20250818Comments_2.pdf

From: [e-mail] <[e-mail]>
Sent: Friday, August 15, 2025 7:02 PM
To: secretary<[e-mail]>
Subject: RE: Case No.VID-W-25-02, Public Hearing Testimony
Greetings,
I wanted to make sure I complied with all the submittal requirements in this case.
This case had a public hearing on 8-14-25 in Sandpoint.
I gave oral testimony and had written exhibits to compliment that testimony.
I provided a total of 2 paper copies to the Court Reporter and the Commissioners. I read in
the rules that I may have to submit 3 copies and one a-file.
Can you please accept the attached two documents as my submittals for compliance for
the Exhibits at the Hearing and my printed copy of my testimony?
Thanks much.
Sincerely,
David Frohnen
545 Green Monarch Lane, Sandpoint, Idaho
Mailing: 105 Vermeer Drive, Suite 2-302
Ponderay, Idaho 83852
[e-mail]
[phone]
1

David Frohnen
545 Green Monarch Lane, Sandpoint, Idaho
Mailing Address: 105 Vermeer Drive, Ste 2-302, Ponderay, ID 83852
[e-mail]
August 14, 2025
RE: Idaho Public Utilities Commission Case No. VID-W-25-02
Valiant Idaho/TIC Utilities, LLC's — General Rate Case
Testimony of David Frohnen
Introduction:
My name is David Frohnen. My address is 545 Green Monarch Lane. Together
with my spouse, Christine Frohnen, we own a residence in The Idaho Club —this is
our only house. We have no business connections to the Applicant or any
affiliates. I'm speaking today as a property owner and concerned customer. I
am an engineering graduate of the University of Idaho and, after working in
several western states — we look forward to settling in North Idaho. I also earned
an MBA degree from the University of Portland with an emphasis in finance and
business management. I have a current Professional Engineering License and
formerly practiced in the areas of water and land development. I was a certified
water operator in 3 states and served as state-wide manager for a major national
water utility. I have utility accounting and rate case experience and have
appeared multiple times before 4 different state commissions.
Thank you for the opportunity to present testimony in this case and thank you for
coming to Sandpoint. I will also note that, although the public participation has
been reasonable, there is a "fear of retribution" that has dampened participation.
The provision of critical water service to a development such as The Idaho Club
through a private entity is a MONOPOLY. For more than 100 years, the federal
government, as well as all 50 states, have passed laws calling for the reasonable
regulation of monopoly utility services. For more than 20 years, private
companies providing water and wastewater services to The Idaho Club operated
outside the oversight of the PUC. Some would say "under the radar".
My position on the regulation of the Applicant, its predecessors, and similar
companies is; regardless of when the companies achieve full and legitimate
licensing from the PUC, they are under the authority of the PUC and subject to
statutes in Title 61, the Public Utilities Act and related regulations by virtue that
they are in-fact acting as water corporations as that term is defined in Title 61.
2

The fact that the Applicant only achieved formal licensing in 2024 does not abate
any duty to comply with the Public Utilities Act and related Statutes in the past.
Any other position excusing prior acts or non-compliance of a utility company
simply by the fact that it failed to properly register is contrary to public interest
and supports a pattern of "rewarding" certain utility companies for non-
compliance.
For now—the paramount goals are that the Utility Company meets its
obligation to provide "adequate, safe, and reliable service" and that the
Commission grants rates that are "Just and Reasonable".
I fully support the principle that the Utility is entitled to recover reasonable and
prudent operating expenses and make a fair return on its "rate base" classified
investments. It is in the homeowners' and community's long term best interest to
support a water utility that can provide adequate and stable services. I will note
that the Utility is making progress toward compliance with DEQ and PUC
requirements — however, there is more work to be done.
The question is —what rates are "just and reasonable".
My detailed analysis and recommendations are included in my comments filed
with the PUC - April 28, 2025, and a subsequent comment on August 5th. I would
like the Commission to take note of those written comments and consider them
part of my testimony.
One main theme is that the Applicant/Developer has not met all of its water
system construction and start-up cost obligations to service the full Planned Unit
Development. There are approximately 369 platted or planned lots and the PUD
is authorized for approximately 458. Currently, the PUC reports only 110
customers taking water.
It is a requirement to complete water system infrastructure in advance of lot
sales, and such costs are treated in Title 61 and Title 50, Chapter 13 "Plats and
Vacations" as "contributed capital". I take exception to the efforts to attempt to
collect monies for startup costs multiple times from property owners and
customers, as it is contrary to the public interest, violates provisions of several
Statutes and policies, and it is simply unfair and immoral.
3

