Minutes from the April 23, 2019 quarterly meeting

President Wade Cornelius called the meeting to order at 6:07 p.m., suggesting that it begin with introductions, as guests were present. He introduced himself, then Patrick Stafford, member (of the board) at large introduced himself. Also present were Randell Mellor; David Lucero, treasurer; Enrique Ponte; Alfredo Holguin of Souder, Miller, and Associates; Karen Nichols of Lower Rio Grande Public Waterworks Authority (LRGPWWA); Martin Lopez, also of LRGPWWA; Josh Smith, Watson Smith, LLC; Henry Torres, water operator; Mark Sechrist; and Beth Morgan, secretary. Karl Pennock of the Rural Community Assistance Corporation came in a few moments later.

Rob Campion had asked that Ponte be added to the agenda shortly before the meeting, and he chose to introduce Ponte’s reason for attending the meeting. Campion noted that he had known Ponte for many years and that Ponte had bought property north of the Vista del Rey subdivision in the recent past. Ponte has begun developing the property and has found that he needs more water rights. Campion invited him to the meeting and, noting that he is an on-call physician, suggested that we hear his concerns first. Ponte indicated that he has met some of us and greeted everyone. He said he has worked as a physician in El Paso for 31 years. He purchased the property to the north of us and said that the state engineer had told him that there were three types of water rights: domestic, commercial, and irrigation.

As Josh Smith, who specializes in matters having to do with water rights, was present, he jumped in, stating that domestic water rights generally allow for the use of three acre feet of water per year. It might be possible to switch commercial and irrigation water rights from one to the other, commercial water rights having different delivery rates. Morgan noted that the Vista del Rey water system representative had declared 242 acre feet of water rights when the subdivision was formed, but that recent figures showed that users of the water system have put only 18 acre feet of water rights to beneficial use. She said that the only water rights the association could legally sell would be from among the 18 acre feet it has already put to beneficial use. She then asked attorney Smith if that was correct. He agreed that it was.

Smith said that the subdivision creator had declared as much water rights as he had thought it might use. But those rights do not become “vested” until they are put to beneficial use. David Lucero said that the association currently does not have the capacity to sell any water rights, but that supposedly we are getting a new system. Ponte asked whether the association has only 15 members. Lucero said he thought that was right; Morgan said that 15 was the number at which an association becomes a public system. The last time she checked, she said the association had 17 members, with which Stafford agreed. Ponte wanted to know whether he should become a member. Lucero said that he would have to be hooked up. He noted that he is interested in putting some trees near his entrance. For other uses, he intends to acquire some commercial rights for irrigation purposes.

Smith noted that an individual with an irrigation rate gets a bit of a break, because it puts some water back into the system at a rate of three to 1.67 acre feet. “You put 3 acre feet on the land, the plant only uses half, and the rest returns to the system. So they’re giving you basically a return-flow credit for water . . . that percolates down into the water table,” Smith said. He noted that if Ponte intended to irrigate an orchard, he could not do so with domestic water. Ponte said he wanted only five or six trees at the entrance of his “ranch.” Cornelius suggested Ponte take some of the board members to his place to see what he was talking about.

Ponte said that he purchased three tracts. The connection between the 50-acre parcel and the other piece (160 acres) is 20 acres. This is where he has the two wells, and where he hopes to purchase additional water rights. The 50 acres nearest his gate he does not plan to irrigate—except for the five or six trees. He wanted to know if it would be advisable for him to join the association. Cornelius noted that his request sounded reasonable and that the water association board wanted to be on good terms with him. He stated that no decision could be made on the spot, because he would need to check with neighbors and with Alfredo (Holguin) and Josh (Smith) to ascertain legal and practical concerns about allowing Ponte to use the system. David Lucero noted that we would have to extend a line from the existing system to bring water to him. Ponte said if he had to pay for that, it was not an issue.

