Board Signs Contract With Souder, Miller, & Asso., Engineers, to Oversee System's Improvements

Special Meeting of the Board of Directors, Aug. 31, 2021

President Wade Cornelius called the meeting to order at 6:05 p.m. on Aug. 31. This was the first in-person meeting the association has held during the aftermath of the 2020 global COVID-19 pandemic. As the board has been short one member, since the resignation of treasurer David Lucero approximately a year and a half past, board member Rob Campion has served as treasurer. He was not present, however. Only the president, Secretary Beth Morgan, and Patrick Stafford were there to represent the board. Marty Howell, an engineer for Souder, Miller, and Associates; attended, as did Deborah Stafford; Mark Sechrist; and Claire Baumgartner and new association member Brian Walker, who arrived after the meeting was already under way.

Patrick Stafford made a motion to accept the minutes of the board’s meeting May 5, 2021, which had been sent out to board members prior to the meeting. Morgan was the only other board member present to second the motion, which she did. It carried unanimously. May’s minutes can be accessed on Facebook and the VDRMDWCA website.

The president next explained that he had been ballparking Water Operator Henry Torres’ pay, in lieu of receiving an invoice from him, so he has offered him $5,000 to catch us up with some previously unpaid hours. Torres apparently accepted that, and the president indicated that he is considering setting up an automatic withdrawal for Torres’ pay at his regular rate, so that it is less likely we will get behind during times when he does not provide us with an invoice. As an aside, Morgan noted that she had attempted to set up an automatic withdrawal from her account to pay her personal water bill, but rather than transfer the money electronically, her bank is writing an actual check to Washington Federal and mailing it. When asked if Torres was happy with the arrangement, he noted that the water operator had greeted the prospect of getting paid with his usual noncommital reception, and when the president had said unless Torres told him otherwise, he would just be paid his normal amount on a monthly basis in the future. He said that Torres did not express any concern.

As the treasurer was not present, no current financial statement was presented to the board. At this point, Baumgartner and Walker arrived.

Stafford noted that although we had lost power after a storm, Torres had texted him that everything was OK at the well house immediately afterward.

The president invited Souder-Miller representative Howell to give those present the “Cliff’s Notes” version of the history of our grant acquisition for water system improvements, particularly for Walker’s benefit. The purpose of the meeting was to sign a contract hiring Souder, Miller, and Associates to be the engineers overseeing construction of our improvements. Howell noted that the process had begun about five years ago. The association first got a Local Government Planning Grant to do a preliminarry engineering report. That is required before any other funding can be sought from the state. After they had completed that, the association got additional money to do the design work for improvements deemed to be priorities. (These primarily include a new booster station, an interconnection with the neighboring High Valley Farms water system owned by the Lower Rio Grande Public Water Works Authority, and new lines.)

Next, he said, “a rarity occurred;” the association got money from two sources: the Legislature’s Capital Outlay fund and the Colonias Infrastructure Fund. Howell noted that in New Mexico, you have to “suck up to the politicians,” so they’ll give you (or their district) your money back, or allow it to be used for projects in their jurisdiction. The association was awarded a grant of $323,000, but it also got $777,000 as a grant/loan. [Although it is a bit more complicated than it appears, the grant portion is 80 percent and the loan 20 percent—actually, it’s more like a 90 percent grant, a 10 percent loan, and a 10 percent match on top of that—for which the association has 20 years to pay off the 20 percent.] Howell indicated that what caused some of the association’s delays in getting the contract approved was the fact that, although the association paid for the design of the High Valley Farms-Vista del Rey interconnection, LRGPWWA is paying to build it. The state’s “gatekeeper,” Steven Deal (who looks after our interest and the state’s interest), and the lawyers had to resolve that among them prior to approving our contract. Morgan indicated that she had thought they would have a contract by the end of January, but it had not been approved by Deal until June, in part due to the COVID-19 pandemic lockdown, the association’s difficulty in holding meetings, and the state’s lack of clarity about how the two entities were handling the interconnection, its ownership, and its financing.

