VIRGIN VALLEY WATER DISTRICT REGULAR BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
AUGUST 17, 2010

Minutes of a Regular Board Meeting of the Virgin Valley Water District Board held on August 17, 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 Ken Rock District General Manager, Michael “Boomer” Johnson Chief Hydrologist, 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 3:02 p.m.
Mark McEwen offered a Prayer and Karl Gustaveson led the pledge.
Public Comment – There was no public comment at this time.

Discussion: Board Comments – Ted commented that he had attended the Chamber of Commerce luncheon and that he enjoyed a stellar presentation by Ken Rock and heard lots of positive comments from other attendees. John Paul also stated that he echoed Ted’s comments.
President of Board Comments - None

CONSENT AGENDA:

Karl Gustaveson made a motion to approve items 1, 2 and 3 on the consent agenda as listed below. Kenyon Leavitt seconded this motion and it was unanimously carried. 5-0

1. Discussion & Action - Approve Agenda

2. Discussion & Action – Approve Minutes from 8/3/10 Regular Board Meeting

3. Discussion & Action – Approve Bills Paid - $254,061.00

** End of Consent Agenda**

4. Discussion – Presentation summarizing the liquid and physical assets of the VVWD – Presented by Ken Rock

Ken presented a power point presentation describing the District’s drinking water sources stating that the District currently has nine production wells, what their depths and pumping rates are and that they have the capability of pumping 17.6 million gallons per day (mgd) with approximately $30,000,000 in assets.

The VVWD has eight reservoirs with a total capacity of 15.3 million gallons totaling approximately $1,000,000,000 in assets. The VVWD below-ground assets included the diameter in inches and length in feet of the pipe totaling 133 miles. 

The VVWD has five arsenic treatment plants and including the buildings, equipment, offices, etc., the District has approximately $180,000,000 in assets. The VVWD had grants from the ACOE, Nevada AB198 and US EPA assisting in the funding of this project and the District also obtained the 2008 Bond to assist in the District’s portion of the project. Ken further informed every one of the O&M budget for the plants along with the arsenic removal efficiencies.

Included in the presentation was the District’s annual deliveries from 1982 through 2009; the monthly water production in 2005, 2007 and 2009; and the potable water use by category.

Ken also explained the lower Virgin River Flows; the total surface water rights in the lower Virgin River; the surface water right allocations on the lower Virgin River; the Intentional Created Surplus (ICS) with the pre 1929 Agreement and the post 1929 Agreement and the relevance to the District; the composition of the surface water rights on the lower Virgin River; and the surface water owned by the VVWD on the lower Virgin River.

The District’s customer base included the meter sizes and number of connections within the District.

Looking into the future, the District will need to meet all federal water quality standards; possibly an aquifer recharge for off-stream storage; possibly an under-river water collector; possibly accessing additional water rights; co-op with Lincoln County development; conservation and smart water use help for everyone; and total water resource management with the City of Mesquite for the sustained benefit of all and preservation of environmental resources.

Ken proceeded to open this item for questions and comments.

5. Discussion & Possible Action – Consideration to approve a Mission Statement for the VVWD

Ken had included six potential mission statements stating that we could use one of these or a combination of these by piecing words together. Ken further stated that a motion did not have to happen tonight if they would rather ponder on this. Ken also stated that he felt mission statements should be short and memorable. Karl and Mark agreed that they would like to ponder on this and have it come back on the next agenda.

The item died for a lack of a motion.

6. Discussion & Possible Action – Consideration of the litigation brought by the District against Vanguard Piping et al. and consideration and possible action to retain the law firm of Panish, Shea & Boyle to represent the District in that litigation on a contingency fee basis

