Valleyhi Community Club, Inc.
Minutes of June 9, 2024 Special Membership Meeting
Location: Ingalls Creek Enrichment Center
Purpose of the Meeting
For the members to vote on whether to accept or reject an assessment of $1300.00 on each lot in Valleyhi to pay off our current Drinking Water State Revolving Fund loan with the Department of Health so that we can apply for a new DOH loan for our Reservoir Replacement Project.
Trustees, Tom Freeburg (2), Shane Glasenapp, Jim Nies, Susan Raley (2), and Danielle Small. President, Karl Ruether (3), and Acting Secretary, Peggi Lopez.
Club Members Present in Person
Rosie Alaimo, Alpine Chalets/John Schweizer (2), Keith Bowden, Jay Chapin, Colleen Clark, Cynthia Collamore (2), Don Conrad, Andrew Disher (3), Karen Eadie, Greg Forinash, Patty Freeburg, Diane and Kelly Gaddis, Icel Garcia (2), Debra Guffin/Bayne, Anthony and Helen Hillock, Wendell Hills, Caitlin Huson (2), Rebecca Harris/Ianniello, Denise Lancaster, Juan Lopez, Kathryn MacCallum (3), Ryan MacPhee, David Martin, David McIntyre, Caitlin Mehall (2), Susan Miller, Jeff & Jan Moore, Mark Nelson, Kathleen and Jim Nies, Sophia & Dave Nobach (2), Raymond & Julie O’Brien, Robert Pierson, Herman Raley, Pat Thomas, Renee Tracy, Ethan & Elizabeth Walrath, Chris & Kim Ward, Mike Weil, and Jim Wolf.
John Baird, Roger Breeze, Daniel Buhr, David Carney, William Hanson, Richard Griffin, Charles Jamerson, Jeff and Shellee Potocki, Andrew Rigazio, Audrey Saunders, Robyn Hoffman Smith, Vicki Streit, Jennifer Swalin, Louis Thomas, and Steve Walter. (Two members present by proxy were not in good standing so their proxies were not counted.)
Notice of the meeting was sent by mail and was also posted on the website and the bulletin board.
The proxies were available for members to review at any time during the meeting.
The vote on the $1300.00 assessment began as soon as members received their ballots.
The meeting was called to order at 3:30 P.M. by President, Karl Ruether.
Verification of the Quorum
The number needed for a quorum was 39. The total number of members present in person or by proxy was 68, which represented 69 lots or possible votes, thereby satisfying the number needed for a quorum. The number needed for the assessment to pass was a majority of the total number of members present or represented by written proxy. 51% of 69 is 35.19.
Engineer, John Torrence
John Torrence was invited to speak to the membership about our reservoir replacement project. He designs a lot of small rural water systems and is the engineer that prepared our Project Report for the Department of Health. We would like him to design our new reservoir. He began by explaining the components of our water system and continued by letting us know that our reservoir is on borrowed time and that the situation is critical. This prompted a lengthy discussion with the membership.
The discussion included questions about logistics, design, structural integrity of current reservoir, consequences of pump failure relating to stand-by storage, State requirements for connecting more lots, why installing a bladder and other interim ideas were not recommended, how long a new reservoir would last, and why waiting for a very expensive structural analysis is not a good idea. Members were invited to hike up to the reservoir to see the condition it is in for themselves. They were warned not to walk on top of it.
Review of Question and Answer Sheet
Tom Freeburg reviewed a Question and Answer sheet about the proposed reservoir replacement project with the membership. This included why the reservoir replacement project is so important right now, which members are currently paying back the loan, our current financial situation, why a special assessment is being proposed, who will pay the assessment, and any other major issues or changes that may come. The Question-and-Answer sheet is attached to these minutes.
Membership discussion included why Fire District 6 will not use our system and how a new reservoir would solve that problem, the pond being used as fire suppression for forest fires, and members being dropped from fire insurance.
Continued discussion included the hardship an assessment would be on members who own multiple lots, the ways in which costs and fees have already been raised on a gradual basis over the years, descriptions of what our system used to be like before any improvements, the original loan bids coming in too high with reservoir included, the benefits to all lot owners whether or not they are connected to the system, a short history of the 2009 original loan process, what the new loan process may entail, and how the longer we put this off the more expensive it will get.
