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HomeMy WebLinkAbout20160122Supplemental PKS to Staff 1-3.pdfRobert A. Vostrejs, Jr. Treasurer Packsaddle Water Systems, Inc. P. O. Box 7L Driggs, 1D.83422 rN THE MATTER OF THE APPLTCATTON OF ) PACKSADDLE ESTATES WATER COMPANY ) TO TRANSFER rrs CERTTFTCATE OF PUBLTC ) CoNVENTENCE AND NECESSTTY NO. 320 TO ) PACKSADDLE WATER SYSTEMS, INC. ) nF,-f_tt ri-'1 lr-L,L, l t. ,- ?fii1J.qI 22 F.ll 9: 20 i- 11.l-'i..':' :r.l I lT!,-i , :i:.:, t-).,,',',l"ii;;,..:'i BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. PKS-W-15-01 SUPPLEMENTAL RESPONSE TO FIRST PRODUCTION REQUEST Packsaddle Water Systems, lnc., by and through its Treasurer, Robert A. Vostrejs, Jr., files this Supplemental Response to First Production Request as follows: The First Request for Production sought information and documentation concerning Packsaddle Water Systems, lnc.'s ownership of the subject water system. Since filling its Response on January L1, 2015, Packsaddle Water System, lnc., has come into possession of additional documents dealing with alleged HOAs that could, if valid, constitute an encumbrance of sorts on the ownership interests of Packsaddle Water Systems, lnc. Not being sure whether these additional documents fall within the First Production Request; in an abundance of caution, and in accordance with the highest ethical standards, Packsaddle Water Systems, lnc., is attaching copies of these documents hereto. They consist of the following: Teton County record t2L824 entitled, "Amendment to Protective Covenants for Packsaddle Creek Estates, Divisions 1&2, Teton County, ldaho" and Teton County search page pertaining to the same. Teton County record 130251 entitled, "Rescind Water Asso." and Teton County search page pertaining to the same. Articles of lncorporation for "Packsaddle Creek Estates Homeowner's Association, lncorporated" and Secretary of State's search page pertaining to the same. Packsaddle Development Corporation Staff Report Case No. GNR-W-95-1. The original documents that were copied and produced in this Supplemental Response are in the current possession of Robert A. Vostrejs, Jr., the Treasurer of Packsaddle Water Systems, lnc. His physical address is 3102 Aspen Dr., Tetonia, ldaho, and his mailing address is P.O. Box 71, Driggs, ldaho. His land line phone number is 208-456-0950 and his cell phone number is 2O8-2OL-2676. Dated at Driggs, lD, this 18th day of January 2016. Certificate of Service I HEREBY CERTIFY THAT I HAVE THIS 18TH DAY OF JANUARY,20!6, SERVED THE FOREGOING SUPPLEMENTAL RESPONSE TO FIRST PRODUCTION REQUEST IN CASE NO. PKS-W-15.1, BY MAILING A COPY THEREOF, POSTAGE PREPAID, TO THE FOLLOWING: Neil Price Deputy Attorney Genera I ldaho Public Utilities Commission P.O. Box 83720 Boise, ldaho 83720-OO7 4 Treasurer, Packsaddle Water Systems, lnc. -JR.E'C E IV:E D ilwrz1995 fETol{ Co. td.Clerk Reccrder o^rn il&ri 1,2L82* AMENDMENT TO PROTECTIVE COVENANTS FOR PACKSADDLE CREEK ESTATES, DIVISIONS I &2, TETON COUNTY, STATE OF IDAHO V. All prope4v owners in this suMivision shall be members of the Packsaddle WaterUsers Association, Irrc. Tlp ov.rner(s) of cach lot have one vote in the Associetion for each lot ovmed- Packsaddle Water Users Association Inc., shall supply to each property orryncr, current in water ass€ssme$ts, \ratcr for do,rrestic use only and the Association shall own, operate, rnanag€ ard coiltrol the land on which the wells and pump arc located together with aU pipes and equipurent associated with the water system. In consideration of this sclice, Packsaddle Water Users Association, Inc. shall have the right to ass€ss each property owner, the subsequed owner, such suurs as the Association shall fiom time to time deem necessary for the initial cost, upkeep and maintenance of the entire systern and any irnprovements ma&. This amendmant was natified by a majority vote ofthen owners of the lots in Packsaddle Creek Estates, Divisions I and 2 in acomdarrce with thc requir€ments of the Covenants for Packsaddle Creek Estates, Divisions I &.2. ; 1995, beforc me a Notary Public ifl and for said state, personally appeared BARNEY FLORA ad ROBERT YOUNG, SR, lrrown or identified to rne to be tho pcrsons whose namcs arc subocribedto the within instnnnent and acknowledged to me tbatthe vote was a majority of all then lot ovrners ofthe Papksaddle Creek Subdivision itr'#,:iYffi;W-dp/ STATE OF IDAHO County of Teton ) :3S ) t21824 FILED Committee on Protective C,ovenants }".fls TI{E BEOUESTOF '/15 1t13t416 DocumentSsch l Teton County Recorded Documents Click the 'Image' button to vlew the document. t2r824 l\lumber Of Pages 1 Date,/Time tl2l1ggs 2:43 pM 382 DECLAMTION OF COVENANTS AMENDMENTTO PROTECTIVE COVENANTS PACKSADDLE CR. ESTATE 1 &2 Name FLORA, BARNEY PUBUC Search Results Ctick on the Instrument # to view document detail. "#i" Document rvpe . DECLARATION OFt covENANTs Document Detail Instrumetrt # Transactlon Code Descrifiion Instrument Recorded# Date 12La24 ttl2lL995 c!