VIRGIN VALLEY WATER DISTRICT REGULAR BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
MARCH 1, 2011

Minutes of a Regular Board Meeting of the Virgin Valley Water District Board held on March 1, 2011, at the Virgin Valley Water District Office at 5:00 p.m. Attending were President Karl Gustaveson and Board Members Ted Miller and Sandra Ramaker. Vice-President Mark McEwen and Secretary-Treasurer Kenyon Leavitt were not present. Also present were District General Manager Ken Rock, District Legal Counsel Bo Bingham, District Hydrologist Aaron Bunker, District Administrative Assistant Mary Johnson taking minutes and other interested parties of agenda items.

President Karl Gustaveson called the meeting to order at 5:04 p.m.

Bo Bingham offered a Prayer and Ted Miller led the pledge.

Public Comment – Rob Fuller with Wolf Creek Golf Course (WCGC) questioned whether he should make public comment on item #12 or would it be opened up for public comment at that time and Karl stated he would open the item up at that time.

Reuben Proper, Superintendent at WCGC, and Charles Singer, also an employee at WCGC asked that the Board keep employees in mind when deciding rates for the secondary water.

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

CONSENT AGENDA:

Sandra Ramaker requested that item #7 be pulled from the consent agenda and heard as the first item after the consent agenda.

Ted Miller made a motion to approve the consent agenda as listed below with item #7 being pulled from the consent agenda and heard as the first item after the consent agenda. Sandra Ramaker seconded this motion and it was unanimously carried. 3-0

1. Discussion & Action - Approve Agenda

2. Discussion & Action – Approve Minutes from 2/9/11 Special AM Meeting

3. Discussion & Action – Approve Minutes from 2/9/11 Special PM Meeting

4. Discussion & Action – Approve Minutes from 2/15/11 Regular Meeting

5. Discussion & Action – Approve Financial Statement for December 2010

6. Discussion & Action – Approve Bills Paid - $349,825.30

** End of Consent Agenda**

7. Discussion & Action – Approve Purchase Orders Over $2,500
a. CDW Government - $21,702.00 – Replace existing tape library, firewall and network switch gear

Sandra explained that she just wanted more information regarding this item. The District’s IT Consultant, Tracy Lee, was present to explain the items listed on the purchase order and why they should be purchased. Tracy started at the top of the list and explained that these were budgeted line items and we needed to replace the firewall because it was at its end of life; and that we needed to update these end of life items because we are unable to obtain updates for various vulnerabilities, to prevent attacks and for security reasons. Along with the firewall, there is annual, recurring maintenance costs associated. Tracy explained why the network switch gear and the tape library also needed to be replaced along with the supplies to maintain. The District is currently two models out of date and if there were a catastrophic failure, we would have no back-up.

Ted Miller made a motion to approve purchase order 9982 to CDW Government for $21,702.00. Sandra Ramaker seconded the motion and it was unanimously carried. 3-0

8. Discussion & Possible Action – Presentation from David Waite on submitted RFP’s for an auditing firm to conduct District’s annual audit for fiscal year ending June 30, 2011. Possible action by Board may include consideration to approve firm to conduct annual audit or consideration to take action at next meeting if more time is desired.

David Waite with Draper & Gleave distributed handouts in response to RFP requirements. David stated that he created the RFP with assistance from Hinton, Burdick. They looked at advertising, but accountants are not known to look in newspapers for opportunities to bid on jobs. David called other water districts, the Nevada Association of CPA and received a list of firms that do specifically yellow book accounting. The District received seven proposals. David disclosed to the Board that he worked for Wisan, Smith, Racker & Prescott for three years, but had no contact with them now. David then reviewed the spreadsheet and explained that all seven firms met the basic requirements and that pricing was between $14,000 and $24,000.

Ken stated that he was thankful that David had assisted in this endeavor and continued with explaining the spreadsheet; that the firms were listed alphabetical; and that Ken reviewed qualifications first and not the price. After Ken had reviewed, he narrowed his opinion down to the top three with Piercy Bowler Taylor & Kern at number three, number two, Wisan, Smith, Racker & Prescott and Hinton, Burdick, Hall & Spilker as number one. Ken also stated that his choices came down to experience, skill and comfort levels.

Sandra stated that she personally was very much for a new auditor. Ted stated that he had probably initiated this request and thought that it was good practice to see where we stood price-wise. Karl commented that he agreed with both Sandra and Ted and felt a fresh set of eyes was a good idea.

Sandra Ramaker made a motion to change auditors and to use Wisan, Smith, Racker & Prescott to conduct District’s annual audit for fiscal year ending June 30, 2011. Ted Miller seconded the motion and it was carried unanimously. 3-0

9. Discussion & Possible Action – Consideration to approve purchase of a 4.47 acre parcel in Bunkerville owned by Coal Creek Co., LLC that has a VVWD pump station and a 250,000 gallon concrete reservoir on it.

