VIRGIN VALLEY WATER DISTRICT REGULAR BOARD MEETING
VIRGIN VALLEY WATER DISTRICT OFFICE
JUNE 7, 2011

Minutes of a Regular Board Meeting of the Virgin Valley Water District Board held on June 7, 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 General Manager Ken Rock, District Legal Counsel Bo Bingham, District Hydrologist Aaron Bunker, District Accountant Wesley Smith, 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.
Kenyon Leavitt 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:

Sandra Ramaker requested that item #3 and 4A be pulled and discussed.

Ted Miller made a motion to approve the consent agenda as listed below with the exception of pulling items #3 and 4A from the consent agenda. Sandra Ramaker seconded this motion and it was unanimously carried. 5-0

1. Discussion & Action - Approve Agenda – with the exception of items #3 and 4A being pulled

2. Discussion & Action – Approve Minutes from 5/19/11 Special Meeting

4. Discussion & Action – Approve Purchase Orders Over $2,500
B. Cordova Construction – Ratify $8,700 – Emergency Repair of 14” Ductile Waterline at Kitty Hawk Drive
C. Sundance Helicopters - $280 – Overage of amount Board approved 5-3-11

** End of Consent Agenda**

3. Discussion & Action – Approve Bills Paid - $312,522.11

Sandra questioned the amount paid to Draper & Gleave when we have a staff accountant.
Ken stated that this was due to preparing the budget and that John Gleave had stated that this would be the final bill of this significant amount.

Wes Smith also stated that this was due to the budget process and that he was handling the day to day accounting, but that John’s experience and expertise was required in order to meet budget requirements and compliance.

4. Discussion & Action – Approve Purchase Orders Over $2,500
A. Dell Marketing - $4,618.64 – Two desktop PC’s

Sandra stated that she thought these computers were in the next budget ending 6/30/12 and not the current fiscal year.

Wes stated that they are in both budgets and that Tracy replaces old equipment as it is cycled out. Wes also stated that this was approved in the 2011 budget process and explained what was budgeted and the amount spent to date.

Ken also mentioned that since we had to turn over a couple computers to the DA, that he has requested Tracy to order a new laptop computer, but that we would still be under budget for this fiscal year.

Mark McEwen made a motion to approve items #3 and 4A. Ted Miller seconded this motion and it was unanimously carried. 5-0

5. Discussion & Possible Action – Consideration to approve agreement with Robcyn, LLC for Robcyn, LLC to continue to provide consulting services to the District for a term of twelve months.

Mike Ford and Barry Stubbs were present along with their new associate, Joe Liebhauser. Mike Ford began by distributing handouts and informed the Board that he had Barry had been associates together for eleven years. The handouts contained information on who they are, how they got here and who they represent. Another handout explained what they have done for the VVWD within the last year since they were engaged with the District and continuing or future projects that they foresee the District requiring their assistance. Mr. Ford continued verbally on what was contained within the handouts stating that their expertise was with federal agencies such as the BLM, BOR, Fish & Wildlife, National Park Services and ACOE. Mr. Ford further stated that they have been working closely with Ken, Bo and Aaron. Robcyn is putting together a plan to augment right-of-ways, easements, permits, etc. on federal lands with Aaron and have been working with Bo on historical activities.

Ted asked about the District’s trespass violation on well #30 site and whether this has been resolved and how it was accomplished. Mike explained that this matter was resolved as it pertains to the District, but they are not involved with the litigation matter filed by Rebel Communications. Bo clarified that Robcyn was very effective in resolving the District’s trespass violation with the BLM, but because Rebel Communications has filed a lawsuit, it has not been completely resolved. The District has the right to be on that site, but no third parties (Rebel Communication) can be on that site.

Kenyon questioned their foresight and how long it would take Robcyn to accomplish the activities mentioned. Mike Ford stated that whenever the Board said they no longer required their services, they would be done. Barry Stubbs stated that if he had to guess, he would estimate that it would take at least six months to a year to finalize the HCRP and HMMP.

There was further discussion regarding the contract and it was explained that all their contracts have a 30 day out clause and that they bill a flat fee with no indirect expenses billed monthly.

Mark McEwen thanked the Robcyn crew for attending the meeting at his request from the budget workshop and informing the Board of what they have done and what they will be doing for us and also felt that the Board should review every six months.
Ken stated that Robcyn has proven that they are very valuable to the District and feels that it is good to have them on an annual contract so the Board can ask questions every year.