_o_ge Imgg€ Type R. GMNTOR E - GRANTEE Description ATTIEI{DMENT TO PROTECTIVE COVENANTS PACKSADDLE CR. ESTATE 1 & 2 l I l I L htp://gi s.co.teton.i d. us/Recordi rB/Defaul taspx 1t1 r 30251 ulal^"r Asso. MaY 11 ' tee' Re: Notice to amend the Protective Covenants of Packsaddle Creek Estates. Pzcorded8/2D24 Paeksaddle Water Users Assoclation Inc. is dissolved by the Secretary of State of Idaho for lack of activity thus making the attached docuument for amendment of the covenants for Packsaddle Creek Estates is now null and void and does not affect the properties in Packsaddle Creek Estates. I 30251 FILED *TDGMUES'OF Pescind EECEIVED ttAy I I flS .temr,#d%- ,{-- / rrra&t.o - r DanmgtSscfi Teton County Recorded Documents ii':, l- l,Jl r;l :! Liii.r- Document Detall )f ..:r: .r ::?'rir.lLCla,-ll\5 li:lf)t:;! r.:iii(5 Cllck the 'Image'bulton b vlew the dxument.xj Inttrum€nt # Tnncagtion Codg Detcdptbn 11302s1 iSoo-- Ilumbcr Of Pagan ,?Datc/rtmo ltllllrre iir4s pli- i-oor€ i lnrumr I Imag€ i #L21824 PACKSADDI-E WATER USERS ASSOCIATION INC. Name t SearCh ReSultS Click on the Instrument # to view document detatt, In3trum€nt# Rccordcd DatG #of Pagnc DocumcntTypc Dercrfurtbn 130251 Sl,,,/lgga 2 RELEASE *,.zta2+ PACKSADDT-E WATER USERS ASSOCIATIOT{ IilC. I PACKSADDLE WATER USERS ASSOCIATION INC. I I PUBUC tfr prlds.ao.Ebn.id.rx/Recd rBlD#ltaspx tEtcw6a 6E0;0P STATE '!E BEC 15 RIl I a0 Art'tcrrs offiiiRrruor 'ss 0tgtr nfl 0 50 PACKSAIIDI"E CNEEK ESTATES HOMFI)WI{ER'S ASSOCI,ATION, INSONPONATED We, ttc uetdpd rcgidcnb of the Staa of ldabo, bcing lS pan or morG of agq do hcraty urodre onchlcr tqgcthcr for tbc Frpocc of foroing r corycttion undcr tbc Idrho Non-Profit Corpoedo Act AR"IICLE I Namc Ttc DlnG of thc oorpcadon &all bG PACIGADDTB CRBEK ESTATES HOMEOWNER,S ASOCIATION, IN@RPiORATED. ARTICT.E II Non-hulli Conmra{on Thc oorporethn b r no-profit corporation. AITICLE III I Dunthn Ttc duretion of ttb mpontion rhell bc perpetual. ARTICLE IV hrruocl To pturdc thc hcatth, saftty, and wclhre of all pcrlmq finnr and oorpontionr owairy propcrty h Prclraddh Gcct FrtstcN eccording to thc plat thercd recordcd in thc rtcor& of Tctoo Couily, Idrhq nrch puryoocr includc but arc not linitcd to: th hprovcmcnt end meintcoanco of thc cffimor ercar, thc uptocp of all vacant and uainprorcd lots, thc onfqcemc[t of conditioos, covenant$ and restrictioae on a.od rppurtrorot to reld propcrty, to acquirc, oum, tr harc arcb real aod perrcnal propcrty er ney bc ncocallry or corvcnlcnt for tte tsauaction of ie bucioe$ and thc ftrlfillncnt o( itr F rpo.ct todo ery end rll ^hi,rgl rceBlsary toproorotc thc gcncral wclfarc of thc residcntr Aaflcut O? tr$tionAnor. P cIT DDI.E cng ErAtEr HoilEowlBl AspcurTroN, nrc.. I .T rod o*len of aoy eordmof Pactrrddlc Gcct Eilttq to lrrErtc rodll end rccrcedod fundolr for lE ncobcn rd to cror&e any rud dl porcn that may be dclcartcd to it frm timc to thc by thG ourrr of lctl propcrty in Oc tstst Thi! corporatioo rhall not cn!ryc io polidcd rtlvity q Fuerc politad F rporcr of any Hnd or chanc'tcr. Armct,E v Mrmtcr*tn lto oorpcrfih rtdl bG omprhcd of w chr of ncmbcq rtlch clrrr rhdl bc omprbod of dl Frrgr nrn* p.rtncnhlp+ corpsetlor eud oOGr roddcr nGGeS fuqurltgcrto !u nrdcnhlp qpcdncd iD th Eyhrr ldoptld by thG oorecefu eod rhnll hrtp dl thc ftbr of ncmbcrrhip dotigDatcd thcrcin Enidcm o[ mcobcilDtp rhrll bcn d! by thc Gspofldm hlhs r ocrdficatc of nanbcrhip !o c.ch duly $rdificd ncubcr, Tbc ncurbcr of tbc mrpcrtlon rhrll nd bc pcnoorlly lilblc fo th dcbq lirbllidc* c obl&ldmt of &c oorpcetho frc nanrgcrnent of thc corporador rhttl bc w.tcd itr lt, Eord of DirucEr rd lol lD ltc ncmbcn end thc euthority of reid Bold of Dittcton$dl bG er rpt fort b fu Bybxr of ttG corpcatim. AETICI,E VIAcsruar ArlcrlnGntr nry bc kiliod upo,n all mcarberr. Thc Boerd of Dircaon ir euthsizcd to ft thc uqrat Ocrcof fro thrc to tirre, ud matc than pa;oblc at rue,h tincr or lnurnh eod upoo irch rdcc, rnd by nrch mctho& u thc Dhocton may prcrcrlbe. Arcrrocntr o.y bc Dtdc onforoceblc by lcdoE or by thc forfaihtrc of ncmbcnhip, c b,oth, upm lodoa ;hno ln ritlry trrcnf G0) deyl bcfore cffimcDoeocnt of rucb rcdonq nrch forhltura. Amsat nry bc rccurpd by e licn upo rcd prcpcrty to u,thb ncmbcrdf r|hs .rG rpFrrtcDrrt ATMCLE VII Rrdrlurd Ofilco rnd Aront Thc eddrcr of tbb corporathn'r Initial rcgiricrcd offise end tbc rarc of tB oridosl rcgltcred r3pnt rt och rddrcr b; Earl BalnDrid&. 219 Ccntral Avcmrc. P. O. Bq 16t. Tcroaie. Idahq t3lt2 AKTICLE VIII Dlutorr Tto numbcr of dlrecton oosrtitutitrg thc ioitial Boord of Dirccton rif thc oorpontio b thrcG (3). frc namer and eddrcssc3 of the Flroor sfu arc to rerrc u hithl dirGctct rrG !r follqr; irmGtll OP ttaOonfir&fiOr - ?ffIlltDdl Cf,lE EIIATE HOilPwtGRl A!ilrctATl0l, llt .2 luelib g.iDMtr Gary F. ArooH AnmcLE lx lncolTonion Ttc nrocr rd addrcsr of thc pcnoor foruring thir oo,rpondon arc ar follo*r: Ner Errl Brtrbrldjc Nrc E rl B!tubrldp ,utoitt B.ryS. Addltrs P. O. Bc 161 219 Ccrtrel Arqpuc Tciorh Ideho 83052 Phono: 45G,2236 P. o. Bq 161 219 Ccitrrl Avsiu? Tctmrr ldelo ts{52Ptucz 156.ZEI5 551 Buth Atrmc Idaho F,elh. IIr t3d04 Phmc: 525{l{t Addrcrcr P. O,.,BG 161 219 Ocntrll AYppuc Tctmlr. Idaho 83t52 P. O. Bd 16l 219 Ccntrel Arcouc Tctonir rdaho t3f52 551 B$th Avpnue Idaho Falh ID 83{O{ Gily F. Arnold anmclr x Dhl{Oudoa on Dlmlutlon Ttcre rrdplo of imrporetirn harc bccn cxccttcd on lfia id day of Dcccrnbcr, 1993. AftTtct,r Or DOOnrcnAmf . ? ctrt DIt8 cnSBr EfArEl lor&i,rGn Ascurnoil ut ., il.;,';,: ;, S STATB OF IDAI|O County of Totoo O! tbL ,l^**rof Dcocobcr, 1993, bcforc mc e Noterry hbtic lD !d fior rlH StrtG, pcnorlly ryq.r.d BAru BAINBRIDGE and ruA].IITA BAIITIBRIDC]E hu0rnd aod wifiB kno*l q ldrod0cd !o uc to bc the pcrlol! urtoe orocr are nrMbcd to thc rylthln inrtruncat rnd .ctrcrilcdgcd to arG that thcy csccutcd thc ramc. STATE OF IDAIIO Cornty ot4 -, .,r'L Or thb E-dry of Doccmber, in tbc ycar of 1993, bcforo rnc, ! No,tuy Public tD rod fior trtd Strt L ponmrny eppeercd CARY F. ARNOLD, trowr or idefiiEcd to mc tobc