparing exhibits and coordinating activities with special legal counsel regarding the Vanguard pipe issues. Filed protest on Application Nos. 79356 and 79357 to divert underground water in lower Virgin River Basin by LCWD and Vidler Water Company. Boomer also stated that he met with the USACE in Los Angeles to pursue funding for the aquifer recharge project. He is working on the completion of the contract documents for drilling and development of VVWD No. 34 and has established contact with USACE for requirements necessary for funding the project. Boomer also reported on the Halfway Wash Project and upcoming meetings regarding Virgin River Habitat Conservation & Recovery Program and Gold Butte National Conservation Area.

16. Public Comment

George Misnik gave some background information on the Defend Our Desert Group and offered volunteer services if needed.

Bob Draskovich commented on irrigation water.

17. Adjournment

President John Paul adjourned the meeting at 3:40 p.m.

(NOTE): 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.

•  Special Board Meeting Minutes: 2010-05-20 (.pdf 29.K)