From the PUC Website, there is a link to a document called CPCN Background
Information. Under the section "Rates and Rules" quote "If a company is serving
a new development, it is expected that there will be start-up losses in the
operation of the system until the number of customers has reached 75% to 80%
of the number for which the system was designed". The Idaho Club currently has
less than 30% of the lots taking water. This policy may have merit in this case.
Personal Testimony:
First some personal perspective. What have I learned? "In urban settings, the
provision of water service is taken for granted. You turn on the tap and good
water comes out. In rural settings, such as The Idaho Club, you may be advised to
NOT take that service for granted."
When my wife and I were planning our retirement home, we took several
scouting trips to North Idaho. We are both prudent and detailed decision makers
AND the idea of spending a significant amount or our "Life Savings" required
research and due diligence. We discovered that nearly all the properties of
interest to us were outside the service areas of municipalities or major water
utilities. We weighed the pros and cons of a large lot with an individual water
well and septic system versus more centralized systems via co-ops, HOA's or
private utility systems. The Idaho Club made a convincing sales presentation
about the benefits and value of its centralized water and wastewater utilities,
including public fire hydrants.
In 2021, 1 recall a conversation with our sales rep about the lot we bought in The
Idaho Club. I was told that the water and wastewater systems were privately
owned. I specifically asked, "who oversees and approves the rates and rules that
those companies charge". The answer was "some government body".
presumed this to be the Idaho PUC.
Prior to buying our lot, I reviewed the Real Estate Public Report for the project. I
found several citations that reassured us that the risk of inadequate or excessively
expensive water/wastewater service was minimal. Representations that we, and
many others, relied on included:
- The water company was authorized and under the regulation of the PUC.
- Bonner County had approved the Subdivision PUD and Plat of our
subdivision based on an existing water system that met requirements for
water quality, water quantity, and pressure.
- The water and wastewater systems were complete.
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- "Will Serve" letters had been issued by the utilities, reviewed and approved
by Bonner County.
Fast forward 3 years, when I was able to cut back my work time and focus on our
dream to move to North Idaho, we did move to Idaho. First as renters and then
finally as new homeowners in 2025.
During this time period in 2023-2024, 1 discovered that the water company had
never been granted a CPCN nor was it properly licensed to conduct business as a
water utility. Also, I discovered that there was ZERO water pressure at our house
until a year after we started construction. Then, I discovered that water pressure
was too low and did not meet IDEA requirements. You can only imagine the
sleepless nights wondering what to do after spending our "next egg" on a half-
built house with no water service. I was told a construction project would be
starting soon and, in fact, the booster pump system was activated 2 months
before our move-in in May 2025.
1 also followed the changing ownership of the water company and plans to sale
the system to various 3rd parties. Those details are important but too time-
consuming for this venue. I will say, I am categorically opposed to allowing the
system to be sold without PUC approval and without protections for the
homeowners that could likely be forced to pay two or three times for a single
water system.
So, where am I going with this? I have several points to make that challenge the
Applicant's request to set Rate Base at over $1,000,000. The net recommendation
is that Rate Base is in the range of $50,000 to reflect working capital and some
recent minor equipment replacement. All costs to establish initial adequate
water service are to be treated as "contributed capital" and outside of Rate Base.
As someone recently said to me: "Of course the developer and golf course owner
needs to put the water and sewer system in place first at his cost. Without
THAT, THERE IS NO THE IDAHO CLUB."
I have organized my testimony as replies to the PUC Staff Report.
5

Specific Comments on Staff Report Dated 8-6-2025:
PUC staff spent considerable time researching and analyzing this case. Thank
you. I agree in general with the Staff findings and recommendations. In order of
the staff's report, I have several areas that I would like to comment on and ask
the Commission and Staff to reconsider.
1. Reliability of Water System
The reliability calculations only address the water demands for the current
connected and flowing customers. Yet, the Applicant has a Certificate and PUD
for many more customers and has the obligation to serve those customers. The
Developer is required to have a completed water system in place before selling
lots. The fact that the Applicant elected to NOT purchase the past water supply
source from the previous owner does not excuse it from meeting this obligation.
Review of the numbers in Table 2, on page 4, of the staff report indicates
Maximum Daily Production (MDP) is 177 gpm. The standard for compliance is to
meet this demand with the largest water source out of service. Customers
cannot be left with no water when waiting for repairs. So, currently, with the
largest source out of service, the water supply is 279 gpm. This complies. But
only for the current customer counts (approximately 100). This customer count
will go to approximately 400 at buildout. The system does not comply at full
build-out and additional water sources are needed. It is paramount that the
Applicant have plans and financing in place to secure the needed source of
supply. AND the cost of this basic infrastructure is a "start-up" cost, that the
Commission should bar from recovery from customers in future rate cases.
2. Rate Base
Applicant has proposed a non-standard approach to apportioning system costs to
various customers based on the time of lot sales. This logic is flawed, and the
Commission should deny this approach on principle.
The Developer's proposal, as adjusted and supported by Staff, includes $435,000
of basic water infrastructure to be included in Rate Base and the Customers are to
fund an 11% rate for return on this amount to the Applicant. Roughly $50,000 per
year. This approach is in direct conflict of many utility regulatory principles and
violates several Statutes.
In theory, it appears this Rate Base proposal will call for the capital costs to serve
lots that the Applicant acquired in the 2018 Sheriff's sale to be allocated as
6

