20091211Decision Memo.pdf

DECISION MEMORANDUM 1
DECISION MEMORANDUM

TO: COMMISSIONER KEMPTON
COMMISSIONER SMITH
COMMISSIONER REDFORD
COMMISSION SECRETARY
COMMISSION STAFF
LEGAL

FROM: SCOTT WOODBURY
DEPUTY ATTORNEY GENERAL

DATE: DECEMBER 10, 2009

SUBJECT: CASE NO. TRH-W-09-01 (Troy Hoffman Water)
SALE OF COMPANY

On November 12, 2009, an Application was filed with the Idaho Public Utilities
Commission (Commission) requesting approval of the sale of Troy Hoffman Water Corporation
(THWC) by Bentwood Park LLC to Dalton Square LLC. Dalton Square will operate the THWC
as a corporation and continue to operate under the THWC name. The Application is solely for
approval of the change of ownership.
Dalton Square is familiar with the Commission’s regulatory authority and rules and is
prepared to abide by existing directives. They are aware of the Commission’s website and have
made themselves familiar with the Utility Customer Relations Rules (IDAPA 31.21.01) and
Utility Customer Information Rules (IDAPA 31.21.02.). Dalton Square is familiar with the
water system testing requirements of the Idaho Department of Environmental Quality and is
prepared to fulfill those ongoing requirements.
Dalton Square represents that it has the business experience, financial ability and
water system expertise to operate and maintain the system. Dalton Square is owned by Ron
Stadley and Ken Murren and was formed in 2006. Dalton Square owns light industrial buildings
for rent in Coeur d’Alene as well as apartments for rent in Plummer. Mr. Stadley has been the
water master for THWC since 1995 and is qualified to operate a pressurized potable water
system, both through his hands-on experience of handling the day-to-day operations,
maintenance and emergencies as well as through being licensed as a drinking water operator
DECISION MEMORANDUM 2
which requires ongoing continuing education classes. Mr. Stadley holds a current Drinking
Water Operator License. Mr. Stadley has also been an electrician since 1988 and owns his own
electrical company. He holds a master electrician license in four states. Mr. Murren has 25
years of experience in commercial and residential construction. He owns a general contracting
and landscaping business and specializes in custom homes. He is currently in the process of
preparing to take his tests to receive both his Drinking Water Operator License and Backflow
Assembly Tester License.
There is no deed transferring title to the water system because THWC is the
corporation owns the real estate and Dalton Square is purchasing the corporation. Included with
the Application are copies of the Purchase and Sale Agreement between Bentwood Park and
Dalton Square. The transfer of ownership took place April 1, 2009. Also included is a copy of
the Drinking Water Operator License held by Ron Stadley, a copy of Dalton Square’s Certificate
of Existence from the Idaho Secretary of State, and a copy of the Idaho Tax Commission’s 2009
Valuation of THWC for $16,081.
The Purchase and Sale Agreement, Attachment A, shows the purchase price of
$65,000 as the value the seller and buyer agreed upon for sale/purchase of THWC. Dalton
Square acknowledges that they are aware that the valuation of the system by the Commission
will be the basis established by the Commission at the time the present rates were established
adjusted for additional depreciation and improvements. Dalton Square understands it is their
responsibility to justify any additions to the valuation.
Included with the filing also is a brief business plan which explains how Dalton
Square intends to incorporate the THWC into their other business interests and a copy of notice
sent to customers on November 10, 2009, informing them of the sale.
Dalton Square acknowledges that it understands that accounting for the water system
must in accordance with the Commission’s Uniform System of Accounts and must be
maintained on a stand-alone basis separate and apart from any other business activities of the
buyer. It is the intent of the buyer to continue to use the services of All Service Electric to do the
billing for the water system and to complete and meet the Commission’s accounting
requirements. All Service Electric has been doing the billing for THWC for the last three years.
Bentwood Park and Dalton Square request that the Application be processed under
Modified Procedure.
DECISION MEMORANDUM 3
COMMISSION DECISION
Filed with the Commission is an Application for the sale of Troy Hoffman Water
Corporation (Certificate of Convenience and Necessity No. 280). The Company and Staff
recommend that the Application be processed pursuant to Modified Procedure. Does the
Commission agree with the recommended procedure?

Scott Woodbury
Deputy Attorney General

bls/M:TRH-W-09-01_sw