rh pcfio *tilo !ilDc ir arbrcribod to thc within instnrmcnt and rchowtcdged to ):tE ) ) : tr. ) nc thrt he crccntod thc ranc. /3-79 moffiil r$rE Bsla:i 0m m 2 C[ lr {6? O3Il U5t9D lluolsm Amrcllt OFnE8rclAflOl{ . ?rmADDla CREIr EJTATEI l{oxEt *}Ent Alg)cl^Tlllt Dn.. 1i V,ltlli ..t R il I l,f,, iri {l; Notary hbtc fof.Id Rcriding *tultu :,il:;#t*fl f,iciffi E[lffit+;"?. j#d#,,' *rC fi3rn16 lddto Brsilres Entity Sach lCahc Public Recorcis r Business Entity Search I New Search ] [ Back to Summary ]I N4onitoT PACKSADDLE CREEK ESTATES HOMEOWNER.S ASSOCIATION. INCORPORATED business filings ] n il it 332 BAINBRIDGE DR TETONIA, ID 83452 Type of Business: Status: State of Origin: Date of Orl gi nation/Authorization: Current Registered Agent: Organlzational lD I Filing Number: ilumber of Authorized Stock Shares: Date of Last Annual Report! CORPOMTION, HOMEOWNERS ASSOCIATION ADMIN DISSOLVED 09 Mar 2007 IDAHO 27 Oec L993 GARY ARNOLD 332 BAINBRIDGE DR TETONIA, ID 83452 ct04470 20 Dec 2005 Filed 27 lrec 1993INCORPOMTION Amendment Filed 19 Mar 1997 REINSTATEMENT I Report for year 2OO5 ANNUAL REPORT Report for year 2qr4 ANNUAL REPORT Report for year 2qr3 ANNUAL REPORT Report for year 2OO2 ANNUAL REPORT Repoft for year 2OOl ANNUAL REPORT I Helo l'1e PrinVView TIFF ] View Imaoe (PDF format) View Imaqe (TIFF formatl I Help tle Prrnt/View TIFF ] View Image (PDF format) View imaoe (TiFF format) I Help t4e Print/View TIFF ] View Imaoe (PDF format) Vrew Image (TIFF format) View Image (PDF format) View Imaoe (TIFF format) Vierv imaoe (PDF format) Vrew Image (TIFF format) Vieiv Imaqe (PDF format) Vrew Imaoe (TIFF format) View Imaqe (PDF format) Vrew imaoe (TIFF format) F :,...ii: ir,, Pe.opieSmartPREMIUM SEARCH: peopteSn First PU BLIC RECORDS This is meLast trtQ//gtH icrecords.onlineearctres.cornfuiew/l id495S 1t1 PACKSADDLE DEVELOPMENT CORPORATION cAsE NO. GNR-W-95-r STAFF REPORT Robcrt E..Smith Seoior Auditor in Consultation with Donald Oliason, Engineer & Rose Schulte, Compliance Investigator INTRODUCTION This case was initiated in response to a petition received on January 17, 1995 from water customeni of Packsaddle Developmcnt Corporation (Company or Packsaddle) requesting an ldatro Public Utilities Commission (Commission) investigation of the Company's water service. By is Order No. 25908 (Order) dated February 24, 1995, the Commission opened a formal investigation into whether Packsaddle is selling water to the public for compensation, and thercfore operating as a public utility. The Commission, by its Order, directed the Commission Staff (Statr) to "...issue production rcquests, written intsrogatories or other forns of discovery as well as pursue its statutory right to cxamine and audit the records of Packsaddle Development Corporation as they relate or pertain to the sale of water.n The Commission secks to determine, through the investigatioo, whether the Company is a public utility subject to the Commission's jurisdiction under Idaho Code, Title 61. This report was prepared in rcsponse to the Commission's directive. This report was completed after visiting the Packsaddle Creek Estates subdivision and interviewing representatives of the Company and several residents who had contacted the Commission regarding the water system. Tbis report is organized in two major parts. Part One is a general background of the Company, its development of the Packsaddle Creek Esates Subdivisioo, urd a summary of the findings of the Stsff during the course of iu investigation. Part Two prcsents the Staffrecommendations regarding the satus of the Company as a public utility, the jurisdiction of the Commission and alternatives for the frrture operation of the water system. This report serves two purposes. It was wrinen to provide the Commission with facts rcgarding the case and to make rceommendations regarding action by the Commission. It was also wriuen to inform the Company and the petitioners as to what is requircd of a public utility and how regulation of the water system would affect them. STAFF REPORT MAY 25,1995 PART I: BACKGROUND & STAFF FINDINGS The Packsaddle Development Corporation was originally incorporated under the Iaws of the State of Idaho on July 10, 1970. Its business is listed as land development. The Company has subdivided a plat of land approximately ten (10) miles southwest of the town of Tetonia in Teton County, Idaho. The suMivision is known as Packsaddle Crcek Estates Division #l (recorded in Teton County on August 10, 1970) and Packsaddle Creek Estates Division #2 (recorded in Teton County on March 19,1973). The two divisions compose the entire subdivision and include a total of eighty-uine (89) residential lots. The subdivision is located on a hillside on the west side of the Teon Valley. The terrain is relatively steep with more than 400 feet of elevation difference between the lowest part of the subdivision and the top where the wells and storage rcservoirs are located. Also on file in Teton County are copies of the Protective CovenanB For Packsaddle Esutes Division No. I recorded Seprcmber 9, 1970, aod a Domestic Water Ageement berween the Company and the Board of County Comsrissioners of Teton County recorded November 6,1970. Neither the protective covenants nor the water agrcement mention Division #2. A copy of the Domestic Water Agreement was provided to all original purchasen of lots within both divisions of Packsaddle Creek Estates. It provides a perpetual rigtt, running with the land, to lot owners relative to the supply of water