The president stated that he would be moving on to the approval of minutes, but first, he wanted to offer members the opportunity to sign up for a software program that would allow the association to contact its members as they wished to be contacted. Although the association has a Facebook page, which is used to communicate with members, not everyone chooses to use social media. They can look up the same information on the association website, but often do not. Using this program, they can receive information via text, email, phone call and so on. Cornelius has brought this up in the past, as Lucero and others have expressed concern about duly informing all members about events within the association. He passed around a sheet to allow members to choose how they wish to be informed, which he hoped would be completed by the end of the meeting.

Cornelius asked Morgan to give a summary of the minutes from the February 5 meeting. She stated that it was the annual membership meeting, which included a potluck. The meeting had been called to order, she said, after people had finished eating about 6:30 p.m. Board members except Stafford were present. Andrea Cecur, Randell Mellor, Henry Torres, Shane Wohlfert, Skip Trego, Alfredo Holguin of SMA, Mark Sechrist, Claire Baumgartner, and Bob Melvin were also present. Introductions were made; then two sets of minutes were approved from the Aug. 2 meeting, where we decided to accept the Colonias Infrastructure Board grant, and the Oct. 21 meeting, in which there had been some confusion about the time—whether it was at 2 p.m. or 6 p.m., so the board had covered only the most important issues. Also during the February meeting, we heard and accepted the treasurer’s report which Lucero had noted we ended 2018 with $3,753.20 in the bank. We had had some hefty expenses, one for $8,000 plus, and another for about $1,000. Two sets of minutes were approved. Wohlfert had asked how minutes are distributed, having been told that they are posted to Facebook and the website, which usually pops right up when she “googles” the water association, but which had not done so on this date. We talked at that meeting about the program Cornelius had discussed on this date. Henry Torres had given a water operator’s report. People had been complaining about low water pressure, so the board had decided to have Torres increase the pressure by 5 psi. He also stated that we had a small leak, but that he would wait for warmer weather to address it.

Morgan said that the board was to have passed its Open Meetings Act resolution for the year at that meeting, but she had failed to bring it to the meeting, so the board would address it during the current meeting. Alfredo Holguin had asked the board to sign a contract amendment to pass on to the New Mexico Environment Department (NMED) to allow us to proceed with the design portion of our project. The board did in fact sign the resolution for the contract amendment, with the understanding that Holguin would pass it on to NMED. Following that, the board had a discussion about easements for the design project, which were of concern to Wohlfert, especially if the association is to interconnect with the High Valley Farms system, now owned by LRGPWWA.

Morgan stated that Lucero had brought up at that meeting concerns that he had not seen the grant funds from the PER come through the association’s account, nor anything from the new grant, and wanted an explanation for that. The secretary noted that, had the association brought that money into its account, it would artificially inflate the budget and throw the association into a different category in the Department of Finance and Administration’s (DFA) tiered system. Mutual domestics taking in over a certain amount of money have to be audited every year, or did, before the DFA discovered it was not constitutional to have these water associations submit annual budgets. As an audit costs around $8,000, Morgan had felt it would be unwise to put ourselves in that position, nor did she think the association needed to be responsible for $50,000 nor to have to hire a fiscal agent to manage the grant funds. The New Mexico Finance Administration (NMFA) had administered the first grant for the association and will do so again.

Morgan further noted that we had discussed the upcoming design work and the need to meet with the homeowners’ association to talk about the maintenance of the road. Rob Campion moved to approve the minutes, Patrick Stafford seconded the motion, and the minutes were unanimously accepted.

David Lucero was invited to give the treasurer’s report. He noted that a receipt had come in after he had closed the books for 2018. It was to the Rural Water Association for $149 and that required him to change the year-end balance to $3,604. January through March, he noted, we brought in $3,525, paid out $1,415, ending with a net income of $2,110. Cash available at this time is $5,714. Patrick Stafford inquired about an $85 expense. Lucero noted it was a check that did not clear, for $75 with a $10 service charge. Rob Campion moved to approve the treasurer’s report; Stafford seconded the motion. It carried unanimously.

