Board Minutes February 2024

The Board of Directors of the Snake River Water District (SRWD), Summit County, Colorado, met at the district offices at 0050 Oro Grande Road and via online Zoom conference on February 13, 2023, for their regular quarterly meeting. The meeting was called to order by Scott Price at 4:00 p.m.



The following members of the Board of Directors were present at the meeting, constituting a quorum: William Bergman - President; Char Bloom - Secretary; Randy May - Treasurer; Bill Bowerman - Vice President; Steve Bushkuhl; and Scott Thisted. Also present: Steve Martin – Volunteer for Board Appointment; Scott Price – District Administrator; Ron Mentch – Superintendent of Operations; Dan Teodoru – Legal Counsel for the District; Donna Svenson – Financial Manager; Alec Bry – Lead Engineer, Tom Peltz – Bond Counsel, KutakRock; Mike Hark – Bond Underwriter, MCMG; Barb Winkler – Bond Underwriter, MCMG. 


Mr. Price introduced Mr. Martin to the attendees as a qualified volunteer that is willing to serve on the Board of Directors. Mr. Martin introduced himself and explained why he would make a good Board member. After questions and discussion, everyone agreed that Mr. Martin’s community service to the new Town of Keystone and Snake River Planning Commission would be helpful to SRWD. Mr. Price commented that Mr. Martin has his copy of the Master Plan, and he has invested time already to understand the District by coming into the office and discussing the status of projects, priorities in the Master Plan, and the financial model. The Board members asked Mr. Martin to attend the May Board meeting which will include an agenda item to consider an appointment to the Board. Mr. Martin agreed and thanked everyone for their consideration.



Mr. Price reviewed the information in the packet regarding the November Board minutes and the three Transaction Detail Reports. President Bergman asked if anyone had questions or comments regarding the minutes. 


Director Thisted made a motion to approve all items on the Consent Agenda. Vice-President Bowerman seconded. The motion passed unanimously.



Mr. Price summarized the Board’s previous activities regarding the funding of the Master Plan, and the decision to pursue a bond offering rather than loans. He reviewed the work conducted with KutakRock and MCMG in the process of offering bonds. Several complex documents were produced for the purpose of accurately representing the District’s Master Plan, capital needs, financial situation, historical perspective, and strategic vision. The meeting with Standard & Poor’s went well, and the District received an “A” rating. Mr. Hark expressed that the District had exceeded expectations for the rating, and he commended the staff for their outstanding job on the documents and presentation to S&P. Mr. Hark led a discussion regarding bond insurance and whether the cost would be beneficial overall. Mr. Teodoru recommended that the insurance be purchased. Mr. Hark stated that he anticipated favorable quotes from insurance companies for an “AA” rating. He explained that the insurance will give the institutional investors comfort that the rating will not change in the future. He described that the Official Statement will be posted on Bloomberg for a week. After that, his team will go to the market and sell the bonds. He explained that the process is flexible in a two week window in March. He estimated that the interest rate to be paid on the various bonds with maturities from one year to twenty years would average about 3.5%. The Board discussed and agreed that this rate would be a tremendous benefit to the District. 


Mr. Price reminded the Board that the proceeds will be approximately $29 million and $3 million will be used to pay off the Holman/Fresno loan. Mr. Hark mentioned that the analysis shows that the payoff will be a net benefit to the District. 


Mr. Peltz introduced himself as a partner at KutakRock. He serves as Bond Counsel to the District. His team assisted in the documentation with Mr. Price and Ms. Svenson. Mr. Peltz reviewed the documents included in the packet. He explained that there is a required Board Resolution to establish the parameters such as maturity rate, interest rate, and insurance. The Official Statement is like a prospectus, and it has a lot of important information for investors. The Official Statement is complete, but the Bond Purchase Agreement (BPA) will lock in the final financial terms. The Sale Delegate, either Mr. May or Mr. Price, will sign the BPA to lock in the terms. He provided details and answered questions related to the Official Statement, Bond Purchase Agreement, the Bond Resolution, Refunding Escrow Agreement, Sale Delegates, and Paying Agent Agreement. The Paying Agent Agreement is to make a bank the intermediary to the market which makes payments of principal and interest on the bonds. 


