This was a strange meeting. The Board of Directors pushed their lack of transparency with shareholders farther than ever before. They refuse to answer any questions asked during the meeting, and the only information given out was from Dave Nilsen or his daughter Kelli Williams. After the chaos of the August meeting, now we are getting a first-hand look at the family who runs this company. A reversion to form, if you will, since everyone knows that Mr. Nilsen runs Sheep Creek Water Company, regardless of who has the title of “president” or “vice-president” etc. Still, very weird. The GM didn’t even give the system update, that honor went to Mrs. Williams, who simply read the update included in the agenda out loud.
Mr. Nilsen had a few things to say in the meeting. Towards the end of the meeting, he talked about company goals, and dropped an interesting tidbit. One of his goals is to bring a plan to equalize the allotment for shares to the annual meeting. What an interesting admission, considering there has been discussion on the Sheep Creek Shareholders Forum on Facebook about the current allotment being illegal, with lawsuits being filed against the company and a class action lawsuit discussed, specifically about the current inequitable treatment of shares.
The timing of this allotment change seems all wrong, unless the Board is quietly admitting they have a legal problem on their hands. The Board of Directors, especially Mr. Nilsen, have repeatedly stated their plan to pay for additional wells using Tier 3 money. Giving every share the same water allotment out of Tier 1 would seriously hamstring their Tier 3 funds. There would still be Tier 3 money coming in, but not nearly as much. The one problem with this, of course, is that the people most impacted by this change would be the customers with only one share. They would bear the brunt of the Tier 3 charges moving forward.
Mr. Nilsen’s other comments were about the illegal closed session discussion the previous month. Mr. Nilsen is chairing a committee, and he will select the people who will be on this committee. Much like the current “Roberts Rules of Order” committee, which is made up entirely of Nilsen extended family members. This committee will be discussing Sheep Creek Water Company’s attempts to get the compliance order from the State Water Resource Control Board lifted. The deadline for complying with the order is December 1, so time is of the essence on this one.
Some of the details Mr. Nilsen brought up about this committee were very interesting: committee members will be paid $200 per meeting, and the company is setting up a $50,000 fund to pay their lawyer to review and strengthen their arguments for the SWRCB. All of this money will of course come out of Tier 3, which continues to be the Board’s slush fund for all sorts of goodies. California may not have bought the Nilsen family shares last year, but they’ve come up with all sorts of ways to get money out of the company since then, with the Share Buyback Program, quietly raising the Board stipend from $200 to $600 per month, and now the SWRCB forgiveness committee.
The fact this committee has to happen in the first place makes it clear the company won’t actually be in compliance by December 1. Personally, I think it is very dangerous for Sheep Creek to rely on goodwill from the state that refused to buy our shares last summer because they don’t “buy failed water companies”, especially when it is known that California in general isn’t a fan of mutual water companies. We won’t have long to wait for an answer, though, since December is right around the corner.
The other main item of interest from the meeting is the Board answered my previous question about the collateral for the loans for the wells they are drilling. Kelli Williams said the bank providing the loan has liens against all properties of Sheep Creek Water Company. They refused to elaborate on what this means, but this information alone is pretty scary. If the SWRCB finds Sheep Creek to be out of compliance, they can fine the company up to $10,000 per day. Wouldn’t take long for this to become a problem, and with all properties having liens on them the Board could quickly be backed into a financial corner.
One final note: Kelli Williams discussed having high school students from Victorville work on a water bill calculator for the Sheep Creek website. Hard to say whether or not this is a good idea or if it will work, but just the fact this is under discussion shows how arcane and bizarre the Sheep Creek billing system is. Our usage isn’t even broken out by tier on the monthly bill, and neither are the charges. Instead of making the billing system better, they’re going to put a calculator on the website. Weird.