MOHAVE VALLEY IRRIGATION & DRAINAGE DISTRICT

MINUTES OF THE REGULAR BOARD MEETING HELD TUESDAY,

JUNE 3, 2014	AT THE OFFICES OF THE MOHAVE VALLEY

IRRIGATION & DRAINAGE DISTRICT ("THE DISTRICT")

CALL TO ORDER.

The meeting was called to order at 4:10 p.m.

PLEDGE OF ALLEGIANCE.

The Pledge of Allegiance was led by Mr. Steve Buck.

ROLL CALL.

Present:	Charles B. ("Chip") Sherrill, Jr., Chairman, Director District III

Vince Vasquez, Director District II

John Kai, Director District I

Perry Muscelli, Treasurer, Director At Large

Clay Vanderslice, Director At Large

Mark R. Clark, CCM, Manager

Jamie Kelley, District Counsel

Cecily ("CeCe") Preusser, Administrative Assistant

WAIVER MOTION. Motion to waive the reading of full minutes and resolutions presented for approval or adoption.

Mr. Muscelli made a motion to waive the reading of full minutes and resolutions presented for approval or adoption. Mr. Kai seconded the motion. All were in favor, motion passed.

1.	REPORTS.

A.	Staff report on water use.

Mr. Clark announced that the water order for this year as of the end of April, 2014 was 712 acre feet of water less than what was ordered, compared to a variance of last year of 4,589 acre feet less than what was ordered. Mr. Clark stated that the District is pretty close to its water order this year and is forecasting the amount of water to be used by the District in 2014 at 37,000 acre feet.

B.	Bureau of Reclamation Lower Colorado Water Supply Report as of May 27, 2014; Upper Colorado River Basin Snowpack Report; Lake Powell Water Data Graph; and Lake Mead Water Data Graph.

Chairman Sherrill stated that the total system contents of Lakes Powell, Mead, Mohave and Havasu are at 48%. The total system contents this time last year was at 52%. Lake Mead's current elevation is at 1,088.82 feet, and at 1,075 we hit the first trigger. Mr. Clark advised that since the May 27, 2014 date of the report, Lake Mead had dropped another foot and was currently at 1,087.82 acre feet. Chairman Sherrill stated that, as far as the Colorado Basin snow pack is just bleak. There really has not been any snow pack to speak of and California is doing much worse than Arizona. Mr. Muscelli stated that the moisture in Colorado is actually almost normal this year, because of the moisture that has been received in the northern part of the state. The southern part of Colorado has not received much snowfall, but the northern part of Colorado has been very wet.

Mr. Clark advised that if you check with the Bureau of Reclamation, the rainfall in Colorado has not been in the right places to get into the Colorado River.

Mr. Muscelli stated that it was his understanding that it was forecasted that the Colorado River was running at 100% of its normal flow.

Mr. Clark stated that that was correct, but it was still not giving the District what we need because of the evaporation in Lake Mead and the releases from Lake Mead, we will still be seeing a drought.

Chairman Sherrill interjected that there was a treaty with Mexico in place. He stated that the Colorado River was at the highest levels that he had seen in a long time, but that was due to the part of the treaty to release that water to go into Mexico for their wetlands. The water did not make it quite to the ocean, but if you look at the satellite maps for last year and this year, it has improved Mexico's situation so much. Agriculture in Mexico almost clear to the Gulf of Mexico was bleak, but now you can actually now see a little river going through there. Chairman Sherrill clarified that the release to Mexico was experimental to help the wetlands. It was just a bad year to do it.

Mr. Vasquez added that, in addition the 7.5 million acre feet the lower basin uses, plus the 1.5 million acre feet for Mexico and then the 600,000 acre foot evaporation off of Lake Mead, the yearly releases of 8.25 million acre feet out of Lake Powell has resulted in a perpetual deficit unless you get real exceptional releases out of Lake Powell.

C.	USDA National Agricultural Statistics Service: Arizona Agri-Weekly for the month of May, 2014; Cotton Ginnings Reports for May, 2014.

Chairman Sherrill stated that the reports show that the crops are good to excellent, very poor would only be range or pasture at 5%, poor would be 30%, fair is at 29%, good at only 15% and excellent at 1%, because we have not received any rain at all. The ranchers are really hurting right now. The cotton planting and all other different crops harvested are on track.

D.	Arizona Meteorological Network Monthly Summary for May, 2014.

Chairman Sherrill advised that the report for May shows what percentages we are off and, basically, we are just in a dry year and need a lot of rain to help out the agricultural community and/or the desert and everything else.

