VIRGIN VALLEY WATER DISTRICT REGULAR BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
SEPTEMBER 7, 2010

Minutes of a Regular Board Meeting of the Virgin Valley Water District Board held on September 7, 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, 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 3:08 p.m.
Kenyon Leavitt offered a Prayer and Karl Gustaveson led the pledge.
Public Comment – There was no public comment at this time.

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

CONSENT AGENDA:

Karl Gustaveson made a motion to approve 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 8/17/2010 Regular Board Meeting

3. Discussion & Action – Approve Michael Johnson Evaluation Closed Session Minutes from 8/17/10

4. Discussion & Action – Approve Bills Paid - $493,487.06

** End of Consent Agenda**

5. Discussion & Possible Action – Consideration to approve Assignment and Assumption of Lease with SNWA for the Mesquite Irrigation Company share purchased from Staci Frei

The District purchased a Mesquite Irrigation share from Staci Frei that she had previously leased to SNWA and the District would be entitled to this year’s lease amount for the share they purchased. An Assignment and Assumption of Lease agreement was forwarded from SNWA for approval. Once this agreement has been signed and sent to SNWA, they will forward a check to the District for the lease amount for this share and they will issue Ms. Frei a check for her remaining share that she still owns.

Kenyon Leavitt made a motion to approve the Assignment and Assumption of Lease with SNWA for the Mesquite Irrigation Company share purchased from Staci Frei. Karl Gustaveson seconded this motion and it was unanimously carried. 5-0

6. Discussion & Possible Action – Consideration to approve William Peterson to become certified as a “Conservation Practitioner” along with any costs associated to obtain certification

Mr. Peterson provided information to the board proposing that he was willing to offer his services in obtaining a “Conservation Practitioner” certification through the CAL-NV section of AWWA, stating that the cost is negligible and would not be a burden.

Karl commented that he was very much in favor of this and that he would like to take it a step further in regards to continuing education on the treatment side and to have someone meet the credentials required for the District in treatment. Ken stated that he along with Pete and Philip were in the process of meeting the requirements to obtain higher treatment certification.

Mark stated that he approved and supported this idea and that Pete’s memo was extremely positive.

Mark McEwen made a motion to approve and also support William Peterson becoming certified as a “Conservation Practitioner” and that the Water District will pay for any costs associated with obtaining this certification. Karl Gustaveson seconded this motion and it was unanimously carried. 5-0

Kenyon wanted to make sure that this was an accredited certification and Ken stated that it was a certified AWWA course.

7. Discussion & Possible Action – Consideration to approve additional SCADA programming services with Bowen, Collins & Associates, Inc. not to exceed $42,000

Karl asked if it was possible to submit these costs to the ACOE for reimbursement through the grant that has not been completely utilized. Ken stated that it was very perceptive of Karl to suggest this because that is exactly what we have done. We have had correspondence with the ACOE representative and he has stated that as long as it is related to the arsenic plants that the District would qualify for reimbursement of 75%. Ken further stated that we are working on putting together purchase orders for valves, supplies, training, equipment and paving to the arsenic plants besides this SCADA programming service to submit invoices to the ACOE before the grant expires.

Kenyon Leavitt made a motion to approve additional SCADA programming services with Bowen, Collins & Associates, Inc. not to exceed $42,000. Ted Miller seconded this motion and it was unanimously carried. 5-0

8. Discussion & Possible Action – Presentation from Bowen, Collins & Associates, Inc. and Marty Johnson with JNA Consulting Group for alternatives on 2008 bond legal defeasance and proposed alternative rate schedules

Mike Chandler with Bowen, Collins & Associates, Inc. (BCA) began by summarizing the three variations on the scenarios proposed by Marty Johnson at the last workshop. Mike stated that what it amounted to was shifting the increase of the debt service coverage through rate increases in one to three years. BCA looked at each of the scenarios and developed the rate increases based on the information that John Gleave provided BCA. Mike continued and stated that in order to get to the debt service coverage, we would need an aggregate of 36% over today’s current rate structure and that can be implemented in one of three ways; a one-time increase of that amount or stepped out over two or three years. BCA prepared a couple items for the board to look at. Mike stated they had several examples of different scenarios and what this would look like on customer’s water bills. BCA also looked at Marty’s scenario 3A and implementing an increase over one, two and three years and how that would affect the District’s cash reserves. Mike further stated that one advantage of moving aggressively is, having just finished the arsenic treatment plants; you never know what is on the regulatory horizon. Mike stated that by moving and being proactive, it will allow the District in the future to not need as much bonding, debt financing and being able to proactively position the District to handle things better.

