yarnell water improvement association 2018 annual report

YARNELL WATER IMPROVEMENT ASSOCIATION 2018 ANNUAL REPORT

IMPROVING THE QUALITY OF LIFE FOR OUR COMMUNITY.

PROVIDING THE HIGHEST QUALITY, SUSTAINABLE WATER TO OUR CUTOMERS


PROVIDING THE HIGHEST QUALITY, SUSTAINABLE WATER TO OUR CUSTOMERS.

Copyright 2019 YWIA © All rights reserved. 03.23.2019

Contents

Board of Directors & Staff _____________________________________________________________________________ 3

Claude Mattox, President: State of the Association ________________________________________________ 4

Jerry Postema, Chief Operating Officer: Corporation Report ____________________________________ 6

Steve Kremer, Treasurer: Financial Report ________________________________________________________ 6

2017 - 2019 Budget Comparison ____________________________________________________________________10

Special Recognition ____________________________________________________________________________________16

Company Information _________________________________________________________________________________16




Board of Directors, Corporate Officers & Contractors

CLAUDE MATTOX, PRESIDENT & CHIEF EXECUTIVE OFFICER

STEVE KREMER, VICE PRESIDENT & TREASURER/CHIEF FINANCIAL OFFICER

JERRY POSTEMA, DIRECTOR & CHIEF OPERATING OFFICER

EMAD MOHIT - DIRECTOR

TIM O’DAY – DIRECTOR

TOM COLUMBUS – DIRECTOR

TERRI DENEMY, SECRETARY/CHIEF CORORATE OFFICER

SHERRI FAGAN, GRANTS ADMINISTRATOR

AQUALITY WATER: FIELD & BUSINESS OPERATIONS

• PAT CARPENTER, PRESIDENT & CHIEF EXECUTIVE OFFICER

• FLETCH WILES, FIELD OPERATIONS

• WALLACE UTILITY BILLING SOLUTIONS, BILLING & BUSINESS ADMINISTRATION, CHERYL IBBOTSON

VALENTINE ENINGERING, TERESA VALENTINE, MANAGING PRINCI CPAL




Claude Mattox, President: State of the Association

Yarnell Water Improvement Association’s

word for 2018 is progress. We have made

progress on many of the opportunities we

have been talking about over the last several

years.

We are actually seeing work done with our

USDA and CDBG grant funds. Badly needed

renovations and repairs of our aging water

system and replacing old laterals, meters and

valves. These improvements will help make our system more reliable, address constant leaks and will

ultimately save us money on emergency repairs. Jerry Postema (Chief Operating Officer) will give

more details in his statement.

The change to our business operations contractor, Wallace Utility Billing Solutions a professional

accounting firm specializing in water utility accounting, has paid dividends with better customer

service availability, more options to pay your monthly bills and keeping our books in order.

Additionally, our business operations contractor has worked closely with VP/Treasurer Steve Kremer

and our CPA (Ullman and Associates P.C.) to complete a review of our 2017 financials. We are happy

to say that we are confident our financial books are correct and now meet professional accounting

practices for water utilities and the Arizona Corporation Commission standards. Steve will provide

more information in his report.

We adopted a 5 year Capital Improvement Program (CIP) for 2019 – 2024, which will be updated

annually. This will help us identify and prioritize projects we need to complete our current

infrastructure program and to maintain the quality and service of our water company. The CIP helps

us develop our annual budget and will assist in determining revenues needed and grants we can

target to complete the job.

Your Board takes its role very seriously and understands the many pitfalls that can easily derail a

small water system. To reinforce our individual and collective dedication to professionalism,

integrity, transparency, accountability and above all assure your board now and in the future is

putting the best interest of the water system above individual personal gain; we have adopted a new

Oath of Office, a Board Code of Ethics & Professional Conduct, and revised Conflict of Interest and Gift

Disclosure Policies. These items represent significant institutional measures to assure the high

standard of service we feel the YWIA board must provide to the community for the water company

to remain financially solvent and operationally sound. I look forward to the board standing together

and taking the new oath of office in front of you, the members we serve.




