VIRGIN VALLEY WATER DISTRICT REGULAR BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
MAY 3, 2011

Minutes of a Regular Board Meeting of the Virgin Valley Water District Board held on May 3, 2011, at the Virgin Valley Water District Office at 5:00 p.m. Attending were President Karl Gustaveson, Vice-President Mark McEwen, Secretary-Treasurer Kenyon Leavitt, and Board Members Ted Miller and Sandra Ramaker. Also present were District Legal Counsel Bo Bingham, District Administrative Assistant Mary Johnson taking minutes and other interested parties of agenda items. District General Manager Ken Rock and District Hydrologist Aaron Bunker were not present.

President Karl Gustaveson called the meeting to order at 5:00 p.m.

Mark McEwen offered a Prayer and Sandra Ramaker led the pledge.

Public Comment – Brian Haviland of Bunkerville stated that he had a comment on the presentation given by Forsgren Associates for the Secondary Feasibility Study and the money allocated. Brian stated that he thought the money was allocated for a secondary water study and their presentation was not anywhere within the scope of work the Board had approved for a project that was fiscally responsible; but more for someone’s dream that wouldn’t happen for another 20-30 years, if ever.

Karl answered stating that this would usually come before the Board at another meeting, but he would go ahead and answer Brian’s question stating that Forsgren found a grant that they felt could go along with this study and expand the scope and have it paid for by this grant. Karl further stated that the money spent to date has been for the secondary study and Forsgren didn’t charge the District looking into the grant.

Discussion: Board Comments – Sandra stated she had some concerns in regards to water conservation, having spoken to several individuals with questions; she would like to see a workshop put together with some outlines and bring back to the Board for approval.

President of Board Comments – Karl stated that he wanted to apologize that the information for item #8, Ordinance 5, had not been distributed any sooner than right before the meeting, but legal counsel was out of the office until Monday.

CONSENT AGENDA:

Sandra requested that item #7 be pulled and Karl asked that item #6A be pulled to give the public more information.

Kenyon Leavitt made a motion to approve the consent agenda as listed below with the exception of pulling items #6A and #7 from the consent agenda. Ted Miller seconded this motion and it was unanimously carried. 5-0

1. Discussion & Action - Approve Agenda – Items 6A and 7 pulled from consent agenda

2. Discussion & Action – Approve Minutes from 4/19/11 Regular Board Meeting

3. Discussion & Action – Approve Minutes from 4/25/11 Special Meeting

4. Discussion & Action – Approve Financial Statement for February 2011

5. Discussion & Action – Approve Bills Paid - $364,487.71

6. Discussion & Action – Approve Purchase Orders Over $2,500
B. Sundance Helicopters – Estimated between $3,500 - $4,500 – Visit rain gage sites

** End of Consent Agenda**

6. Discussion & Action – Approve Purchase Orders Over $2,500
A. Legacy Construction – Ratify $12,967.50 for the emergency repair of a 14” water main on W. Pioneer Blvd. near Siena Lane

Karl requested that this item be pulled from the consent agenda and explained to the public that the District had a 14” water main break on Pioneer Boulevard and the District took emergency measures and went out to bid. We received five bids with Legacy Construction the low bidder. The work has already been completed.

Kenyon Leavitt made a motion to ratify $12,967.50 to Legacy Construction for the emergency repair of a 14” water main on W. Pioneer Boulevard near Siena Lane. Ted Miller seconded the motion and it was unanimously carried. 5-0

7. Discussion & Action – Approve changing regularly scheduled Board Meeting on May 17th to May 19th in order to be held in conjunction with Public Budget Hearing Scheduled per NRS

Sandra stated that she wanted the public to know that this meeting is scheduled per NRS and instead of having two meetings in one week, the regular meeting for Tuesday is held along with the public budget hearing.

Mark McEwen made a motion to approve changing regularly scheduled Board Meeting on May 17th to May 19th in order to be held in conjunction with Public Budget Hearing scheduled per NRS. Ted Miller seconded the motion and it was unanimously carried. 5-0

8. Discussion & Possible Action – Consideration of and possible action to approve the proposed language for the Ordinance for the metered lease of irrigation water including final terms, parameters, and details Kenyon stated that he thought we could discuss, but maybe table until next meeting since the Ordinance was only presented today and no one has had time to review. Karl stated that this would make the third delay and unless there was a compelling reason, he felt the Board should move forward. Mark felt that this reason was compelling enough to wait two weeks.

Bo explained that he had met with Aaron and Kraig Hafen last Wednesday and a rough draft was started, but Bo was out of town and it was not completed until today. Bo further stated that we could discuss it in as much detail as wanted, or put it off if the Board so desired; but he could answer, or attempt to answer, any questions that may come up.

