Special Meeting to Address Funding Concerns

This meeting was conducted via Zoom

President Wade Cornelius opened the meeting via Zoom at 6:14 p.m. He said he would put the agenda on the Zoom screen. He dispensed with introductions, as those present knew one another. Attending the meeting were the president, board members Patrick Stafford and Rob Campion, secretary Beth Morgan, and Marty Howell of Souder, Miller, and Associates.

The president asked Morgan the status of the minutes, and she noted that they were started but not finished. Therefore, they were not read or approved. The water operator’s report was next, so they moved on to it. In the absence of Henry Torres, the Vista del Rey MDWCA’s water operator, Patrick Stafford reported that our main water meter had been failing, so a new two-inch meter was obtained and installed. That was reported to the State Engineer’s Office and Stafford noted that readings were starting over at zero. Cornelius said that perhaps that is appropriate, as we are on the verge of installing both a new booster station and new lines. Stafford said the water report looks ”very good, so there’s no concerns there.”

Rob Campion, serving out David Lucero’s term as treasurer, said that we are still having troubles with Washington Federal, as they have only one location, due to the COVID-19 pandemic, and he can’t get there, as he works in El Paso. Cornelius actually ends up doing the actual deposits. There is a treasury program that is intended to streamline matters, but we aren’t enrolled in it. He noted that he needs to be put on the account as a signer. At this time, Cornelius is the only signer listed. He stated that we have to sign up for the program in person. He feels it is “difficult to work with,” and at some point in the future, we may want to consider whether we want to continue banking with them, as something with more flexibility and more locations would be easier to manage. He said that would require a decision of the board.

He stated that most of our members are caught up on their bills, there are some folks who pay quarterly. No one is really causing him concern; the Henries have recently made a payment. He said we had received a bill from our electrician, Mark Parmeter. Electric bills have been high: he said the last one had been $456, and a previous one $476; rates have gone up about 10 percent. He said the unseasonably hot weather has meant that people were using a lot of water, and usage and electricity costs should go down as it cools off. The $476 [sic] should come out next week, which should put us at just more than $4,000. He said he didn’t anticipate any other large bills, until Cornelius indicated that our insurance, at $1,818, is due. Once that is paid, we’ll have around $2,000 in the bank; the association is not sitting on any large sums of cash now. Campion also noted that we have not, apparently, lost any water payments due to mailbox thefts recently. He said he had been fairly astute about checking our local water payment mailbox for checks, however, in future times members should consider setting up automatic withdrawals and/or transfers to the VDRMDWCA account at Washington Federal. It is very easy to do and “super secure.”

For those who may not have heard, Campion explained that some of our mailboxes have been raided more than once. The Campion family lost items they had ordered, and learned of this when the Sheriff’s Department informed them they had found discarded boxes in vehicles they had seized, but not the merchandise that had been in them. Thus, mail security has been a concern. (Early in these thefts, it had been speculated that the thieves were after COVID relief checks.)

The president asked whether there was any discussion on the foregoing, to which no one responded. Thus, he vowed to move on to “new business,” consideration of a resolution to accept the Colonias funds that were awarded to the association, and the Readiness to Proceed items of which the board was recently informed.

The president said in spite of several emails and conversations, we were under the mistaken impression that we had made clear we wanted to include the 10 percent match (note: Cornelius actually said the 10 percent loan [sic] which we would then pay back), bringing it to a 20 percent loan, 80 percent grant, rather than a 10 percent match, 10 percent loan, 80 percent grant. (A 10 percent match would come to about $70,000, which is several times what the association brings in in a year. The association had been allowed to use its $50,000 preliminary engineering report [PER] funding as a match for funds the association was granted for design work costing approximately $87,000, for which the association received a Colonias Infrastructure Board grant, but the board cannot use the design grant for a match). Additionally, he said, board members thought it was a 40-year loan, but they now understand that it is a 20-year loan, the president said. Additionally, as the association was awarded money from both Capital Outlay and the Colonias Infrastructure Board fund, it has more money than board members thought would be awarded, and some board members thought the association could therefore, undertake everything it had planned (instead of breaking it into two phases), and do it all at once. Finally, he said, we need a figure for how much the two outstanding aspects—a new booster station and new distribution lines—of our project will cost, added together.