Mr. Steve Buck asked, as compared to other droughts suffered, is this particular drought the worst ever. Mr. Clark answered that this drought was the worst ever.

Mr. Buck asked if the data went back to the turn of the century. Mr. Muscelli responded that the data goes back approximately 100 years. Mr. Vasquez added that the tree rings suggest words like "40 year drought". Mr. Vasquez added that if you go by recorded history, then we are at the top end range and it can't get much worse. However, if you go by the tree ring data, then potentially we are in a more dire situation.

2.	AGENDA MODIFICATION. Possible action to withdraw from, or move, any item on the Agenda, including the removal of an item from the Consent Agenda.

No action taken.

3.	CONSENT AGENDA. The items listed below will be considered as a group and acted upon by one motion with no separate discussion of said items, unless a Board Member requests an item or items be removed for separate discussion and action.

A.	Approve the May 6, 2014 Meeting Minutes.

B.	Ratify payment of expenses for May, 2014.

C.	Approve the Snell & Wilmer Billing Statement for the month of April, 2014.

Mr. Muscelli made a motion to approve the Consent Agenda in its entirety. Mr. Kai seconded the motion. All were in favor, motion passed.

4.	REGULAR AGENDA.

A.	MVIDD Budget For Fiscal Year July 1, 2014 Through June 30, 2015. Discussion and possible action to approve the MVIDD Budget for Fiscal Year July 1, 2014 through June 30, 2015, as well as Comprehensive Fee Schedule and Payment Rule updates.

Mark Clark stated that staff is recommending approval of the budget with the following changes to the Comprehensive Fee Schedule, which will then flow into the actual budget:

The first change would be the Interim Water Agricultural Entitlement Fee will be $8.00.

The tax levy will remain the same at $1.50.

The Agricultural Water Entitlement Fee will go up from $3.00 per acre foot to $4.00 per acre foot, a 33% increase.

The PPR Administration Fee, which is a new fee, will go to $1.00.

The Out of District Water Entitlement Fee will go to $8.00.

The Agricultural Water Supplement Fee will go to $8.00.

The remaining fees will stay as presented to the Board. Those fees will flow to the budget to provide a Fiscal Year 2015 revenue of $325,211.00. Total expenses will remain the same as presented to the Board.

There was a question from the audience as to the fee for agricultural water entitlement. Mr. Clark stated that the fee would go from $3.00 per acre foot to $4.00 per acre foot, which is a 33% increase.

Mr. Muscelli made a motion to approve the MVIDD Budget for Fiscal Year July 1, 2014 through June 30, 2015. Mr. Kai seconded the motion. All were in favor, motion passed.

B.	Arizona Municipal Power Users' Association ("AMPUA"). Discussion and possible action to approve the presentation Chairman Sherrill plans to give at the next AMPUA meeting.

Chairman Sherrill explained that he was going to go to the AMPUA meeting to present an overview of what the District is, when it was formed, the history of it, and explain how the District works. The AMPUA might give the District an opportunity to purchase some power for agriculture, it is agricultural specific, and Mohave Electric will wheel it, to obtain cheaper power rates for agricultural use.

Mr. Kai stated that it was not Arizona Municipal Power Users Association, but the Arizona Power Authority ("APA"). Mr. Kai stated that he thought a presentation by Chairman Sherrill would be beneficial.

Mr. Kai made a motion to approve Chairman Sherrill's presentation to the Arizona Power Authority. Mr. Vanderslice seconded the motion. All were in favor, motion passed.

C.	Elections. Discussion and possible action to direct staff to notice and call election of Charles B. ("Chip") Sherrill, Jr., as Director of Division III.

Mr. Clark stated that it was that time of year again to call for elections. We need to call for the election for the office of Director of Division III, currently held by Chip Sherrill, for the November election.

Mr. Kai made a motion to approve the call for election for the office of Director of Division III. Mr. Muscelli seconded the motion. All were in favor, motion passed.

Mr. Steve Buck questioned as to whether we were calling for the election for the one person. Mr. Clark advised that no, we were calling the election for the office of Director of Division III. For the seat currently held by Chip Sherrill.

D.	MVIDD Water Conservation Report. Discussion and final review of the Water Conservation Report.

Mr. Clark advised that the Board had already reviewed the report a couple of times now, and it had gone to the public, this is just a second reading of the Water Conservation Plan in public. If anyone has any comments, we will be bringing this matter back before the Board next month hopefully for final approval. Mr. Clark advised that the report was about 99% done, that he is awaiting the edits. Once the changes are made, the Report will be submitted to the Board for its final approval. If the public has any comments, any input will be welcome.

