Holiday Hideaway Association Special Informational Meeting Concerning Acquisition of the Water Company

Saturday, February 21, 2004

The meeting was called by order at approx 2:10 pm in the Guemes Island Community Center. Those present were board members: President, Sharon Schlittenhard, Zobra Wambleska, Hal Forsey, Anne Casperson, Secretary, Susan Wintermantel, Treasurer, Barbara Larson, Mark Spahr, proposed water system manager, and interested Association members.

Zobra Wambleska gave an introduction and review of the path that the Association has taken over the last few years as it considered acquiring the Guemes Island Water Company. "Last year at the annual meeting of the HHA we voted to accept a motion to take over the water company, if after further study, the Board decided that the risks were acceptable and we could be assigned the State Revolving Fund loan." The loan has been approved for our assumption and we have studied many facets of the water company as part of our study. Mark Spahr, a qualified water systems engineer has inspected the mechanics of the water system and found all to be in good shape. The board has yet to vote, wanting first to get final input from the members.

Sharon Schlittenhard discussed the liabilities considered by the Board. These liability concerns centered around the issue of water availability and commitments made to water customers by the Guemes Island Water Company. She gave a detailed account of the water shares (217 residential and 50 metered or ready-to-serve recreational) and the results of the Board's study. The Board has several reasons to be optimistic about having enough water shares to serve the customers. The first is current Skagit County zoning ordinances that limit the dividing of parcels. The second is the trend toward lot aggregation by existing owners. The third is a proposed new policy by the HHA water company to reimburse, and therefore, encourage existing owners to return unneeded water shares to the water company. (The policy for proposed reimbursement formula has not been determined at this time.) Also, incorporation protects the HHA water company to the limits of the assets of the corporation. Finally, we would carry liability insurance coverage to cover any unforeseen problem.

Hal Forsey shared the financial estimates for the Holiday Hideaway water company. They are estimates but he tried to be conservative so it may turn out to be even better than this. Without any changes there would be a shortfall in October 2004 when the $23,000 payment for the State Loan is due. By increasing the loan surcharge from $5 to $10 the loan can be covered. According to Hal's estimates, after October's loan payment, the estimated monthly income will be high enough to set aside $2,500 each month to be used for system maintenance and replacement. The plan is to do approx $90,000 in upgrades every 3-4 years. There will be start up expenses, insurance, software, phone and this will be covered by loans from members of the community. We also have agreed to pay back the HHA for the money used for legal fees and other expenses during the last year.

Mark Spahr, retired professional water engineer for 30-35 years, then gave his report of his study of the physical water system. Mark lives on the island and has been asked by the Board to manage the system. He has agreed to operate the system for a minimum of 3 years. He took a very careful look at the system because he doesn't want extra problems as the manager. He looked at the state files in Kent, the engineering, the physical plant, the loan and the improvements what it was spent on. He looked at the system with Hugh Adams, who built and maintains the system. He went out with Carol Terrana when the system was down after the thaw. In general, after all that study, he's going into it with his eyes wide open. The pumps are fine, there's a pretty modern control system, parts of the system are fair and parts are good.

Mark addressed the need to gradually replace the distribution system. He said that the galvanized fittings that were used at the junction points for each customer's line cost much less initially but they do have a limited life. Mark talked with the GIWC and looked at the pumping records to check for leaks and the system is surprisingly tight. The goal is, starting in about 3 years, to replace 1000-1500 ft of pipe every 3-4 years. At that time Mark plans to increase the diameter of some of the distribution pipe and to increase fire hydrants in some strategic places. Mark described the size, quality and cost of the 8" ductile iron pipes that the PUD would use for replacement vs. the high quality thick wall 6" PVC that he proposes to use. The price is approx double for the larger iron pipe. It's a question that we will address in 3 years when we are ready to start replacing pipe. But, it is very important to set aside money to start the replacement process.

Questions from the floor followed.

Minutes submitted by Susan Wintermantel, recording secretary

Tags: HHA Holiday Hideaway 2004
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