by the sellers. It also specifies that the sellers would bear all sosts associated with the installation of a water system from the wells to the lot lines, and purchasers would beu the cost of rcpair, maintenance, and installation of water lines from the lot line to struc$res. In addition, the purehaser is required to pay a monthly rate of $6.00 per month for water service after hookup. Another document entitled oProperty Reporg Notice and Disclaimer, By Oftice of Interstate Land Sales Registration, U.S. Deparrnent of Housing atrd Urban Development" (HUD) was provided to the Staff by the Company. The Company mainuins this document was signed by all original purchasers of land within the subdivision. The Washington D.C. office of HUD has inforrred me that Packsaddle Estates was registered with HUD in November of 1970. HLJD suspended the registration in January of 1973. Due to administrative changes affecting the registration, modifications were required. The Compuy did not rcspond to corespondence requesting modifications to the registration and therefore, the registration was suspended. Use of the HUD document in the sale or marketing of a piece of property either before the effective date of November 1970 or subsequent to the suspension in January of 1973 is illegal. The HIJD rEport contaios several statements which are pertinent to the status of tt. water system. Page 4 of the rcpo4 item 7, indicates that property buyers are not required to pay any special assessments or make paymcnts of any kind for the maintenance of common facilities within the subdivision, nor are therc any property owner association payments required. Page 5 and 6, item 10, states that culinary water only is available within the subdivision; that the developer is responsible for extending water lines to lot lines; there will be no charge to purchasers to hookup to the water lines; that water rates charged are $6.00 per month; that the developer has a report from a cognizant health officer on the quality and STAFF REPORT MAY 25, I995 purity of water; and that there are no bonds or escrows to assurc completion of the warcr facilities and therefore there is no assurance that such service wil! be available. During development of thc property, the Company built roads and installed a domestic water system. The backbone of the water system is almost completed, with only a short extension of 400 feet (more or less) rcquired for completion of the water mains. This last extension is planned for completion during 1995 to rcach two lots that have recently been sold. The water system was insulled as oecessary to reach lots as they were sold and requests for warcr service were rcceived. The costs of installing the water system were not capiulized as part of fie subdivision development costs but, instead, were expensed for both book and tax purposes. Only 24 of the 89 lots have been developed and connected to the systcm at this time. I understand nrro additional lou are expected to be improved this summer. Many of the improved lots are summer or part-time second homes. The ldatro Division of Environmental Qualtty (DEQ) lists this subdivision as a 'Transientn (pan-time occupancy) system which limits the required watcr quality tests significantly. When the subdivision exceeds 25 full-time residents, the number, type and cost of required water quality tests will incrcase. Laboratory fees coutd incrcase by as much as $1,000 annually while DEQ fees will increase from the current minimum $25 annual fee to $5 per customer. A significant ,rmount of additional time will be required to adrninister test sampling and doeumenution. The water system is composed of nrro wells with a toal production capactty of 100 gallons per minute, a concr€te 80,000 gllon storage tank, a steel 7,500 gallon storage tank, a pressure pump and 50 gallon pr€ssure tank, and approximately 20,000 feet of main line. The two wells, storage unls and pressurization system are located on lot No. 63. Copies of the water system schematic diagram have been provided to t[e Staff by the Company's engineering consultant Benton Engineering. The design of the system as depicrcd by the schematic diagram appears to be adequate to serve the subdivision. There may be some discrepancy between the schematic diagram of the system and ttre actual plant buried and out of sight. One customer asserts that thc main line in front of his properry is a 2 inch line. The water systcm map indicates the line is a 3 inch line. The Company can neither confirm nor deny this allegation. It is possible a necessary repair to the line was made using two inch line that was on hand at the time. The main line just above this customer is a 3 inch line. The nuo inch "repairn to a 3 inch line does obviously create a restriction. However, therc are only 2 los downstream from this location which should not be adversely affected by the resriction. Several residents question the quality of the installation and the accuracy of the schematic diagrams. They fear that the system has numerous leala and allege that several of the water mains are installed outside the indicated easements and may traverse los in locations incompatible with the constntction of homes. The schematic diagrams prepared by Benton Engineering indicate the drawings n...rcpresent the existing water system, as near as we are able to determine." The Staff must rely upon the engineering firm's drawings as the best information available. I(, however, there are discrepancies of this nature, wtrich