Erda Acres Water Company Annual Meeting 2018 Highlights
Erda Acres Water Company's annual meeting in 2018 covered key agenda items including the water system status, connections, usage, and 2019 initiatives. Discussions included the proposed water rate increase, acquisition offer, board member election, and shareholder Q&A. The meeting also featured updates on the company's finances, infrastructure, and changes in legal representation and engineering services. Attendees were encouraged to participate, vote, and shape the future of the water company.
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2018 Annual Meeting Erda Acres Water Company Annual Letter Major Agenda Items: Water system status, connections, usage and 2019 initiatives 2018-2019 budget Proposed water rate increase for 2018-2019 Water company acquisition offer Shareholder Q&A Board member election Shareholder Adjourn November 2018 board meeting. Recommendations: The Board is recommending an increase in the water rates for 2018-2019. EAWC has not increased rates since the completion of the new system in 2009. The stability of our water rates is due to the increased number of connections. However, the growth in Erda has slowed due to requirements imposed by Tooele County to have new developments connected to sewer. Current monthly rate: $40.00 monthly base fee + $0.75 for each 1,000 gallons of water used up to 70,000 gallons + $1.25 for each 1,000 gallons of water used over 70,000. EAWC Overview: Currently, EAWC finances are steady with adequate reserves. The water system, which includes a storage tank, two wells, two water pumps, a booster station, a generator and a distribution system are all functioning properly. EAWC infrastructure is sound, however, repairs and upgrades to the system are consistently required to address meter reading issues, leaks, and operation of fire hydrants. Backflow prevention. Remember water can flow two directions in a hose. If ther water pressure becomes lower than normal water can flow backwards. Some helpful hints. Ensure water leaving a hose runs through an air space gap of at least 2 inches before it enters into a container. Another tip is to make sure there is a hose-bibb vacuum breaker attached to all outdoor spigots. The proposed budget for 2018-2019, the minutes from last year s Shareholder Meeting, the voting proxy form and this year s meeting agenda are posted at www.erdawater.com. Please come, participate, and vote on the decisions that will shape our water company s future.
2018 Annual Meeting Erda Acres Water Company Fiscal Year 2018 Changes Hired new attorney Jon Schutz from the law firm Mabey Wright & James PLLC. Previous attorney Brent Rose also represented Stanbury Park Improvement District and Tooele City. (Clyde Snow Attorneys at Law). Hired attorney James Krause from Michael Best Friedrich LLP (specializes in the buying and selling of companies) Changed Engineer of record to Epic Engineering.
2018 Annual Meeting Erda Acres Water Company 2014 & 2015 Water Usage 2014 FY Water Usage Summary 2015 FY Water Usage Summary Average Number of Connections 169 Average Number of Connections 202 Total Gallons Pumped Total Gallons Metered Billing Efficiency 43,171,781 40,841,230 Total Gallons Pumped Total Gallons Metered Billing Efficiency 53,653,620 45,666,880 95% 85% Average Gallons used per connection Average Gallons Used per Month 241,664 3,597,648 Average Gallons used per connection Average Gallons Used per Month 226,074 4,471,135 Gallons in 1.5 Acre Feet gallons in 1 Acre Feet 488,777 325,851 Gallons in 1.5 Acre Feet gallons in 1 Acre Feet 488,777 325,851
2018 Annual Meeting Erda Acres Water Company 2016 & 2017 Water Usage 2017 FY Water Usage Summary 2016 FY Water Usage Summary Average Number of Connections 253 Average Number of Connections 220 Total Gallons Pumped Total Gallons Metered Billing Efficiency 76,208,775 69,371,390 Total Gallons Pumped Total Gallons Metered Billing Efficiency 75,062,919 64,526,298 91% 86% Average Gallons used per connection Average Gallons Used per Month 274,195 6,350,731 Average Gallons used per connection Average Gallons Used per Month 293,301 6,255,243 Gallons in 1.5 Acre Feet gallons in 1 Acre Feet 488,777 325,851 Gallons in 1.5 Acre Feet gallons in 1 Acre Feet 488,777 325,851
2018 Annual Meeting Erda Acres Water Company 2018 Water Usage 2018 FY Water Usage Summary Average Number of Connections 279 Total Gallons Pumped Total Gallons Metered Billing Efficiency 89,888,073 82,838,310 92% Average Gallons used per connection Average Gallons Used per Month 296,911.51 7,490,673 Gallons in 1.5 Acre Feet gallons in 1 Acre Feet 488,777 325,851
2018 Annual Meeting Erda Acres Water Company Erda Acres Annual Scholarship 2018 winner - Whitney Clark 2017 winner - Ashley Beazer $500
2018 Annual Meeting Erda Acres Water Company 2018 2019 Fiscal Year project list. Nelson well Rehab $25,000 Water Model $7,000 Replace 8 meter boxes $6,400 Scada Upgrade $4,600 Total $43,000
2018 Annual Meeting Erda Acres Water Company SYSTEM VALUATION SOURCE Nelson Well 700 gpm Campbell Well 475 gpm DISTRIBUTION 13.75 Miles of pipe, 6 to 16 in diameter STORAGE 1 MG buried concrete reservoir WATER RIGHTS 1.5 acre-feet per acre dedication 440 acre-feet total? OPERATION EQUIPMENT Land, generator, buildings, SCADA system, booster pumps, etc.
