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San Andreas Mutual Water Company

2024 Shareholders Meeting

May 19, 2024

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Meeting Agenda

(aka Presentation Contents)

  • President’s Report
  • Financial Report
  • Maintenance Report
  • Election Results

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Background Info

  • Shareholders have been invited to join a Zoom meeting on May 19, 2024 @ 1:00pm.
  • This presentation will also be on our website: www.samwac.org
  • Shareholders, as always, are encouraged to ask questions and provide comments.

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Board of Directors

  • Tony Lee – At Large
  • Paul Lego – Treasurer
  • Owen Sharp – At Large
  • Carrie Wildenboer – At Large
  • Jay Zucca – President & Secretary

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�Operator of Record

Mason Weidner

&

Jasper

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Office Manager

Owen Sharp

Joey : Water Dog

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President’s Report

  • SAMWAC is a mutual water company
    • SAMWAC is your water company
    • We have ~140 connections, i.e. active shares
    • If you own property with a meter in our service area, you have a share.
  • SAMWAC Board
    • Members are unpaid volunteers elected every two years
    • Meetings are monthly every 3rd Thursday and open to shareholders
    • Info at samwac.org

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President’s Report

  • SAMWAC is in good shape
    • Our finances are in good order
    • We are slowly growing our reserves to meet future challenges
    • We have growing influence in the County and State
  • Challenges
    • New regulations are coming that could have an impact
    • Nitrate levels are continuing to rise in our water

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The State Water Board has approved a Chrome VI MCL

  • Current MCL (max contaminant level) is 50 ppb (parts per billion)

  • Proposed new CA MCL is 10 ppb

  • The US EPA MCL is 100 ppb

  • SAMWAC Cr(VI) level is 20 ppb

  • The effective date has not been set yet; probably January 2025

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What is Cr(VI)?

  • Chromium occurs naturally in the environment in various oxidation states (i.e. III and VI)

  • Anthropogenic sources are from industrial processes

  • Cr(III) is a necessary dietary element

  • Cr(VI) is toxic at high concentrations (ppk)

  • SAMWAC Cr(VI) is naturally occuring

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What happens when the new MCL is adopted?

  • Systems with <1000 connections will have 4 years to comply

  • Only drinking water needs to comply

  • Treatment options: 1) point of entry to the house, 2) point of drinking water use, 3) treatment at source, 4) new source of water

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CalMutuals is engaged on this issue

  • Zucca is a member of the CalMutuals board

  • CalMutuals sponsored economic feasibility study found that the States cost estimates are too low by factor of 2.

  • SAMWAC is looking at compliance options

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We are testing POU units

Icepure system fits under the sink easily

Works on RO principles

Separate tap for water

Testing shows nitrates and Cr-6 significantly reduced

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The State is thinking about PFAS next

  • PFAS is a family of fluorocarbon chemicals with a variety of everyday uses
  • Called ‘forever chemicals’. Potential health risk.
  • Our wells are within 1 mile of a closed landfill
  • For the two main chemicals (PFOA, PFOS), we are below the proposed EPA MCL of 4 PPT in wells
  • CA wants us to quarterly monitor all three wells. We have negotiated to reduce this requirement to reduce sampling costs.

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3M Lawsuit

  • 3M to begin multi-billion dollar payouts in 3rd quarter over PFAS in fire-fighting foams and other products

  • SAMWAC has joined the class-action lawsuit

  • We are likely to receive $30 to 40k as part of this action

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Are We Conserving?

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Financial Report

  • Financial Summary
  • Income Statement at-a-glance
  • Balance Sheet at-a-glance
  • A look at our reserves

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Financial Summary

  • Ended 2023 with a $35K operating loss
  • Water revenues were lower due to a rainy year
  • 2023 saw a lot of big repairs and higher operating costs
  • Rate increase in early 2024 is helping but not enough
  • No new connections in 2023, so Reserves were flat
  • Finished 2023 with $391K in cash + reserves
  • Continuing to have an outside CPA review our books
  • In solid financial shape, but still need to grow reserves

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Income Statement At-A-Glance

2023

2022

2021

(Preliminary)

Revenues

Water Fees

$112,867

$119,918

$101,947

PVWMA + Other Income

27,715

15,276

9,951

Total Revenues

$140,582

$135,194

$112,701

Expenses

Payroll and Administrative

$56,014

$41,627

$42,825

Operations

101,422

71,822

98,337

Other Expenses

800

800

800

Total Expenses

$ 158,236

$ 114,249

$ 141,962

Profit/(Loss)

($17,654)

$21,143

($29,241)

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Balance Sheet At-A-Glance

12/31/23

12/31/22

12/31/21

(Preliminary)

Operating Cash

$15,839

$29,788

$21,299

Reserves

$375,445

$375,136

$194,171

Total Cash

$391,284

$404,923

$215,470

Fixed Assets

$18,938

$22,938

$28,232

Accounts Receivable

$0

$0

$0

Liabilities

$7,956

$5,765

$4,809

Equity

$399,935

$421,436

$239,693

Shareholders interested in more information are encouraged to request a copy of the Annual Report (i.e., complete financial statements) by email to samwacwater@gmail.com.

