Call to Order:
Welcome: Darton, President
Present/Quorum (yes): Darton, Todd, Clint, Matt, Morris (10:15am), Gini, Paul, Dave (Manager). Guest: Kai
Consent Items
Approved? – Contents and order of this Agenda: Approved
Approved? – Minutes of February meeting: Approved
Information Items
Guest Speakers comments (if any): None
Board Member comments (if any): Gini asked for clarification on the term lengths for the board members who were planning to reapply to be on the board again. The three members will be applying for standard two year terms. Dave mentioned he planned to post a call for candidates on the website even though everyone already has gotten one in the mail.
President’s Report :
- Darton said he and Dave had gotten together to go over the CIP and that he had sent a copy to us via email.
- Darton will be sending Dave a Presidents Statement to include in the Annual Meeting mailing.
Manager/Operator Report (Dave):
- Dave will be preparing the President Statement in March for mailing in the April 3 billing. He also will be needing the Treasurers Statement from Todd. Last year we didn’t include a Treasurers Statement but in previous years we have and this year Todd says we need one because there will be information about a possible rate change.
- Dave brought up the issue of late fee charges. We had stopped issuing late fees at the beginning of the Covid emergency but Dave was wondering if it is time to begin charging them again now that the emergency appears to be ending. Darton thought that we should end the waiver unless a member presents information backing up the need for a continuing waiver due to Covid. Todd pointed out that in previous “normal” years penalties brought in on average $1,300. Therefore we could presume we essentially lost $1,300 in fees. Dave noted that surprisingly this year it seemed like most people, even those who are regularly late, appeared to be staying pretty much up to date!
- Dave said that he is still waiting for the new metal door for the Springs to be delivered. It is still in route! He’ll install it just as soon as it gets here.
- Dave said the meeting yesterday with Ben Dahl, who is helping us analyze our water usage, went well. The main issue discussed was how to categorize full and part time users. At the moment we designate any share that is not used in 6 months as part time. We have been listing 90 shares as part time in our filings but Ben saw when he did his analysis that actually we only have 17 that qualify as part time according to that model. Dave said that the 90/17 difference probably has to do with the fact that many houses that were only used in the summer are now full time and that people are renting houses on Airbnb. Todd asked if this data is important in that it is sent to the State. Dave said yes and that is why it is important to get an accurate reading. It is important because it tells us what the true water used by a full time household is. By listing part time as 90 it looks like a full time household uses a lot more water than they actually do use. Having an accurate reading will allow us to know how many more households we can truly accommodate.
- Dave said that the change order for the driveway and the cellular masts at the Sandy shores project will be done using money available in the minor changes funds established for the project.
Committee Reports:
Finance Committee (Todd):
- We are now through 67% of the Fiscal year and we are basically flat in our revenue. Billings are still running slightly ahead (at 69%) because we will be under in the spring with less revenue due to less water usage. Our staffing expense is on point. Slightly elevated business costs. The expense of hiring Dahl Consulting is showing. System Operations will end up being below $64K. Emergency maintenance is going to be low this year (thank you Dave!). Taxes are showing low because $12K is still sitting waiting for the RoW to be decided. This money will remain into next fiscal year – until we finally know what the charge will be. We are showing $24K ahead in Revenue but $30K will be being transferred to System Replacement. System Replacement shows only about $3K spent of the budgeted $77K because we could not pursue the Manzanita/Hake link and repairs to the DWA building will more likely occur next year. Under Capital Improvements, when we budgeted last year we estimated the project costs. Todd put in a cost of $200K in the proposal to Kitsap bank but the bank granted us up to $250K. The Contingency Reserve Fund is high historically because we received the government covid loan. We don’t yet know what we will do with this money or if it will remain a loan.We are finally able to apply to have our PPP loan converted to a grant. We won’t know immediately if that will be accepted but we have full expectation that it will be converted. The books show we have about $400K in the bank but bills will be needing to go out which will leave about $240K remaining.
- Todd has worked on the budget. He asked when he needed to get this written up. Dave said May. Todd and Darton have been reviewing the budget and it seems we will need to increase our revenue to meet our needs. We are basically going to be $20K under if we don’t make changes. Staff compensation review was completed and the Executive Committee decided to agree to the staff requests. This figure has been added to the new budget. Business Operations are on target but may be raised a bit. Legal fees are going to be reduced for next year. System Operations are not a discretionary figure. Our two big dollar amounts here are power and unexpected maintenance. Traditionally $15K is set aside for unexpected maintenance and $11K for power but we anticipate power to go up going forward because of the higher energy usage at the new filtration plant and the cost of electricity going up. Todd believes the Operation Budget will drop to $52K from it’s current $64K because we won’t be paying for Dahl next year. Our projected total expenses will be $224K as opposed to our current $200K which explains why we need to increase our fees by $20K. Next year we will keep our System Replacement transfer to $30K but in subsequent years return this to it’s traditional $50K.