Howell started with the scope of the grant applications: the estimate in 2018 was about a million dollars. When the report was completed, we applied for design work for a new booster station, new water lines, and an interconnection between our system and High Valley Farms. VDRMDWCA’s total cost was about $650,000. However, if the association wanted to rehabilitate the tank and put a new pump and make a few other improvements to the well, that brings it to about a million. He paused to check the PER to verify that, coming back with a figure of $1.35 million. The president noted that the two funding sources give us approximately that much. However, Howell noted that not all of these improvements had been included in the design work the company did for us, so they could not be done with this money. (Generally, funding sources disallow significant changes to what an entity has stated they want funding for.)

The association paid for the design work on the new booster station, the new water lines and the interconnection, but High Valley Farms (via the Lower Rio Grande Public Water Works Authority [LRGPWWA]) is paying for the construction of the line interconnecting the two systems. He said he supposed it was worth talking to Stephen Deal about the Colonias Infrastructure grant, however, how Deal interprets it is more important than what he (Howell) thought it includes. Howell noted that the wording of the grant was neither inclusive or exclusive. The association had applied for Capital Outlay funding, but because it was uncertain whether it would be awarded, the board also applied for Colonias Infrastructure funds. The amount of $350,000 was determined to be an amount that might actually be considered, rather than enough to do everything, Howell said. (Actually, he said $300,000 in this meeting, but the amount previously agreed upon was $350,000.) From the Colonias fund, the board asked for enough to undertake both parts of our project: the improvement of the booster station and the new water lines, a sum of about $770,000. All of that amount was awarded. However, it is a grant of 90 percent, 10 percent loan, and the match is an additional 10 percent. It is a 0 percent loan. As the Capital Outlay funding is a grant that does not have to be repaid, the board will use that funding first, thereby reducing the amount of Colonias funding that will be needed. That will reduce the amount of the match/loan portion, thereby lowering the amount it will need to repay. The board had to wait until Nov. 19 for that request to be heard. It was approved.) He estimated that, if we take the Capital Outlay funds, that leaves $389,000 to complete the project, as planned. Ten percent of that is $38,900, to be rapid over 20 years. That will actually be double, as we plan to roll the 10 percent match into a loan, so, the association ends up paying back around $77,800 (or $3,890 per year, as Howell stated.) Patrick Stafford noted that we have 17 members who are paying in. (Actually, it’s 15, as Morgan and Sechrist own two lots that have no water connections and which use no water, in which case the $324 per month to be repaid by water users works out to about $21.60 per water user.) Howell noted that board members should have gotten an email noting that, while our financial statements indicated that we were capable of taking on $70,000 worth of debt, we did not appear to be able to take on an additional 10 percent debt ($140,000), without raising rates. He said that it might be important, in order to get the match turned into an additional 10 percent loan, that we pass a resolution that evening to document our raising our rates to cover it. Stafford was concerned about whether the rate increase would affect our ability to respond to other crises, which have come at approximately two-year intervals.

Howell said he wasn’t sure how to handle telling Angela Quintana that we did not intend to use all of the Colonias Infrastructure money. Morgan said it only seemed wise to use the Capital Outlay money first, as it does not have to be repaid. Howell indicated that she was aware of the other funding and that it was wise to use it first, but that it might not be smart to reduce the amount of the Colonias Infrastructure award.

Board members then had questions for Howell regarding the equipment being replaced inside the well house. Stafford noted that he was under the impression we would no longer need pressure tanks in the well house with the new booster station. Howell indicated that there is a small pressure tank on the skid with the pressure pump, and various parts of the booster system plumbing and electrical connections would also be replaced. Morgan pointed out that the board had often discussed the fact the board of directors very much wanted a monitoring panel that would alert them if the three-phase electrical system lost a leg of its power. Howell indicated that that pertains to the well, which we are not replacing at this time. (It had been rehabilitated in 2014, after an 11-day interruption of service. The well had caved in at the bottom and had to be cleaned out and recased, at a cost of about $20,000.) However, he did say that he thought he could get the monitoring panel past NMED’s Stephen Deal, because it would assist with the operation of the pressure pumps.

Stafford asked whether we need to pass a resolution or motion stating that we are raising our rates to cover the 10 percent match being rolled into the loan portion of the funding. Howell noted that Quintana will require additional financial statements. Campion said he had sent her some, but could send her revised financial information the next day. Morgan noted that it also is some time after construction is completed that we are required to begin paying off the loan. Howell indicated that he thinks we get a year after completion.