A Quality Water continues to do a great job keeping our system operating, we appreciate their hard

work. While keeping the system operating is their primary focus, much of their work is dealing with

non-routine repairs due to the age of our system. They are working directly with our engineer,

Valentine Engineering, and various contractors on the grant infrastructure work.

To stay on top of what YWIA is doing and to maintain communications with you, our members, go to

our newly renovated website at www.yarnellwater.org, or like us on Facebook . Terri Denemy

(Secretary) has been our social media and web expert, building our webpage and enhancing our

connectivity and transparency; posting monthly meeting agendas and minutes, annual budget,

financial review, board member bios and information to keep you aware of the company’s and Board’s

activities.

I want to thank Rod Saubel who produced the Yarnell Water Video, “Yarnell Arizona, Where the Desert

Breeze Meets the Mountain Air”. It is an exceptional video about our community and water company

showing the beauty of our town. The video can be found on the YWIA YouTube channel. To view the

video you can go to yarnellwater.org for the link, or go to YouTube.com and search for YWIA, Yarnell

Water Improvement Association or Yarnell Water. Thank you Rod for an excellent job.

As always, our monthly board meetings are open, you are welcome to join us the 4th Saturday each

month at 9:00AM at the Yarnell Community Center (unless otherwise posted).

Last, but not least, I want to thank the others who have been a big part of our progress this last year;

Board Members Emad Mohit, Tim O’Day and Tom Columbus, and Grants Administration Contractor

Sherri Fagan. The focus of YWIA continues to be “Improving the quality of life for our community” by

“Providing the highest quality, sustainable water for our customers”.

2018 was a year of progress, 2019 will only get better!




Jerry Postema, Chief Operating Officer: Corporation Report

2018 has been a year of progress and change! Progress and change to benefit the communities of Yarnell and Glen-Ilah for decades to come! A significant milestone for our recovery and long-term sustainability was in the influx of USDA and CDBG grant funds. Combined these grants represent just over $1.3 million investment in YWIA’s infrastructure. The grant projects have been going full force since August of 2018, with several portions of the projects already completed.

The USDA Project: United States Department of Agriculture (USDA) Grant funds six major infrastructure projects:

• Replace/rebuild the Air Relief Valves (ARV) and the Pressure Reducing Valves (PRV), • Replace and rebuild the booster pumps, • Clean and rehabilitate the well, • Clean and repaint the North Tank, and add cathodic protection to both tanks, • Restore the water tank access road, • Replace the watermain, valves and water service laterals on Norton.

The Booster Pump replacement and rehabilitation have been completed. The booster pump is located at the well site and pushes water from the well into the distribution system and no longer worked reliably or efficiently. The parts for the Pressure Reducing Valves and Air Relief Valves are in our stock and waiting to be installed. The Well Rehabilitation and cleaning has been awarded and the work scheduled to begin later this month. The water tank rehabilitation project was bid, low bidder approved by USDA and we are currently waiting to award final contract for work to start when the air temperatures allow. The Norton watermain, valves and service lateral replacement has been designed and sent to USDA for final approval, so they can be sent out to bid. The water tank access road is in the design phase, then it will go out to bid as well. The design will include stormwater abatement. These six projects represent major components of our infrastructure and a long-term investment in the future of our water system. The CDBG Project: We also received funding through a Community Development Block Grant (CDBG) to replace over 100 water service laterals, meter assemblies and meter boxes. A service lateral is the water service line from the main to the easement, the meter assembly which includes the curb stop, the meter, the meter box and the customer side valve at the property line. With 423 active accounts, this represents a new service infrastructure for nearly one of every four customers! As of March 2019, over half of the water service laterals, meter assemblies and meter boxes have been replaced. The project should be complete around the end of April/first of May 2019.




5 Year CIP The YWIA Board has approved and adopted a 5-Year Capital Improvement Plan (CIP). The plan outlines infrastructure priorities and establishes dedicated funding. The plan can and will change when priorities shift as new things happen with the water system and additional funding options arise. The other reason for having a plan in place is to open opportunities for more grants. One of the critical considerations in grant awards is being able to show you have identified a need and have a plan adopted by the Board to fund those needs. This gives us a huge advantage when the grants are scored. A copy of the newly adopted CIP is available for you to look at in the back of the room. AzWARN Membership

We are happy to announce YWIA is a member of the Arizona Water/Wastewater Agency Response Network, known as AzWARN. This network, like Fire and Police, allows water systems to provide mutual aid to each other during emergency situations. There is no cost to be a member and it is up to each agency when contacted if they can provide assistance and if they want to be reimbursed for any resources that are shared.

