~~

l

MINUTES OF THE PUBLIC HEARING AND REGULAR BOARD MEETING

BOARD OF DIRECTORS INDIAN WELLS VALLEY WATER DISTRICT

November 9, 2015

The Regular Meeting and Public Hearing of the Board of Directors of CALL TO ORDER the Indian Wells Valley Water District was called to order by President Corlett at 6:00 p.m. in the Board of Directors Hearing Room, 500 West Ridgecrest Boulevard, Ridgecrest, California.

The Pledge of Allegiance was led by Director Cordell.

DIRECTORS PRESENT:

DIRECTORS ABSENT:

ALSO PRESENT:

President Leroy H. Corlett Vice-President Donald J. Cortichiato Director Charles F. Cordell Director Peter E. Brown Director Charles D. Griffin

None.

Jim Worth, Attorney; Chuck Krieger, Consulting Engineer; Don Zdeba, General Manager; Jason Lillian, Operations Superintendent; Jennifer Keep, Chief Financial Officer; Renee Morquecho, Chief Engineer; Rose Koch, Recording Secretary

AGENDA DECLARATION

Recording Secretary, Rose Koch, reported that the agenda for tonight's Regular Board Meeting and Public Hearing was posted on Friday, November 6th, 2015.

CONFLICT OF INTEREST DECLARATION

None.

PUBLIC QUESTIONS AND COMMENTS

None.

ALTERNATE ENERGY PROJECT

PLEDGE

ROLL CALL

AGENDA DECLARATION

CONFLICT OF INTEREST

PUBLIC COMMENTS

ALTERNATE ENERGY

Staff reported that three solar energy entities were asked to give a PROJECT presentation to the Board: OpTerra, Siemens, and Ameresco. Presentations were heard from OpTerra and Siemens.

Staff had a conference call with legal counsel and consultant engineer to determine what information was needed for the Board of Directors to make a decision. A list of four questions was sent to the references

1

I provided by OpTerra (7) and Siemens (5) inquiring of the selection of either the Power Purchase Agreement or the lease purchase performance contract, how the project was financed, etc. Three responses were received from Siemens references and five from OpTerra references. Staff considered a field trip to Desert Water Agency. Staff also considered seeking a third neutral party to evaluate the two types of proposals and have them explain the benefits to the District and make a recommendation. Neither of these considerations were completed.

Staff recommends the Board enter into a Lease Purchase Performance Agreement because the financials are more favorable. In the long term, it appears the revenue stream would be more significant and more beneficial to the District. Responses received favored purchasing the facility so that benefits are received immediately.

At the Finance Committee Meeting, Director Griffin questioned the impact of the District's financial credit rating. Staff acquired a response from Gabriela Gutierrez of Fitch Ratings, which is included in the Board Packet. Ms. Gutierrez's response is vague, "Because it is a debt, the loan would be captured in our debt ratios in our next review cycle. We would also review the impact to the debt service coverage on secured debt since it sounds like it would be paid as an Operation and Maintenance (O&M) expense (if savings don't offset the loan repayment)". The District would need to meet their debt obligation, and Fitch Ratings will review the District again in two PUBLIC years. HEARING

PUBLIC HEARING FOR THE ALTERNTE ENERGY PROJECT

ALTERNATE ENERGY PROJECT

President Corlett opened the Public Hearing for the Alternate Energy INTRODUCTION Project at 6:12 p.m.

Soloman Rajaratnam, Vice-President, and A.J. Antongiovanni, President FINANCING and CEO, presented Mission Bank's proposal to finance the proposed PRESENTATIONS solar project. A commitment letter was included in the Board Packet. Their commitment is to provide financing of $7,878,625 for the MISSION BANK District's proposed solar project at a fixed rate of 3.50%. Any outside legal expenses and bank expenses would be incurred by the District. Included is a five year prepayment penalty of 5%,4%,3%,2%,and 1% in years 1-5 respectively. Mr. Antongiovanni noted the loan amount can be increased to $8,000,000.