2018 Annual Meeting Erda Acres Water Company SYSTEM VALUATION SOURCE DISTRIBUTION STORAGE 1 MG Capacity 744,667 gal in 2017 Market Value: Depreciated Value (2% /year): Depreciated Value of Excess Capacity: WATER RIGHTS 440 acre-feet total? 236 acre-feet proofed Market Value ($10k / ac-ft): Market Value of Excess Rights: OPERATION EQUIPMENT Total Grand Total $1,997,040.00 $1,605,620.00 $409,968.31 $4,565,000.00 $2,116,500.00 $2,526,468.31 $3,000,000.00
2018 Annual Meeting Erda Acres Water Company Loan Schedule Year 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 Total Principal $21,000 $22,000 $24,000 $26,000 $27,000 $29,000 $30,000 $33,000 $36,000 $39,000 $42,000 $45,000 $48,000 $51,000 $54,000 $57,000 $59,000 $61,000 $63,000 $65,000 $67,000 $70,000 $72,000 $75,000 $77,000 $79,000 $82,000 $85,000 $88,000 $93,000 $1,620,000 Loan balance $1,599,000 $1,577,000 $1,553,000 $1,527,000 $1,500,000 $1,471,000 $1,441,000 $1,408,000 $1,372,000 $1,333,000 $1,291,000 $1,246,000 $1,198,000 $1,147,000 $1,093,000 $1,036,000 $977,000 $916,000 $853,000 $788,000 $721,000 $651,000 $579,000 $504,000 $427,000 $348,000 $266,000 $181,000 $93,000 $- Loan Amount is $2,120,000, of which $1,620,000 is the Loan Proceeds and $500,000 shall be Principal Forgiveness if payments are made on time. Total of 30 year payment schedule $1,620,000 Balance as of 9/30/2018 was $1,071,000 Balance as of 10/10/2018 was $1,002,000
2018 Annual Meeting Erda Acres Water Company Water rate increase proposal. The Board is recommending a water rate increase to occur during fiscal year 2018-2019. 1. 2. 3. EAWC has not increased rates since the completion of the new system in 2009. The stability of our water rates is due to the increased number of connections. Growth in Erda has slowed. Sewer requirements imposed by Tooele County Encroachment from Stansbury Park Improvement district SPID proposed to Tooele county that any home that hooks up to their sewer is required to use their water. Competition from new water company 4. Current water rates: $40.00 monthly base fee $0.75 for each 1,000 gallons of water used up to 70,000 gallons $1.25 for each 1,000 gallons of water used over 70,000 gallons 5. Proposed water rate structure: $45.00 monthly base fee $0.75 for each 1,000 gallons of water used up to 70,000 gallons $1.25 for each 1,000 gallons of water used up to 140,000 gallons $1.75 for each 1,000 gallons of water used up over 140,000 gallons 6. No increase if Pass Canyon Pipeline Company agrees to purchase.
