Pennichuck Water Special Committee

REPORT OF THE PENNICHUCK WATER SPECIAL COMMITTEE OCTOBER 9, 2013 A meeting of the Pennichuck Water Special Committee was held on Wednesday, October 9, 2013 at 7:00 p.m. in the Aldermanic Chamber. Alderman-at-Large Brian S. McCarthy presided. Members of the Committee present: Alderman-at-Large Barbara Pressly Alderman Michael J. Tabacsko Alderman-at-Large Mark S. Cookson Alderman-at-Large Lori Wilshire Also in Attendance: Alderman Daniel T. Moriarty, Arrived after Roll Call John Patenaude, CEO, Pennichuck Corporation Thomas J. Leonard, Chairman, Pennichuck Board of Directors PUBLIC COMMENT COMMUNICATIONS MOTION BY ALDERMAN WILSHIRE THAT THE RULES BE SO FAR SUSPENDED AS TO ALLOW FOR THE INTRODUCTION OF A COMMUNICATION REFERRED TO COMMITTEE AFTER THE AGENDA WAS PREPARED MOTION CARRIED From: Mayor Donnalee Lozeau Re: Obligation to Reimburse the Merrimack Valley Regional Water District for Expenses Related to the Pennichuck Corporation Acquisition MOTION BY ALDERMAN WILSHIRE TO ACCEPT, PLACE ON FILE AND RECOMMEND THAT THE BOARD OF ALDERMEN REAFFIRM THE CITY’S OBLIGATION TO THE MERRIMACK VALLEY REGIONAL WATER DISTRICT FOR REIMBURSEMENT OF EXPENSES INCURRED AS A RESULT OF ITS PARTICIPATION IN THE PENNICHUCK CORPORATION ACQUISITION PROCESS AND DIRECT PENNICHUCK CORPORATION TO DISPERSE, ON BEHALF OF THE CITY, $250,000 OF THE RECENTLY DECLARED SHAREHOLDER’S DIVIDEND TO PAY THE CITY OBLIGATIONS TO THE OTHER SEVEN (7) MUNICIPALITIES THAT COMPRISE THE DISTRICT ON THE QUESTION Alderman Pressly I have lots of questions. First off, did the Pennichuck Corporation ever announce to us that they were going to disperse the $500,000 this year? I know the Mayor brought it up during budget time because she had already decided where she wanted this disbursement to go, but I do not recall that we have ever received a formal communication saying that the company is sufficiently stable and in good shape this year, that we can distribute the $500,000 refund. Pennichuck Water Special Committee -2- 10/09/13 Mr. Patenaude The Board of Directors declared the dividend at the August meeting to be paid in October. The dividend is mainly a result of giving the conservation easement money from the Forest Protection group. Chairman McCarthy Were we informed of that in some way? Alderman Pressly Did you ever send us a memo saying that you were going to get half a million dollars as the refund this year, that we’re stable enough? Mr. Patenaude No, we didn’t. Alderman Pressly We’ve all suspected this because the Mayor during budget had already decided that she had $250,000 that she wanted to add to paving which I was surprised. I have to assume that she did know about this. I’m sort of confused because we’ve never been formally notified. Chairman McCarthy The Board would have voted on the Declaration of the Dividend, correct? Mr. Patenaude Yes, they did. They voted at the August meeting. Chairman McCarthy I presume the Mayor was there in her capacity as a director at that. Mr. Leonard That is correct. Alderman Pressly She knew in August. You have to understand we’ve never been notified that we were going to get a refund this year in any formal way. So she did know in August. Mr. Leonard I am concerned just so we can have good communication, would you like notice? That wouldn’t be a typical process. Chairman McCarthy I think under the circumstances, it’s probably a good idea. Pennichuck Water Special Committee -3- 10/09/13 Mr. Leonard When we first put it on the agenda, would you like notice that it’s being discussed? Is that the right way to handle this, as far as you’re concerned? Chairman McCarthy I would be happy if we were just told when the vote was taken although others Alderman Cookson I was just curious how other companies are notified when dividends are approved? How companies notify their shareholder or shareholders. Chairman McCarthy With a check. Mr. Leonard They do it the way we did it. I understand that you want to develop a little closer relationship and exchange information so we’re happy to at least consider what you’re talking about. I don’t think there’s a concern. Of course it is part of our agenda which is posted on our website. Alderman Cookson I’m thinking about companies that we worked for, Alderman McCarthy. While we have received checks, I believe there was also an outward effort in a shareholder call or conference call that they would announce that dividends were being, I know that I’ve been part of those phone calls. Chairman McCarthy If you’re a publicly traded company you have those quarterly or annual disclosures where those things are done. Alderman Cookson Correct. Chairman McCarthy We don’t do that because it’s not a publicly traded company anymore. Alderman Cookson I think that’s a technical piece to this. Typically shareholders are notified or have notice that a dividend is going to be released. Chairman McCarthy I think that’s the right thing to do and we should do it that