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HomeMy WebLinkAbout1955-06-08; Municipal Water District; Minutes576 -There was some discussion of the subject, Mr. Trygg suggesting that it would be desirable if the Mutual Directors would receive copies of the Municipal's Engineering Report in order that they might have the chance to study it. e Director Director Anthony then left the meeting. Anthony Meeting President Ingels stated that he felt the Adjourned to June 8th Directors should get together again on June 8th after they have had time to study the Municipal's Engineering Report, The meeting was therefore adjourned until June 8, 1955 at 9:OO A. M. p& :7+;/T/ 7 L.' 7 e/ ecretary MINUTES OF THE ADJOURNED SPECIAL MEETING of the of. the BOARD OF DIRECTORS CARLSBAD MUTUAL WATER COMPANY Adjourned The adjourned special meeting of the Board of Special Meeting * Directors of the Carlsbad Mutual Water Comp3ny June 8, 1955 was held in the office of the Company in the City of Carlsbad, County of San Diego, State of California, on Wednesday, June 8, 1955 at 9:OO A. M. Directors C. H. Ingels R. R. Robinson Present W. W. Rogers + C. A. Anthony Arnold Brilhart Also present were C. E, Trygg, Secretary-Manager and Maribee Balcom, stenographer. President Ingels called the meeting to order at 9:05, stating that this was the adjournment of the ;Special Meeting of May 27th. ?! Letter from Assemblyman Sheridan H Hegland re Correspondencc bills in Legislation Letter from Fallbrook Public Utility District stating no diversion from San Luis Rey for the month of April. Letter from Carlsbad Union School District dated May 20, asking an extension of time over the due date of water bills and that the penalty be waived, due to the time required in processing warrants, Director Rogers moved, seconded by Director Anthony and carried unanimously: BE IT ORDERED that the penalty be 55 - 87 waived on all water bills €or public or quasi-public organizations that pay bills by warrant, providing payment is received within a reasonable Length sf time, Letter from Escondido Mutual Water Company regarding rate increases Letter from LaMesa, Lemon Grove 8, Spring Valley Irr. District regarding increases in electric rates, The Manager presented the laboratory reports of Laboratory Reports Dr. Carl Wilson and stated that the reports indicate insufficient chlorine in parts of the system. It is impossible, with the present facilities, to provide sufficient chlorination at these points, The Manager stated that we h.av e had a standard Meters and Services price for water meters which was established in 1953, The price of meters has been increased two or three times since then and our prices no longer cover the cost of the meter and the cost of its installation, Director Rogers said he does; not think the rates should be raised until we start to use some of the new meters, The Manager stated that the new subdivisions and also new individual dwell- ings would require new 5/8" meters. The Directors then instructed the Manager to work out a new sc:hedule of meter charges and present it to the Board at the next meeting. Pr.3 if k Finances The Manager read letters from Occidental Life Insurance Company and Percy H. Goodwin Company, the latter containing forms to be filled out. T. Bruce Smith then entered the meeting. Finances 3 The Manager reported that he had gone to Los Continued Angeles on June 1st for consultation with Wagenseller & Durst. He talked to their Mr. Field, who thought he could definitely find someone that is interested in the water company to the extent of a $500,000 loan. He..wants several statements from us which are standard. He is thinking in terms of 5% interest and a finders' fee of 2% total, plus necessary legal fees, The report by Mr, Browning is sufficient for them as far as the engineering report is concerned. They are definitely concerned, however, as to what is going to happen to the Mutual. Is it going to stay as it is, is it going to be taken over by the Municipal, or is it going to merge with Terramar? He has received our financial statements for the past four or five years. Under present conditions, they would favor an expanded Mutual because a Mutual can assess to make up any deficit in operating expenses, His fee of 2" applies only if the loan is successful. If there is no loan, there is no finders' fee, The Manager also presented a Letter from Lindley, Lazar & Scales, attorney for Security Trust i3 Savings Bank of San Diego. The Security Bank will make a loan of $75,000 or $80,000',, provided they are given a complete chattel mortgage on the Company. Director Robinson said that-he could not see much value in such a loan, Director Anthony stated that he could not see paying 5% ! on money when you can get it by assessment, Director Rogers said that i:F the Directors wanted to "kill" the bond issue, to just go ahead and put out -an assessment. When Director Robinson suggested that from what comments he had heard, the bond issue might *.be difficult to pass, Director Rogers said that it was a question of education for the public. Director Robinson then said that to face the situation fron; a realistic standpoint, we have a political consideration of which we must be aware. It is a definite problem and one of the pressing things in it is whether this Company is going to continue to exist, If we are going to sell it out to somebody else, we wouldn't have to have a heavy loan. Obviously the bond issue is not going to carry unless the people who fought for the Municipal Water District are going to be willing to go out and hustle for the bond issue. Director Anthony stated tha.t it made no difference to him who owns this Company; it is going to cost money to put it on its feet, no matter who owns it;. Director Rogers said that from the standpoint of the Municipal, if the Municipal takes it over at all it would have to be done as an Improvement District. That Improvement District would have to be financed, whatever is going to be done. Director Robinson stated that he is fairly well convinced in his mind that water should be operated by only one concern, He thinks the Municipal should 'buy out the Mutual, so there will be only one organization. But-the Board of Directors has a problem now of trying to opera-te this Company and they cannot do it unless they come to some decision about what its future is to be. 