Karl asked if the first 11 items that have already been approved were in the document. Bo stated that they were, but not in that numerical order. Bo stated that the District currently has parameters in place for leasing and auctions and that the terms of the proposed ordinance, as discussed by the board thus far, are not fully consistent with some of those parameters. Bo had included alternative language in Article #2 that would coincide with the District’s previous parameters and the Board could decide to adopt all, or a portion of the alternative language.

There was discussion as to the limited supply of river water and that the District shall not be responsible for any shortage or any failure to provide a sufficient amount of river water unless the shortage or failure is caused by the willful act or gross negligence of the District. Rob Fuller with Wolf Creek Golf Course (WCGC) stated that they have a metered history and thought District staff would use this history to determine the amount of water that would need to be set aside for their course.

There continued to be a lengthy discussion regarding shares versus $.10/1,000 gallons and how the District would lose income; the amount of water in a share; how it would be determined the amount of water a golf course would require; the monthly service charges; and peak usage.

Bo clarified why the Ordinance was presented for approval as written. Kenyon stated that he thought the last paragraph in Article 2 should be removed. Sandra stated that if the alternative language was used, that number 5 should be removed since Ordinance 5 was for 8 years and it states leasing only for one year.

After continued discussion, Bo stated that maybe we should go through the Ordinance and treat each issue separately. Bo began with Article 1 and continued with Article 2 with discussion from the Board.

Ted Miller made a motion concerning Article 2 removing the last paragraph and using the alternative language with number 5 being scratched. Kenyon Leavitt seconded this motion with it passing by a vote of 4-1 with Mark McEwen opposed. 4-1

Bo continued reviewing each article. Bo stated that the motion approving this action included in Article 5 did not expressly include the date of December 31, 2020, but only mentioned 8 years. He didn’t know if the Board wanted to end in December or 8 years from 6/1/11.

Kenyon Leavitt made a motion that Article 5 begin June 1, 2011 and ends in eight years. Sandra Ramaker seconded this motion and it was unanimously carried. 5-0

Article 7 would need to be changed due to Article 2 being amended.

Ted Miller made a motion to amend Article 7 with the alternative language numbered 1-4 from Article 2. Kenyon Leavitt seconded this motion and it passed by a vote of 4-1 with Mark McEwen opposed. 4-1

Bo continued reviewing the articles and discussion ensued on Article 14 regarding other costs and expenses. A lengthy discussion continued regarding assessment fees; responsible party(s) for other costs & expenses; negotiating costs for repair; and the fact that the District is the owner of the shares and ultimately responsible because they are the owner.

Ted Miller made a motion to eliminate the first paragraph of Article 14. Sandra Ramaker seconded the motion and it passed by a vote of 4-1 with Mark McEwen opposed. 4-1

Article 16 regarding the water meters was discussed and the responsible party for ensuring accuracy and reliability.

Kenyon Leavitt made a motion to approve Article 16 as written with the meter being calibrated yearly, if possible, and if the meter requires any repairs, the meter owner will be responsible for the repairs. Ted Miller seconded this motion and it carried unanimously. 5-0

There continued to be discussion regarding Will Serve Letters and protection to the user so that the District doesn’t lease out too much water and how this would be handled. It was also discussed if this was going to be based on a first come/first serve basis or if a certain amount was guaranteed to any entity.

After a lengthy discussion, the parameters were set out for inclusion for in a Will Serve Request and would be added to Article 2:
Shortage of water -
Property location (physical address, APN)
Size of meter(s)
Peak usage
Total use on annual basis
Required entity information – outlined in Article 2 paragraph 2
Board review actual water usage on an annual basis, amount of water required for peak usage and determination if “shares” (or the amount of water aside) needs to be adjusted
Will Serve will be issued contingent upon payment of Rate Lock Fee received in office

Bo continued and stated that he believed we should have some motions about everything we’ve talked about or he could read from the list and have one motion:

1. If there is a shortage of water, those that have received a Will Serve Letter will share proportionately in the water that is available;
2. We will put on the application the following items to request from those who are seeking a Will Serve Letter;
a. Provide the peak amount of water they estimate to use
b. Total amount of water they estimate to use over a period of a year
c. The size of the meter they are requesting
d. If they are doing this through an entity, they are going to provide the owners of that company if they own over 1% pursuant to statute
e. Provide the property location of where the water is going to be used
f. The District will not provide the Will Serve Letter until the Rate Lock Fee has been paid in accordance with the schedule
g. Will Serve request must be approved by the Board of Directors so the Board can make a determination if there is enough water available for the person seeking the Will Serve

Sandra Ramaker made a motion to add the items Bo stated above to Article 2. Ted Miller seconded the motion and it was unanimously carried. 5-0

Bo stated that he was reminded that he did not state that there would be annual review in the items listed above.