way. Pennichuck Water Special Committee -4- 10/09/13 Alderman Pressly I’m surprised that this is called a dividend because my understanding is that we are not to get regular dividends. This is a refund that was specifically spelled out by the PUC. After the $5 million that we spent to purchase the company, after that which if they do it in $500,000 increments, and they do it every year, it would be about ten years. After ten years, I don’t think there’s going to be any dividends, are they? This is not a traditional corporate dividend. This is a requirement by the PUC, an understanding, and this is a refund for the expenses that the city incurred to purchase the company. Once that’s over, it’s over. Chairman McCarthy That’s true, but it’s still a dividend in the traditional sense of the word. The company is under a regulation that it can only pay $500,000 dividends or less until $5 million is reimbursed. Alderman Pressly I’ve already had some comments. I think the fact that we’re sort of an interesting hybrid that maybe we should look at new words to explain it more clearly. This is really not a dividend. Mr. Leonard It’s absolutely a dividend. Chairman McCarthy It is in corporate law. Alderman Pressly In your world, but for us it’s unanticipated revenue. Mr. Leonard No, it isn’t. I beg to differ with you. Chairman McCarthy In terms of the city it is. Alderman Pressly The city. What you are doing, you’re announcing that you’re going to give us an unanticipated revenue in our budget process. I’m wondering does that require legislation? Would that be cleaner for us to say that Pennichuck is now going to give us a new $500,000 revenue? Chairman McCarthy If we’re going to spend it as the city, then we must do that. What we’ve asked them to do is actually write half of the check to the Regional Water District because there’s no real reason why it should ever go through the city’s treasury. Pennichuck Water Special Committee -5- 10/09/13 Alderman Pressly That’s sort of why we need to talk about this because I really am confused. We’re going to get $5 million back over a period of a minimum of ten years. That’s money that was taxpayer money that was spent to purchase the company. We’ve agreed to give from that $5 million, $250,000 to the Regional Water District. You need to know that’s not the full amount that they spent. They spent over $300,000. It was a negotiated lesser amount than what they spent, all the towns. If we don’t take it and have you issue the money, what does that do? Does that mean after we receive $4,750,000 that it’s over or do we get that $250,000 at the end of the $5 million refund? Mr. Patenaude My understanding of the agreement with the PUC was that that $250,000 was part of the eminent domain cost, the $5 million. It was part of that $5 million that is paid over time. Alderman Pressly So in other words when the towns are paid the $250,000 we’re getting back $4,750,000. Mr. Patenaude Here’s where you have to be careful. The PUC ruled on $5 million out of the regulated utilities over time to the extent that the regulated utilities could pay that. Then there are other non-regulated utilities that can pay dividends to Pennichuck Corporation who can then pay dividends to the City that are not regulated. You could still get back over time to that $5 million that you are looking for. Alderman Pressly So what I said was not true? We will still can $5 million? Chairman McCarthy The agreement covers $5 million in total from the regulated utilities. It is possible that, for example, the services corporation which is not regulated by the PUC has a very profitable year. It can pay us a dividend that is not restricted by the PUC’s agreement on the acquisition. We haven’t anticipated that at all yet. That is separate entirely from the acquisition and the $5 million reimbursement. Mr. Patenaude is just pointing out that if the services business is really good we could make money at that. Alderman Pressly Wow. That’s something that we promised we would not do. The city would not make money on this. Chairman McCarthy We promised we wouldn’t make money on the regulated utilities. This is a service that we contract out to towns in Massachusetts. This is not to our water customers. We provide service for other water systems by contract. Alderman Pressly So by buying the water company we are going to after the payback on the $5 million we could be making money according to what you’re saying. Pennichuck Water Special Committee -6- 10/09/13 Chairman McCarthy It depends on the performance of the service company and what the Board of Directors does with the service company. Alderman Pressly That’s a surprise to me. Chairman McCarthy At the moment, I don’t anticipate getting rich from it. Alderman Cookson Is the service arm the only unregulated utility in which we would potentially receive dividends from? Mr. Patenaude There are two unregulated companies: the Southwood Corporation and also the Pennichuck Water