INSCRIPTION CANYON WATER COMPANY

Members:

IMPORTANT Organizational Announcement

Part-time Contract Manager

The board has been concerned for the past 5 years about the inability to recruit new board members. Of the current board, one member -volunteer has been serving for 7 years, one for 6 1/2, 2 for 5 and one for 3. The last 2 annual elections produced no net-new nominations.

A suggestion was made by one of the member-attendees at the 2024 annual meeting, that perhaps a contracted manager that relieved the board members of much of their operational time commitments would make it easier to recruit “oversight” board volunteers. This had been discussed by previous boards since 2020.

The board researched this concept and agreed to investigate the legal ramifications and costs of this structural change. The resolution to fund the legal work was passed at the May 7^th meeting and appears in the minutes of that meeting. The research revealed that many utilities do use contracted management to operate the day today functions of the company. The going rate for these types of services was in the $60K-$80K/yr. range. There are several companies and individuals that provide these services in Arizona.

The company’s attorney determined that it was not a violation of the company bylaws to hire such a resource as an independent contractor. However, several board members expressed a reluctance to bring in a resource that had no ties to the communities that the company served, and no knowledge of the system or its complicated history and diverse users. There was also concern about the ramp up time and the total annual cost.

The concept of contracting with a member was also briefly discussed at the May 7^th meeting, where Mark Armstrong proposed to be the test pilot for this concept. He agreed to provide the services at a “substantially below market” rate to prove out the concept and get the boundaries of an ongoing job description defined. The board asked the company attorney to define the parameters for that to happen, with regards to Mark Armstrong’s current status as a board member and officer. The attorney reported to the board that to satisfy the ICWC bylaws, and the State of Arizona Statutes, that a board member could contract services to the company as long as:

• The potential conflict of interest was presented to, and accepted by the board by resolution
• The services were contracted transparently, and the contract was deemed favorable-fair to the company

The board agreed that this approach would be a good trial and would eliminate the ramp up time and be much lower cost.

The board acknowledged the disclosure of the conflict of interest potentially caused by this action. Randy Joly made a motion to accept the conflict as it had been presented. The motion was seconded by Dan Cancelleri and passed.

The board then reviewed Mark Armstrong’s qualifications for the position. Their findings indicated that he presented the following attributes:

• Degree in Chemical Engineering
• Master’s degree in Business
• 6 ½ years on the ICWC board including 2 as VP operations and 3 1/2 as President
• Established relationships with all active developers and the golf course operators
• Established relationships with all vendors and agencies
• Established relationships with all contract operations and business partners
• Established relationships with existing board members
• Visible member in all communities

As a result of these discussions, the board determined that there was not likely a better candidate available to trial this function, and requested that the company attorney, Jeff Crockett esq., prepare a draft contract for Mark Armstrong to provide these services. This draft was presented to the board. After a review of the contract, and a board conference-conversation with the attorney, Randy Joly made a motion to proceed with the contract, which was seconded by Mike Hubbard. The motion passed 3-0 with Mark Armstrong recusing himself from the vote.

The board agreed that the structural changes would be effective July 1^st. In the interest of maintaining an evenly distributed management structure, the board also proposed the following officer assignment changes, also to be effective July 1^st:

Mark Armstrong resigns as president and becomes a director and manager

Randy Joly resigns as secretary and becomes President

Giles Howard becomes Secretary and Treasurer

Mike Hubbard remains VP -Operations

Dan Cancelleri remains – Director

These changes were motioned for a vote by Randy Joly, seconded by Mike Hubbard and passed. Cheryl Ibbotson agreed to verify that these officer assignments were in compliance with the AZCC rules.

With one board member planning to re-locate, and one of the current board members being in the last year of their term and not seeking re-election, the board believes that this will allow the company to keep sufficient board members involved to satisfy the bylaws of the company in the event of another zero-nominee situation, and not allow control of our water resources to fall into the hands of a state agency. The manager contract is posted here: Inscription Canyon Water Company Management Services Agreement (Mark Armstrong).

This contract will be available to future applicants if the company deems it appropriate. It is cancellable with 30 days-notice, if future boards desire to revert to the current management model.

The board confirmed its intention to start conveying this concept to persons potentially interested in an “oversight only” board position, so that they may consider nomination for the elections this fall.

ADEQ 2023 Water Quality Test Results

Water quality test results are back from the AZ department of environmental quality. Our wonderful water passed all of the tests. The results may be viewed here ICR CCR 2023 and  (TRR) CCR 2023

There was a board of directors meeting held June 10th, 2024. The minutes of that meeting may be found here: Inscription Canyon Water Company -Draft Minutes June 10 2024

Thanks,

Your ICWC Board of Directors