William Morton, President, presented Municipal Finance Corporation's MUNICIPAL proposal to finance the acquisition and construction of a solar FINANCE CORP. photovoltaic electric generation system by OpTerra Energy Services. The financing amount is estimated at $8 million and is comprised of project costs, California Environmental Quality Act (CEQA) fees, capitalized interest, reserve fund and bond counsel fees. No bank, legal, and/or underwriting fees apply. The term of the loan would be 20 years at an interest rate of 3. 39 %. The District shall have the right to prepay the installment payments in whole or in part on any installment payment date commencing 5 years after the closing date. A 1% prepayment premium shall apply. A commitment letter was not provided to the Board of Directors. The transaction is subject to final credit approval by City National Bank (Bank) and receipt of all documents and opinions in a form acceptable to the Bank.

2

Director Griffin urged whoever is awarded the solar project to use BOARD local contractors. COMMENTS

President Corlett asked that if the District purchases the equipment, the solar panels are American-Made.

Chip Holloway and Peggy Breeden supported the use of Mission Bank for PUBLIC the loan because it is a local bank. COMMENTS

President Corlett commented that being able to make prepayments without penalties favors the local Mission Bank.

MOTION: was made by Director Brown and seconded by Vice- RESO 15-08 President Cortichiato adopting Resolution 15-08, Making Findings SOLAR ENERGY for the Alternate Energy Project under Government Code Section PROJECT 4217.10. et seq. with OpTerra Energy Services, Inc. for the installation of 2.08 Megawatt of solar facilities in the form of photovoltaic panel systems on selected District sites. The Motion was carried, by the following roll call vote:

President Corlett: No Vice-President Cortichiato: Yes Director Brown Yes Director Cordell: Yes Director Griffin: Yes

MOTION: was made by Director Griffin and seconded by Vice-President Cortichiato adopting Resolution 15-09, Making Certain Findings for Financing the Alternate Energy Project under Government Code Section 4217.10. et seq. Financing of the Project with Mission $8,000,000 at an interest rate of 3.50% payments. The Motion was carried, by vote:

President Corlett: Yes Vice-President Cortichiato: Yes Director Brown Yes Director Cordell: Yes Director Griffin: Yes

the

and Approving the Bank not to exceed amortized via level following roll call

President Corlett closed the Public Hearing at 6:58 p.m.

PRESENTATION BY CHRIS BROWN OF CHARLES Z. FEDAK, CPA'S: 2014-2015 AUDIT REPORT

A PowerPoint Presentation of 2015 Audit Results was given to the Board of Directors by Christopher J. Brown of Fedak & Brown LLP. Mr. Brown reported on the financial highlights of the District such as current assets, current liabilities, total net assets, total revenues, total expenses, and total expenses vs. total revenues.

It is Fedak & Brown LLP's opinion, the financial statements present fairly, in all material respects, the respective financial position of the District, as of June 30, 2015 and 2014, and the respective changes in financial position and cash flows thereof for the years then ended

3

RESO 15-09 FINANCING OF SOLAR ENERGY PROJECT

PRESENTATION : 2014-2015 AUDIT REPORT

in accordance with accounting principles generally accepted in the United States of America.

CONSENT CALENDAR

MOTION: was made by Director Brown and seconded by Vice­President Cortichiato to approve the Minutes of the October 13, 2015 Regular Board Meeting and Public Hearing and to approve payment of Accounts Payable totaling $704, 958. 34. Motion was carried, unanimously. (Ayes: Brown, Cordell, Corlett, Cortichiato, Griffin. Nays: None.)

CONSENT CALENDAR

PLANT AND EQUIPMENT COMMITTEE P & E

Resolution 15-07 was presented for accepting dedication of water RESO 15-07 system improvements for mainline extension at Tract 6221 Unit B, Neil Christman, value: $14,357.50. This dedication is presented with a two-year warranty following dedication and afterwards, for three additional years, to pay for slurry and hot patch of the road for any failures that develop during that time. Said mainline was installed almost ten years ago.