are impossible to determine without excavating the lines and/or easements, the Company should be required to relocate the lines within the easements. The Company maintains that residents have, through various aetivities, disturbed survey markers making it difficult to precisely STAFF REPORT MAY 25, 1995 determine the exact lot lines. A new sutyey could be required in order to precisely determine the exact location of tlre easemenB. I sampled several locations for water prtssure and found that pressure on the system is quite good, Likewise, these tests showed that maximum pressures on the system at the lowest elevations are adequately controlled to protect residents from the daurage that may be caused by exnemely hrgh prcssurcs. If leaks arc prcsent, they were not apparent from the static prcssure tests taken. The only way to prccisely determine if leals are present on ttre system is a controlled test with the cooperation of the residents measuring water flow fiom the reservoir over a period of time when customers werc not using nrater. The system has no flow meters installed at this time to enable that kind of testing. The portion of the system connected to the pressurc pump and tanlc did not indicate any leakage. While testing that portion of the system, it was necessary to intentionally wasrc water in order to activate the pressure switches to determine the higMow settings. The question was raised by one resident rcgarding the adequacy of the system to support fire flow should the county evennrally require the insullation of fire hydrants. The system is not sized for this purpose. Generally fire disricts rcquire a minimum size of I inches for mains supporting fire hydranu. The largest main on this system is 5 inch and rcprcsents only a small portion of the system. The majority of the mains are 4 inch and 3 inch. The question regardiog the eventual requircment by the county for installation of lire hydrants is best addressed to the county. Normally once a subdivision has been approved, county plarrning and zoning commissions do not yeats larcr require reBofit of the water system. During 1992 and 1993, the Company was experlenciag water supply problems due primarity to the drought. The original Well #1, which is 385'in depth, was sloughing at the bonom and getting dangerously close to drying up. The owners of the Company, Mr. and Mrs. Earl Bainbridge, installed a separate water supply system to provide water from a spring owned individually by them while repairs to the well were accomplished. In 1993 a new pump was installed in the well at a cost of $2,395.44. This original well, even with is new ptrrp, only has a pumping capaciry of 30 gallons per minute, which is inadequate to serve the subdivision when comptetely developed. The Company insalled a second well (Well #2) br 1994 at a cost of $21,341.43. The well was paid for through the issue of a note payable to The Bank of Commerce in Driggs, Idaho in the Amount of $20,475.00. The note carries an interest rate of 9o/o and is payable in three installments of $8,084.42 in August of 1995, 1996 and 1997. The second well has a pumping capacity of 70 gallons per minute which, when combined with Well #1, brings ttre total pumping capability to 100 gallons per minute. Other major repairs to the system in recent years include replacing a pressure pump in I 993 at a cost of $403.89 and rcplacing the pressure tank in 1994 at a cost of $482.79. With the replacement of the pump in Well #1, rcplacement of the prcssure pump and tank in 1993 and 1994, and the addition of Well #2 in 1994, the system's water supply system is practically new and should serve for a number of years without major expense. STAFF REPORT MAY 25, 1995 Customers on the system have expressed both dissatisfaction and suspicion of the water system and its ownem. Tbe owncrs (Mr. and Mrs. Bainbridge) formed a second corpration on Decembet 27,1993 knov*n as tlrc Packsaddle Crcck Estarcs Homeowners Associatiou Incorporated (Association). The owners have atteurpted to mnsfcr the water system to the Associrtion. Resideots indicae the Association was formed without &eir knowledge and consent. Many rcfirse to bc a pan of the Association and mainuin they caffrot be forccd to join an associatiou formed well after their purchase of prsperty. AII the aforcmentioncd documeng are sileot regarding a homeownen association. Accusations have been made, both by rcsidents and the Company, that water consumption is disproportionate arnong the customers. Some homes are permanently occupied, others only on weekeods or seasonally. The watcr system is a culinary system not inrcnded for landscape inigation, ponds or other aesthetic exterior purposes. 