Membership Focuses on Loan Concerns at April Meeting

Vista del Rey Mutual Domestic Water Consumers’ Association

Minutes of the Special Meeting of the Board of Directors

6 p.m., April 3, 2018

The Lord’s Ranch

575-233-4071

President Wade Cornelius called the meeting to order at 6:09 p.m. and welcomed guests noting that there would be discussed a matter of interest to both High Valley Farms and Vista del Rey Estates neighborhoods. However, he noted, some general business would be handled first.

He then invited those present to introduce themselves. They included all of the board members (Cornelius, Rob Campion, Beth Morgan, Patrick Stafford, and David Lucero). Also attending were Bob and Jana Melvin, Mary Lucero, Andrea Cecur and Randy Mellor, Henry Torres, Shane Wohlfert, Bill and Beth Rittenhouse, Grover Heard, Skip and Martha Trego, Rebecca Flores, and Claire Baumgartner, all of Vista del Rey; Stan Hill and Larz Oberle of High Valley Farms; Karen Nichols and Martin Lopez of Lower Rio Grande Public Water Works Authority (LRGPWWA); and Alfredo Holguin of Souder, Miller, and Associates. The LRGPWWA representatives were their project manager and general manager, respectively.

Beth Morgan, secretary, gave highlights of the minutes of the membership meeting in January. That meeting included the passage of resolutions for the Open Meetings Act, the resolution approving the budget for 2018, and a resolution approving the continuation of the grant application process for the design phase of water system improvements after having had a Preliminary Engineering Report completed by Souder, Miller, and Associates. Morgan noted there was a good deal of discussion about the continuation of the grant application process. David Lucero had suggested, based on Alfredo Holguin’s estimate of $500,000 for the construction phase of our project, we would be owing $58,000 on the two phases. Morgan noted that that would depend on the funding source. However, the resolution for continuing with the grant application process was passed, and the president had to certify that he had reviewed the application and found it in order, which he did. After that, Morgan noted, we had held elections, replacing Jana Melvin, treasurer, with David Lucero, and Morgan was re-elected as secretary. The potential for interconnecting with High Valley Farms was raised, but nothing firm was decided. Morgan also noted that we had agreed to hire Watson-Smith as our attorney, because we needed one for the grant application. Morgan noted that minutes stated Lucero said that if we were taking on debt, it would make sense to merge with Lower Rio Grande. He later asked that she changed that to “sell to.” Morgan made a note to check the tape to verify what had been said. We had selected Joshua Smith as our attorney for the grant proposal. He is considered the local expert in water rights concerns. The board had agreed to that, and we were to send in a fee agreement to make that final. A motion to approve the January meeting’s minutes was made by Patrick Stafford and seconded by Rob Campion. The minutes were approved unanimously, pending that potential correction.

Lucero then gave the treasurer’s report based on figures from Jan. 1 to Feb. 28. He had not yet gotten March’s bank statement. We began the year with $5, 983.19, brought in water assessments of $3, 375.00, total expenses were $1,451.26, with net income of $1,923.74. Expenses during those two months included $71.50 road maintenance; $474.70 for utilities; $250 for meeting space (utilities); well and pump house maintenance of $576.46; and we paid a Tax and Revenue bill of $78.60. As of the end of February, we had a cash balance of $7,906.93. Upon Lucero asking for questions, Morgan and Cornelius explained that we don’t actually pay rent to the Lord’s Ranch; we are asked for a donation for utilities. Lucero will leave it as rent but add a descriptor for utilities.

Next, Henry Torres was invited to give a water report, which he did. He took care of priorities with the New Mexico Environment Department—they needed a copy of a Consumer Confidence Report from 2013 and a hydrant [sic, meter]repaired. Torres asked if there had been any complaints about the water and received none. He also stated that all leaks had been fixed.

The next agenda item was examining the water meters and replacement of ineffective ones. Stafford noted that the PER we had done by Souder, Miller and Associates noted that we do not have a way to measure water wastage, which could be going straight down, rather than attracting cows at the surface. Stafford noted we had discussed doing some readings to determine whether the water amounts coming out of the wellhead and the amounts going through individual meters, match up fairly closely. Bob Melvin wanted to know whether we were required to do this or if it was a voluntary process. He said the amount of water we use is so insignificant—the amount people use on the gardens, he says, amounts to more than what is produced by a leak. He suggested that all leaks will eventually show up on the surface. Randy Mellor asked whether we would test all the meters. Shane Wohlfert noted that a float system would be an easier method for testing wastage: if it was running all the time and his electric bill was going up, that would signal a leak.