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Reserve Discussion

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6/15/22

  • Why do we need Reserves?
  • When things break, repairs/replacement are expensive
  • Repairs/replacements often come as a surprise
  • We need to be financially prepared for emergencies
  • We may need $$$ to comply with Cr-6, etc.
  • The state of CA requires us to have reserves

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Reserve Analysis Assumptions

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6/15/22

  • Asset Lives and Today Replacement Costs:

Wells = 40 years, $100K

Pumps = 20 years, $25K

Tanks = 50 years, $250K

Valves = 50 years, $40K

Controls = 20 years, $25K

Generator = 20 years, $60K

Meters = 25 years, $40K

Water Mains = 70 years, 4.5 miles, $4.7M+

Sheds = 50 years, $10K

        • Cost to replace 1 linear foot of Water Main = $400+
        • 140 Connected Users

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Spring 2024 Reserve Analysis

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6/15/22

Including Water Mains

Not Including Water Mains

Overall Replacement Cost (2024)

~$5.8M

~$1M

Replacement Cost per Customer

~$40,437

~$7,430

Reserves Needs today (2024)

~$2.3M

~$552K

Reserve Deficit today (2024)

~$1.9M

~$177K

Reserve Deficit per Customer

~$13,509

~$1,240

Annual Depreciation

~$100K

~$30K

Annual Depreciation per Customer

~$700

~$200

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Reserve Summary

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6/15/22

  • It would cost about $6M to replace our water infrastructure today
  • Higher inflation will make this number higher in the future
  • Most of that cost ($4.8M) is our 4 ½ miles of water mains
  • The rest of our wells, tanks, etc. would cost ~$1M to replace
  • We have ~$375K in reserves today to cover replacement costs
  • We now have those reserves invested in CDs making 4-5% annually
  • Every year our equipment gets older and more likely to break
  • New Connection Fees of $50K per customer help
  • But very few new connections are left to hook up
  • We have some time, but this problem is not going away
  • We need to figure out other ways to build reserves

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New Payment Options

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6/15/22

  • SAMWAC now accepts electronic payments via:
        • Zelle
        • Venmo
  • Electronic Payments make life easier for everyone
  • Find our Zelle account using samwacwater@gmail.com
  • Talk to Owen if you want to pay via Venmo
  • Please include your account number on any transaction so we can properly credit your account

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Maintenance Report

  • Water quality and testing
  • Noteworthy projects

We’re very fortunate to have such good quality water, and a dedicated team to keep it flowing.

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Water Quality & Testing

In the past year SAMWAC has met all State and Local water quality requirements:

  • Coliform organisms (i.e., E-Coli): zero

  • Volatile Organic Chemicals: within regulatory limits

  • General Mineral/Physical: all within limits

  • Details have been mailed to all shareholders in the annual Consumer Confidence Report

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Noteworthy Completed Projects

    • The Well-2 modification project did not reduce nitrates. Well-2 is off-line.

    • Valves at the end of Crest were cleared of tree related damage.

    • Water main taps that were installed last year now have meters and radios in place

    • New hydrant added near 101 Crest

    • Laterals fixed on Crest, Harms, and Palm View

    • Ladder cage added to Tank-1 and a longer ladder

    • Upgraded last manual read meter to radio!!

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Water Security

Our water table is rising due to rains. Little effect from months of drought before the rains.

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Nitrate Monitoring

  • Our delivered water meets all State and local requirements

  • Our nitrate levels are slowly increasing over many years

  • We blend from multiple sources to control nitrates

  • Point of Use reverse osmosis is an option. We are testing a model for durability now.

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Future Projects

    • 6” main valve on Tank-2 is leaking and needs to be replaced.

    • A lead pipe audit turned up several galvanized pipe laterals that will soon rupture (years). These need to be replaced with plastic or copper.

    • All water main gate valves need to be tested and evaluated for replacing. They just leak too often.

    • Complete backup water level monitoring electronics on Tank-1

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Election Results

Thanks to our ballot proxies,Marina Chiarappa-Zucca and Sandra Hoppe, for certifying the election of:

  • Tony Lee
  • Paul Lego

Congratulations, and thanks to all the Directors for your continued service to the SAMWAC community!

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“Whiskey is for drinking;

Water is for fighting over."

- This quote has been attributed to Mark Twain