'Despite the alleged disproportiooate use, all culitomers have beeu ctrarged the same monthly rate whether water is acnrally consumed or troL Tbe only way to oversome this problem is the installation of warcr metem and a rate design based upon measured consumption. This of course would rcquire additional investment which would rcsult in even higher revenue requircments. Thc residents' concems go well beyond the operation of the water sysrem. The Association byJaws do not addrcss the water systcm at all, but do address maintenance and snow removal from roads within the subdivision. Homeowners have indicated that the ownerc reprcsented that ttre roads have been dedicated o Teton County and ttre County has accepted them. The residents are reluctant to join an association wtrich may, they suspect, have responsibility for the roads. They feel they need legal assurance that indeed the counry has acccpted rcsponsibility for the roads. Tbe restictive covenants of the subdivision havl not been strictly enforced by the owners. Residents claim favoritism on the part of the owuers regarding enforcement of the covenans. Some residents feel the formation of the Association is simply an anempt by the owners to sidesrcp responsibility for policing the covenants and mainaining the roadways and water system. Discussion with several rcsidents rcvealed that they may be witling to entertain the formation of an association of some type if limited to the control and management of the culinary water system. They still have reservations rcgarding any responsibilities transferred that rightfully should (in their opiuion) be retained by the development company. The rate history of the system has been relatively stable until last year. Therc are only three meters on the system at ttris time, and they are on the newest insullations. The Company charges customers a flat monthly rate and meters are not rcad. Initially, the= Company provided water at the $6.00 per month rate irdicated by both the Domestic Water Agreement filed with the county and the HUD repon. In 1987, the rate was increased to $15.00 per month and seems to have been accepted by the customers. The Company does not charge new customers for providing a connection to the water system. The Domestic Water Agreement and the HUD report botb include provisions for connection at no charge. This is not normal for most rcgulated water utilities. Generally a connection fee is charged which is at least large enough to pay the direct cost of actually making the connection and STATT REPORT MAY 25, 1995 often includes an additional incrcment to offset some of the cost of backbone water supply and transmission facilities. The Company has been absorbing its dircct cost for these connections as normal operating costs for supplying water. The Company notified customers by a letter dated December 20, 1994 that the rates were going to incrcrase in February of 1995 to $28.00 per month and again in May 1995 to $74.00 per month. This notice was the catalyst that led to the numerous calls to the Commission and the petition that was filcd seeking Commission intervention. The justifrcation for the increase provided in the December 1994 letter was to rccover through rates "...all back debts incurred agaimt the water system...' Additional justification provided to the Staff indicarcs that the rates are intended to recover the cost of thc new Well #2, the new pump in the #l well, the new ptessure tank and the new pressure pump over a two-year period. In addition tbe Company iadicarcd the rate was designed to provide for $500 per month to pay maintenance labor cosu and $174 per month for electriciry and provide funds for unforeseen emergencies. STAFF RECOMMENDATIONS In my opinioq the Packsaddle Development Corporation is, and has been, operating a domestic water system that clearly comes under the Commission's jurisdiction as a public utility as defined in Title 61, Idaho Codc. However, I firmly believe the customers and the ownent of the system would be better offif the systsm wcre to be organized as a cooperative non-profit system op€ratd ard managed by the residents of the subdivision. There is no assurance of continuity into the future with a small family-owned water corporation. Should something happcn to Mr. & hdrs. Bainbridge, thcir heirs,may not be willing or abh to accept rcsponsibilrty for maintenanee of the sysem. Acooperative association whose membership goes with ownership of the land providcs continuity of thc organization. I note that the protective coveoaots of the subdivision are binding until August of this year at which time tbey will automatically be exended for successive periods of ten years unless the majority of the property owners a$Ee to change them. The timing may make it possible to modifr those covenants to provide for operation of the water system. I have idcntilied for'r dternative solutious o the water supply problem in the Packsaddle Estate Subdivision. Three of those alteroative arc mdq the rcgulaed jurisdiction of the Commission. Tbe fourtb is the unrrylatca opcration of the werqr sy$Em througlr an organization composed of the subdivision rcsidens. The anachment to this report compares the cost to the homcowners under each of the dternatives. PUC REGUIATED OPTIONS The Company could continue as operator of the water system under the Commission's jurisdiction. This scenario rcquires a finding by the Commission regarding just and reasonable rates for the Company. To reach that findinE, the Commission must first determine the amount of the Company's investnent in the water system, a reasonable returu on that investment, and reasonable operating expenses. STAFF REPORT MAY 25,1995 Tbe Commission policy rcgarding developer-installed water systems is to assume thar the developer recovem all of the initial investment in the systcm through the sale of lots. This policy is premised on two basic assumptioos: either the water system was required by local ofticials bcfore the subdivision was allowe4 which means the lots were unsalable absent the systenq or the fact that a system was in place incrcased the value of the lots. Thercfore the developer has no initial invesunent in the system upon which to earn a return, and rates are based simply upon rcasonable opcrating costs, including compensation for