Mr. Peltz described how the bonds will pledge the net revenues of the water system, and there will be no lien on the District’s systems. The District is promising to raise the rates and charges if it needs more cash to make the payments to the bond investors. The rate covenant is in the Bond Resolution. The Board needs to vote to approve the Bond Resolution. He also explained that the Board is committing to keep $5 million in funds to make the bond payments. 


Mr. Teodoru explained that the Board would need to raise rates to keep reserves in excess of 1.2 times the annual bond payments. He recommended the Board approve the Bond Resolution first and then vote on the other documents.


Mr. Hark answered questions regarding the financial aspects of the bond offering. He explained the annual debt service, paying off the $3 million Holman/Fresno loan, use of the proceeds for projects, cost of issuance, early redemption of bonds, disposition of proceeds through BOKF into a new dedicated ColoTrust account, permitted investments, arbitrage rebates, obligations for ongoing reporting, and how the bonds would be priced by his team.


After much discussion, Board members expressed their gratitude for all of the attention to detail by the staff, the attorneys, and the underwriters. Mr. Bergman asked if anyone had any reservations about this course of action, and everyone conveyed their support for this funding approach. The group believed the District was getting an exceptional financial deal that would position the organization to provide a world-class water system to Keystone for many years to come. 


Ms. Bloom made a motion to approve Resolution #2-2024 for the purpose of issuing revenue bonds as presented in the packet. Mr. Bushkuhl seconded. The vote was conducted by asking each Director to vote independently, and each Director voted to approve the motion. 


Mr. Teodoru recommended that the Board vote on the Section 14 amendment for the insurer BAM to use the language “substantially in form” if BAM was chosen later as the insurer when the quotes were received.

Mr. Bowerman made a motion to accept the amendment as proposed. Ms. Bloom seconded. The motion passed unanimously.


Mr. May made a motion to accept all remaining documents as presented in the Board packet. Mr. Thisted seconded the motion. The motion passed unanimously.


Mr. Teodoru recommended that the Board appoint Mr. Bushkuhl and Mr. Thisted as Assistant Secretary. The benefit would be if documents need to be signed during the closing process, and if Ms. Bloom was not available, it would be more expeditious to have a Secretary readily accessible. Mr. Bergman agreed that there may be times when Ms. Bloom may need to travel for family reasons, and he stated that he had confidence in the other Board members to assist because they have a thorough understanding of the District’s business and activities. 


Ms. Bloom made a motion to appoint Mr. Bushkuhl as Assistant Secretary. Mr. May seconded. The motion passed unanimously, and Mr. Bushkuhl abstained.


Mr. Bowerman made a motion to appoint Mr. Thisted as Assistant Secretary. Mr. May seconded. The motion passed unanimously, and Mr. Thisted abstained.


Mr. Price asked Mr. Peltz if there were any additional actions that needed to be taken by the Board. Mr. Peltz said no, and he commended Mr. Price and Ms. Svenson for doing an excellent job throughout the process. He explained that the staff will have additional work going forward because of the bonds. He mentioned the “continuing disclosure” that will be reporting submitted to the proper governmental agencies so that investors are kept informed of the District’s financial situation. He also mentioned the need to keep track of the interest earned and that an arbitrage rebate will need to be calculated and paid to the federal government. 


Mr. Teodoru commended the Board and staff on being so proactive in addressing system improvements in the Master Plan. He stated that the District is better positioned than ever before to continue providing quality water to the customers. 



Mr. Price reviewed the complaint against the state. He explained that neither party is disputing facts, and the problem is how the State Engineer is interpreting the rules regarding the Green Mountain Reservoir Historical User Pool. Mr. Price introduced an additional water rights attorney, Mirko Kruse, who is assisting Mr. Porzak.


Mr. Bushkuhl asked about the diversion accounting in Mr. Oberheide’s report. Mr. Mentch and Mr. Price explained the basics of how augmentation plans work relative to water diversions. 



Mr. May directed the Board’s attention to his update in the packet. The Schoolmarm Transmission project went well. Vail Resorts and the USFS were helpful as we worked. He stated that he is working to finalize the approval by USFS for the preferred location of the new Base 2 Storage Tank. He described that the CWP is concerned about an elk corridor, but that elk herd has not been in the area for several years. SE Group, the consultants, are confident that the USFS is addressing the issues. The District hired a wildlife biologist who reported no concerns with the elk.