"Contributed Capital" and Applicant will allocate a portion of the lot sales price to
water system costs. However, roughly 50% of the capital costs for the water
system to date is proposed to be added to Rate Base and earn a return from the
Customers based on the fact that the Applicant was not able to sell lots sold to
others, prior to the Sheriff's sale - thus reducing the Developer's cost recovery
from lot sales. Again, this logic is flawed and should not be approved by the
Commission for many reasons. Some reasons include.
1. Forcing customers that bought lots before the Sheriff sale to fund Rate Base
is unfair to them as they have already paid for and were receiving adequate
water service from the prior water utility. Such denial of access to this
previous benefit could be construed as a "public taking."
2. Conversely, this approach is unfair and discriminatory to the new lot
owners that bought lots after the Sheriff sale. That is that "presumably" a
portion of the purchase price they paid for their lot is being apportioned
from them to cover the cost of water infrastructure for their lot. Why then
should a new lot owner pay for rate base and an 11% return on equipment,
serving other customers —this could be construed as paying twice.
3. The Applicant had and has many remedies to resolve the infrastructure
issues. Some include:
a. At the time of the Sheriff sale, acquire water sources or negotiate a
service contract with the previous water utility.
b. Properly factor in the total water system capital costs for the PUD
into the overall financial model for THE IDAHO CLUB and its many
affiliates.
c. Allocate a greater portion of the proceeds from lot sales to water
system infrastructure and less to profit.
d. Subsidize the water system costs from related entity revenues. The
Applicant has affiliates in Golf Courses, Country Clubs, a marina, real
estate sales, property management and other ventures.
Two IPUC policy documents speak to the treatment of costs for new water system
development and operations — requiring them to be "contributed capital."
- IDAPA Section 31.36.01.102 PRESUMPTION OF CONTRIBUTED CAPITAL
- AND, as discussed above, the Commission's information package for new
developments and CPCN's indicates that operating losses should be
expected until 75 to 80% of build-out.
7

Additionally, there is recent precedent and cause for the Commission to deny the
Applicant's request for "Rate Base".
In Case GSW-W-23-01, the case seeking approval of the proposed sale of the
water system from Valiant to Gem State Water, Gem State Water asked the
Commission to definitively approve Plant-in-Service treatment as "Rate Base".
The Commission did not make such an Order. Moreover, the Official Written
Commission Findings in that case includes the following passage:
IPUC Order No. 35971, Case No. GSW-W-23-01 - See bottom of Page 6.
"... the evidence in the record does not show that the Selling Parties [Valiant] or
any other entity involved in the construction of the water system have not
recovered the cost of this endeavor through the sale of lots in the area that it
serves. Consequently, all current plant-in-service of the Selling Parties' water
system shall be excluded from rate base."
Applicant is now asking the Commission to revisit this issue based on the premise
that it was not a "party" to that case. However, Valiant was a party to the Sales
Agreement that was the subject of the case and Valiant supplied all the detailed
information on Plant-in-Service costs. Also, Valiant had ample opportunity to
comment, seek reconsideration, or Appeal the Final Order as an affected party.
Valiant chose Not To. PUC rules bar this final decision from being attacked
collaterally.
There are also Statutes and Policies at the State and County Level that require the
development to have adequate infrastructure for water service prior to approval
of lot sales. Namely Title 50 Chapter 13 — Plats and Vacations AND Bonner
County planning and zoning rules. For brevity sake, these regulations require a
private water utility to be IPUC registered, the system needs to be completed, and
the capital requirements are the responsibility of the Developer and are treated
as "contributed capital".
Then, from a practical matter, we have significant evidence, and customer
comments, that developers have already collected monies from homeowners
dedicated to the water system costs as part of the purchase price of their lot.
Also, public comments (Christopher Norton comments dated 4-8-2025 at Page 4
and Exhibit 1) include evidence that the developer and owner of the water
company received an estimated $31 million of proceeds from lot sales on 130
8

Warranty Deeds to 3rd parties. This is based on an estimated average sales price
of $240,000. 1 have personal knowledge that most lots for sale were listed above
$200,000 and I have personal knowledge that some listings are approximately $1
million. And, there have been several real closings in the $700,000 range. I have
included an Exhibit to my testimony showing current vacant lot listing prices.
They range from $998,000 to $129,000, with an average of $414,000. So, the
estimate of $31 million in proceeds appears reasonable.
The Applicant paid $1.66 million for the land in the County Sheriff's sale. Surely, a
profit of $29 million could go a long way in covering the necessary water system
"start-u p" costs.
The summary of all this is that the Utility Company is required to treat ALL the
initial infrastructure start-up costs as "contributed capital" and not Rate Base.
3. Revenues (Adjustments No. 4)
In addition to the Staff's adjustment, we need to make the IPUC aware of a non-
standard billing practice and ask the Commission to order a correction.
There are many customer accounts that are flagged with a special developer
waiver of water fees. The accounting practice on this has been to NOT BILL the
customer. This practice appears to be discriminatory and understates revenue.
I suggest the Commission Order that all Customers be billed without
discrimination. To the extent the developer offered a sales incentive to certain lot
owners, the water fees due should be collected in cash from the Developer and
booked on the Utility Company's books as revenue.
Regarding construction water. We suggest that a tariff or utility rule be adopted
to formalize a policy that; "once water is being consumed at the parcel for any
use, that customer is obliged to start paying the rate for a full flowing
connection."
4. Rate of Return
With due respect to Staff's good efforts, 11% is too high. This case involves a
sophisticated developer with Big Bank, Wall Street, and private equity
connections and experience. Authorized rates of return should be lower.
9