'F; c -J Q $!< Director Rogers said that he thought the Board would admit that the Mutual does not have enough water under its own right to serve the Community, The first question is how we are going to get the water to serve the Community, There is no other reason- able suggestion than the bond issue., He thinks he can prove to any reasonable person that there is no alternative. When the bond is passed, the Board would be in a better position to decide what to do about the Mutual. He also said that if the bond issue is defeated, it will be more serious to the Mutual area than to the outside, The parties outside have enough assessed valuation so they can build their own line, and then what is Carlsbad going to do? Director Rogers said he is sure with the proper presentation of the problem to the people, they will see the light. Director Anthony stated that he wanted Colorado River water here for a longer time than most people, but he does want to see the Mutual on its feet until such time as it is taken over, Director Rogers said he thinks the Board should go ahea.d and get the loan from the Security until they see what is going; to happen. There is no way to get water other than to build the pipeline , Director Robinson inquired about connecting on the Oceanside- Fallbrook lateral. Director Rogers replied that he had asked the Water Authority for definite information as to what would happen if we requested permission to connect with that line. That is, if we do connect, whether the line would also be available to other agencies such as Vista, Rainbow.and other proposed districts, If the water in that line is divided, there will not be enough for anybody., He further stated that Oceanside certainly would not sign any contract with US if we-were planning to take water out of their line. The Manager said that the water consumption was Water Consumption down about one third in May, The revenue was almost identical with April, due to the rate increase. !< . Oirector Robinson said that he felt this loan Finances, Continued should be given some business consideration, Is it better to make a loan on what would be considered poor business judgment, or make an assessment? Getting water is the most vital matter we have, But how can we get the money and still justify our position, both as to business and also for the best interests sf the people and of the political ang:Le? If an'assessment is really going to hinder the passage of the bond issue, it should not be made, Director Rogers said that the Municipal will make a final decision at their meeting on July 7th and call an election. The decision will be upon the amount and the date of the election. The Municipal Board has voted unanimously to build the pipeline. They voted four to one to ask for funds for the reservoir. If The Municipal builds this pipeline, they will sell water to any- body that wants it until the District needs the entire capacity for itself, Director Brilhart stated that it is not going to do any good to borrow $75,000 from the Security Bank. We need at least $100,000 if we are going to get an interim loan, He said he did not think it good business to pay 5% and give the Bank a-chattel mortgage. Director Rogers said he claims it is not right to ask the shareholders to support the Mutual, Director Brilhart stated that he would rather have an assess- !y?" 4 "3 ment than to pay 5% for the loan, The Bank has security when they lend money to a Mutual Water Company because the shareholders may be assessed, Director Brilhart said he does not think that the suggested Security Bank plan is a good deal for the organiz- ation, There should be at least $100,000, and he certainly would not transfer all of our assets to the Bank for a laan even of that amount, Director Robinson said that if we are endangering the rights of the Mutual Water Company, we should certainly do something about it right now. Director Rogers said he thought the Board should say that we are willing to sell this Company at a price and request that an Improvement District be included in the proposed bond election to raise the necessary funds to buy the Mutual, At the election, we would have two propositions: 1st: Shall we build a pipeline at a cost of $2,000,000.00? 2nd: Shall an Improvement District be formed north of Hedionda Lagoon to buy the assets of the Mutual? The next two questions are: 1st: What will it cost? 2nd: Who will operate it? The Mutual could continue to be operated under some sort of a lease arrangement as the Improvement District is not an operating agency. The big advantage is that YOU would immediately get off the tax rolls and would be able to get money at 3% instead of 5% * Director Rogers continued, saying that he would go along with a recommendation to the Municipal that this Board favoTs an Improvement District to buy out the Mutual and perform the necessary rehabilitation of the facilities, to be operated as later decided. He said one of the things that should be done first is that steps should be taken now to determine a price at which the Mutual might be purchased, Probably the best organization to get that price would be the Public Utility Commission. Director Rogers moved, seconded by Director Robinson and carried unanimously: BE If ORDERED that Attorney T, Bruce Smith be 55-E8 requested to take immediate steps to find out whether the Public Utility Commission would under- take a valuation survey of the Carlsbad Mutual Water Company and what the cost would be, President Ingels said that a lot of people felt that we should get the water-first and then determine what to do with the Mutual. He asked what would happen if we did not get the bond issueo saying also that if too many things were put into the bond issue, it would defeat it, Director Rogers said he would like to see the Board go ahead with this Security loan and would also like to have the Board suggest to the Municipal. that we would consider selling it if an Improvement District is formed, If we put it in this bond issue, the decision would have to be made by the 7th of July. It will take at least a year to hold the bond election and complete the engineering and building of the pipeline, Director Brilhart said he does not think the Board should go ahead with this loan. He said he would not care to accept a loan of $75,000 at 576 because it doesn't do anything for the 5 9 tr) ci. &..