MOTION: was made by Director Brown and seconded by Vice­President Cortichiato adopting Resolution 15-07, Accepting Dedication of Water System Improvements For Mainline Extension at Tract 6221 Unit B, Neil Christman, Value: $14, 357. 50. The Motion was carried, by the following roll call vote:

Director Brown Yes Director Cordell: Yes President Corlett: Yes Vice-President Cortichiato : Yes Director Griffin: Yes

Director Griffin recommended adopting a policy for a time limit for mainline extension acceptance. Director Griffin feels the agreement presented is fair. Staff responded that a new permit system is being developed.

Jennifer Keep reported that Crew Leader Truck #30 has over 106, 000 TRUCK miles on it and is in need of extensive repair estimated at a cost of PURCHASE $10, 588. Staff recommended purchasing a new truck, possibly downsizing the Crew Leader Truck (Ford F450) to a Ford F250 with a utility bed.

The following three bids including the estimated cost to build the utility bed were received to replace Truck #30:

Kieff e & Sons Ford Jim Charlon Ford Tuttle Click Ford

$29,123.28 $32,372.35 $33,001.24

The 2015-2016 Capita~ Improvement Projects and Purchases budget included $85, 341 to replace Crew Truck #39 using current year's net revenues. The revised cost to replace Truck #39 is $56, 143 leaving $29,198 in the budget. Based on quotes received to replace Truck #30

4

~ with a Ford F250 with a utility bed ($8, 000), the cost should not exceed $29,123, which is within the remaining budget.

After further staff discussion, another option Operations Superintendent's truck (F~50) for the Crew Leader truck and purchase a smaller truck Superintendent. This would reduce the cost of the

was to outfit the replacement of the for the Operations

new truck.

Director Griffin inquired to legal counsel if the Board of Directors could approve a five to seven percent equalizer from the lowest bidder to purchase the truck locally. Legal counsel will research.

MOTION: was made by Director Brown and seconded by Director Griffin to approve the purchase of a truck, not to exceed $35, 000, but to delay purchase of truck pending legal counsel recommendation. Motion was carried, unanimously. (Ayes: Brown, Cordell, Corlett, Cortichiato, Griffin. Nays: None.)

ADMINISTRATION/EXECUTIVE COMMITTEE ADMIN/EXEC

Association of California Water Agencies (ACWA) asked that the Board DELEGATE FOR of Directors appoint a director for voting purposes at the ACWA 2015 ACWA Fall Conference for the election of President and Vice-President and CONFERENCE proposed amendments to ACWA's Bylaws.

MOTION: Brown voting (ACWA) (Ayes: None.)

was made by President Corlett and seconded by Director to appoint Vice-President Cortichiato as delegate for purposes at the Association of California Water Agencies 2015 Fall Conference. Motion was carried, unanimously.

Brown, Cordell, Corlett, Cortichiato, Griffin. Nays:

INYO-MONO REGIONAL WATER MANAGEMENT GROUP REPORT (IRWMG)

President Corlett reported that the full amount of $1. 8 million was granted to the IRWMG. This resulted in the District receiving $322, 000 in funds for the Cash For Grass grant. The Public Hearing was held on November 6th.

President Corlett added that Mammoth Water District has an Automated Meter Infrastructure (AMI) system. They have 3,500 customers, which 700 were notified of leaks.

GENERAL MANAGER AND STAFF UPDATE

General Manager Don Zdeba updated the safety record to 300 consecutive days without a recordable injury.

Metered water production at the wells for the month of October was 172,242,000 gallons (528.6 acre-feet). The number the State Water Resources Control Board (SWRCB) is using for comparison is metered water through the distribution system or consumption, and non-revenue water which is water lost to leaks, flushing activities, blow-offs, etc. For the month of October, the number is 189,473,000 gallons (581.5 acre-feet). This is a 25.6% decrease compared to September

5

IRWMG

GENERAL MANAGER & STAFF UPDATE

SAFETY, PRODUCTION & NEW SERVICES

2013, the baseline year the SWRCB is using for comparison. For the five month report period, the District is at 24. 9%, about 11% below the assigned conservation rate of 36%.