I have prepared Exhibits providing additional data:
1. Comparables: Staff comparables have connections between 11 and 100.
Applicant is over 100 and going to 400. None of the comparables appear to
be master planned communities with related golf and wastewater issues.
2. Organizing Papers for Valiant Idaho: There is no initial funding of equity -
but loans. The balance sheet shows negative equity and debt exceeding $9
million. The commission should impute a hypothetical capital structure
based on an optimal blend of equity and debt for utilities.
3. SBA and specific Lender Interest Rates: While the SBA 7a program allows a
very high "maximum interest rate", evidence shows market competitive
rates for the 7a program or 504 program are much lower and, special
"utility infrastructure loans" at lower rates, may be applicable to this case.
Loan rates in the 6 to 7% range are more plausible.
In particular, I'd like attention on 3 recent rate case data points.
1. Gem State Water's August 2025 case. ROE of 9.8% and overall ROR of 7.51.
2. Avista's December 2024 case for Spokane. ROE of 9.8 and overall - 7.32
3. Stoneridge Water's July 2025 case. ROE of 10% and overall - 8.21%. This is
perhaps the best comparable. It is of similar size, in the same region. It is a
developer system with a golf course and similar interconnectivity issues.
Stoneridge has also been the subject of management concerns, similar to
TIC.
Based on this information, I believe a fair overall ROR is 8.2 %.
5. Taxes and Net to Gross Multiplier
There is no evidence that TIC pays any taxes. The purpose of a gross-up for
Corporate Income Taxes is to normalize and cover the "double taxation" that C-
corporations have with taxes both at the corporate level and stockholder level.
The Applicant and affiliates are all LLC's - "tax - pass through entities" and are not
required to pay income tax.
Thus, I believe it is proper to eliminate the tax gross up calculation.
10

6. Rate Design
Customer comments speak to issues of generating revenue using a flat rate
structure versus a metered rate structure. Also, the issue of charging vacant lots
needs resolution.
Every water system has its own unique features. Two key factors for The Idaho
Club are:
- The unique nature of lot purchases as investments and left vacant - some
for up to 20 years, with a water meter box set but non-flowing customers.
- The differences in irrigation use in the Golf Course homes versus the Moose
Mountain homes. And the HOA requirement for certain lots to maintain
grass lawns.
I support a rate design that:
- Allows for a basic (low) water rate for the vacant lots.
- Defers the approval for a metered water rate until Applicant makes
demonstration that the costs and revenue generated from a metered rate
reflect fixed and variable costs and addresses the irrigation needs for golf
course homes in a fair and reasonable manner.
Should the Commission proceed with an approved metered rate - the base
amount of water allowed prior to paying the commodity charge needs to be on
the order of 15,000 gallons per month.
Final Request of Commission today— Investigate the monopoly operating at The
Idaho Club providing wastewater services.
There are several interdependencies of the Applicant, and its customers, with the
wastewater system that impact the parties. These include:
- Connection of the Applicant's water treatment plant to the wastewater
system. This treatment plant is dependent on filter backwash water being
properly discharged via the wastewater provider. Without a reliable
wastewater service provider—the Applicant cannot treat the source water
to make it potable.
- Need for wastewater service to get County approvals for subdivisions and
lot sales AND for basic habitability of homes in the Applicant's service area.
- Disposal of treated wastewater for beneficial use in irrigation.
- Possible use of potable water from the Subject Case Applicant by the
wastewater system operator.
11

Recent issues with this wastewater provider are causing customers, in this Subject
Case, much anguish and concern about NOT having a habitable structure due to
lack of wastewater service or notices of violations, corrections, or rate increases.
Some examples include:
- Announcement of a 60% rate increase in January 2025.
- Moratorium on new connections with little or no notice to property owners
or contractors.
- Changed design and construction requirements for septic and pump
systems with no notice.
- Retroactive changes to requirements to septic system design, installation,
and inspections.
- In-effective customer or field services communications with customers.
- Reports of termination of sewer service by valve closures without
notification.
The Applicant in this Subject Case sold the wastewater system to this 3rd party
outside of any regulatory review.
The Company providing wastewater services in The Idaho Club is operating a
monopoly water utility company.
Title 61, Section 124 partially defines "Water System" as one that provides water
facilities for" ... irrigation, reclamation, manufacturing or for municipal, domestic
or other beneficial use for hire." The wastewater system meets this definition.
Furthermore, Title 61, Section 125 partially defines a "Water Corporation" as an
entity that operates "... any water system for compensation within the state."
Again, certainly the wastewater utility at The Idaho Club meets this definition.
Thus, the wastewater utility is under and subject to Title 61, Public Utility
Regulation.
Since the provision of wastewater service is integral to any Idaho Club customer
receiving water service, I believe it is entirely appropriate for the Commission to
open a docket item to investigate the provision of wastewater services.
12