Torres noted that he repaired four leaks during the past year, five with the one at the well house, which were significant. Cornelius asked the water operator how long a leak would take to show up on the surface. Torres noted that by the time a leak shows up on the surface it has probably existed for several weeks. Torres said that the method Stafford suggested is “the way to go.” As a level III water operator who retired from the City of Las Cruces water system, he has experience in identifying leaks and checking meters. We have a float in the tank, but there is no light on top to alert us when the water in the tank is getting low. Andrea Cecur asked if the point was to figure out which meters were accurate and replace them if necessary, which was affirmed. She then asked Henry how often he intended to check the meters. He stated that he would check the meters once a month—by which time Cecur said it would be obvious that they were leaking.

Bob Melvin noted that a couple hundred gallons make a big sign. When he developed the system, he said, his original intent was to keep the cost down, keep everybody out of debt, and to make sure that everyone was supplied with water. Melvin stated that three things are vital in any water system: power house, transmission, and distribution. Additionally, one must have energy, which we’ve got—and we’ve got “the best system in the world.” He said as far as he knows, there is nothing wrong with the electrical system. He said he could redesign the system with the help of an engineer in two days. He said the only thing that’s wrong with the well is that it was lined with a five-inch casing, when it needed to have a new casing inserted. He claimed that the issue on the supply side, not with the equipment already in place.

He says there is “a balanced system there.” The 17,000-gallon tank cost $35,000 to $48,000. He says “It’s undetermined how long that line will last.” He’s never seen any pulled that was not elastic. Because it is not on top of the ground, he believes it is not in danger of losing elasticity, because it is buried. If we have a spare pump, it only takes about two hours to replace it. For less than $30,000 and no engineering. He says we don’t have a backup system. We should drill another well at the far southeast corner and put another pump right there. He says “It’s so simple, it’s unbelievable.” If we had that, he says, we could run one system one month and another the next. If we had that, “all we gotta do is tell Henry to go down there and flip a switch. Just like that”—he snaps his fingers—“and we’re back in business.”

“I know one thing: everybody here is trying to do the right thing: I’m satisfied with that …. Why do we need somebody to help us, for Heaven’s sake? …. Especially the damn government.” ….. “And taking this debt on—who’s gonna pay for this stuff? I’ll tell the debt you oughta take on …. start saving a little bit of money every month and don’t spend it. And get enough money to drill us a well. Then you can tell everybody to go, go fishin’."

Someone asked why the joints are popping out. Melvin notes that air gets in the line if one side has to be closed off for a repair, and if the spigots aren’t open when he repressurizes, the air builds up thousands of pounds. Then, you’re pumping water against air and you bust the joints. New lines don’t have PVC glue—they use rubber seals.

He continued that High Valley Farms currently does not have the capability of putting water in our tank. The best resolution, he says, is (with Larz Oberle’s assistance) another well. At this point, the president indicated that we were getting ahead of the agenda. He asked how many meters were bad, how much they would cost, and how much it would cost to hook them up. He could not immediately estimate the cost. He needs to get the current cost for meters. Cornelius asked how long Torres had worked for the City of Las Cruces. A couple of other methods for checking for water loss were suggested. Lucero said if all the meters are shut off, if the main meter is still running, we’ll know if water is leaking. However, Torres warned that we need consistent pressure on the line. “Every time you shut off the system . . . every time you drop the pressure, you’re asking for trouble,” Torres said.

The president asked whether we had enough information to decide whether we should proceed with testing the meters. Lucero wanted to settle the matter. He said he knew how to vote. Morgan made a motion to defer the matter to another meeting. It was seconded by Rob Campion. Lucero voted against it. The remaining three board members voted for it.

Melvin then asked to put forth a motion, if that was permissible—and did so, even though he did not receive an answer from the board. The meeting then dissolved into a general discussion about who was eligible to vote, whether the current meeting was a membership meeting, or a board meeting. Campion noted that the matter had been deferred to a future meeting. There had been a motion and a second, and the decision had been to defer a decision on the issue of whether to pursue the examination of the meters and checking for leaks. Melvin then asked if we close the meeting, and he says “we are going to have another meeting,” does that not count as putting people on notice?