For the month of October, the District's reported R-gpcd was 166. This is a significant decrease compared to the past two years; 195 in 2014 and 224 in 2013.

The District received and responded to 20 water waste reports in October. This is a decrease from 55 reports received in September. The October waste rep9rts resulted in 20 notices (written or verbal), four formal letters being issued and two fines being assessed. From April ist through the end of October, staff has received and investigated 332 reports of water waste. Of these, 330 were issued notices (written or verbal), 30 have resulted in formal warning actions being taken and four fines assessed.

There were three new connections during the month of October. number of new connections for this fiscal year is eight.

Total

Don Zdeba reported that staff continues to focus on conservation PUBLIC outreach. Follow-up meetings continued with customers responsible for OUTREACH usage at the highest 25 locations as mandated in the Conservation Order issued by the State Water Resources Control Board. Those meetings resulted in specific conservation actions agreed upon during the initial meetings and are in progress or complete. In addition, staff contacted 11 residential customers that had significantly higher usage in the month of September compared to September 2013. Staff discussed with these customers the reasons for the higher use and customers were given a water audit kit.

The District was represented at the Petroglyph Festival Street Fair with a booth this past weekend. Staff distributed water saving devices, conservation items, and conservation literature. Mr. Zdeba recognized Patty Montenegro, Arty Blanco, and Amber Lane for manning the booth and Rose Koch, Chris Charlon, and Arturo Magallanes for assisting with preparation and setup. From Mr. Zdeba' s perspective, the Street Fair was a huge success.

Don Zdeba attended Mayor Breeden's Community Collaborative meeting at City Hall on November 3rct. The Economic Development Council is scheduling sporting events to bring additional revenue to the community. Two basketball and two baseball tournaments are scheduled to take place in the spring and talks are continuing to bring a youth chess tournament to town as well. The City of Ridgecrest and Navy are holding meetings to plan for possible flood events resulting from El Nino this winter. One of the actions the Navy is already undertaking is cleaning culverts in floodplains so natural drainage is not impeded. Plans are underway for the Annual Economic Outlook Conference on February 25th. The new Super Walmart is expected to be open for Black Friday sales in 2016. Captain Wiley will be the featured speaker on Veterans Day at a special ceremony conducted at the VFW Hall.

The XERI(© Ambassadors completed Though there is a backlog, none November.

four consultations during have been scheduled to

6

October. date for

BOARD COMMENTS/FUTURE AGENDA ITEMS

Director Griffin updated Director Cordell on an issue he has with pushing conservation on everyone in town and then charging only one­hal f the rate for construction water with no conservation tier in place. This was discussed at the Finance Cammi ttee Meeting. Staff had informed Director Griffin that unless a formal rate study is done, it cannot be reviewed. Director Cordell responded that it can be brought up on the next rate increase.

Director Brown thanked everyone for continuing with the solar. The District did its due diligence, and he is comfortable with the Board's decision.

Vice-President Cortichiato recognized all the employees that worked on the Petroglyph Festival.

Director Griffin reported on the Groundwater Sustainability Management Act class he attended.

President Corlett also recognized all the employees that worked on the Petroglyph Festival.

With no other Board comments, President Corlett recessed the meeting and adjourned to Closed Session at 7:53 p.m.

CLOSED SESSION

The meeting was reconvened in Closed Session at 8:03 p.m.

The meeting was recalled to Open Session at 8:50 p.m.

There was no action taken which would require disclosure under the Brown Act.

BOARD COMMENTS

CLOSED SESSION

ADJOURNMENT ADJOURNMENT

With no further business to come before the Board, the meeting was adjourned at 8:50 p.m.

~;ul~= Rose Koch Recording Secretary

APPROVED: December 14,2015

7