Mr. Steve Buck asked for clarification of an item on page 55 of the Water Conservation Report, the Drought / Water Shortage Contingency Plan, of which he quoted, "The Agricultural and Amenity users will share proportionately in an reduction required thru December 31, 2017." Mr. Buck questioned how this would affect his contract with the County. District Counsel Jamie Kelley inquired as to whether Mr. Buck was asking if Bella Vista's contract with MCWA would be influenced by the District's Water Conservation Report. District Counsel advised that Bella Vista would be out of luck as the water contracted for with MCWA was 5th priority water, and that there really is no 5th priority water.

Mr. Buck asked that, if the MCWA contract went away due to a declared shortage, Bella Vista would come back to its water allocation through their contract with the District. Then, before 2017 (when the District contract will expire), the amenity users will be asked to reduce their use of water by the same amount that agriculture will have to reduce its use of water. District Counsel stated that was correct. Mr. Buck stated that his concern was, farmers would "fallow" the acreage to offset the reduction of water.

Chairman Sherrill then corrected Mr. Buck by stating that if farmers fallow a field, they receive no financial benefit from the field or ground that has to be fallowed due to the shortage. The farmer will still have to pay property taxes, rent, wages, etc., but will have no income from the fallowed ground. If there is a crop in the field when the farmer has to fallow, the farmer will lose that crop.

Chairman Sherrill stated that if a shortage is declared, it is going to be economically terrible for the farmers and everyone else who will have to participate in a water reduction. If there is a reduction in anybody's water usage, it's going to hurt.

Chairman Sherrill then asked District Counsel to educate as to the 2026 rule. Mr. Buck interjected that all rules go out the door. Ms. Kelley advised that no, reductions will be based upon the amount of the allocation rather than the amount used.

Chairman Sherrill advised that until 2026, Bella Vista would be going on their allocation. Mr. Buck stated that until 2017, amenity users shared the reduction with agricultural users, but after 2017, amenity users go first.

District Counsel clarified that it must be a second stage drought declaration before there is a true cut, because up until 2026 the reduction is based upon the contract amount and not the use amount. Chairman Sherrill stated that buys us a little more time. Mr. Clark added that the District is not now using its full allocation.

E.	MVIDD District Office - Maintenance Of Outside Area. Discussion and possible action to approve the cost of maintaining the outside and landscaping of the MVIDD District Office. Estimates provided by M&M Maintenance & Landscape included.

Mr. Clark stated that staff is recommending that additional quotes be obtained for the outside maintenance and landscaping of the District Office. The quote included was the only one that was received.

Mr. Muscelli asked if it would be a problem for Chairman Sherrill's company to provide the maintenance and landscaping required. Ms. Kelley answered that a conflict of interest would have to be declared before the payment of the contract was completed.

Mr. Muscelli made a motion that more proposals be sought for the maintenance and landscaping of the MVIDD District Office. Mr. Vanderslice seconded the motion. All were in favor, motion passed.

5.	PUBLIC INPUT.

Steve Buck reported that there was a board meeting of the Bella Vista HOA not too long ago, which was attended by Angelo Rinaldi, owner of the Los Lagos Golf Course. Mr. Buck stated that Mr. Rinaldi spoke to the MVIDD contract, and made the same comments that he has been making for the last seven years. Mr. Buck stated that one of Mr. Rinaldi's contentions was for Mr. Buck to ask whether the Bella Vista and Los Lagos amenity contracts were valid beyond 2017. Mr. Buck stated that he had been told that they were. Mr. Buck was told that the contracts go on forever. Mr. Buck asked for clarification on the issue.

District Counsel Jamie Kelley stated that the sale of water at the prices stated in the contract expires December 31, 2017. Ms. Kelley stated that what Mr. Rinaldi was referring to is what appears to be a first right of refusal to purchase allocated but unused water, which the District is now referring to as interim water, but that is what it is. It is water that has been committed to subdivisions but is not currently being used. District Counsel stated that what Mr. Rinaldi fails to understand is that the District sets the price for that water. And the District's priorities in times of shortage will eliminate that water first. District Counsel stated that maybe the water goes on forever and maybe it doesn't, but amenity users will be allowed to purchase the water on only a year to year basis and that does not help the resale value of the golf courses.

Mr. Buck inquired as to the price of the interim water. Mr. Clark advised that the price for interim water to amenity users is $150.00 per acre foot, compared to the $30.00 per acre foot currently provided for in the contracts. District Counsel stated that, unfortunately for Mr. Rinaldi, the contract is fully adjudicated. To the extent that the value of that water has been established, it has been established at a rate of $150.00 per acre foot which is what is being paid by a current user, that user being Marina Coves.