Next, Henry Torres was invited to give his water operator report. He said the Bac-T reports were coming out well and noted a monitor for the three-phase electrical system had burned out. He said this was the second one in six months. He discussed this with Mark Parmeter, who has assisted the association with electrical issues in the past. Parmeter told him that this could be caused by just about anything: the electric company could be doing something that would make it burn out. He said that Bill Rittenhouse had helped with this monitor, and that we had had a backup. We still have a backup, as well, he said. Water use is going up now that spring is here. The pump is running excessively, he said. “It’s not even summer yet. It’s already stressing out.” He said at 5 p.m., recently, the pump’s booster was running for a minute, resting 45 seconds, and kicking on again. Lucero asked whether having increased the pressure by 5 psi had affected how long the pump runs. Torres said it does and recommended some kind of restructuring of the system: one big pressure tank instead of four or five little ones. He said that even if we added a new one, it wouldn’t make that much difference. Torres said that last year, they were all on line and functioning properly, and it still didn’t make a difference.

The water operator said another matter the board should address is the need for storage. This has been an area in which we have been found deficient; the NMED does not want anything stored in the pump house. Stafford indicated that he had found a stainless steel cabinet at Sam’s Club that should be adequate for what we need to store. He suggested putting the unit on a concrete slab on the north side of the pump house. It should cost about $350 total.

Torres stated that he had listened to Mr. Ponte’s concerns, adding that at this time, we do not have the power or capacity to supply him with water. Going back to the issue of pressure, Torres said that our range had been from 30 to 65 psi. Lucero asked whether we should drop it back down the 5 psi to maintain the health of the system. Even the SMA Engineer, Alfredo Holguin, said, “you’re at the high end of what that pump can handle.” The president urged Holguin to “help us, Alfredo, help us!” Morgan added that she hoped that the new equipment Holguin has specified will be more powerful than what we already have.

Lucero noted that people who put pressure pumps on their water lines probably are not putting hard pressure on the lines all the time, because they aren’t drawing water out of the system at the same time. Campion said that he had not noticed a difference with the increase of 5 psi of pressure. Lucero said he would make a motion to reduce the pressure by five pounds, but Attorney Josh Smith noted that technically, we could not make a motion, because we had not put on our agenda that such a motion would be considered.

Stafford noted that the reason he favored [allowing Ponte to hook up to our system] was that it might allow us to claim more acre feet of water put to beneficial use. The same goes for the individual who recently purchased land from Bob Melvin, who wants to provide water to his purchaser via a larger line (one-and-a-half-inch) than is being used to deliver water to that hookup. Torres indicated that Melvin will need to get rights-of-way to do that.

Cornelius wanted to know whether everyone was happy with Stafford pursuing the storage for placing items into outside the pump house. Torres briefly explained that pump houses are not supposed to be used for storage, as items being stored can get in the way if a repair is needed, or if they fall, might necessitate one. He was asked whether the unit was adequate. Stafford indicated that he thought it was.

Karen Nichols of Lower Rio Grande Pubic Water Works Authority was invited to speak next. She indicated that they are designing High Valley Farms’ (HVF) improvements and have a grant application into the Colonias Infrastructure board for building them and the interconnection line with HVF that VDRMDWCA is paying to have designed. Thus, she said, they need to execute a supplemental well agreement with the State Engineer’s office, so that VDRMDWCA can pump water to HVF and vice versa, in the event of an emergency. She said that LRGPWWA had previously executed a supplemental well agreement of this type with Alto de las Flores at San Miguel, NM. LRGPWWA does not have a formal agreement with them, just the supplemental well designation. She noted that if VDRMDWCA wanted more, we could draft something. But under the supplemental well designation, “you just repay each other with water; so the interconnect will be metered. And if High Valley Farms has wells go down and they need to pump water from Vista del Rey, and you send over 50,000 gallons of water, we get repairs done, we send it back to you and vice versa.”