time spent managing and maintaining the systcm. When major rcplacements of facilities arc required due to age and failurc, the.replacement cost is tneated as new investment and a return is allowed. The Packsaddle Estates odgind supply system and the traasmission mains represent the initial investrrent assumed to have been recovercd through the sale of lots: The rehabilitatioo of Well #l and the new pump in that well; the replacement of the pressure tank, and the replacement of the prcssurc pump are replacemcnt investrnents upon which the Commission would norurally allow a retum. The large investnrent in the new lVell #2 presents another problem. This well is not a replrcemenl It is a new well and is nccessary in order to complete the sysrcm for adequate service to the entire subdivision. The subdivision is only about one-third developed. The existing custome$ could be adequately served by the original well assuming drought conditions did not threaten to dry up the well. Of course this is exactly the condition experienced in 1992 and 1993 tbat led to the temporary connection to the private spring and the drilling of &e new dceper well in t994. Thereforc at least part of the cost of Well #2 could be assumed to represent an invesunent in systcm reliability for the benefit of not only new customers but existing customen as well. r The Commissioo must decide: l) Was the second well a necessary obligation of the development company to complete the system for which compensation has already been received through the past sdes of lots? 2) Was the second well requircd simply to maintain service to existing customers and therefore an investment upon which a rehtrn should be allowed? 3) Is the new well an investrnent made in order to assure service to existing as well as provide service to future customers in which case a rcturn is allowed on a prorata share of the new well in proportion to the fill ratio of the subdivision? Reasonable operating costs must be allowed in any rate strucurrc approved by the Commission. These operating costs include not only repair materials and supplies but also depreciation expeille, water testing expcnse, uxes (including corporate income taxes), electricity for pumping, rcasonable compensation for labor costs to maintain the rystem and perform administrative functions including customer accounting. Since no corponte vehicles exist, a reasonable mileage allowance for the use of private vehicles to perform water sysrcm business should also be added. Note that at the currcnt time the Company has no payroll and individuals are not being compensated for either labor or use of private vehicles. The Idaho Public Utilities Commission Customer Relations Rules and Regulations apply to all public utilities in the state. These rules prescribe the rcnns and conditions under which regulated utiliry customers receive service. The utility is requircd to adopt the STAFF REPORT MAY 25. t99s provisions of the rules that identifr the policies and practices including deposirs, disconnections and bilting. With the filing of ilris repo6 copies of these rules are berng pmvided to the owners of Packsaddle Dwclop'rrett Corporation and to Mr. Don Lingle as'the designatcd contact for tbe petitioners. A regulated utility is also required to file its proposed rate schedules, line exrcnsion policies and general service provisions witb the Commission for its approval. Finally, an Annual Rcport cmtaining the finamcid statement of &e utility must be filed with the Commission WREGUIJTED OPTION The fiad option is the formation of a homeorrmcrs cooperadve watcr system. The Commission has no jurisdiction over this qpe of wata sptcm, whieh is setf gwerning through its mcmbenhip. Cerain bcnefits are available to this type organization which help minimize the cost of providing watcr. Fust, anA the mdt obvious, is there ffe no income taxes to pay. Scsond, becausc it is a non"profit organization, there is no r€ura on investmcnt requircd to compensatt owneni. Rae.s may bc incrcased or decreased quickly simply by a majority vote of the mcmbcnhip. Mauy of the maoagcment finrctions for which a private corporation must rcceive compensation may be accomplishd frce through the ofEcers of the organization or o&cr volunteer efforts by tre members. CONCLUSION I strongly urge the Compmy and the rcsidcnts of Paclsaddle Esiates to investigate the formation of a coopcrative system. Should the Commission ultimatsly exercise jurisdiction over the system as a public utility, I believe the rates sct forth in the Attachment under altemate #l are just and reasonable for this system. I wguld support them in a format hearing. Stnong argument could also be made in support of alrcmative #3 as wetl. In my opinion, alternative #2 is patently unfair to the customers of a system that is currcndy overbuilt for the cxisting number of customerc. The Commission Staff has in the past conducted meetings less formd than official Commission hearings in an effon to expedite resolutions to complaints or proceedingp. I believe we stand ready to do the same in this case should the Commission, the Company and the residents believe such a prccess would be beneficial and rcsult in a stipulated rcsolution to this case. Such a meeting could be held soon assuming a suiable meeting location could be scheduled in the Tetonia-Driggs are& b,rmhh\p*ksaddhigorud5 I prclim.rpt STAFF REPORT ,ryry'E* Robert E. Smittr MAY 25, 1995 ATTACHMENT PAGE 1 UPDATED 05/25/95 3. 