Mr. Buck questioned as to the District's three tiered pricing which was changed to one price, which is $150.00 per acre foot. Mr. Clark confirmed the that price and that the Board had just approved that rate for the upcoming fiscal year.

Chairman Sherrill added that with the current drought conditions, that water is going to go away first. The District cannot give anyone more than a year's use of water that is allocated but unused because, should the subdivision that it has been allocated to decide to use it, you can't allocate the water twice. Chairman Sherrill stated that Mr. Rinaldi's statement is true to a certain extent, but it has some real grey areas.

A Los Lagos resident, who did not identify herself, stated that when she was sold her property, she was advised by the real estate agent that they would have water forever and would not have to worry about it.

Chairman Sherrill stated that he would like to elaborate on that point. He stated that realtors do not have to give a water report, they do not have to tell buyers that they have water (although they may have to now). Chairman Sherrill advised that when this woman bought her lot, realtors may not have even known about water rights or water districts. Realtors assumed that when you bought land you had water. It is just not that simple. Chairman Sherrill stated that the realtor that sold the woman her property was either not truthful for just was uninformed as to the water situation. Chairman Sherrill stated that this practice has been going on for years, which was one of the reasons the District was formed. The District is here to protect the water so that everyone has water, regardless of the size and type of the property in question.

Mr. Vasquez added that there would always be water available for domestic use. What is in question now is the water that is currently being used in the Bella Vista lakes, not what is coming out of the homeowners' taps.

The next issue raised was the rumor that Los Lagos was not getting any water after 2017. Chairman Sherrill stated that the rumor was just that, a rumor. Chairman Sherrill reiterated that residences would always have water, it would not be taken away. It is the lakes that are in question. Should a water shortage be declared, agricultural and amenity users will be hit first.

The next question was if Bella Vista has a contract to get water from the District and a drought is declared, do they have something for backup. Chairman Sherrill asked if she was talking about drinking water or lake water. She stated she was asking about lake water. Chairman Sherrill asked District Counsel to respond.

District Counsel advised that Bella Vista's Mohave County Water Authority contract is a different matter. Mr. Clark advised that the MCWA contract is a take or pay contract. The take or pay issue was questioned and Mr. Clark clarified that the MCWA contract was a take or pay contract or, in other words, a use it or lose it. Bella Vista has to pay for the water whether they use it or not. Steve Buck added that the water under the MCWA contract is the water that is used first. Then the water allotment given under the District contract is used.

Mr. Buck then inquired as to what progress was being made in bringing effluent into the District. Chairman Sherrill stated that it was a goal to which the District was still striving, and the District remains in ongoing negotiations and conversations with regard to bringing effluent to the District. Mr. Buck reminded Chairman Sherrill that, when going into negotiations, to remember that the District had 470 people very interested in effluent. Chairman Sherrill responded that there were more than that. Interest in effluent was not the problem. Obtaining effluent at an affordable rate is the problem. In all negotiations, the District has to keep in mind that the effluent has to be affordable. The District is continuing to seek a solution to the effluent situations and will continue to do so keeping the 2017 date in mind.

Mr. Buck stated that Bella Vista's ongoing efforts to purchase additional water through the Mohave Water Conservation District was very promising at this stage.

Mr. Anthony Vackar asked Chairman Sherrill how the 2017 date was reached. Chairman Sherrill stated that the amenity contracts were drawn up in 1992 and that was the date that was agreed upon and included in the contracts. Mr. Vackar asked if there was a reason the 2017 date was chosen. Chairman Sherrill answered that these were 25 year contracts. These contracts were not meant to last forever. The contracts state that the amenity users were to replace fresh water with effluent because it is ludicrous to use fresh water on golf courses or in lakes when fresh water should be used for homes and drinking.

Chairman Sherrill stated that it was always known that sooner or later there would be a water shortage. But the District, in an effort to aid the development of the subdivisions built around the lakes and golf courses, issued contracts for water for the amenity uses for a period of 25 years to give the amenities the chance to find a source for effluent.

Marilyn Gabriel of the Bella Vista HOA then addressed the Board with regard to statements made by Mr. Angelo Rinaldi at the last Bella Vista meeting, who passed out copies of the Los Lagos contract to the meeting attendees, and the fact that he kept referring to a portion of the contract stating that the water was guaranteed forever. Marilyn acknowledged that if you continued to read the contract, it was made clear that a source for effluent was to be diligently searched for. Ms. Gabriel also stated that Mr. Rinaldi had made the statement that if effluent was not available in the District, that it was not mandatory to obtain effluent.