Sandra Ramaker amended her motion to include an annual review. Ted Miller seconded the amendment and it was unanimously carried. 5-0

Bo then stated that one other thing the Board may want to do is have a final vote on this agenda item and it could include all the items talked about:

Approve this item with all the motions being made; that it be immediately effective and on this next motion, the President be authorized to sign; Kenyon attest it; and if someone were to show up tomorrow during the regular business hours of the District, they could provide this information even if there is no formal application done and we could start the process tomorrow.

Sandra Ramaker made a motion to approve this item as stated above by legal counsel. Ted Miller seconded the motion and it was carried by a vote of 4-1 with Mark McEwen opposed. 4-1

9. Discussion & Possible Action – Consideration of the District’s options for the possible lease or other use of any excess irrigation water that is not used pursuant to a metered lease. Possible action may include, but is not limited to, approving making such water available for lease pursuant to a public auction

This item deals with both Bunkerville and Mesquite Irrigation water. Bo thought that we should wait and see how much water would be available in Mesquite after requests came in for metered river water. There was discussion regarding the Virgin Valley Veterinarians lease of one share and not going to the metered option. Bo further stated as an option, if there is still water available in Mesquite after allocating water for metered watering, the District could continue with an auction of any extra shares; and this would also apply to Bunkerville Irrigation shares.

Ted Miller made a motion to leave the Bunkerville Irrigation shares available for auction as they are currently. Kenyon Leavitt seconded this motion and it was unanimously carried. 5-0

10. Discussion & Possible Action – Consideration to approve amount of settlement for the current litigation with Southeast Directional Drilling and Longview Construction pursuant to the mediation on April 21, 2011

Bo informed the public with background information stating that in 2008 VVWD hired Longview Construction to drill a hole under the river because the District had to remove their waterlines located on the bridge between Bunkerville and Mesquite. Longview Construction gave the District a fixed bid for this work, significantly lower than the other bids, and subcontracted out most of the work to Southeast Directional Drilling. Southeast Directional Drilling was unable to complete the work in the time specified by contract, and ultimately paid $75,000 extra to bring in a larger rig out to drill. They submitted a change order because they felt that the subsurface conditions were different than what had been represented. The District disagreed with this and felt that we had entered into a fixed contract with Longview and that they should bear the burden for their lack of due diligence in looking at the subsurface conditions. Southeast Directional Drilling was pursuing the District under, among other things, essentially an unjust enrichment theory, where they felt they did the work and they should be paid for it. They were seeking a significantly amount of money in excess of $209,000, plus attorneys’ fees, along with other statutory claims that they felt they could prevail on. The District considered the amount of expense that would be incurred in attorneys’ fees, the risk of not knowing what could happen at trial, and with the advice that had been obtained from legal counsel through POOL PACT, to consider very carefully whether it makes sense to settle the case. The ultimate decision, pursuant to that mediation, was an agreed amount of $132,500 to be paid to Southeast Directional Drilling for the extra work they had to do dealing with the subsurface conditions. Bo then stated that this was before the Board today for them to decide whether they were going to approve this tentative settlement. The money would be going to Southeast Directional Drilling, but the District would receive a release from Longview as well as Southeast Directional Drilling for all claims related to this project.

Bo further stated that he believed that the District received a grant to pay for this project and would also receive $15,000 from the POOL PACT towards the settlement. Pursuant to the contract, there was also a $2,000 per day penalty in liquidated damages totaling $50,000 that was withheld from Longview.

Kenyon also stated that the Judge asked what the next lowest bid was and with it at 1.2 million and paying Longview Construction $605,000 for the original bid, plus the $132,500, the District was still getting a bargain. Kenyon further stated that the pipe manufacturer (Underground Solutions) should be thanked because they came back in and put in the pipe at no cost.

Kenyon Leavitt made a motion to approve amount of settlement of $132,500 for the current litigation with Southeast Directional Drilling and Longview Construction pursuant to the mediation on April 21, 2011. Ted Miller seconded the motion and it was unanimously carried. 5-0

11. Hydrologist’s Report

Aaron had included a written report with significant events since the last Board meeting, but was not present.

12. Public Comment

There was no public comment at this time.

13. Adjournment

President Karl Gustaveson adjourned the meeting at 7:54 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: 2011-05-03 (.pdf 31.K)