SUMMARY
In addition to requests contained in my written comments, today I am asking that
the Commission adopt the recommendations of Staff with the following
exceptions and additions.
1. Deny the Applicant's proposal to apportion Plant-In-Service costs to Rate
Base treatment based on the timing of lot sales.
2. Find that the Plant-in-Service is "Contributed Capital" and adjust the
authorized water rates accordingly.
3. Order the Applicant to submit a facility and financing plan such that the
service requirement to meet maximum day demands at full build-out of
the CPCN area is met. Find that such financing is a project "start-up" cost
and is excluded from rate base.
4. Order Applicant to charge all customers the same authorized rate and
eliminate the past practice of waiving certain charges. Clarify that
customers will begin paying a "flowing customer" rate once ANY water
begins to be taken from their service line.
5. Allow for a basic water service charge for vacant lots.
6. Address a fair and reasonable approach to metered water rates.
7. Open a docket item to investigate the operations of the wastewater service
monopoly serving water customers of the Applicant and others.
I, and other customers, have dedicated time to find a fair, moral, and reasonable
solution to issues with water services in the Idaho Club. We sincerely want a
utility to be paid a fair rate and be able to provide quality, reliable and efficient
services now and long into the future. However, we do not want to pay twice for
infrastructure nor subsidize others that may look at the customer base as an easy
and convenient "piggybank". We are optimistic that the Commission will in fact
find a "JUST AND REASONABLE" set of rates for this system.
AGAIN: Thank you to the Commission, Staff and others for processing this Case
and holding a Public Hearing in Sandpoint.
I am happy to answer any questions.
END
13

David Frohnen
545 Green Monarch Lane,Sandpoint, Idaho
Mailing Address: 105 Vermeer Drive,Ste 2-302, Ponderay, ID 83852
[e-mail]
August 14, 2025
RE: Idaho Public Utilities Commission Case No. VID-W-25-02
Valiant Idaho/TIC Utilities, LLC's—General Rate Case
Exhibits to Testimony of David Frohnen
- 1. The Idaho Club — Vacant Lots for Sale — List Prices.
- 2. Comparable Rates of Return Summary
- 3. Organizing Papers of Valiant, Idaho LLC
- 4. Current SBA Loan Rates for 7a and 504 Business Loans.
1
14

Zillow.com
Listing of Vacant lots for Sale in The Idaho Club as of 8-9-2625;
By-David Frohnen 8-9-2025
Ranked high to low.
Li tin Asking Price($1000's)
1 998
2 900
3 849
4 695
5 599
6 500
7 499
8 495
9 475
10 450
11 450
12 349
13 349
14 295
15 285
16 275
17 265
18 249
19 249
20 225
21 199.9
22 198
23 195
24 174.5
25 129
Average 413.896
15

Idaho Public Utilities Commission-Case No.VID-W-25-02
Valiant Idaho/TIC Utilities, LLC's-General Rate Case
Listing of Comparable Rates of Return.
By David Frohnen 8-11-25
Decision Company Location Connections ROE-% ROR-%
A.IPUC Staff Comparable
33658 Morning View Water Rigby 100 11.00 2.15
33910 Grouse Point Kuna 24 11.00 11.00
35978 Kootenai Heights Bonner County 11 11.00 11.00
36587 Aspen Creek Near Bear Lake 73 11.00 11.00
B. Frohnen-Additional Com ap rable
36703 Gem State Water North Idaho Over 500 9.80 7.51
36407 CDS-Stoneridge Water Blanchard 380 10.00 8.21
C. Large Company Electrical Comparable-WA State
12/23/2024 Avista Greater Spokane 1000's 9.80 7.32
16

VALIANT IDAHO, LLC
A Limited Liability Company
Organized Under the Laws of
the State of Idaho
Dated Effective: July 5, 2014
Amended&Restated: November 13,2015
THE MEMBERSHIP INTERESTS EVIDENCED BY THIS DOCUMENT ARE
SUBJECT TO RESTRICTIONS ON ASSIGNMENT AND TRANSFER SET FORTH
HEREIN. THE INTERESTS HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAW AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED UNTIL REGISTERED OR UNTIL THE
BOARD OF MANAGERS HAS RECEIVED AN OPINION OF LEGAL COUNSEL, OR
OTHER ASSURANCES SATISFACTORY TO THE BOARD OF MANAGERS, THAT AN
INTEREST MAY LEGALLY BE SOLD OR OTHERWISE TRANSFERRED WITHOUT
REGISTRATION,ALL AS PROVIDED IN THIS DOCUMENT.
17

AMENDED&RESTATED OPERATING AGREEMENT
VALIANT IDAHO,LLC
THIS AMENDED&RESTATED OPERATING AGREEMENT is entered into as of the
18th day of November, 2015 ("Effective Date"),by and among the Members, each of whom hereby
agrees and certifies as set forth herein. This Amended & Restated Operating Agreement shall
replace in its entirety the previous Operating Agreement of Valiant Idaho, LLC dated July 5,
2014, such previous Operating Agreement to hereinafter be null and void. All capitalized terms
used herein and not otherwise defined outside of Article II hereof shall have the definitions
prescribed thereto pursuant to Article II of this Agreement.
ARTICLE I
ORGANIZATION
1.1 Formation. The Members, by and through their authorized representative,
caused there to be filed a Certificate of Organization with the Idaho Division of Corporations on the
Organization Date, creating the Company, organized and to be operated in compliance with the
provisions of the Act. The rights and liabilities of the Members are as provided in the Act except as
provided in this Amended&Restated Operating Agreement.
1.2 Name. The name of the Company is"VALIANT IDAHO,LLC."
1.3 Principal Office; Reldstered gent. The location of the registered office
and place of business of the Company is 916 Greenlawn, Celebration, FL 34747. At this principal
office, the Company shall maintain its records as required by Section 608.415 of the Act. Rick
Stacey, Esq. is the registered agent of the Company in Idaho, and his address is McConnell Wagner
Sykes+ Stacey, PLLC, 827 East Park Boulevard, Suite 201, Boise,ID 83712. This Section 1.3 of
the Agreement is to be amended from time to time by the Board of Managers or by the Officers
(without the need for any action by any Member)to reflect each change in the identity or address of
the registered agent in Idaho.
1.4 Term. This Agreement is effective retroactively as of the Organization Date
and will continue in perpetuity unless and until the Company is dissolved and liquidated in
accordance with the provisions of this Agreement.
1.5 Pnmose. The purpose of the Company is to conduct any business or joint
enterprise that is legal for a limited liability company to conduct under the Act.
2
18

