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HomeMy WebLinkAbout1975-04-17 Min - Board APRIL 21 , 1975 The special meeting of the Board of Directors of the Truckee-Donner Public Utility District was called to order by the president at 5 : 07 p.m. in the conference room of the District. ROLL CALL: Waters . present ; Sutton, present; Wilson, -present ; TRUCKEE-DONNER PUBLIC UTILITY DISTRICT POST OFFICE BOX 309 TRUCKEE, CALIFORNIA 95734 TELEPHONE 587-3896 APRIL 17, 1975 F` THERE WILL BE A SPECIAL MEETING OF THE BOARD OF DIRECTORS OF THE TRUCKEE-DONNER PUBLIC UTILITY DISTRICT ON MONDAY, APRIL 21 , 19759 AT 5 : 00 P.M. IN THE CONFER- ENCE ROOM OF THE DISTRICT. AGENDA: DISCUSSION WITH AUDITORS, ARTHUR YOUNG & COMPANY, REGARDING THE TRANSFERRING OF TAHOE DONNER RESTRICTED FUNDS TO GENERAL FUND AND ACCOUNTING PRACTICES RELATED TO THE DONNER LAKE ELECTRIC LINES. TRUCKEE-DONNER P.U.D. j� BY: PAUL HOBENSACK, MANAGER 3 PH:mhk Page 222 APRIL 21 , 1975 The special meeting of the Board of Directors of the Truckee-Donner Public Utility District was called to order by the president at 5 : 07 p.m. in the conference room of the District. ROLL CALL : Waters , present ; Sutton, present; Wilson, present ; Anderson, absent, arrived late; Craig, present . EMPLOYEES PRESENT: Kinzie, Hobensack, Chapman, Grow, Drace -- OTHERS PRESENT: Mr. & Mrs . Robt. Christensen, Art Broughton (Sierra Sun Reporter) , Don Strand (Dart Resorts representative) , Dan Cook, Brian Strom and Matt Gomez . ARTHUR YOUNG & COMPANY Mr. Brian Strom and Matt Gomezwere present from Arthur Young & Company to discuss with the Board several accounting transactions they dis- covered in conducting the 1974 audit. In regards to the monies in restricted funds collected under the Tahoe Donner Water Agreement , Mr. Strom stated that all funds were in the Restricted Account except $51,195 . In August, 1974, $19 , 520 was transferred to the General Fund; $21 ,925 never was deposited in restricted funds but went directly into the general fund; and $9, 750 was transferred sometime in 1973. In summary, the accountants were interested in meeting with the Board to ask if they had any knowledge as to why the money was transferred, where it was spent and if it was spent for additional source and supply facilities for Tahoe Donner as justified in the Agreement. Neither the Board members nor Dan Cook, the District' s water consultant, had any knowledge that the money was spent to provide additional source and supply facilities to service Tahoe Donner. Director Waters stated that he thought the money was spent to pay j past-due amounts to creditors . In rectifying the District ' s situation in regards to the water monies , Mr. Strom recommended two alternatives : 1) replenish the trust fund, or 2) renegotiate the agreement. Another justification for the transferring of the money was the possibility of the previous District Manager, George Cattan, had advised the Board that the money was not restricted and the Board acted on this advice. Mr. Strom recalled seeing a letter to this effect; however, he could not find a copy of it in his files . Also, George Cattan gave to Dart ' s predecessor, Lakeworld, a $56 , 875 "credit" on the water agreement payments which represented the installation of a pipeline from Highway Drive to Soma Sierra tank. This raises a legal question of whether George Cattan was authorized by the Board of Directors at that time to give this allowance or whether he was acting beyond his authority. Electric Agreement': It was reportedthat $178 ,627 was received from Dart for the construction of the electric distribution line at Tahoe Donner (based on the total lots times $35) . All but $51 ,660 was transferred to the General Fund of the District. The remaining $51 ,660 was reimbursed to Dart as outlined in the Supplemental Elec- tric Agreement of May 1974. This apparently was to represent the amount that was not spent for the construction of the lines . Mr. Strom noted that in 1972 the monies transferred to the General Fund from the � -1 restricted fund were used to cover the expense of constructing the electric system. However, the money transferred in 1974 was not directly related to providing service to the lots in Tahoe Donner ; that is to say, the expenditures for line construction were not allo- cated to this amount transferred to the General Fund. At the time the monies were returned to Dart, the Districtstill had on hand $38 , 307 which was not returned to Dart, but later transferred to the General Fund by the Board while Lyell Cash was acting as Interim Manager in October 1974. Page 222 Arthur Young � Company . . . continued Director Sutton throught perhaps money was withheld to pay for certain materials ordered for the construction of the Tahoe Donner lines that was then given to the electric contractor employed by Dart to finish the line construction. Mr. Hobensack was directed to look into the - total amount in dollars for the materials given to the electric contractor for that construction. Also brought to the Board' s attention was the fact that the total construction cost ( 101 , 000) for the Tahoe Donner distribution lines built by the District to serve 1 , 864 lots of the total 2 ,486 lots in Units 1-4 and 7, was exceeded by approximately $36 , 000 more than received from Dart at $35 per lot. This had never been brought to the Board' s attention. Director Sutton asked if there was any direct relation between the construction of the Donner Lake substation and the TAhoe Donner development. The auditors have not established any correlation at this time . Mr. Strom said a legal opinion should be rendered by our attorney regarding the $38 , 307 that was not returned to Dart and later transferred to the General Fund to see if there is a District liability to Dart in this