John Paul turned this item over to legal counsel. Bo explained to the public that the District has had piping within the system busting, breaking and failing and the District is concerned and wants to make sure they are repaired, which is at a significant cost. The pipe is called a bruiser pipe. The Water District has brought claims against the company and is seeking its damages including the pipe, wages and the patching on the roads that require repairs. Initially Kolesar & Leatham were retained on an hourly basis. A modified fee agreement was reached where the District was paying 55% of the usual fee, but this is still high. The firm of Panish, Shea & Boyle would take this case on a contingency basis and the firm would front all costs and then share a percentage of the costs recovered. This firm is extremely well respected and has obtained the largest verdict ever in any trial against General Motors in a product liability case, such as ours. Bo further stated that he has been working with their attorney for the past few weeks and as of August 16, 2010 they finalized a fee agreement. This fee agreement is very different from the prior fee agreement with Kolesar & Leatham. This would be a straight contingency agreement. If we prevail, the law firm would get 1/3 and the District would retain the rest of the money for repairs and reimbursement. Kolesar & Leatham will continue to be involved with this case since they have done a lot of work-up for the case. The District will not have to put in any more money into this case other than fees that were incurred through July. The current costs expended by the District have been significant reaching over $500,000. Assuming there is a recovery, and we have every belief that there will be, the first $1,000,000 of recovery will have no fee taken out and will be strictly for the VVWD. For any amount above $1,000.000 to $5,000,000, then this firm, Panish, Shea & Boyle and Kolesar & Leatham will receive 33%. Anything above $5,000,000, these firms will retain 35% and the District will retain the rest. Bo further stated that his confidence was built up after Panish, Shea & Boyle reviewed the case and decided that they wanted to proceed in representing the VVWD, spending $75,000 of their own money as soon as the agreement is signed, and that demonstrated their belief in the case.

Ted questioned about others joining in on the case and Bo stated that at the beginning he wanted to do this, but with it being taken on a contingency basis, he no longer felt that way.

Karl Gustaveson made a motion to retain the law firm Panish, Shea & Boyle to represent the VVWD on a contingency fee basis on the Vanguard pipe litigation. Mark McEwen seconded this motion and it was unanimously carried. 5-0

7. Hydrologist’s Report

Boomer had included a written report informing the board that revisions had been submitted for incorporation into the Virgin River Habitat Conservation & Recovery Program (VRHCRP) document and that the US Fish & Wildlife and City of Mesquite were incorporating comments from all participants in preparation for printing. There was a meeting held on 8/5/10 for the upcoming Virgin River Watershed conference to be held in Mesquite on October 20 and 21, 2010 at City Hall.

Boomer further reported that the parcels held by VVWD as right of ways with BLM had been finalized in regards to water rights points of diversion within the Gold Butte ACEC and future parcels area for water resources critical to future operation to VVWD.

Boomer stated that we had completed annual compliance sampling for inorganics, metals, SOCs, VOCs and radionuclides and that all were non-detect; and compliance sampling for Disinfection bi-product rule consisting of total trihalomethanes and haloacetic acids concentrations were below action level. We did have two arsenic samples report upsets in the plant operations and above the 10 ppb and that Ken would report remedies initiated to prevent similar upsets in the future.

The District’s high delivery date was 8/7/10 producing 11,284,768 gallons of water.
Boomer also stated that we had received a draft agreement from BOR to revise grant agreement of $1,376,000 for installation of a prototype horizontal collector well.
Karl questioned Boomer on Ordinance IV and if an amount had been determined for the costs to the District. The District will collect $250 per EDU per Boomer. Karl stated that the board would need to make a decision on this pretty soon and the board needed more information on this ordinance before they could make an informed decision.

8. General Manager’s Report

Ken had included a written report and stated that he was not going to go over that because it would take up too much time. Ken stated that he has been spending a fair amount of time with Mike Chandler and Ken Spiers with Bowen & Collins. Bowen & Collins had produced a couple system maps hanging on the board room walls and Ken handed out laser pointers to all board members so that they could use these to point out reference points on the maps produced.

Ken reported on the failure at the arsenic treatment plants stating that the chemical pumps for ferric chloride were clogged and this was not allowing the pumps to work correctly and remove the arsenic. Ken also stated that the in-line strainers had also clogged up. To remedy this from happening again, in-line basket strainers would be used from the chemical truck straining the ferric chloride before it is put into the chemical pumps. With the help from Aaron and Ken the operators at the treatment plants developed round sheets, which is a series of checklists to record numbers and check functioning of things at each of the treatment plants. Along with these log sheets, each operator will have diaries at each treatment plant that is dated, recording any work or problem and these will be handed down as a pass down log also. Also, they pulled the basket strainers that were an issue in the delivery lines.
Bowen & Collins had also spoken to Ken regarding improvements to the SCADA (Supervisor Controlled and Data Acquisition) system. Bowen & Collins have a programmer who will assist the VVWD in upgrading the SCADA system and we are in the process of updating a contract on this.

Ken stated that he toured the Mesquite Waste Water Treatment Plant.

Besides talking with Mike Chandler and Ken Spiers, Ken has been in contact with Marty Johnson, our bond specialist. Ken stated that the District has great assets base, field and office staff, but our CIP program and our bond debt were set up for rapid growth, not a stable situation. Ken is proposing that we set up a bond and budget workshop to reassess and adjust. It was decided that the workshop would be held on Monday, August 30, 2010 at 3:00 p.m.