Stafford also questioned whether the board would need to acquire a commercial loan to provide the 10 percent match. During the design phase, we were able to use the funding we had obtained for the PER as a match. This time, we are not able to do that. Howell said that the PER is in a different category from the Capital Outlay and Colonias funds. Thus, they were eligible to be used for a match to the funds we received from the Colonias Infrastructure Fund, while the Capital Outlay and Colonias funds are in the same category, and therefore, cannot be used to match each other. The president asked whether we wanted to just do the basics, or whether the board wanted to see if it could get a bit more done. Morgan, eyeing the monitoring panel, and Stafford favored going for a bit more than was designed. He noted that some of the equipment in place is original. It would be good to have someone who is an expert in three-phase systems to prepare a panel that would serve us for at least 20 years. Cornelius agreed, quoting Shakespeare to the effect that we should use the money while it is available. Howell said that in terms of controls and lightning arrestors, etc., he thought he could persuade Deal to include them, because it becomes part of the booster system. We do not know what it will cost, but some of these items are not matters that will require Deal’s blessing. Howell said he had already sent him an email on “the well,” referring to the monitoring panel.

Next, Howell asked if we wanted to enact something that would reflect a rate increase for the sake of persuading the NMFA to accept our request for an additional 10 percent of the funds as a loan. He wondered whether we chose to raise rates $20 or $25. Campion said we should raise rates $25. His calculations indicated $21 would be necessary, but $25 gives us a bit of a cushion. Morgan agreed. Campion said he would provide new financial statements the next day. The president asked whether we need to pass a resolution to roll the 10 percent match into the loan. Howell indicated that NMFA would let us know promptly. Campion and Stafford worked out a motion to raise the rates to $100 per household (or meter), actually voiced by Stafford, and seconded by Campion, to begin at the first of the year. Campion will draft a letter to inform members of the rate increase.

Last on the agenda was a potential resolution to accept the Colonias funds. Howell had informed us that he had already handled Readiness to Proceed items, and a resolution is not required. He had also requested that the association be put on the NMFA agenda for their Nov. 19 meeting. No further action was required.

A discussion of whether Stafford’s neighbor Grover Heard’s home had sold. It was sold for $239,000. Stafford said he hoped for a good new neighbor.

Stafford noted that he is getting concerned about some of the members’ water use, because it is unknown how much they will tax the system. Some are planning to run cattle; Mo Williams is building a pond. Stafford said he had heard Melvin state that he had purchased two memberships. He wanted to know if he actually paid for two memberships. [After a records search of documents she inherited following the meeting, Morgan noted that the Melvins had certificates for two memberships, but copies of checks she has in her possession show that he paid for one membership. It states in the memo section of the check what it was for. He could have paid for an additional membership at a later date. Morgan remembers Melvin stating numerous times that he held two memberships, in meetings and out.]

The president expressed some unease about keeping Howell at the meeting, if we no longer needed him. Morgan said that there were some issues that she wanted his thoughts about, that being, in matters concerning the Capital Outlay funds, she did not wish to serve as the primary representative of the association. She said this because she had been listed as the official representative in some of the documents regarding that funding. Morgan wanted to know if we could make Cornelius the primary representative and herself the alternate. The president is the only individual who can legally accept the funds.

Howell said that Paulette Ortiz would not care whether we changed the last paragraph of the resolution or rewrote the entire document. He was released from the meeting after that.

Stafford additionally is concerned that people are not informed about the fact that the subdivision has covenants. We have some new property owners in the neighborhood who may not be informed about having covenants and what they are. The subdivision he said is residential, which means people are not intended to run businesses out of their homes that create a lot of traffic. Supposedly, the Wohlferts are looking to have paying folks boarding horses at their place and have advertised this on Facebook. Who is actually president of the homeowners association and what caused Wohlfert to pass his records on to Claire Baumgartner, while Morgan asserted that Martha Trego was elected president at a meeting she attended, are kind of up in the air. Campion said he had looked up the covenants filed at the Clerk’s Office and thought they had looked considerably pared down to him.

Morgan said she still needed to talk with the president further, regarding the Capital Outlay resolution. It was agreed they could communicate about it at another time. Stafford asked if we need another board member. Morgan stated that we had invited Terry Holder to serve and that he had agreed to, but he has not participated since we had asked him. The president vowed to remind him. The meeting was adjourned at 7:58 p.m.