4. PACKSADDLE CREEK ESTATES ALTERNATIVE RATE STRUCTURE DEVELOPMENT Case No. GNR-W-95-1 Based upon limited actual financial inbrmation regading operation of the water system, mucfr of the bllowing information is based upon estimated requircrnents to operate the system. Where actualfinancialdata was available, that information was ueed as the basis forestimating levels of expense that reasonably can be expected to occur in he.futurc. 1. Elestricity expense is based upon ac{ual costs inarred during the period August 94 through February 95 which represents operation of the system wtth both wells operational. 2. Materials and supplies expen8es are based upon adual ests incuned brthe two most re@nt fiscalyears of the Corporation and do not indude costs incund brthe connec{ion of new customers. Labor costs for maintenance and adminigtration are my ortm estimates of reasonable levels required to monitor and perform routine maintenanoe of the system ri,hich includes travel time. Water testing expense and DEQ fees arc based upon the minimum costs for a *tranciEnf' system. This information wae provided by DEQ. Actual water Est expens* mry be higher in any otte year if additional tsts are required because of bad results from a previous test. These cost wiH increase at the time the suMivision reactes in excsss of 25 full time rcsidents. PUC hes are the minimum regulatory fee assessed by he Commission. Property taxes are based upon a 1.25o/o estimate provide by he ldaho SEte Tax Commission wtto is rcsponsible fur appraisal of public utility propErty throughout tre stnte. Administrative supplies is a simple estimate of S.501customer per month br postage and office supplies. This estimate does not assume monthly biling. The vehich allwance @ $.26frnlle assurnes 3 round tdps between Tetonia and the service area perw€ek (20 miles), and 6 mund tdps between Tetonia and Rexburg p€ryear (80 miles) to deliver water samples and/or get supplies not available in Tetonia. NoG that 112 of the cost of fips to Rexburg are assumed to provide persona! beneftt blthe individuals and are eliminated. The albwance is br fuel, oil, maintenance and wear & tEar on the vehicle. Page2 of this attachment presents the rate stuctures that result ftrom the fourfulloving altemative approaches to determining revenue requircment for he water system. Altemative #1 assumes all of the initial investnent in water Buppily, reservoirc and distribution plant have been recovercd by the developerthrough the sale of lots. Reflacement investment for repair of well #1, the neuv pump in well #1, the replacement of he pressure tank and the rc- placement of the pressure pump are beated as additional investnent that has not been recovered through the sale d lots. The new well is not included assuming this investment completes the developerE eommitment to provitle a compleE system adequate to serve the entire subdivision, in wlrich case the cost was recovered in years priorto Ure actual expendature. Altemative #2 is the same as #1 exoept the new uell is tr.eated as a new investment Altemative #3 is the same as #1 except 24l88ths of the new well are induded as new investnent to improve system reliabiliU br existing customers. the remainder of the investment is assumed to be for the benefit of future customers. Altemative #{ assurnes the system is converted to a homeourner controlled system in which case the customers controlthe rates and the PUC is not involved. A cooperative non-profit organization has no rate base (investnent) upon which a retum is nequircd. 5. o. 7. 8. ATTACHMENT PAGE 2 PACKSAD DLE DB/ELOPMENT CORPOMTION CASE NO. GNR.W.95.1 ALTERNATIVE RATE DESIGNS RATE BASE (INVESTMENT) INITIAL Ii.IVESTMENT MAINS/WELURESERVOIRS tfr,ELL #2 NEW PUMP IN WELL #1 NEW PRESSURE TANK NEW PRESSURE PUMP TOTAL RATE BASE NET REQUTRED RETURN @12% 8% STATE INC TA,\ (1A.23O2o/o OF NET) 15%FED MIN|MUM RATE tNC Tru( 07.U71oh OF NET) GROSS OPERATING INCOME REQUIRED ADD OPERATING EXPENSES: ELECTRTCTTY ESTTMATE (1500 K/IH/MO @$.088) DEPRECIATTON EXPENSE (20 YR COMPOSITE LIFE) MATERIALS & SUPPLIES ESTIMATE WATER TESTS (Note these could increase signiftcanty) DEQ FEES (Note these could go to S5 per customer) PUC FEES PROPERWTN( ESTTMATE @1.2s% OF RATE BASE MAINTENANCE LABOR (12 HRS/WK @ S10/r{R) ADMTNTSTRATTVE LABOR (IHR/CUST/MO @ S8) ADMINISTRATIVE MATERIALS & SUPPLIES VEHICLE ALLOWANCE TOTAL ANNUAL CASH RFUENUES REQUIRED ANNUALCOST PER CUST WTH 24 CONNECTED MONTHLY CHARGE UPDATED 0525/95 ALT#1 ALT#z ALT#3 ALT#4 $0.00 $0.00 $0.00 $0.00 $0.00 $21,341.43 $5,820.39 $0.00 $2,395.44 $2,395.44 $2,395.44 $0.00 $482.7s $482.79 $482.79 $0.00 s403.89 $403.8s $403.89 $0.0i $gsg.as $2,9s4.83 s1,og2.3o $o.oo $40.29 $302.28 8111.74 S0.00 $69.s0 8521.44 $192.76 $0.00 $1,584.00 $164.11 $500.00 $100.00 $2s.00 $50.00 $41.03 $6,?40.00 02,304.00 $144.00 $800.00 $1,584.00 $1,231.18 s500.00 8100.00 $25.00 $50.00 $307.79 $6.240.00 $2,304.00 $144.00 $1,584.00 $455.13 s500.00 sl00.00 $2s.00 $50.00 $113.78 $6,240.00 s2,304.00 $144.00 $1,584.00 $0.00 $500.00 s100.00 $25.00 $0.00 $0.00 $0.00 * $0.00' $144.00 $800.00 $800.00 $12.455.78 $17,(84.52 $13,712.71 S2,353.00 $518.9e $711.02 $571.36 $98.04$43.25 $59.2s $47.61 $8.17 'NOTE: lf residents deeired, rcmuneration br service of officers/caretakers could be arrangad. Cunent rate of $15.00 would provide montlily excess of $163.92 for this purpose or to provide a reserrre for unexpected rcpairs above normalmaintenance. A contengency reserve would help alleviate unusualassessments against users wtren extraordinary repairs are neoBssary.