District Counsel stated that he must have been referring to a different issue. What Ms. Gabriel was talking about was the diligent effort to comply with the terms of the contract and those were to develop reclaimed water or effluent as the primary source to water the golf courses. The amenity contracts were made to be interim contracts for 25 years during which time the amenity users were to obtain either reclaimed or effluent water for use on the golf courses and in the lakes. Those conditions are made clear in the contracts. Ms. Kelley also stated that she wondered if Mr. Rinaldi had made the public at the Bella Vista meeting aware that he owned the sewer treatment plant that at the time those contracts were negotiated. That is part of the reason why the contracts contain the portion excluding the Fort Mohave Indian Tribe. The effluent must be generated within the District boundary excluding the Tribe. That language was added because at the time Mr. Rinaldi and Dewey Davide owned a sewer treatment plant.

Ms. Gabriel asked why they didn't build the plant bigger. District Counsel answered that they would have to pose that question to Mr. Rinaldi. Ms. Gabriel also advised that Mr. Rinaldi was trying to get together a petition which would basically state that if Epcor raised their rates on effluent, the golf course would be offered for sale to the Colorado River Indian Tribe. Ms. Gabriel stated that she contacted the Commission (Arizona Corporation Commission) and was advised a petition could be submitted to the Commission. Division Counsel asked if the petition would be comments to the Commission. Ms. Gabriel stated that they were encouraging the people to send individual emails stating in their objections in their own words rather than have a blanket petition.

District Counsel advised that in last week's Mohave Daily News there was a letter to the editor from a woman in Mohave Valley that gave out her email address and her physical location if people wanted to sign the papers.

There was then a question presented as to whether or not it was fair for Epcor to raise rates when they poorly planned the project in the first place. District Counsel stated that she did not know if that were the case or not, but that it was a matter for the Arizona Corporation Commission. In order to address that issue, they would have to consult that forum as this Board has nothing to do with that.

Chairman Sherrill stated that the Arizona Corporation Commission was responsible for that ruling. Those interested could attend the Corporation Commission meeting in Phoenix and object or approve, whatever they wanted to do. Chairman Sherrill stated that there was usually a public forum during the meetings for public input. Mr. Vasquez added that a good term to use when questioning the Commission was "use and useful".

Mr. Buck questioned as to whether or not the effectiveness of the pumps was effected when the River was low. Chairman Sherrill responded that when the River was running high during the time that water was being sent to Mexico, his pumps ran 15% to 25% stronger than when the River was low. When the River is down, performance is down and we get less use. Chairman Sherrill also stated that we live in an area where Yuma, Parker, LA, Phoenix, pump down south of us. That's a benefit. If you go too far south of that, then you don't have the demand and then you really have a problem because they pump out of the River, not just out of wells.

Mr. Muscelli added that we have been talking about a drought, and there is a very serious drought that is not over yet, but regardless of that, the River is over-allocated. We have been warned through the years that the River might go dry if we don't change our usage. We give Mexico and everybody a bunch of water. The only reason we still have our water is because everyone didn't use the amount of water we gave them to use.

Chairman Sherrill stated that we also had storage. Mexico has kept storage, Los Angeles has kept some storage. There is an agreement to keep the water in the lake above 1075. Steve Buck added that there was also an overflow policy with Glen Canyon. Chairman Sherrill agreed, stating that there was an equalization program between Lake Powell and Lake Mead that when Lake Mead gets to a certain level, Lake Powell will release water and keep the equalization up. But if we get down to a certain point, we won't be able to do that.

Mr. Muscelli stated that there is a constant push and pull between the Upper Colorado Basin and the Lower Colorado Basin. And no one expects the population to decline in the southwestern United States either. So as the population grows so does the demand for water.

Ms. Gabriele asked whether or not there was an allocation for the project going in down by Lipan (Fairway Estates). Chairman Sherrill stated they had the allocation with good conservation standards in place. Chairman Sherrill stated that in the future, anyone who wants to develop or put in housing units is just going to have to plan the projects in a way that will most effectively conserve water.

Chairman Sherrill stated that everyone was going to have to become more conscious of conserving water.

6.	ADJOURNMENT.

There being no further business to be considered by the Board, Mr. Kai made a motion that the Meeting be adjourned. Mr. Muscelli seconded the motion. All were in favor, motion passed. The Meeting adjourned at 4:50 p.m.