Service Company. Southwood is a real estate arm and that’s where we got some of the money, some of it came through the conservation easement from the Forestry group. That’s where some of that money came from. Alderman Cookson Understood. How active is Southwood at its current state? Mr. Patenaude It’s not active. Alderman Cookson Right. In actuality we only have the Mr. Patenaude The service company. Alderman Cookson Thank you. Alderman Pressly I believe the services company is where you have expanded and have brought in a profit if I understand what I’ve been watching. Mr. Patenaude It’s a slight profit. Pennichuck Water Special Committee -7- 10/09/13 Alderman Pressly A slight profit, but a profit. What do we normally do if we have an unanticipated revenue? Do we have a resolution to bring it in and accept it and put it in the budget? Chairman McCarthy The revenue just comes into the general fund. If we want to do something with it we need a resolution to appropriate additional money. Alderman Pressly Well we’re going to clearly do something with it. Either gives it back to the taxpayers or the mayor wants to have it be paving. She announced that during budget time. Chairman McCarthy And that would require an appropriation. Alderman Pressly But not to accept the money. Would it not be appropriate to? If we’re putting it in our coffers we’re going to do something with it even if we just leave it there. Chairman McCarthy We don’t pass a resolution every time somebody pays their taxes. Revenue just comes in over the course of the year. We pass resolutions to appropriate money. Typically we do it for things like grants because there is an appropriation that goes with it to expend the money or we put it in a trust fund. It’s basically the expenditure of the money or the approval of potentially expending the money that requires a resolution not the revenue, itself. Alderman Pressly I always assumed that you would return it to the city and the city would give the $250,000 in one lump sum, that’s sort of has been the understanding, to the towns. Why do you want to change it and have it go directly from you to them and not through us as sort of is what the interpretation of the PUC and this means? Why do you want to do this? Chairman McCarthy They don’t want to. We asked them to do it that way because it’s easier for us. Alderman Pressly So it’s an easier step. Mr. Leonard We don’t even know if it’s easier. To be honest with you the way we view this, and when I say “we” I simply mean the Pennichuck companies, we view this as an investment that you have. You own a corporation, actually you own the stock. We treat it like your investment. This is a return on your investment. What you want to do with it is fine by us in any fashion. The only reason we are willing to make a direct payment to somebody is because the city asked us to. We don’t really have any interest in it. It’s solely up to you. Pennichuck Water Special Committee -8- 10/09/13 Alderman Pressly According to the three items that the Mayor has spelled out here, it says payment of the district’s costs incurred during the acquisition process and an agreed to amount of $250,000 paid from dividends to the city by Pennichuck. Clearly the Mayor is asking for a change in the agreement. A minor change granted. Mr. Leonard I don’t even know what the agreement was, to be honest with you, because I wasn’t a part of this whole thing before you acquired the stock. My understanding is that the city incurred this $5 million. There was a hope that they would be reimbursed through some process. The companies are restricted in the sense that they can only pay up to $500,000 as a dividend from the regulated utility per year. We did not make that payment last year. This year we had some money and it was like a good faith effort to start paying towards that $5 million. Other than that, I don’t know what the city’s obligations are. I understand just from third hand information there’s something out there with the committee you’re referring to, but we’re really not a part of that whole thing. Alderman Tabacsko We have an agreement with the Water District. We have an amount of money coming in from Pennichuck, and we’ve asked Pennichuck to make that payment on our behalf. It seems to me pretty straightforward. I’m not sure I understand why we wouldn’t want to just do it this way. It seems to be a pretty simple thing. Alderman Cookson It seems simple, it sounds simple, but that’s where I have my question. Honestly the City of Nashua is the entity that negotiated with the Merrimack Valley Water District. Is that right, Alderman McCarthy? Chairman McCarthy Yes. Alderman Cookson And the City made the obligation that it would refund or pay back that water district, the $250,000. We have since as everybody knows have purchased the outstanding stock of Pennichuck and now we are its sole shareholder. We’ve always attempted to have the company run as independently as possible at arm’s