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. )
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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
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t21824
FILED
Committee on Protective C,ovenants
}".fls TI{E BEOUESTOF
'/15
1t13t416 DocumentSsch
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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
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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
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Teton County Recorded Documents
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Document Detall
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Inttrum€nt #
Tnncagtion Codg
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#L21824 PACKSADDI-E WATER USERS ASSOCIATION INC.
Name
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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
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tEtcw6a
6E0;0P STATE
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Art'tcrrs offiiiRrruor
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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
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lCahc Public Recorcis r Business Entity Search
I New Search ] [ Back to Summary ]I N4onitoT PACKSADDLE CREEK ESTATES HOMEOWNER.S ASSOCIATION. INCORPORATED business filings ]
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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
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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.