Another major project is to modify the Base 2 Water Plant to improve the chlorine gas and soda ash processes. Several alternatives exist to improve safety, expand storage, replace the compressed tanks, and increase efficiency. He is working with AE2S to design the best solutions. 


Mr. May stated that the Loveland Pass Village project will be constructed this summer. AE2S is finalizing the engineering design. An agreement with a contractor is being concluded with Mr. Teodoru’s assistance. Questions were asked about the history of LPV and its relationship to SRWD. Mr. Price gave a brief summary of how LPV had its own water district which was out of compliance with CDPHE in the 1990s. When the SRWD Base 2 water plant was completed, a deal was struck to sell LPVWD water via pipes connected near Rasor Drive. Eventually, another agreement resulted in the payment of tap fees by the homeowners in LPV, and those houses became a part of SRWD. Thus, the District inherited old infrastructure that needs replacing. Mr. May stated that it will be a challenging situation this summer. He estimates construction to take place in August and September. Storage of materials will be a problem. Temporary water lines will be used. 



Mr. Price referred the Board to the report in the packet. He stated that the new billing system has been successfully implemented and acceptance testing conducted. The billing functionality is working correctly. Additional training and configuration will be conducted as needed. The new online customer portal has not been set up, but it will be made available after the April billing. Ms. Bloom asked if it would allow autopay. Ms. Svenson answered that autopay is available and customers can pay a bill with a credit card. She added that the customer will pay credit card fees. The current ACH process will continue as is, and there is no charge to customers.


Mr. Price provided an update on the Aclara conversion. He explained that their company was forcing the District to move to the cloud based software. There have been problems with networking connections which require new modem hardware and VPNs. The old system with Aclara metering is working fine until the new system is running. 


Mr. Price stated that the new Snakeriverwater.colorado.gov website went live. The old snakeriverwater.com address is permanently redirected to the new location which is hosted by a Colorado government agency. SRWD’s site is now part of the state government’s platform with the same look and feel. There is no cost to the District for the platform hosting. The content has been remediated to meet the new state law which goes into effect on July 1 for accessibility. The SRWD site is ready, and it is a simpler system.


Mr. Price provided an update on the PFAS detection project. He stated that sampling and testing is continuing, and the District is in the second year of EPA testing. The testing of each well will also continue under the task order with AE2S, and Mr. Bry gave an update on the test results received in the prior week. Mr. Price stated that the District has partnered with CDPHE and was awarded $45,000 in grants to help pay for testing. Mr. Bry said the lab testing of each well is voluntary, which is in the grant. Mr. Price stated that the District has applied for a grant to pay for a feasibility study to evaluate treatment options. The District is posting on the website as new information becomes available. There was a discussion about PFAS news articles, other districts, and hot spots around the state. 



Mr. Mentch reviewed his memo to the Board. He explained the bar graph and answered questions about water production and leak detection. He stated that the 2023 data is skewed because of the tank being offline. He explained some historical leaks in LPV. He answered questions about leaks, using outside leak detection services, and the costs to fix leaks.



Mr. Price reviewed the quarterly P&L and Balance Sheet. He explained items of interest that are highlighted in his memo in the packet. There was a brief discussion regarding the interest earnings and the impact of bond proceeds. Mr. Thisted commented on the extraordinary financial position of the District. The Board members agreed that SRWD was truly fortunate to have the resources to implement the necessary system improvements and address the PFAS problem. Mr. Teodoru stated that SRWD is in a better position now than ever before because Mr. May and the staff have provided wise guidance strategically while managing expenses tactically.


Ms. Bloom made a motion to accept the fourth quarter financials. It was seconded by Mr. Thisted. The motion passed unanimously.



Mr. Bergman asked if the Board members could attend a spring dinner in late March. Everyone expressed their availability and desire for a dinner event to celebrate the success of the District. 



Mr. Bushkuhl made a motion to adjourn. It was seconded by Mr. Bergman. The motion passed unanimously. Mr. Price adjourned the meeting at 5:50 p.m.


Respectfully Submitted, 
Scott Price 
Recording Secretary 

Approved by the Board of Directors 
Scott Thisted 
Assistant Secretary