2018 Annual Meeting Erda Acres Water Company Budget example supporting rate increase Fiscal Year 2018 Water Revenue Fiscal Year 2019 Water Revenue FY 2018 Rates 16,905.26 $ 13,633.60 $ 12,456.21 $ 12,537.76 $ 12,520.88 $ 12,333.83 $ 12,318.78 $ 12,782.67 $ 15,647.99 $ 22,484.64 $ 28,803.49 $ 24,177.53 $ 196,602.64 $ Proposed rate change $ $ $ $ $ $ $ $ $ $ $ $ $ % Change Base $ $ $ $ $ $ $ $ $ $ $ $ $ Service $ $ $ $ $ $ $ $ $ $ $ $ $ 196,603 $ Base $ $ $ $ $ $ $ $ $ $ $ $ $ Service $ $ $ $ $ $ $ $ $ $ $ $ $ $ Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Total 18,331.02 15,048.48 13,866.21 13,978.69 13,945.12 13,743.83 13,728.78 14,195.67 17,057.99 23,937.07 30,654.37 25,679.88 214,167.11 8% 10% 11% 11% 11% 11% 11% 11% 9% 6% 6% 6% 9% Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 sub Total Total 11,200 11,200 11,200 11,200 11,200 11,200 11,200 11,200 11,200 11,200 11,200 11,200 134,400 5,705 2,434 1,256 1,338 1,321 1,134 1,119 1,583 4,448 11,285 17,603 12,978 62,203 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 12,600 151,200 5,731 2,448 1,266 1,379 1,345 1,144 1,129 1,596 4,458 11,337 18,054 13,080 62,967 214,167 Increase $ 17,564 FY 2019 Budget Income FY 2019 Budget FY 2019 Rate Change $232,380 $134,400 Base Contract fee $24,000 Hook Up Fee $4,000 Late fees Water Service $65,000 Reimburse Interest Income Expenses Net Loss Net Income 232,380 $ 248,500 $ 16,120 $ 249,944 $ 248,500 $ $3,000 $ 1,444 $3,000 $580
2018 Annual Meeting Erda Acres Water Company Shareholder Classifications 76 A class shareholders (original property owners) 154 B class shareholders (Properties 1 Acre or larger that joined after 10/1/2006) 51 C class shareholders (1/2 acre properties that joined after 10/1/2006) 1 D class shareholder with 4 shares (non-residential properties) Class B and Class C shares are convertible to Class A1 or Class A2 Class D shares are not convertible to any Class A shares Shares in the Erda Acres are linked to property
2018 Annual Meeting Erda Acres Water Company Pass Canyon Pipeline Purchase Offer Developer Joe White made an initial offer of $1,800,000. Negotiations ensued for several months. Erda Acres and Pass Canyon have come to a verbal agreement of $3,000,000.
2018 Annual Meeting Erda Acres Water Company Pass Canyon Pipeline Purchase offer Erda Acres By-Laws Problem with By-Laws Proceeds from sale of assets will be distributed amongst Class A shareholders. Class B and Class C shares can convert to Class A1 and Class A2 after 10 years. Longest tenured Class B or Class C is dated 8/4/2009. If sale proceeds are distributed in accordance to existing By-Laws Erda Acres will lose is tax exempt status for this transaction. Result - Erda Acres would be subject to a corporate tax (approximately 20%). Shareholders will also be taxed on a personal level. Sale of substantially all of the Company assets requires a shareholder Quorum. Quorum will consist of 50% of the outstanding stock of the company. 50% requirement can be in person or by proxy.
2018 Annual Meeting Erda Acres Water Company Pass Canyon Pipeline Purchase offer Solution to Erda Acres By-Laws Change By-Laws to allow equal distribution of sale proceeds to all shareholders.
2018 Annual Meeting Erda Acres Water Company Pass Canyon Pipeline Purchase Offer Shareholder distribution example (figures from Oct 2018 statement) Sale Price State Loan Balance Sale Proceeds Bank Accounts Gross Distributions Accounts Receivable Estimated Projects Estimated Transaction Costs Net Distributions $3,000,000 $1,002,000 $1,998,000 $503,310 $2,501,310 $23,000 $50,000 $100,000 $2,328,310 Distribution per Shareholder $8,345 ($2,328,310/279)
2018 Annual Meeting Erda Acres Water Company Pass Canyon Pipeline Purchase obstacles Referendum o Group of Erda residents is opposed to approved zoning change (1/2 acre lots). o Has until December 7, 2018 to obtain 2,700 signatures. o If 2,700 or more signatures are obtained by 12/7/2018 approved zoning changed is on hold. o Tooele county has until 1/7/2018 to verify signatures. o If 2,700 or more signatures are verified by Tooele county Referendum proceeds for a vote on the 2019 November ballot. o If less than 2,700 signatures are obtained by 12/7/2017 approved zoning changes can proceed. Stansbury Park Improvement District (SPID) proposal to Tooele County. o SPID has approached Tooele County to require any property that hooks up to SPID sewer by required to use water provided by SPID. o Tooele County now requires residential property smaller than 5 acres to be hooked up to a sewer line.
2018 Annual Meeting Erda Acres Water Company Board Member Directory Tom Isom, President (expire odd) 435-843-9023 (H); tisom2000@yahoo.com Rob Adams, Vice President (expire odd) 801-673-9092; wingmanut@gmail.com Blanche Smith, Treasurer (expire even) 435-850-9106 (M);tiserdaacres@gmail.com Michael Webb, Secretary (expire even) 385-252-1519 (M); webbmike3609@gmail.com Brian Townley, 801-647-5207 (expire even) BJTUSA@ME-MAN.com Larry Brown 801-232-6905 (expire even) lbrown@wheelercat.com Elke Ewell, 435-850-8214 (expire even) elkeewell@gmail.com Michael Hartvigsen, 801-824-0053 (expire odd) mdh4x4@gmail.com Dave Gunderson, 605-430-2291 (expire odd) obie58@yahoo.com