"Revaluation Event" means (i) a liquidation of the Company (within the
meaning of Treasury Regulations Section 1.704-1(b)(2)(ii)(g), but not including a Deemed
Liquidation), or(ii) a contribution of more than a de minimus amount of money or other property
to the Company by a new or existing Member, or a distribution of more than a de minimus
amount of money or other property to a retiring or continuing Member,where such contribution
or distribution constitutes consideration for one or more Company Units or any portion thereof.
"Securities Act"means the Securities Act of 1933,as amended.
"Service"has the meaning set forth in Section 5.13 of this Agreement.
"Termination"has the meaning set forth in Section 8.2(d)of this Agreement.
"1 PM "has the meaning set forth in Section 5.13 of this Agreement.
"Transer" means any sale, assignment, pledge, hypothecation, encumbrance,
disposition,transfer(including,without limitation, a transfer by will,intestate distribution,or decree
of divorce or separation), gift, or attempt to create or grant a security interest in any Unit or portion
thereof, whether voluntary or involuntary, by operation of law or otherwise. With respect to a
Member that is an entity,the term"Transfer"includes a Change in Control of such entity.
"Treasury Regulations" means those final, temporary, and proposed regulations
issued by the U.S.Department of the Treasury pursuant to the Code.
ARTICLE III
CAPITAL CONTRIBUTIONS
3.1 vital Contribution . Initially,the Members have made a contribution of
cash in exchange for their initial interest in the Company as described on Exhibit A of this
Agreement. From time to time, if the Board of Managers determines that capital is needed, the
Board of Managers shall request that the Members contribute to the capital of the Company, in
money or other property, in proportion to their Company Units or as otherwise agreed to by the
Members. A Member shall not be required to make any such additional capital contributions. In the
event that one or more Members contribute to the capital of the Company, in a disproportionate
amount to their Company Units, the allocation of such Company Units shall be treated as a loan
from a Member as defined in Section 3.4 of this Agreement. Any such loans shall bear interest at
the Preferred Return Rate and shall otherwise be repayable on such terms as the Board of
Managers and such Member reasonably agree upon.
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3.2 Initial Interest in the Company Each Member has subscribed for the
number of Units as further described in Exhibit A, attached hereto, and shall have an interest in the
profits and capital of the Company proportionate to such Units as provided in this Agreement.
3.3 No Interest On Capital. No interest shall be paid by the Company on the
contributions to the capital of the Company by the Members.
3.4 Loans from the Members. If any Member advances any funds to the
Company, in excess of his, her, or its required contributions to the capital of the Company, the
amount of any such advance shall not be deemed a capital contribution but shall be an obligation of
the Company to such Member and shall be repaid by the Company on such terms as the Board of
Managers and such Member mutually determine as of the date of the advance. An Initial Member
Loan in the amount of five hundred thousand dollars ($500,000)has been made to the Company by
Brian Kramer on July 5, 2014, and an Initial Member Loan in the amount of two million five
hundred thousand dollars ($2,500,000) has been made to the Company by Kenneth Clark on
November 13, 2015. The Initial Member Loans, and any subsequent Member Loans, shall bear
interest.at a rate of twenty percent (20%) from the date of each, and shall be prepayable without
penalty at any time. For all Member Loans, accrued interest and principal, in that order, shall be
paid in priority to Member Distributions, until paid in full, unless otherwise agreed to by the
Members.
3.5 Withdrawal. No Member is entitled to withdraw any portion of his, her, or
its paid-in capital contribution, and no Member has any right to a return of capital except through
distributions as provided in Articles IV and VII of this Agreement. A Member who withdraws in
breach of this Agreement shall be liable to the Company for damages for breach of this Agreement,
which damages shall include the cost of replacement capital, and the Company may offset the
damages against any amounts otherwise distributable to the breaching Member.
ARTICLE N
ALLOCATION OF PROFITS,GAINS,AND LOSSES;
DISTRIBUTIONS TO MEMBERS
The Members agree that the income,profits, gains, and losses of the Company shall
be allocated,and cash distributions of the Company shall be made,as follows:
4.1 Capital Accounts. Each Member shall have a capital account ("Capital
Account")maintained as set forth in Treasury Regulations Section 1.704-1(b)(2)(iv).
4.2 Allocations of Book Income and Loss. After the special allocations
contained in Sections 4.3 and 4_4 have been made, all items of income,profits, gains, and losses of
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20