Recently, Howell said that Deal approved Souder-Miller’s contract, the cost, and that we can go to bid. The engineer said that Deal now has 30 days to review the signed contract (if we were to sign it). When Deal has reviewed it, Howell said he would advertise it the next week and for several weeks thereafter, they will have a pre-bid meeting, give them a chance to look at our system and roads, and then a bid opening will take place at his office. He said that recently, our project was expected to cost about $600,000, and that we have $1.9 million [actually, more like $1.1 million], but that costs of gone up because plastic manufacturers were closed down during the COVID-19 pandemic lockdown. “Has anyone heard the term ‘because COVID?’” he asked. He said the price of PVC pipe may be twice what it was. “Imagine a huge plant that makes plastic out of oil and the whole thing freezing,” he said. It took such factories some time to begin operating again, which is why prices are so high. However, we are in better shape than High Valley, who has $3,000 worth of wiggle room on a $500,000-project.

Once the bids come in, Howell said they will be reviewed to ascertain there was no “dirty math,” that their bid bonds are in order, look at references, and make a recommendation that we give the bid to their preferred applicant. We would then approve it conditionally upon Deal’s approval. He said he expects it to take about three to four months until construction can begin on our project.

Howell noted that the booster station for High Valley Farms was from Harbor Freight and was put together with duct tape and bailing wire. They now have a new well, but the largest pump it can accommodate is about 5 hp, which means it will produce from 28-40 gallons a minute, max, but with three-phase electrics, they could get more. Stafford noted that their tank is larger than ours, and thus, can probably hold more.

Howell noted that Souder, Miller, and Associates had first had the well drillers for High Valley Farms to “just … poke a raw hole,” from which they take water and soil samples to determine the most productive parts of the acquifer. They then ream out a bigger hole and put the casing in.

Deborah Stafford asked if we still had a spare pump. Her husband noted that it is actually a motor, which is too big to install. She speculated that we had not had three-phase electrics until they had been here a year (2008). Morgan disagreed, because the system has always been “temperamental,” she said.

Walker inquired about the funding of the approximately $325,000 grant, and the 90 percent grant/10 percent loan, wanting to know how we would be able to pay back such a loan at 10 percent interest over 20 years. [Stafford said he thought it was a 40-year term. There was a time when we believed that to be true, Morgan said, but it had been made clear that we have only 20 years. Howell said that the 40-year term is for loans from USDA; Colonias is a 20-year term.] Howell clarified that 90 percent of the Colonias funding is a grant and there is a 10 percent loan. Morgan then noted that because the association did not have the required 10 percent match (on top of the 90 percent grant, 10 percent loan), the association was able to roll the match into the loan portion, making it a 20 percent loan. Walker was under the impression that we had to pay that back at 10 percent interest. Howell said that the term is 20 years, but the interest rate is 0. That seemed to alleviate his concern. Morgan noted that it is possible the association will have to raise rates again to pay for the loan portion of the funding, but she said that she did not expect it to be more than $20 a month per household.

Howell said monthly, we will owe $583 on the loan service. Walker said that he doesn’t have a problem with the recent hike in water rates to $100 per month, but what he was confused about was that it is currently a flat fee. That means he could potentially invite another 10 people to live with him and use the water, and he would still be paying only $100 per month. Morgan said she thought she had seen something in some of the paperwork on the funding that indicated we would have to charge people by metering and charging them for actual usage. Howell said that he did not remember that, but he would check. Mark Sechrist said that metering is one of the ways our water operator checks for leaks. Howell noted that we are one of the few systems he knows of that does not charge for actual usage. Walker said it was just something that he thought about. Morgan told Howell that we do have a resident who plans to build a pond his property; something Howell said he was not aware of. She also indicated that when she and Sechrist had moved to the area and became water users in 2000, the charge for water was $25 per month. At that time, Bob Melvin’s wife, Jana, was our bookkeeper, and Morgan speculated that they favored the flat rate to keep the bookkeeping as simple as possible. However, at that time, there were only about four users. Howell noted that if we must meter, we could set a pretty high cap and make any amount over that an additional charge.

Howell indicated that most systems have a base rate. After a certain amount, it goes up. Walker questioned whether our water fees, currently set at $100 per month, would pay off the loan portion of our funding. Morgan explained that we were hoping to use all of the Capital Outlay money first, to hopefully reduce the portion of the loan we would have to pay back, then use the Colonias Infrastructure money. She said that, as she understood it, Deal wanted the association to do the opposite. Howell said what Deal was actually saying was that he wanted us to use the Capital Outlay money to pay the engineers and the Colonias Infrastructure money to pay construction contractors.

Deborah Stafford then asked who would read the meters. Her husband noted that Torres had traditionally done that. However, Morgan joked that getting him to turn over the figures might be a challenge, since we can’t get him to give us his invoices in a timely manner. Morgan also noted that she remembered one iteration of the budget for this project that included new meters for each resident. The engineer said he thought that had been taken out, but that it could be added back in: all it would take is an e-mail, he said. Stafford said our water use is metered at the well head. There is some question as to whether there is a requirement to meter individual users or not, which would make it clearer where leaks occur.