Ken had included a memorandum explaining that the District’s facilities have been on this property for over 35 years and there appears to be no apparent easement. Ken pointed out where it was located and its uses and that it is completely functional. Ken explained that it would probably take 2 acres to separate this from the parcel and the Board had authorized Ken to offer $31,500 for a sub-parcel of the land that these facilities are on. Mr. Joe Bowler, representing Coal Creek Co., LLC, believes that there will not be sufficient value remaining in the property if it is carved in a fashion that best protects our facilities and counter-offered with a purchase price of $115,000 for the entire parcel.

Mr. Bowler stated that there was a possibility of two lots in the frontage.
Ken stated that there was a title search in 2009, but there is no record of any right-of-way.

There was discussion regarding other lots for sale and their comparable value and Ted suggested making a counter offer to Mr. Bowler. Sandra stated that the property had value to the District and that we should keep it, but that money was tight and that $115,000 was more than what the District should pay and also agreed on making a counter offer.

Mr. Bowler stated that he had called Premier Realty for a letter like he received from ERA and was informed that they are doing a market analysis for the District and asked if Ken had that information. Ken stated that he had called Premier Realty and disclosed that four out of five realtors had an opinion on the property that it was worth $90,000 to $95,000.

Ted Miller made a motion to make a verbal counter offer of $50,000.

The motion died for a lack of a second.

Sandra stated that with the realization of knowing that the property was purchased for $31,500, she would suggest doubling that.

Sandra Ramaker made a motion to offer $63,000. Ted Miller seconded the motion and it was unanimously carried. 3-0

 

Mr. Bowler commented that with the consensus of four realtors stating that it was worth at least between $90,000 and $95,000, he would not go less than that. Mr. Bowler, on behalf of Coal Creek Co., LLC made a counter offer of $95,000.

Sandra Ramaker made a motion to have more deliberation and bring back to the next meeting.

This motion died for a lack of a second.

Ted Miller made a motion to accept Mr. Bowler’s offer of $95,000.

This motion died for a lack of a second.

Comps and appraisals were discussed and Mr. Bowler commented that 2.2 acres had sold for $42,000 close to this property.

Sandra Ramaker made a motion directing the general manager to research this further and possibly get an appraisal and bring back at the March 15, 2011 meeting. Karl Gustaveson seconded this motion and it was unanimously carried. 3-0

10. Discussion & Possible Action – Consideration to approve Task Order 11-2 with Bowen, Collins & Associates to make groundwater hydrologic sustainability opinions for Basin 222 and other basins that may influence it, particularly Basins 204 and 221. The not-to-exceed budge is $10,000 unless further authorized.

Ken stated that task order 11-1 was for approval of drawings submitted through the District and that this has already been really valuable. Ken further stated that there is a lot of disagreement on the sustainability of the water in Basin 222 and that we need to know how much groundwater there is. BCA would be able to do a study in a few months for less than $10,000 and that this was a critical part of the decision process concerning District Ordinance 2, impact fees, etc.

Sandra Ramaker made a motion to approve Task Order 11-2 with Bowen, Collins & Associates. Ted Miller seconded this motion and it was unanimously carried.
5-0

11. Discussion & Possible Action – Annual review and consideration to change District’s parameters of leasing water shares.

Ken began by reading the District’s current parameters for leasing water shares. Ken had distributed a handout showing the number of shares leased; annual amount received; amount received per share; the lease duration; end of lease date; who it is leased to; and whether it is a Mesquite or Bunkerville share. Ken stated that we could look at leasing outside the valley since we have shares available that have not been auctioned off and the water is leaving the valley anyway.

Aaron commented that at this time, SNWA was not offering any new lease agreements, but that they may continue leasing shares already being leased, but this has not been confirmed. Aaron also stated that ten (10) BIC shares are set aside for the secondary system in Bunkerville.

Ken stated that he thought Conestoga might be able to use 40 shares when their lease runs out with SNWA.

Tim Colbert with Pulte Homes corrected Ken in that they would need 120 shares. There was further discussion regarding this item versus item #12 and how these would affect each other.

Ted Miller made a motion to table item 11. Sandra Ramaker seconded the motion and it was unanimously carried. 3-0

12. Discussion & Possible Action – Consideration to set a monthly meter charge and water rate for the sale of river water to golf courses from the Mesquite Irrigation Company canal.

Rob Fuller began by commenting on behalf of the golf course community and distributed a handout entitled “Golf Course Compromise Water Delivery Appeal”. The golf courses have suggested to mitigate incremental increases in the first 10 years and offered the idea of an up-front assessment in the form of an impact rate-lock fee to be paid to the VVWD on a prorated basis; the courses would be given a rate of .10 cents per thousand gallons for a period of ten years; in year 11, it would be agreed that the rate would then increase by 50% to .15 cents/1000 gallons; and to secure the connection and dedication of the water supply, a $500 per month meter fee would be assessed in addition to the monthly charges.