Kenyon Leavitt made a motion to approve agreement with Robcyn, LLC to continue to provide consulting services to the District for a term of twelve months with a six month review at the December 6, 2011 Board meeting. Sandra Ramaker seconded the motion and it passed by a vote of 4-1 with Ted Miller opposed. 4-1

6. Discussion & Possible Action – Consideration of the terms and a proposed draft of a standard lease for the District’s leasing of irrigation shares in the Mesquite Irrigation Company and the Bunkerville Irrigation Company. Possible action may include adopting the proposed draft lease as the District’s standard lease for its irrigation shares with possible additions or modifications as determined by the District’s board.

Bo stated that he tried to take Ordinance 5 and put it in the framework of a more traditional lease for reasons of practical concerns that we are dealing with in the Virgin Valley; some undetermined specifics such as the amount of water per share and the place of use. Bo further stated that this accomplishes the purposes of Ordinance 5 while at the same time trying to address those unknown issues without causing potential harm to the irrigation shareholders.

Aaron had put together a table based on Wolf Creek’s usage for an 18 hole golf course with projected revenues to the District comparing rate/fees and metered/leased shares. Under the standard lease/share method, lessees would still be able to pay a rate lock/right of first refusal one-time fee based on years desired, up to 8 years. All MIC and BIC shares, except shares leased by Wolf Creek ($250/share) are currently leased at $300 per share.

Kenyon asked about issuing a “will-serve letter” and Bo explained that he didn’t believe that would be necessary because the golf courses would be able to show in the lease agreement that they are locked in for 8 years and will have that first right of refusal as long as the District is leasing the shares and they want to pay what the District is requesting per share.

Karl opened the item to the public and Robert Fuller with Wolf Creek Golf Course stated that the lease agreement was fairly understandable, but he had a few questions regarding 3b; hoping that with paying a rate lock fee that the Board would not go to the $300 per share, increasing their lease amount 20%; and questioned if at the end of 8 years if they would still retain that first right of refusal even if the rate was amended.

Bo answered that 3b is essentially stating that the District is not the irrigation company(s), but the District owns the shares and the District is giving all of its rights in the shares to whomever leases the shares; but just as the District is subject to some restrictions, limitations, etc., the lessee would be subject to the same limitations.

Bo stated that the price per share was entered at $300 because that was what he thought had been discussed, but this amount can easily be modified and then Bo proceeded to review and explain the first right of refusal.

A discussion regarding the rate lock fee, first right of refusal and cost per share ensued. Bo had not actually written into the lease agreement that the first right of refusal would continue after the 8 years, but stated that he could add that if the board so directed.

Tim Colbert with Pulte stated that Conestoga Golf Course would like to engage with the VVWD quickly in lieu of who they are currently leasing irrigation shares from. Tim further stated that he does not want to complicate things and/or drag this out any further and supports the lease as written and that they just want to move on and get lease agreement as soon as possible.

Bo had drafted an additional paragraph for the lease agreement as it pertains to the continuation of the first right of refusal and read it aloud:

“After January 1, 2020, if Lessee continues to hold a right of first refusal as provided for above as to any of the Irrigation Shares, Lessee shall have the right to continue to lease the same Irrigation Shares on a perpetual basis provided Lessee is not in breach of this Lease; however, the rent amount for the Irrigation Shares shall be determined in the sole and absolute discretion of VVWD”.

Further discussion ensued between the Board and the public regarding the rate lock fee, the cost per share comparable to Ordinance 5, and whether the lease agreements should come back before the Board. Brian Haderlie questioned how shares would go out to lease as they became available and was informed that it would remain on a first come/first serve basis.

Kenyon Leavitt made a motion to accept the lease agreement with the amendment that Bo has established for after the eight years (After January 1, 2020, if Lessee continues to hold a right of first refusal as provided for above as to any of the Irrigation Shares, Lessee shall have the right to continue to lease the same Irrigation Shares on a perpetual basis provided Lessee is not in breach of this Lease; however, the rent amount for the Irrigation Shares shall be determined in the sole and absolute discretion of VVWD): that we put that on the proposed rate of $250 per share; that the lease amount for non-locked in rates be reviewed annually at budget time; that shares will be leased on a first come-first serve basis; and that the lease agreement does not have to come back for Board approval as long as lessee meets all requirements within the agreement. Sandra Ramaker seconded the motion and the motion passed by a vote of 4-1 with Ted Miller opposed. 4-1

7. Discussion & Possible Action – Consideration of amendment, revision, or repeal of Ordinance 5 based on the District’s intention to proceed with traditional leasing or irrigation shares.