The strength of any water system lies in quality infrastructure. The grant work represents an enormous investment in our system’s infrastructure with long term and short-term maintenance, repair and replacement plans. Overall it has been a year of progress, improvement and working towards a better, sustainable water system for the community.




Steve Kremer, Treasurer: Financial Report

Introduction

YWIA completed a third consecutive year of net positive earnings in 2018. We are continuing to strengthen the financial status of the company through careful management and a strategy of cost containment. Fiscal year 2018 was marked by several one-time expenses that are investments in the company’s future and further stabilization the company’s finances. Last year the company established policies for maintaining

financial reserves, and all of the reserve goals that were established by the Board have now been met. During the coming year we will be working to develop low risk and short-term investment opportunities to enhance revenue generation to augment our revenue from the sale of metered water.

Accounting, Business Management, Tax Preparation

Our financial reporting is made possible with the assistance of three professional contractors. Heather Gordon, CPA of Ullman & Company has led the extensive financial review of our company. Cheryl Ibbotson serves as our business services manager, and Cynthia Wallace provides us with tax preparation services. These three professionals have extensive experience working with water utilities, and have greatly assisted YWIA through their insights, consultation and service.

The Numbers

Provided with this report is a spreadsheet that details the actual expenditures for the company for fiscal years 2016, 2017 and 2018. The spreadsheet also details the 2019 budget approved by the Board of Directors. Our revenue from metered water sales was up slightly to $302,076. This was in part due to a small increase in the number of accounts as well as greater usage by existing customers. Our operating expenses for FY2018 were $263,189. This included some substantial one-time expenses that were related to our substantial USDA grants. An example of this is the $10,405 spent on legal fees for verifying our legal right of ways to complete work. This money will be returned to us through the grant if our contingency funds exist following construction. Additionally, we spent $15, 225 for financial review and auditing services. This included costs associated with substantial corrections to previous fiscal years. The contract for the current financial review is substantially lower due to the extensive work that was accomplished during this past year’s review. A final one-time cost associated with the USDA grants was the expenditure of $36,060 for non-routine facilities work associated with scheduling demands associated with our grant and work by the county on Yarnell roads. With these expenditures, YWIA was still able to achieve net positive earnings for 2018 of $40,682.

The reviewed financial statement for FY 2017 details net assets and liabilities of $1,658,289. The unreviewed financial statement for FY 2018 details net assets and liabilities of $1,714,256. Our long-term debt at the end of FY2017 was $686,555, and at the end of FY2018 was $671,282.




The total cash position of the company at the end of 2018 was $325,777. This represents a year over year increase of $30,119.

Fiscal Year 2019 Budget

The FY2019 Budget anticipates another year of net positive earnings on a projection of $297,550 in total gross revenue. Our projected lower gross revenue is based upon consideration of weather conditions and flat to very low growth in our number of customer accounts. The Board has approved the expenditure of $25,000 for Capital Improvement Projects. The Board has also budgeted $5,000 for Administrative Support related to grant management. Finally, the FY2019 Budget anticipates lower expenditures for legal and financial services.

Long Term Financial Outlook and Challenges

The short-term financial outlook for YWIA is positive. After many years of net losses, YWIA has stabilized through an increase in net revenues as a result of an aggressive cost containment strategy and the 2016 ACC rate case. Increases in the quality of business services and long-term capital investments in our infrastructure should continue on pace while sustaining the financial stability of the company during the next 2 to 3 years. Increases in the rate of inflation in a context of slow (or no) customer growth is the core challenge that could erode stability resulting in the need to increase rates in the future.




Special Recognition

Company Information

Yarnell Water Improvement Association 22609 Lookaway

PO Box 727 Yarnell, AZ 85362

(928) 445-0551 [email protected]

Visit our website: Yarnellwater.org

mailto:[email protected]

http://yarnellwater.org/

yarnell water improvement association 2018 annual report

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