Morgan explained that in general, the answer is no. The association is required to give three days notice for a special meeting, 10 days for a special meeting, and 24 hours for an emergency meeting. The president pointed out that we are governed by the state in terms of the way meetings are run. Morgan also clarified that members are supposed to vote on three things: 1. Elections, 2. Removing someone from office, and 3. Sale of assets. The board votes on other matters regarding the day to day operations of the system and association.

Mary Lucero questioned the board’s move to delay a decision on whether the association will check all meters and replace those that leak was representative of the individuals present. Morgan noted that the decision was tabled in order to get additional information to enable a more intelligent decision. Shane Wolhfert complained that it seemed the board was not adequately prepared, as our water operator seemed to have been surprised that he was put on the spot regarding coming up with costs to examine and replace a meter. As a former member of the military, Wohlfert said that he made sure that anyone he was going to call upon during a meeting had the information he was going to ask for ahead of time.

The president explained that being adequately prepared prior to each meeting is always a goal, but coming to a point at which the needed information cannot be supplied is not entirely avoidable. He then proceeded to note that there were other issues to be discussed and to get through the agenda, some matters would need to wait until the open forum segment of the meeting.

He then noted that we have been working on applying for grants and the like for the past three years, in order to determine the status of our system, so that we can expect to have an operating system 20 years from now. He told Mr. Melvin we would not be making any decision to spend anyone’s money during the current meeting. Morgan then gave some history about why she got involved, chief among her concerns having been an occasion in 2014 when the well was down for 11 days. She felt the need to be more proactive and actually have the system assessed so that the association’s board can make informed choices for replacing equipment and doing so before it became a problem.

The item remaining before open forum was a decision to interconnect with High Valley Farms, the water association to the south of us, to allow the exchange of water between the two systems, in the event of an emergency. Morgan noted that we had obtained a grant to conduct a Preliminary Engineering Report, which informs what we are doing now. However, the report was not completely finished when the Colonias Infrastructure Board’s funding cycle deadline came up. So, we had not had an opportunity to discuss the options in the PER as a board, prior to making the application for an additional grant. Souder, Miller, and Associates representative Alfredo Holguin, who did the PER, had advised us to go with the option calling for redesigning the distribution system, beefing up the booster station, and designing a line for interconnecting with High Valley Farms, so we used that as the basis for our grant application. Morgan attended the CIB meeting in Socorro in March, as the CIB board prefers to have a representative from the associations requesting grant funding to be present.

The application from High Valley Farms, intended to fund the rehabilitation of their well, was heard before that of Vista del Rey. For some reason, Morgan said, the CIB board was under the impression that the High Valley Farms application and the VDRMDWCA application were asking for money to do the same thing (not true). She noted that the board was hostile because the two associations have not made an effort to work together and the CIB was under the impression that we were duplicating efforts. Morgan also noted there were other options in Alfredo’s PER that she had yet to see and that we are not required to accept the grant money, if it is awarded to us. Additionally, she said the memorandum of understanding the board proposed to sign with High Valley Farms and the Lower Rio Grande Public Water Works Authority contained a fair amount of “wiggle room” that would allow any party to it to withdraw or request changes, if that were deemed appropriate. She called on Karen Nichols of LRG to provide additional information.

Nichols stated that the memo is not a contract, it is not an agreement. “It’s a mutual statement of intent to work together towards this goal. There are no penalties for pulling out of it. It’s just a document to show the funding agency that you’re holding hands and singing Kumbaya and working together for mutual benefit to improve both your systems.

Lucero questioned why—if it’s not an agreement or a contract—we even have to sign anything. Nichols said the reason is that the CIB would be much less likely to give either water association funding if they don’t have some assurance that we are trying to work together. Lopez also noted that it was urgent because the CIB board was to meet again soon to determine the fate of the current applications. He noted that the reason that LRG is involved is because they are the successor to High Valley Farms.

Melvin wanted the fact that there is no commitment involved in the signing of the memorandum mentioned in the minutes. Holguin said the alternatives offered in the PER were outlined in a meeting in November (in fact, it was in December). He said we went over it at some length, and that we had chosen the particular alternative in a meeting in December, as the matter of the Colonias Infrastructure Board’s funding cycle had loomed suddenly. He noted that the interconnection was especially important in applying for the CIB funds as the applications are scored and ranked, and the interconnection provides points for the scoring. Lucero asked whether this money is available on a continual basis. Nichols said the CIB money had only been available since 2009, and it could be taken away. This money is only available to qualifying communities within 150 miles of the border. This money is not available to communities in the north of the state, which creates some resentment. However, it is the best grant to loan ratio. There is money available from other sources, Lopez said. However, most of the people who administer those funds are those who sit on these boards.