EXHIBIT A
MEMBER NAMES AND ADDRESSES
CONTRIBUTIONS TO CAPITAL&INITIAL LOANS BY MEMBERS
COMPANY UNITS
Kenneth Clark $0 5,000
6125 Vista de la Mesa
La Jolla, CA 92037
Brian Kramer $0 5,000
4434 Dawes Avenue
Culver City, CA 90025
William Haberman $0 5,000
916 Greenlawn
Celebration, FL 34747
Totals 15,000
NOTE: An Initial Member Loan in the amount of$500,000 was made on July 5, 2014 by
Brian Kramer, and an Initial Member Loan in the amount of $2,500,000 was made on
November 13, 2015 by Kenneth Clark. Any and all capital provided going forward, shall
be treated as Member Loans as described in Article III and shall accrue interest at the
interest specified, unless otherwise agreed to by the Members.
37
21

ILSRP#40014
Valiant Idaho, LLC
STATEMENT OF ASSETS, LIABILITIES AND EQUITY
INCOME TAX BASIS
December 31,2019
Valiant TIC Property TIC
Idaho Management Utilities Total
ASSETS
Cash and cash equivalents $ 98,488 $ 7,303 $ 35,142 $ 140,933
Customer accounts receivables - 32,247 - 32,247
Inventory 1,052,038 17,602 - 1,069,640
Fixed assets 3,743,103 271,432 338,960 4,353,495
Accumulated depreciation (194,638) (230,843) (338,960) (764,441)
Intercompany account 1,639,323 (1,445,361) (193,962) -
Section 754 step-up 387,210 - - 387,210
Loan origination fee 327,266 - - 327,266
Organizational costs 6,590 - - 6,590
Accumulated amortization (150,511) - - (150,511)
Idaho Club land cost 1,651,472 - - 1,651,472
Other asset 105,622 850 - 106,472
Capitalized interest expense 2,356,009 - - 2,356,009
Pre-acquisition costs - 5,047 - 5,047
Total assets $ 11,021,972 $ (1,341,723) $ (158,820) $9,521,429
LIABILITIES
Accounts payable $ 4,072 $ 41,256 $ 804 $ 46,132
Accrued interest payable 1,527,173 - - 1,527,173
Loan payable 3,500,000 L = = 3,500,000 Partner loans payable 5,773,750 5,773,750
Total liabilities 10,804,995 41,256 804 10,847,055
EQUITY
Beginning partner capital accounts 40,905 (1,133,717) (219,245) (1,312,057)
Net Income/(loss) 176,072 (249,262) 59,621 (13,569)
Total equity 216,977 (1,382,979) (159,624) (1,325,626)
Total liabilities and equity $ 11,021,972 $ (1,341,723) $ (158,820) $9,521,429
These financial statements have not been subjected to an audit or review or compilation engagement,
and no assurance is provided on them.
- 1 -
22

he Small Business Administration (SBA) otters various loan programs, eacn witn its own
iterest rate structure. The interest rates are primarily influenced by the type of loan
�rogram, the loan amount, the repayment terms, and the prime rate, which is set by the
.ederal Reserve. Other factors like creditworthiness, economic conditions, and the specific
ender can also impact the final rate.
lere's a breakdown of the current interest rates for different SBA loan types:
;BA 7(a) loans
Variable rates: Range from 9.75% to 12.25%, depending on the loan amount and maturity.
Fixed rates: Can go up to 15.5%, also varying by loan amount.
SBA Express loan rates: Similar to 7(a) variable rates, generally ranging from 12% to 14%.
2A CDC/504 loans
Variable rates: Currently between 6.093% and 6.495%.
Fixed rates: Tied to the 10-year U.S. Treasury rates. 01
;BA microloans
Interest rates: Typically fall between 8% and 13%, depending on the intermediary lender.
t is important to note that the SBA sets the maximum interest rates for these loan
►rograms, but individual lenders can offer more competitive rates. GP
n addition to interest rates, SBA loans also involve certain fees, including a guarantee fee.
"his fee varies depending on the loan amount and repayment terms. For instance, a loan o-
►150,000 or less with a term greater than 12 months incurs a 2% guarantee fee on the
guaranteed portion of the loan. .
is recommended to consult with an SBA-approved lender to discuss specific rates and
erms applicable to your individual situation.
23

:urrent SBA loan interest rates t4151Rp
'he SBA's maximum rates are based on the daily prime rate, which changes based on actions taken by
he Federal Reserve.
;BA 7(a) loan rates
'he 7(a) loan is the SBA's most popular business loan and offers a flexible sum of cash for a variety of
ises, including managing daily operations, purchasing new products and refinancing high-interest
pans. The loan size determines interest rates for SBA 7(a) loans, and rates can be fixed or variable.
fixed rates:
SBA loan size [Maximum7interest rate
$25,000 or less 15.5%.
$25,001 to $50,000 14.5%.
$50,001 to $250,000 13.5%.
$250,001 or more 12.5%.
*Rates calculated with the current prime rate of 7.5%.
Updated August 2025.
Variable rates:
SBA loan size Maximum interest rate
$50,000 or less 14%.
$50,001 to $250,000 13.5%.
$250,001 to $350,000 12%.
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SBA loan size -Maximum interest rate
$350,001 or more 10.5%.
*Rates calculated with the current prime rate of 7.5%.
Updated August 2025.
• • Nerdy Tip
25