Ken asked Mike if he had seen the rate comparison prepared by Aaron Bunker and Mike stated that he had and proceeded to pass out the comparison sheet to the board members for review of the District’s current rate and the proposed 36% increase, along with 6 other entities within a 100 mile radius and their base rates and how the District compared. Mike further stated that the District’s base charge was on the lower end and if you looked at tiered structure, the District’s tier structure is much more forgiving than anyone else. Mike stated that even with the 36% increase, it would position the District well within other entities out there; but it would also put the District in a position where we are able to stabilize existing debt coverage and to prepare for the future where we could take a more proactive stance on some of these issues, whether it be regulatory monitoring or repair and replacement type items. Ken then stated that this rate structure also shows us that currently there is not as high a penalty, or as early a penalty, for high water use, which helps our industrial/commercial users. There was further discussion regarding mandated and un-mandated regulations.

John Paul stated that he felt the District should bite the bullet and go for the increase of 36% in one lump sum. Ted stated that he agreed with John in increasing in one lump sum and further asked when we would be looking at another increase. Mike Chandler stated that with any increase, water usage will decrease and the District may have to increase rates if usage goes down. There was further discussion regarding the comparison chart and the District’s proposed rates. Kenyon stated that the general public has not heard all the discussion in the workshop, so they don’t really know what’s taken place and feels this is something that needs to be discussed; or at least let them know the savings from defeasing the $10.8 million and the CIPs that we are putting on hold and that this 36% isn’t just because we want more money. Ken stated that he has done presentations for the rotary clubs and he could put together a variation of these and the board presentation for a
public presentation to get this information out.

Marty Johnson with JNA Consulting Group stated that the one scenario we had looked at paid off the debt on the backend. The goal was to eliminate all of the payment of the 2008 bond in fiscal year 2012 and then whatever was left was to shorten up the life of the debt and get rid of those payments on the backend with a couple small modifications. Marty further stated that at this point and time, it was going to be the rate increase and how that gets implemented, to determine the fine tuning that is done to the defeasance scenarios. Marty further stated that they would need to come back at a later date and have the board adopt an actual resolution to accomplish the defeasance. Marty explained to the public “defeasing” in that we would take the $10.8 million, or whatever amount that number will eventually be at the time of defeasing, of the remaining 2008 bond proceeds and using that to pay off as much of the payments that we can, including principal and interest; and the goal would be to get rid of all the 2012 payments on those bonds; get rid of the rest of the payments in the current fiscal year; and basically we would be getting rid of the principal and the payments that are on the backend of that bond and the interest associated with those maturities for the life of the bond. Marty stated that this process was pretty straight forward and easy to accomplish. Marty suggested having the resolution available for approval at the October 5, 2010 board meeting and we could have the defeasance done by October 15th.

Karl stated that by defeasing the 2008 bonds, we would be saving the rate payers 8 to 9 million dollars in interest and only looking at the 36% rate increase in lieu of a 50% or more rate increase. There was further discussion regarding refinancing the 2001 bond.

Mark commented that he is a rate payer and if he was not on the board, he wouldn’t understand this rate increase; but understanding it now, along with what Marty said about this helping our debt, this actually protects our District from costs like failure of equipment and federal mandates. Mark further stated that the District experienced growth, but we did not leave a foundation for protection of that growth and believes this is a very sound procedure.

Kenyon stated that he was concerned and felt that it would be smart on the part of the District to put this out to the public at the next board meeting. Ken stated that legal has advised him that the wording on the agenda item does not call for a rate increase being approved at this meeting. Karl also stated that the District’s bond rating is critical and if we don’t take action soon, we could lose our bond rating. Kenyon stated that he would give direction to the general manager to take care of a presentation for the next board meeting and to invite BCA to inform the public of why there would be a rate increase. Ken suggested moving the next meeting to 5:00 so that more public would be able to attend and they could have the litigation session at 3:00 and Mark would be able to attend.

9. General Manager’s Report

Ken included a written report summarizing his meetings with different agencies and individuals, stating that it has been another educational couple of weeks. In summary, Ken stated that there is interest and cooperation in making sure that both, potable and non-potable sources, needs are met reliably at a reasonable cost for our community and also playing into this; working with Mr. Tanner’s group planning on if we want to put pipes under the new 120 interchange is part of a challenge.

10. Discussion & Possible Action – Board approval sought to set up a special workshop for preliminary evaluations of overall water resource options, proposed date 9/29/10

Ken stated that this was an ambitious undertaking; however, he thought it was fairly important. Ken stated he would like to leave this as a goal, rather than a hard and fast demand.

The item died for a lack of a motion.

11. Public Comment

Morris Workman stated that he wanted to applaud the District’s website and having back-up material links provided on the agenda.

12. Adjournment

President John Paul adjourned the meeting at 4:07 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: 2010-09-07 (.pdf 21.K)