Lucero said that he had never been in favor of the pursuit of grants. He complained that it was suddenly an emergency thing and we have to make a decision. He said although our system has had its problems, he felt that we had been successful in maintaining our system to date, and “if it ain’t broke, don’t fix it.” He said he didn’t like having conditions being put on his water, and he didn’t like being rushed into making decisions.

Melvin then launched into an extended discussion of “how government works.” He said getting the government involved and getting grants is “not the way I’ve lived my life.” He said, “You start a business and you become successful, which we have been. So what does the government do? They regulate you.” He said we are now being told that we may not even be able to drill our own well. As soon as you get that grant, “they break you.” He said we will end up bankrupt and then, the government will subsidize you . . . In my opinion, we don’t need a damn thing they’ve got.”

Oberle mentioned that they had gone the grant route and had little to show for it.* Water rights have been taken from High Valley Farms. Nichols said that any time you go to get a permit, the State Engineer has the opportunity to take a look at your water rights. Lopez noted that most water rights are only on paper. If you have not put them to beneficial use, they are not really yours. Lopez said that once you apply for a permit to drill a new well, the State Engineer will be scrutinizing your water rights—for example, if you drill a supplemental well. The system might get to keep them, but if the association has put only a fraction of them to beneficial use, some of them may be taken away. At this point, Lucero said, that was fine: at least at that point we would be able to negotiate. Lopez continued that because we are only metered at the well, it would be difficult for VDRMDWCA to prove beneficial use and for how much water. (VDRMDWCA actually has meters at each residence but they are not checked with regularity, as members are charged a flat fee, not an assessment based on actual water use.)

Lucero also noted that High Valley Farms and Lower Rio Grande are in the midst of a transition. He would prefer to see how that turns out, prior to “rushing into anything.” “… We have a system that is working for us,” he wants to protect it until we have an idea how that turns out. Cornelius said he felt that the VDRMDWCA membership was “on the same page,” but that we did not know that we were. Lucero disagreed. The president then asked our SMA representative to clarify whether VDRMDWCA is obligated to accept the grant for the design phase of water system improvements.

Holguin stated that we do not have to accept the Colonias Infrastructure Board grant. They will offer it to us and ask for readiness to proceed items. While signing the memorandum of understanding may predispose the CIB more favorably toward funding the HVF project AND our project, signing the memorandum does not commit us to taking the grant funds nor does it necessarily mean that a VDRMDWCA project will move forward.

Lucero questioned whether the other board members were there to vote for their neighbors or to represent their own thoughts and opinions. Cornelius said, “both.” Lucero said that he felt that as a board member, it was his duty to go to his neighbors and ask their opinion of moving forward with the MOA and further grant applications. Mark Sechrist noted that the board has not been trying to hoodwink anyone. This process began several years ago, and to date, it has appeared that folks were in favor of it. If they are feeling like they are left out of the loop, Sechrist said, there is no excuse, because they receive minutes and agendas well ahead of each meeting. Lucero said he felt that as a board member, he felt he had to do his due diligence and speak personally to all of his neighbors. If the membership is against it, he said, we shouldn’t be going down a road that they do not favor.

A good deal more back and forth discussion took place, including questions, such as:

1. Patrick Stafford said that signing the memo was only to get the opportunity to apply for funds down the road. He noted that the memorandum of understanding does not address what conditions VDRMDWCA must meet to determine whether we would accept the CIB money. That is to be determined at a later date.

2. If High Valley Farms is the entity merging with Lower Rio Grande, why do we need to sign the Memorandum of Understanding? The short answer to that, from Lopez, was that the signing of the memorandum allows both HVF and VDRMDWCA to move forward with their grant proposals.

3. Cornelius questioned whether he was correct in his assessment that HVF was looking to merge with LRG because they were not happy with the results of working with the state, to which Oberle responded that HVF would have merged with LRG four years ago, but that was not a possibility at the time. “We’ve had to go on our own, and it’s impossible,” he said.

4. Rob Campion said that based on the information presented tonight, nobody wants the grant. He noted that we still have options. All the memo does is to allow folks to move forward with their grant proposals.