SBA 6.23% 6.25% 6.17% Calculate Find a Loan
504 25 Year 20 Year 10 Year payments Expert
Rates
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26

https://www.sba7a.loans/contact-sba-7a-loans-company/
SBA 7(a)Loan Interest Rates by Loan Amount
Interest rates for the SBA 7(a) loan depend on the amount of the loan.They're divided into three
� 4
groups:
Loan Amount Maturity;of less than 7 years Maturity of more than 7 years
$25,000 or less 11.75% 12.25%
$25,001 to $50,000 10.75% 11.25%
$50,001 and up 9.75% 10.25%
Contact SBA7a.Loans
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Let us help you get the SBA 7(a) loan you need,today.Connect with our SBA 7(a) lending specialists for a
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Whether you're a borrower or a lender,we're here to help! We're capital markets geeks with a digital
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EMAIL
hel [e-mail]
We're at the ready to help you get the funding you need for your business. co
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� 6
27

From: Read Tuddenham <[e-mail]>
Sent: Friday, August 15, 2025 9:46 AM
To: secretary<[e-mail]>
Subject: IPUC Public Hearing- Requested Document Case VID-W-25-02
IPUC Secretary,
At the public hearing held in Sandpoint, ID 14 August 2025, Commissioners Hardie and
Hammond requested the attached document regarding water and sewer fee waivers
granted by Valiant Idaho. Please forward the document to them.The following information
and my contact information apply:
Case Number: VID-W-25-02
First Name: Read
Last Name: Tuddenham
Address: 512 S Idaho Club Drive
Sandpoint, ID 83864
Phone: [phone]
Email: [e-mail]
Utility Co. TIC Utilities
Thank you for your assistance.
Sincerely,
Read Tuddenham
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The Idaho Club Developer Sales & Fees Waived
Development Parcels/Hook-Up Fees Waived In Lieu of Construction Costs of
Infrastructure Being Borne by Builders/Developers:
Valiant Idaho, LLC — South of 200/ R-Lots — GTE 12th Addition (29 future lots)
Valiant Idaho, LLC — South of 200/T-Lots — GTE 13th Addition (11 future lots)
Development Parcel — N. Idaho Club Dr. — West of 12th, Builder bearing costs (24 future lots)
Oxbow Development — North of 3rd, Builder bearing costs (17 future lots)
Lots S1 thru S11, C38 — No infrastructure in, Builder bearing costs (12 lots)
Lots S12 thru S19 — No infrastructure in, Builder bearing costs (8 lots)
Jim Brown Way — No infrastructure at property lines, Builder bearing costs (6 lots)
Water & Sewer Hook-Up Fees Only (Did Not Waive Monthly Fees; Total = 36):
Fairway Homes / Kevin Murray - T2
Richard Pace -Al2, Al &Al — One per lot, legally combined into single lot
Michael Haynes - C13
Gerald Pevow - G6
Dustin Rief - F10, G1 & G2 — One per lot, legally combined into single lot
John Kyme - C4
Don Johnson — F18 & F19
Jeff Cooper — G4
Scott Steele — F13
Michael Hinkens — G7 & H5
Ironwood Homes — G3
Jason West — C31 & C32
Brent Lazarenko — F16
Fisher Revocable Trust — E4
Cecelia Hunter — F12
Leif Moon-Nielson — C9
Mike Hannon /Jerry Kittrell — C11
Darin Coder — T3
James Duncan — E10
James Lee & Lezli Benson Trust — C17
JC Delta 2010 Living Trust — C16
Robert Lynagh — C20
Robert Clark — E6
Lee Hardin — G10
James Nugent — E17
Masterpiece Real Estate Investments — G9
Dennis McLaughlin — E18
James Heaverlo II Trust — E12
Tom Waltz — A16
OHFT PL, LLC — H9
Ben Pruden — E23
Ryan Graeff — H2
Kenneth Clark — A2
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Laura Minteer — E11
Scott Hill — T1 A
Rob Toronto — T1 B
Water & Sewer Hook-Up Fees & Monthly Fees (Total = 7):
Derek Kasel — A11 — Waived monthly sewer fees until home completed
Michele Dias — F8 & F9 — Waived monthly sewer fees until home completed
David Striegel — G16 — Waived monthly sewer fees until home completed
The Frohmen Trust — T4 — Waived monthly sewer fees until home completed
Margaret Warner — S22 — Waived monthly sewer fees until home completed
Russell Slaughter — H6 — Waived monthly sewer fees until home completed, Waived only
sewer hook-up
Rick Brown— H3 — Waived monthly sewer fees until home completed, Waived only sewer
hook-up
Unbuildable Lots Bought As Open Space (Total = 2)
GDF, LLC — Lodge Lot 23 — Monthly water & sewer fees waived — Bought as open space
Margaret & Read Tuddenham — A9 — Monthly water & sewer fees waived — Bought as open
space
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