$ Company, He feels we could get lower interest on a secured loan. Also the security should be either fixed assets or current assets, but not both. Director Rogers moved, seconded by Director Robinson and carried unanimously: 55 "0 89 BE IT ORDERED that the Security Bank be asked to prepare a proposal for a loan of $80,000; and BE IT FURTHER ORDERED that they be asked for a lower rate of interest, preferably no higher than 4% in view of the fact that it will be a secured loan; and also that they include no personal property as security; and BE IT ALSO ORDERED that the formal approval of the Board of Directors be obtained before any loan is consummated, Director Robinson moved, seconded by Director Anthony and carried unanimously: 55-90 BE IT ORDERED that Attorney T, Bruce Smith be requested to write a letter in answer to the letter of February 26, 1955 from the Carlsbad Municipal Water District, stating that we are asking the Public Utility Commission whether they will make a valuation study of the Carlsbad Mutual Water Company and what such study would cost; and BE IT FURTHER ORDERED that the letter also request that the Municipal consider an Improve- ment District to provide funds to purchase and rehabilitate the Mutual, subject to the approval of the shareholders, this being in line with the recommendations of the Citizens Water Problems Committee,-which was instigated by the Mutual Water Company. Director Rogers suggested that letters be written to the loaning agencies which we have contacted, stating that in view of decisions now being reached as to Construction of Pipelines, that we propose to delay action On financing for approximately sixty days. The Manager reported on the delinquent assess- Delinquent Assessments ments that there would probably be only two left unpaid by the 17th of June. Director Eiogers moved, seconded by Director Robinson and carried unanimously: BE IT ORDERED that on June 17, 1955, 53-91 all deli nquent stock on which the assessments have not been paid be sold in the regilar manner, The Manager reported that the pump in the South San Luis Rey Yard well had been pulled and we had Sound 67 or 68 feet of sand in it, which was baled out. tVe checked the East River well and .found that we could not switch the pumps. In the meantime, the water from San Luis Rey contains about 230 ppm of chlorides at the present. The Manager stated that we have a Letter from Aka New Well Thiele stating that he will check the ground water re- sources we have in Section 18 for approximately $2500, plus traveling and other expenses. The DLrectors recommended no action on the new well at this time. Attorney Smith reported on the conversion of sea Sea 'dlbater Conversion water. He talked with Mr. Noble of the Sari Diego Gas & Electric Company about the fact that our region might offer a desirable location. Mr . Noble indicated, but not officially, that the Gas Company would be very happy to allow a Conversion Plant on their property and that it might be possible to secure a lease at no cost on the necessary property. A proposal would have to be made to the Gas Company in order that they might take official action upon it. Mr. Buzz Garland of the Carlsbad Journal then entered the meeting. 5 p f3 G ",r New Director Rogers inquired whether the Board is Proposed Pipeline going along on building the pipeline to bring Colorado River water to the Carlsbad Municipal Water District. Director Robinson said he thought the Board is definitely going to have to act on this with a firm motion and resolution to do something about it, but he thought we should wait until the Municipal produces a firm figure on what they are going to do. Contract The Directors disc.ussed the furnishing of water to with Terramar . Terramar and Mr. Cannon's objection to paying $19.00 per acre foot for transmission. Mr. Trygg said that Mr. Cannon had said he would he present at this I3oard Meeting, but he did not come. Director Rogers said that he thought the Mutual should write the Municipal a letter stating that we propose to renew the contract to Terramar at $19.00. Director Robinson moved, seconded by Director Brilhart and carried unanimously: &q c\7 ./"7.- BE iT ORDERED that the Comp.any write a letter I to Mr. Cannon of Terramar Water Company, te:Lling him that we would like to discuss the mattelo with him; and BE IT FURTHER ORDERED that 'the Company will continue to serve Terramar at the old rate after the expiration of the existing contract, until August 1, 1955, in order that we may negotiate suitable terms for the new contract. Director Anthony then left the meeting, Chlorinators The Manager reported on the need for three new chlorinators to chlorinate our water satisfactori1.y in view of the new contract with Oceanside which sets forth a definite limit on the chlorine content, Director Robinson said on the matter of the chlorinators that we shpuld ., do as s,oon as possible what is necessary to take care of the minimum requirements of the system, After some further discussion, Director Robinson moved, seconded by Director Rogers and carried unanimously: BE IT ORDERED that the Manager is 33-93 hereby directed and instructed to purchase and ins,tall one new chlorin- ator; and BE IT FURTHER OF,DERED that the Manager is hereby authorized to expend an additional $5,000 in addition to those funds previously authorized for the replacement of pipelines. F- There being no further business to come before the Board, upon proper motion, duly seconded, the meeting was adjourned at fl:50 A. 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