San Andreas Mutual Water Company

2024 Shareholders Meeting

May 19, 2024

Meeting Agenda

(aka Presentation Contents)

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

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

Office Manager

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Owen Sharp

Joey : Water Dog

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)

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• Proposed new CA MCL is 10 ppb

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• The US EPA MCL is 100 ppb

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• SAMWAC Cr(VI) level is 20 ppb

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

What is Cr(VI)?

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

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• Anthropogenic sources are from industrial processes

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• Cr(III) is a necessary dietary element

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

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• SAMWAC Cr(VI) is naturally occuring

What happens when the new MCL is adopted?

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

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• Only drinking water needs to comply

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• 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

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

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• SAMWAC is looking at compliance options

We are testing POU units

Icepure system fits under the sink easily

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Works on RO principles

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Separate tap for water

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Testing shows nitrates and Cr-6 significantly reduced

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.

3M Lawsuit

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

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• SAMWAC has joined the class-action lawsuit

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

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Are We Conserving?

Financial Report

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• 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

Balance Sheet At-A-Glance

Reserve Discussion

21

6/15/22

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• 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

Spring 2024 Reserve Analysis

23

6/15/22

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

25

6/15/22

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• 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

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• Water quality and testing
• Noteworthy projects

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

Water Quality & Testing

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

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

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• Volatile Organic Chemicals: within regulatory limits

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• General Mineral/Physical: all within limits

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• 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.

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

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

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• New hydrant added near 101 Crest

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• Laterals fixed on Crest, Harms, and Palm View

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

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• 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.

Nitrate Monitoring

• Our delivered water meets all State and local requirements

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• Our nitrate levels are slowly increasing over many years

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• We blend from multiple sources to control nitrates

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• 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.

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

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

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• 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:

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• Tony Lee
• Paul Lego

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

“Whiskey is for drinking;

Water is for fighting over."�

- This quote has been attributed to Mark Twain