Martin Lopez interjected that when Alto de las Flores needed water from LRGPWWA, they wanted both the Alto and LRG boards to take action on the movement of water. For that reason, they did not feel it necessary to have any further agreement. However, they did give Lopez authority to move water without board action in a dire emergency.

Lucero said he is a little disturbed by such an open-ended agreement, especially if it means that we are committed to giving the system needing water unlimited water whenever they want it. Josh Smith noted that such a designation allows you to pump your water right from the supplemental well. Morgan also stated that, if both boards must take action on the movement of water when it’s needed, that should ensure that our requirements regarding timing and the like are honored, with which Nichols agreed. Nichols noted that we have the ability to assist the other system “according to your ability at the time,” or we could decline. Lopez said that a written agreement might be more likely to require us to provide water when it might be inconvenient.

And, Nichols added, if you receive water, you must pay it back. Campion said he felt this explanation had cleared things up nicely. Stafford wanted to know how big the interconnection line will be and whether it would be dry between uses. Alfredo Holguin said a six-inch line is envisioned, and that the line should not be dry, but may occasionally need flushing if it goes dry.

Cornelius asked what the next step should be. The attorney responded that he needs to apply for a supplemental point of diversion for both systems. He said that it does not commit VDRMDWCA to do anything. It is up to the party being asked for water how much they can give and when. If you want to be paid for it, Nichols said, that would require an agreement and a rate schedule and all of that. The supplemental well designation allows for a more informal arrangement. Morgan commented that in the past, she thought one of VDRMDWCA’s concerns had been that we did not want to be committed to providing water immediately, as we are not currently in a position to do so. Nichols stated that High Valley Farms also is unable to at this point, but that both systems are working toward it.

Cornelius asked Smith again what he called what we are doing, to which he responded that we are applying for a supplemental point of diversion. Rob Campion made a motion to have Smith do so.The motion was seconded by Stafford, and it passed unanimously. The president then moved on to the proposed passage of the annual Open Meetings Act resolution, then asking the LRGPWWA representatives if they wanted to stay for the remainder of the meeting. They chose not to remain. Then, Josh Smith asked if we wanted him to stay. Cornelius then said he’d prefer Smith to stay until we had heard Karl Pennock’s presentation. Campion then moved to hear Pennock’s presentation immediately, as Lucero put it, so that we could get Smith “off the clock.”

Pennock had prepared a rate study to provide information about what members can expect to pay once the association begins paying off the 10 percent loan from the first CIF grant. Pennock said it wasn’t a rate study per se, but he had presented a couple of funding scenarios, based on whom we might be likely to get grants from. He showed our existing rates of $75 per month flat rate. Scenario 1 was based on a 90 percent grant (such as we have for the current grant), which would be at 2.5 percent interest, would be $113 per month, based on 17 connections. That means we would be paying back $103,000 over a 40-year-period. Under Scenario 2, a 100 percent loan over 40 years, at a 6 percent interest rate—something more likely if the association were to obtain a commercial loan, rates would “skyrocket,” to $521 per month.

Pennock continued that if we were to pay the rates of LRGPWWA or Doña Ana Mutual Domestic, they ask base rates for 3,000 gallons per month of $23 or $28 per month, respectively. That amount increases depending on water use. They charge more as you use more. Using 30,000 gallons per month, that would go up to $181. At Doña Ana, it would be $150. The challenge that we will have as a system with limited connections is providing a suitablerate structure, Pennock said. He showed impact on 15 connections and 22 connections. At 15 connections, under scenario 1, he said, the cost would be $127.84 or at 17, it’s about $113. At 22 connections, it would drop to around $90 per month. In scenario 2, at 15, the cost of water per month would be higher than the $521 noted, but with 22 connections, the amount drops down to $402.61 a month. “So really, a commercial loan for you may not be a viable option,” he said. “That would be a huge expense.” System rates are greatly influenced by the financing terms of the project, as well as the number of project connections. He also noted that we would be responsible for a debt reserve and a short-lived asset reserve and operating costs.