5. Morgan said that one of the issues involved in the signing of the memorandum is that neither HVF nor VDRMDWCA will be able to proceed with their grant proposals to CIB, and that HVF’s would allow it to upgrade its system so that it would be able to provide water to us for emergency relief. Lucero said if we sign it, but don’t really plan to interconnect, it constitutes lying. Lopez noted that that is not really the case; it indicates that we are agreeable to working with our neighbors without committing to anything--which means each of us can move forward with our grant proposals. The HVF PER has been completed, but it was not done with LRG in mind, Nichols stated. LRG will use the HVF PER to determine how best to proceed, in the event that the HVF grant application is denied this time.

6. Lopez noted that when HVF has completed its merger with LRG, LRG will take over any debt HVF has incurred and spread it out among its 5,000 customers. Cornelius questioned whether such a merger and debt takeover might be possible for VDRMDWCA, if we decided to do that. Lopez responded that it has been done in the past. However, if we interconnect, that is not a merger. It is an interconnection for emergency purposes only.

7. Lucero noted that if we proceed with the current grant application, we will be in debt for that, and that if we continue to seek grant funding it will cost us another $500,000—at least that is what he saw in the minutes of previous meetings. Morgan noted that has been Souder-Miller representative Alfredo Holguin’s estimate, it is just that: an estimate. She estimated that the 10 percent loan portion of the CIB grant would be about $2/household per month, once the design phase was complete. (In order to determine what we would be required to pay, IF we got a grant for $500,000 with a 10 percent loan component, Morgan figured the $50,000 loan portion at 0 percent interest, over a 20-year period would come out to about $12.26 per household. However, a more qualified person needs to determine the actual figures.)

8. Lopez noted that CIB also allows applicants to request a waiver of the loan portion of the grant. Nichols said that it is possible to get design and construction funding at the same time, however, she said because projects often get slowed down in the design phase, due to problems with easements, or engineers dealing with real-world conditions—many things can come up in the field. she felt it was smarter to consider funding for design separately. Some folks then questioned whether we would be guaranteed to get funding for construction. The answer was no, but any applicant who has gotten previous grants is more likely to get additional grants.

9. The president questioned whether those attending were aware that our first grant was a 100 percent grant, which we had used to fund the PER. This was to fund an engineering study of our system to determine its current status. What we are working on now is the second phase of that. He asked Alfredo Holguin to speak to that, which he did. Souder, Miller and Associates’ findings are documented in the report the company created and presented to NMED and VDRMDWCA. This included a hydrogeological study done in December.

10. Lucero questioned whether, if we got the grant, and we built an interconnection, we would be obligated to provide water. Nichols stated that if each water system received the funding it had applied for, an interconnection would be built and it would flow. Each of the two projects for which HVF and VDRMDWCA are seeking funding would improve each system to the degree that two would be able to provide the emergency backup that has been suggested. She noted that the only question to be answered in the current meeting was, “do you want a shot at this year’s funding or not?”

11. She noted that the CIB was under the impression that the two projects were seeking funding for the same items, i.e., double-dipping. She thought perhaps it was the finance people who got confused about that. Holguin wrote a letter of clarification to make sure the Colonias Infrastructure Board understood that the two associations were not asking for funding to build the same project. If we were to get the grant, the CIB would only ask for a pledge that we would have our rates set so that they would cover our loan. Nichols also stated that it is possible that VDRMDWCA could decide not to proceed with their own project and in essence, break the MOU, and there would be no penalty for that. That also should have no effect on High Valley Farms’ funding.

12. The president noted we are just trying to get a sense of what our options are. Shane Wohlfert said that if we sign a memorandum of understanding but we don’t really have the intention to follow through, he considered that to be dishonest. Lopez noted that it is part of the requirements of working within the system.

After a few more comments on the part of the president, who said he would support the wishes of the community, and Bob Melvin, who said he would “vote against” getting the government involved or taking any of its money, a motion was called for. Patrick Stafford presented the motion to sign the memorandum of understanding between VDRMDWCA, HVF, and LRG. It was seconded by Campion. All board members except David Lucero voted for the motion, with Lucero stating he would vote no, on behalf of all those who were opposed. The motion passed and Ms. Nichols agreed to pass papers between the various associations to those who needed to sign. After finding there were no matters to be discussed under open forum, Cornelius adjourned the meeting.