Morgan also noted that she was under the impression that at the former Melvins’ property, the new owners may have to pay to put an additional line from their property line, where a meter would be installed, to their current connection. Howell indicated he believed that would now be done by the contractor. This was another point he agreed to research. Stafford estimated it was the length of a football field. Howell said he could put meters in as an alternative on the bid. The president questioned whether a motion is required to put meters in the project. The engineer said he would find out whether it is a requirement or not.

The secretary then asked Howell regarding all the bookkeeping accompanying public money, whether the state “offered a class or something.” Howell said that Steven Deal would not allow him to mess it up and “that’s my job.” He will be responsible for ascertaining which expenses come from which fund and doing the invoicing. He said that would occur on a monthly basis, in response to Morgan’s query.

Next, Cornelius wanted to know whether a motion was needed to proceed with the SMA contract. Morgan said that whether required or not, passing a motion to accept the contract would be a good idea, although it still required signatures. Patrick Stafford made the motion to accept the contract, which Morgan seconded. The motion was passed unanimously by the three board members present. The authorization to proceed is 270 days after Steven Deal signs off on the contract.

Howell indicated that we will not need to be concerned for a couple of months, but some boards authorize the president to sign off on the paperwork coming from Souder, Miller, and Associates, and some require all the paperwork to be brought to each meeting of the board, which would force us to meet monthly. Morgan said she thought we had already authorized him to sign off on paperwork back in January.

Morgan then indicated that, technically, the association is behind in holding elections by about a year. She said she didn’t know what the association should do about that, but added that it would be nice to have the same ovistafficers while we were getting this project rolling and for those board members to get the hang of it prior to electing new officers. Stafford wanted to know if we had voted to extend terms. Morgan and Cornelius indicated that there had been no vote, as Howell had stated earlier, “because COVID,” Cornelius quipped. Stafford said, “It’s still here! We can call it Delta this time.”

The document was then presented to the president to sign in the various places required, and to insert dates where needed. The secretary indicated the pages that Cornelius needed to sign. She also mentioned some blanks would need to be filled in, but Howell had indicated that he would take care of those when Deal had given his approval of the contract. Morgan then inquired of the engineer what the next step should be. He said that she could give it to him, and he would scan it and send a copy to us and to Steven Deal.

The president then moved on to the next item: open forum. Morgan noted that the individual who purchased the property in front of the well house had asked that the grader that is currently parked on his lot be moved onto the well house plot. He also offered to sell it, as he does salvage. Stafford noted that just getting it to a place to be salvaged could be fairly expensive, and we don’t know how much money we’d get out of it. There were questions about its value batted about. We could trade it to the road-grader operator, who would give us three or four gradings for it. It apparently is operable with repairs, but it is not running now. The woman who owns the company drilling the well for High Valley Farms and installing the interconnection has trailers and other equipment on site and might be willing to help us get it somewhere. Howell gave her name as Rachel Corona. He can obtain her number. Deborah Stafford said, “Maybe they could accidentally fix our road at the same time,” as they are installing the interconnection, to which Morgan responded that, because we have been awarded more money than we anticipate using, the board might be able to purchase a new tank or have roadwork done or both. Howell said Deal was pretty liberal with what we could do with the remainder of our capital outlay money—but probably “no spa days” for board members.

Cornelius noted that the law firm Watson and Smith, whom we have used for legal advice, is ending its partnership. We received a letter to that effect, inquiring if we intend to continue using Josh Smith’s services. The president said that he planned to do so. Howell noted that Smith does not overcharge, and generally, will answer inquiries pretty quickly, even if you have to email him a few times. We just have to let him know that we will continue to use him, the president said.

Stafford inquired about the road. Parts of the base course have washed away in certain areas. This is something we were going to discuss adding to the current project, but board members noted that that would be months away. He says we need to get a better handle on channeling runoff. We could get a local gravel provider to bring out a load of gravel and compact it. Mark Sechrist noted that improvements to the road north of his property had helped slow down the water and the rancher could put in some “thank-you dams” to help spread out the water. The president asked if Stafford would inquire about getting the gravel.

Cornelius asked whether there were any other matters to be addressed. He noted that it was 7 p.m. No one spoke up, so he adjourned the meeting.