For those using 6,000 gallons per month, the rates of LRGPWWA and Doña Ana Mutual Domestic are lower than our $75 per month rates. Pennock said our rate favors high-volume users. Patrick Stafford told Pennock the $181 for 30,000 gallons sounded low to him, based on his contact with HVF. Pennock said he would be happy to meet with Stafford after the meeting to discuss it further. He has the rate table and will share it.

The bottom line, Pennock said, is that financing the cost incurs expense to the system. Getting a large percentage grant, “… seems to be indicated.” He also said that, as we do not check individual meters at the residences, his figures were based on the metered usage at the well, which he said seems quite high. Our master meter recorded use of 14,458 gallons/day in 2015 and 2016, which to our members seems high. However, Lucero noted, Pennock may have been comparing our water usage to that of folks on quarter-acre lots. VDRMDWCA lots are approximately five-plus acres. However, Pennock thought the gallons used per month were high and encouraged us to consider whether we may have a leak in the system. Lucero asked whether the 40-year loan would be comparable to the life of the system. Pennock noted that some parts of the system could outlast the term of the loan by quite a bit. Other parts, Holguin said, are designed for 20 years. He said the booster we have now would still function fine, if there were only a handful of users, as there were when it was installed. However, as user numbers have grown, “it can’t keep up.” Our well output is limited by the booster, not necessarily by the well. He believes the well could handle more production, but the booster limits it. “You could potentially provide water to Enrique afterthe improvements."

“So we’re tapped out with whatever’s on our lots,” Lucero said.

Holguin said the more connections you have, the more water you can put to beneficial use. Pennock added that this would allow us to lower our rates. Morgan also reminded those attending that we still have the potential to merge with Lower Rio Grande, who, upon such a merger, would take over our debt and spread it out over their entire customer base. She said that at this point, it appears that their rates are considerably lower than ours. The president asked whether, if we merged, we could undo it after a time. Smith noted that it does not work that way.

Pennock stated that the $113 flat rate is based on all of the improvements recommended in the PER, not only for the loan we will begin paying back for the design phase. The total sum Pennock was considering was $1,034,000. His figures assumed that we would receive an additional 90 percent grant/10 percent loan. What we put into the system—any repairs or maintenance—and previous grants can be used as matches for grants that require them. That 90 percent split is the best thing out there, Holguin said.

Morgan thanked Pennock for the work he had done. It clarifies the rates we can expect to pay when all the work we are planning has been done. He reminded the board that he could provide them with the rate structure from Lower Rio Grande.

The president said he thought we were all “shell-shocked” and that he feared that at a future meeting Pennock and Holguin would tell us they were just kidding and that the rates would actually be considerably higher. Pennock noted that these are preliminary figures and could change. Morgan then asked Pennock about the high usage and questioned whether we might actually have a leak. A discussion of methods for checking that ensued, but no action was taken. Everyone seemed to think that if there was a leak, it would be apparent.

The president moved on to the passage of the Open Meetings Act resolution. Stafford made a motion to accept the resolution, which the board seemed anxious to pass, but Morgan noted that it must be signed. It was duly signed. Next, Cornelius noted that we are entertaining a contract amendment with Souder, Miller, and Associates. Holguin explained that this contract amendment piggybacks on the original contract with Souder, Miller, to allow us to proceed with the design portion of our project. Their cost total with tax is $81,044.75. Our grant was for $87,000 plus. The difference could be used to pay for an easement, Holguin said. The property across which the easement is being sought belongs to Katerina, Inc., the widow of the individual who had been seeking to develop the property to the south of Vista del Rey. We were to sign the admendment, and then Stephen Deal of NMED needs to sign it, Holguin said, and we should then get word it has been signed and that Souder, Miller should begin their work. The board then signed and dated the amendment as requested.

Under old business, Cornelius stated that we were to discuss road matters with the homeowners association. Campion stated that the president had been ill, and that may be the reason he was not present. The meeting was adjourned upon a motion by Lucero at 7:37 p.m.