- Todd put forward a move to adopt the new budget. All approved the new budget.
- Todd discussed the need to increase our revenue. He has reviewed historical billing data and changes in the billing structure in years past. In the past changes were made whereby active shares started being billed for every drop of water used rather than getting a set amount automatically with the standard billing. The reserve shares did not get a change in their base rate at that time so essentially the active share members got a bill increase without the reserve shares being affected. We are now reaching the conclusion that reserve holders rate will be raised somewhere between $29-$39 a month which will mostly correct this but we will still need a slight increase in the water usage rate to cover the full shortfall.
- Todd presented information that Morris compiled on water usage and charges at other water districts on the island. From this document it appears Dockton Water charges are in the lower half of the pack which makes us all happy.
- Todd asked what the board felt about the discussion of increased fees. Darton felt that whether a member was here using water or not they were still reaping the rewards of a well run system. Morris agreed in that we have improved the water system and therefore raised the value of every share. Todd noted that 15% of the shares in Dockton are reserve shares. If we correct for the way reserve shares are billed we will be able to pay for the $20k budget shortfall.
- Darton and Kai wondered if we could put two options out to our members to choice which way to charge the increase. Todd said it wouldn’t really be a fair vote because resident shareholders dominate reserve shares by so much. He believes we as a board need to decide. Gini and Dave agreed. Todd said we can vote at our next meeting.
- Todd went into a discussion regarding his projection of our financial picture going forward about 6 years. It appears that next year will be a lean year where we will want to hold off on projects to build up reserves. He thinks within two years our funds will be back to normal. Todd asked if the board thought we should go ahead and take the full $250K loan from Kitsap to build up our reserves. We can repay this back faster than the loan requires as long as we don’t repay more than 20% a year. We will have the funds to pay for this extra $50K if we need to use it, or we can pay it back because we are allowed to do this. Darton didn’t think taking on more debt was good. Paul, Gini and Dave thought we should take the full amount. Todd said the Kitsap loan is at 5.25% and the small loan we have through King County is at a very low rate. Todd noted that we are well capitalized compared to many small water systems. He also noted we really don’t have a lot of money in reserves if a catastrophe happened.
- Todd put forth the motion to approve taking the full $250K loan from Kitsap Bank. Board approved this motion.
- Presently we have taken $100K from the Kitsap loan.
Water Production Committee (Paul):
- Water production issues have been relatively quiet.
- We should be hearing from Duncan shortly on the Dockton Springs well point issue. Planning to get this decided by our next meeting.
- Sandy Shores looks good. Some asbestos piping is still in place and will remain there until a future date due to the difficulty of removal. Paul commented on how the filtration system, once it is up and running, will improve the functioning of the whole water system. Reduce wear and tear on pumps, etc.
CIP and Planning Committee
- Darton showed us the CIP plan. 20/21 finish the Sandy Shores Well Filtration, Convert Springs water tank to storage, Fencing, signage and security for the Sandy Springs, DWA building improvements. 21/22 No Projects instead refill our coffers. 22/23 94th to Piner Point connection, Hake to Manzanita connection.
- Todd thinks we should budget for engineering work to remove the asbestos and also to draw up the plans to do the Summerhurst extension even if we aren’t going to actively move forward with this. He thinks that if we do this we could try to get grants to pay for some of these projects from the State. It might cost us $ now to do this engineering work but it might get us grant money to do it, and we will do these jobs anyway. Dave and Paul thought this was a great idea because if we setup the engineering now it will allow us to move more quickly when we are ready to do the jobs. Darton said that plans change as do costs but it would set us up. Paul said that if we do this even to set up the permits it makes it look real. Todd wondered what people thought the true engineering cost would be. Dave thought maybe $15K for two project plans. Paul said price it at $25K.
- Todd asked if we had a quorum to budget $25K in the budget for engineering for projects. All voted yes.
Old Business / Carryover Items
- None
New Business / Discussion Items
- None
Other Business
- None
What did we decide?
- Dave: Presidents Statement
- Todd: Send Dave Treasurers Statement
- Approved Budget
- Gave raises to Angie and Dave
- Updated CIP
- Approved adding engineering work to the Budget for $25K
- Approved that Todd take full $250K loan from Kitsap Bank