Ken stated that our goal was to give stability to the golf courses and to set a rate that would be comparable to other District users. Ken had prepared an outline on the dry erase board outlining his suggestions along with the golf course suggestions with different scenarios. Ken stated that he had concerns with a 10 year lease and felt 4 or 5 would be more appropriate. Ken had suggested that the rate begin at .11 cents/1000 gallons and increase in four increments to be at .15 cents/1000 gallons within four years. He reviewed other alternatives and what amounts would be paid.
Sandra stated that she had concerns regarding the meters and Ken explained how mag meters worked and how the size would be determined. There was further discussion regarding sizes of meters and the monthly meter fee. It was also discussed what exactly a “share” consisted of.

Rob Fuller also stated that if the Board chose to go with the increment increases, there would be no $25,000 up front. There continued to be discussion regarding the terms and length of service. Ken explained that the agreement would only lock in a rate for a certain period of time; that they would still be guaranteed service after the term of the agreement, but the rate per thousand gallons could change.

It was also questioned and explained that Will Serve’s would be issued and only for the water available through the District and that if the water was not available, customers would not be able to obtain a Will Serve.

Tim Hacker, City Manager, commented on Ken’s earlier comment regarding the mayor requesting that Ordinance II fees be lowered and stated that this was done because of the change and the pace of development and the fact that the City was hearing from the development community that the increase in fees was the cause of concern for development to go forward. Tim continued and stated that the predominant industry in this valley, today, is tourism and people come here to golf. The City did not engage in increases in the re-use water even though there is such a high demand. Tim also stated that Ordinance II fees were paid and used to buy irrigation water from the developers.

There continued to be discussion regarding golf courses; their impact on the City; the City’s growth; when to re-evaluate the amount golf courses are being charged; and that the rate-lock would only be on a monetary rate and not on continued service.

Sandra Ramaker made a motion to enter into a Will Serve agreement with a $25,000 rate-lock fee at .10 cents/1000 gallons for the next ten years.

The motion died for a lack of a second.

There continued to be further discussion regarding the availability of water if the river was dry. Ryan Wheeler, with Forsgren Associates, commented that the time frame of ten years was a long time to lock in when values have changed so much recently.
Rob questioned if he could offer $30,000 upfront for .10 cents/1000 for ten years.

Sandra Ramaker made a motion to enter a Will Serve Agreement at .10 cents/1000 gallons for eight (8) years with a rate lock fee of $25,000.

The motion died for a lack of a second.

John Paul questioned the rate lock fee if other courses would not require as much water and not as large a meter as Wolf Creek. Ken explained that the rate lock fee would be $2,500 per inch of meter size and that the proposed monthly meter fee would be 25% of what current potable water users are charged.

Sandra Ramaker made a motion to enter a Will Serve Agreement at .10 cents/1000 gallons for eight (8) years with a $25,000 rate lock fee; the monthly meter charges at 25% of the current potable meter fees; and a lock in rate at $2,500/inch meter size. Karl Gustaveson seconded this motion and it was carried by a vote of 2-1, with Ted Miller opposed.

13. Discussion & Possible Action – Consideration to appoint General Manager Ken Rock as proxy to vote on behalf of District’s interests at upcoming irrigation companies’ annual meetings.

Ted Miller made a motion to appoint General Manager Ken Rock as proxy to vote on behalf of District’s interests at upcoming irrigation companies’ annual meetings. Sandra Ramaker seconded the motion and it was unanimously carried. 3-0

14. Discussion – Information on VVWD Conservation Plan and Conservation Practitioner – Submitted by William “Pete” Peterson

Pete had included a memo to the Board regarding his process in preparing himself for the Conservation Practitioner and a list of where he sees the District at the present time regarding the conservation program.

15. Announcement – Possible announcement of legal action taken by VVWD on behalf of its rate-payers.

Bo Bingham stated that Nevada Law requires that public entities make decisions openly and in the public; the one exception to this is litigation where pending or when the entity is actively involved in litigation, and the Board can deliberate towards a decision in a closed litigation session. Bo further stated that there would be no consideration of this item publicly, but there is an announcement. Bo continued and stated that back in August 17th of last year, the Board made the following statement in a public meeting:

The Board of Directors of the Virgin Valley Water District 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 Virgin Valley Water District accepted the offer (including the terms set forth in this Agreement).

Bo continued and stated that the Water District has taken legal action related to this matter and in consultation with George Taylor who is the Deputy Attorney General with the State; he indicated that the Board should simply make the public announcement that this has taken place. There will not be any consideration of this matter by the Board and we will not accept questions on this, stating it was a very sensitive issue.

16. Hydrologist’s Report

Aaron had included a written report and further informed the Board of the progress of the rehabilitation of Well #31. Aaron stated that Well #31 was back on-line and producing 2,700 gpm. The well was wire cleaned, which added to the price, but now no Aqua Gard™ treatment would be required.

17. General Manager’s Report

Ken had included a written report. Ken also informed the Board that advertisements had gone out in the local papers for the half-time accountant and that the contract with Forsgren for the
Secondary Feasibility Study was signed and dated for today.

18. Public Comment

Rob Fuller and John Paul offered their appreciation and thanked the Board for their time and consideration.

19. Adjournment

President Karl Gustaveson adjourned the meeting at 7:47 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: 2011-03-01 (.pdf 91.K)