9. Discussion & Possible Action - Performance evaluation of Michael Johnson, Chief Hydrologist. Possible action may include, but is not limited to, termination, suspension, demotion, reduction in pay, reprimand, promotion, endorsement, engagement, retention, salary increase, or ‘No Action’. (Closed session may be held to consider character, alleged misconduct, professional competence, physical or mental health pursuant to NRS 241.030.)

Bo began by stating that under Statute 241, the person who is being reviewed, Michael Johnson, if to consider character, alleged misconduct, professional competence and physical or mental health may go into closed session as long as they are not the Chief Executive. Michael may waive this right if he so chooses and this preliminary decision should be made now. Michael Johnson stated that he would not be waiving this right and would like this to be a closed meeting.

Ted Miller made a motion that the Board of Directors go into a closed session to consider the character, alleged misconduct, professional competence, physical or mental health of Michael Johnson pursuant to NRS 241.030. Kenyon Leavitt seconded this motion and it was unanimously carried. 5-0

Bo also clarified that no decision would be made in the closed session.

After a lengthy closed session and litigation session, John Paul reconvened and called the public meeting to order at 7:58 p.m. and again re-read item #9.

Bo stated that he appreciated those in the public that made it through the long closed session.

Bo stated that on behalf of the board he had a formal announcement to make and Michael Johnson, through his attorney, has extended a settlement offer that Bo was also going to articulate, but before he did that, he wanted to make the following statement:

The Board of Directors has had grave concerns over serious allegations of misconduct involving Michael (“Boomer”) Johnson. These allegations were serious enough to warrant an internal investigation. The outcome of that investigation, and in closed session with Michael Johnson and his attorney per NRS 241, was that Michael Johnson has tendered his resignation effective immediately on August 17, 2010.

In connection with that resignation and closed session, a settlement offer was proposed and the Board will consider that settlement offer now; which would include the following terms:

• Michael Johnson would release any claims and all claims that he could have in any way against the District, the Board and any of its representatives in any manner that exists through today.

• It would be a global settlement of any and all claims.

• In the event any employer contacts the Water District in connection with Boomer’s future employment, the District’s response would simply be confirming the dates of Michael Johnson’s employment and nothing further beyond that.

• The Board members and the Water District would be free, including its representatives would be free, to talk with any party regarding these concerns and allegations, other than any future employers as stated above and any press directly, other than the statement just read.

• Michael Johnson will receive his pay on the same terms as though he was terminated (as outlined in the employee handbook) and upon receipt of that pay all these claims will apply to that as well.

That is the proposed agreement and based on that, the Board could make a motion to accept those terms, and accept and adopt that statement, as well accept the resignation of Michael Johnson. Michael Johnson will also receive no severance.

Mark McEwen made a motion to accept Michael Johnson’s resignation; that the statement that has been outlined by Bo Bingham be a formal statement and we adopt that as our formal statement; that the other conditions that Bo Bingham has set forth we agree upon; and we accept that offer. Karl Gustaveson seconded this motion.

Bo stated that before a vote was conducted, he asked Michael and his attorney if the terms read were accurate and acceptable. Michael’s attorney, Christopher Marchand, stated that they are, but that he wanted to clarify something in that the benefits that were listed out that he would receive would be the same whether it was through termination or resignation. Bo stated that was correct and Mr. Marchand stated then “yes” they accept those terms. Bo also stated that this would be subject to a more formal agreement that Bo will prepare consistent with these terms as well as the standard terms that would be in any settlement agreement and issued within 72 hours and Michael would also be obligated to return all VVWD property.

Mark McEwen included in his motion that in addition that the Board ask that Bo Bingham formalize those conditions so that both parties can sign that settlement agreement. Karl Gustaveson seconded and the motion carried unanimously. 5-0

10. Public Comment

Morris Workman asked how many shares were leased at the auction earlier this day and for how much. He was informed that two Bunkerville shares were leased and one Mesquite share and all were for $300 for one year.

Morris questioned what the actual arsenic level was when the failure occurred. He was informed that on 6/28 the reading was 23 ppb and on 7/20 the reading was 25 ppb.

Morris asked if the meeting to be held on 10/20 and 10/21 would be open to the public and where it would be held. He was informed that it was opened to the public and would be at City Hall.

11. Adjournment

President John Paul adjourned the meeting at 8:11 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.

•  Board Meeting Minutes: 2010-08-17 (.pdf 39.K)