We also discussed the post card that was mailed out to the membership for feedback on an assessment to pay out right for the new reservoir and the response to it, possible payment plans to make it easier for owners of multiple lots, time frame from funding to actual building of the new reservoir, and the consequences should the current reservoir fail.
The last call for ballots to be cast and placed in the ballot box was made at this point. The ballots were counted by Kim Ward, Susan Miller, and Peggi Lopez. 56 members voted to accept the $1300 assessment and 11 voted to reject it. The assessment passed.
Karl Ruether announced the results, and the meeting adjourned at 5:05 P.M.
Frequently asked Questions and Answers about the Proposed
Valleyhi Reservoir Replacement Project
Your Valleyhi Community Club volunteer board of trustees always works with our water manager and other professionals to maintain the overall operation of our shared water system. Currently, we think it best to start with some common understandings.
Why is the Reservoir Replacement Project such a hot topic right now?
Since the creation of the Valleyhi community the major interest for each set of board members has been the status of our water system. In 2009 all the distribution, main lines, and connections were updated, and meters and hydrants were installed. This was all funded by a Washington State Drinking Water State Revolving Fund (DWSRF) loan. With a principal of $734,181 and interest of $108,333 at 1.5%, the loan is to be paid back over 20 years. Our current balance is $194,385. We are on schedule to pay off this loan in 2028.
We all rely on a 20,000-gallon reservoir, built in 1978. It surely has a limited life left in it. The fire department limits their use of our fire hydrants because of their genuine concern about damaging our system. This means water must be hauled by truck from Peshastin or Monitor to fight any fires that break out in Valleyhi. In addition, the State’s Department of Health will approve only a small number of new connections without replacing the reservoir. These factors, combined with rapidly rising construction costs, and the possibility of lower interest rates from the DWSRF, make the reservoir replacement project a special focus right now.
Which members are currently paying back the 2009 loan?
Since 2009 only lot owners that were connected to the water system and receiving water were paying back the loan via their annual water system bill. Regardless of the volume of water used, the cost was the same for everyone connected. According to our bylaws, each of us has an ownership share in the water system. Also, we are not charged for how much water we use; we are charged only for the cost of maintaining the water delivery system. Three years ago, the Board started raising the connection fee so that additional lot owners wanting to be connected would begin paying a share of the cost of paying for our 2009 loan. The connection fee with a vault already installed is currently $5,817.
What is our current financial situation, and why is a special assessment even a current topic?
The best rough estimate for a 128,094-gallon reservoir (the minimum size required by DOH for the maximum number of Valleyhi connections) is $545,000. We currently owe $194,385. As of July 1, 2024, calculations by our accountant indicate we will have $114,424 on hand. These funds will go towards our monthly operating expenses, anticipated expenses for a new loan application, permits and start-up costs. Given that the interest rates are beginning to come down a little and knowing that construction costs are only going to increase, a reservoir construction project is an issue ripe for action. A reasonable community-wide assessment of $1300 would make this project possible soon. Once the 2009 loan is paid off, we can apply for a new low-interest loan from the WA State Drinking Water Revolving Fund.
Who will pay the assessment?
The Board sent out a survey in March asking community members to pay up front for the new reservoir. Members were asked to choose whether only members connected should pay or whether all members should pay. Members representing 44% of the lots in Valleyhi responded. 34% wanted all lots to pay and 10% wanted only connected lots to pay. This was valuable information, and we appreciate the response.
Based on the response, we learned that we need to apply for a new loan for reservoir construction. A larger reservoir will increase fire protection in our area. A larger reservoir will allow all lots to be connected to the water system. More available water will increase the value of every lot, which is why all lots should contribute to the repayment of the 2009 loan and any new loan too. This is a change from the current practice.
Are there any other major issues or changes coming?
Yes, there will have to be some more changes. At some point in the future there will have to be a charge for water usage, above and beyond paying for our water system infrastructure. The state regulations are part of this change, but equitable treatment of all lot owners is also a major factor. It is quite likely we will have to create a tiered water fee, meaning that those who use the most water will pay a higher fee than those who use less.