amount. Mr. Joynt referred this matter to Martin McDonough since he assisted in the preparation of the Supplemental Electric Agreement. Mr. Strom proposed contacting Mr. McDonough to set up a meeting with the proper participants to discuss the situation. The Board agreed with this procedure and requested they be kept advised. Mr. Strom felt the legal opinion from our attorney regarding the spending of electric monies is needed prior to completion of the 1974 audit. Mr. Joynt asked if the audit could be completed with no- tations made in the trouble areas discussed tonight. Mr. Strom said he would look into this possibility. Director Sutton asked if other funds held in trust accounts for other subdivisions was accounted for. Mr. Gomez felt there was some money that should be transferred to the General Fund from restricted funct as the project has been completed and there is no longer any restriction on that money. The proper procedure for this would be to have a resolution prepared to authorize the transfer. Director Sutton asked if the $S , 700 transfened to the general fund in August 1974 from Prosser Lakeview Estates electric accounts was a proper transfer. She believed the current and preceeding con- tracts required electric line construction along rear lot ease ent but the District had built the lines along the street. Mr. Gomez said their information was that construction on PLVE Unit 4 was complete . Director Sutton Questioned whether the auditors shouldn' t be concerned if the District has liability from the standpoint of what the contracts say and what was in fact done . She requested including the matter for review with the other Dart Agreements . Mr. Gomez said a legal interpretation of the contracts would be needed, and Mr. Craig said the plans would need to be reviewed. Mr. Strom agreed that the matter should be looked into. Sierra Pacific and Donner Lake Electric Sy stem Acquisition: The agreement stated that the District is responsible for setting up sep- arate cash accounts, which is supposed to be used to channel all revenues from Donner Lake, separate from the General Fund. From that separate fund, the District can take monies out for the maintenance and operation of the Donner Lake system. Also , a separate fund was to be established for future payments on the principal and interest on the Donner Lake acquisition. Mr. Hobensack corresponded with Sierra Pacific Power Company re- garding these defaults under Sections 16 , 18 , & 20 in the agree- ment. SP.P. Co. has acknowledged these defaults and waived its right to claim them for 1974. They have not waived the right indefinitely. An alternative suggested to this situation is to renegotiate the the Electric Contract with Sierra Pacific. Mr. Waters proposed selling surplus lands and pay off the debt to Sierra Pacific. Page Two - April 21 , 1975 Page 223 Arthur Young & Company continued In order to comply with the contract as it is currently written for accounting purposes would necessitate more accurate distribution of expenses to the Donner Lake accounts . Mr. Hobensack noted that the physical separation of the two electric systems does not now exist and would be impossible to do at this time. The separation would entail engineering and construction work to comply with the present contract. The total purchase price for the Donner Lake system was $179 , 841 plus interest under a fifteen year contract dated 1967 . •� It was moved by Director Anderson that the manager and attorney, Mr. Joynt, be authorized to pursue the renegotation of the Sierra Pacific Power Company Donner Lake Acgdsition Agreement , Sections 16, 18 , and 20 with S. P.P. Co'. Seconded by Director Sutton. The question of the accountants working with Mr. Hobensack and Mr. Joynt was discussed; however, Mr. Gomez did not think it would be proper. ROLL CALL: Waters , aye ; Sutton, aye ; Wilson, aye; Anderson, aye ; Craig, aye. SO MOVED. The Board agreed that it is the responsibility of the manager, Mr. Hobensack, to sign and approve or disapprove electric plans for construction at Tahoe Donner and other subdivisions. The Chairman asked that the Directors review the letter presented to them from the Department of Real Estate dated April 16 , 1975 , releasing Dart' s Letters of Credit as it will be on the regular meeting of May 6 agenda. Director Sutton requested that a discussion by the Board on how to proceed with the 1975 Budget be placed on the May 6 agenda. The possibility of having Arthur Young and Company assist the Board in the preparation of the Budget was discussed and Mr. Hobensack was directed by the Chairman to contact them so that a proposal of the procedure and cost could be presented at the May 6 meeting. There being no further business to come before the Board, it was moved by Director Waters and seconded by Director Anderson that the meeting adjourn. The special meeting of the Board of Directors was adjourned by the President at 6 : 4S p.m. TRUCKEE-DONNER PUBLIC UTILITY DISTRICT r By: a. N�4 ohn Craig, Presi ent of the Board Merril n Kinzi Recording68ecretary Page Three - April 21 , 1975 page 224 RESOLUTIONS AND ORDINANCES Number Title Page Res. 7506 REA COMPLIANCE ASSURANCE 23 Res. 7507 OPENING BANK ACCOUNT AT TAHOE NATIONAL BANK AND AUTHORIZING SIGNATURES 170 Res. 7508 ADOPTING RURALITE BASIC SAFETY RULES 199 Res. 7509 ADOPTING GENERAL ORDER NO. 959 RULES FOR OVERHEAD ELECTRIC LINE CONSTRUCTION 200 Res. 7510 ADOPTING GENERAL ORDER NO. 128, RULES FOR CONSTRUCTION OF UNDERGROUND ELECTRIC SUPPLY AND COMMUNICATIONS SYSTEMS 201 Res. 7511 FIXING AND PLACING ELECTRIC AND WATER STANDBY CHARGES ON DISTRICT TAX ROLL FOR COLLECTION BY THE COUNTY OF NEVADA. . . . . . (Rescinded) 205 Res. 7512 FIXING AND PLACING ELECTRIC AND WATER STANDBY CHARGES ON DISTRICT TAX ROLL FOR COLLECTION BY THE COUNTY OF NEVADA 208