Sandra Ramaker made a motion to repeal Ordinance 5. Kenyon Leavitt seconded the motion and it was carried unanimously. 5-0

8. Discussion & Possible Action – Consideration of lease extension offers from Southern Nevada Water Authority to extend existing leases for a period of three (3) years for water shares in the Mesquite Irrigation Company and the Bunkerville Irrigation company and which are scheduled to expire on September 30, 2011.

The District currently owns 8 BIC shares and 1 MIC share that were purchased after already being leased to SNWA from the former owners. The District is able to renew these leases with SNWA for an additional three years or until September 30, 2014. The lease rate being offered is $1,816 per year for a BIC share and $1,620 per year for a MIC share. This is an approximate 40% reduction from last year.
Ken stated that after the secondary study is completed, we would have more information on how the District will utilize their irrigation shares, but at this time, it is more economical to lease to SNWA.

Sandra Ramaker made a motion to continue with the lease extension offers from SNWA for three (3) years at the new rate shown of $1,816 per year for eight (8) BIC Shares and $1,620 per year for one (1) MIC Share. Ted Miller seconded the motion and it was unanimously carried. 5-0

At this point in the meeting, Karl stated there may be a reason to re-look at the Lease Agreement in item #6 on the agenda and we should probably deal with this right now. Bo pointed out that there are a couple things that had been left undecided. Karl stated that this was on page 4 of the agreement under item 6c regarding subleasing and the percentage the lessee shall pay to the District if they sublease their rented shares after approval from the Board.

Ken stated that he felt this would add a lot more complications and would rather not have subleasing, but that was a decision for the Board. Bo explained his reasoning for the subleasing and the potential benefit to the District.

Discussion continued on the options regarding subleasing.

Sandra Ramaker made a motion to delete number 6-Assignment and Sublease from the irrigation lease contract. Ted Miller seconded the motion and it was unanimously carried. 5-0

9. Discussion & Possible Action – Consideration of direction to legal counsel for the District to take appropriate actions to protect the District’s interests and position with respect to potential criminal forfeiture actions of seized assets and related civil proceedings related to pending felony and gross misdemeanor charges against Michael E. Johnson and Robert Coache.

Bo stated that this may entail filing a Notice of Claim which is an official filing with the court just as the Board had directed to be done with Michael Johnson. If Metro and the DA move forward and there is a forfeiture action as a result of the seizing of assets, Bo recommends that the Board instruct counsel to file a claim so that the District will be basically telling the court and everyone that the District has a claim to those assets. If the seized assets come up for a determination of priority of who were the victims and who has the rights to the seized assets, the District will have something on file stating that the District feels that it is entitled to the assets.

Mark McEwen made a motion directing legal counsel to take appropriate actions to protect the District’s interests and position with respect to potential criminal forfeiture actions of seized assets in related civil proceedings related to pending felony and gross misdemeanor charges against Michael E. Johnson and Robert Coache. Ted Miller seconded this motion and it was unanimously carried. 5-0

10. Hydrologist’s Report

Aaron had included a written report and also informed the Board that he has been working on the history of the VVWD. Aaron also informed the Board of his recent visit to the rain gage sites by helicopter and that a couple gages were damaged and required repairs and this caused more ground time and the higher than anticipated invoice charges. Aaron also stated that he and Ken were looking at the possibility of not utilizing a helicopter and trying to reach the sites by ATV and hiking in.
Aaron also stated that his top priority would be working on the HMMP with Barry Stubbs and Mike Ford.

Aaron further stated that he has received a couple calls for individuals requesting to sell their shares to the District and informed them to request to be put on the agenda for Board consideration.

11. General Manager’s Report

Ken had included a written report and distributed some handouts to the Board. Ken also stated that he has spoke with Forsgren regarding buying irrigation shares and that they suspect after the report is completed, they would like to discuss and put up a standing offer what the VVWD will pay for it.

Ken also reported on his health status stating he would see his surgeon tomorrow.

Ken then answered a few questions from the Board regarding his report and activities.

12. Public Comment

There was no public comment at this time.

13. Adjournment

President Karl Gustaveson adjourned the meeting at 7:15 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: 2011-06-07 (.pdf 36.K)