length of the Board of Alderman, at arm’s length of the administration, and now the city makes a request. I can only assume because I don’t think the request came from the Board of Aldermen, the sole shareholder, the request was made by the Mayor, the administration to ask Pennichuck to make this payment to the Regional Water District. Is that correct? Chairman McCarthy That memo asks us to ask Pennichuck to send the payment to the Regional Water District. Alderman Cookson So it would be going through the Board of Aldermen to make this request but it was at the Mayor’s request that Pennichuck consider this. Chairman McCarthy Pennichuck hasn’t been asked to do it until we take action on the memo. Pennichuck Water Special Committee -9- 10/09/13 Alderman Cookson I don’t understand. You made the statement that it would be easier to do it this way, to have Pennichuck disperse the funds to the Regional Water District. What is the hardship of the City of Nashua to make that same expenditure? Chairman McCarthy The first hardship is we are $386,000 below the Spending Cap. If we use $250,000 of that to reimburse the Water District by passing money through the City, we’re then within $100,000 of the Spending Cap which means whenever we want to use the other $250,000 we can’t unless we take the ten votes necessary to exclude bonded debt in the appropriation. Alderman Cookson So it’s the Spending Cap that’s the issue. Chairman McCarthy That is one of the issues. It’s certainly just easier to get the check directly to them instead of passing it through us. It’s six of one, half dozen of the other. Alderman Cookson What other issues besides the Spending Cap might I ask? Chairman McCarthy I don’t know. Alderman Cookson You said there were others. Chairman McCarthy No, I didn’t. I said it’s easier to do it that way. That is one reason why it is easier. It certainly is easier to not have it go through the city treasury if it doesn’t need to. Alderman Cookson My understanding from my statement was it’s easier because of issues. Issues being plural. You’ve identified one issue being the Spending Cap. When I asked you if there were others, you said no. That was it. So. I certainly appreciate the issue. I appreciate understanding because it wasn’t spelled out in any language that we’ve seen. There’s nothing within this memo that says we have to be concerned about the Spending Cap because the disbursement of $250,000 from the City of Nashua to the Merrimack Regional Water District would impact that. So that certainly is a consideration but I’m of the mindset that it was an agreement between the city and the Regional Water District. I’m not inclined but would consider the concern of the Spending Cap to be effected by this $250,000. Thank you for the explanation. Alderman Pressly I appreciate that explanation too and basically agree with Alderman Tabacsko that I have no problem with this being done. In reading this letter though I believe that’s the only part of the letter that really needs some Pennichuck Water Special Committee -10- 10/09/13 action. I might be inclined to amend the motion to just specifically deal with that one issue and to accept the communication, place it on file and authorize the Mayor to request that the Pennichuck Corporation send $250,000 of the disbursement check directly to the Water District. Chairman McCarthy That’s the only action contemplated in the current motion. Alderman Pressly Right but the reason I want to clarify that is some of the other statements made I do challenge so we don’t have to tie up these gentlemen Chairman McCarthy Which statements? Alderman Pressly She is saying here in the fall of 2011 the Board directed our team to negotiate an agreement with the District to drop its opposition to the city’s acquisition of Pennichuck and to support a proposed settlement agreement to be presented to the Public Utility Commission. An agreement was reached and the district consisting of three components. At one point she said she thought that all of the other elements had been completed, and I don’t agree with that. I think number one, I am concerned and would like to find out why dedicating one seat on the Pennichuck Board of Directors to the District. I’ve reviewed the PUC summarized statement tonight and they really thought they were getting a voice, and a voice is not an empty seat. Chairman McCarthy That has nothing to do with this particular reimbursement. Alderman Pressly I know that. That is why I want to separate it out. I don’t accept that as an accurate statement. Chairman McCarthy Which part don’t you accept as accurate? Let me read it again. “recommend that the Board of Aldermen reaffirm the City’s obligation to the Merrimack Valley Regional Water District for reimbursement of expenses incurred as a result of its participation in the Pennichuck Corporation acquisition process” which I don’t think any of us disagrees that we have that obligation Alderman Pressly Yes. Chairman McCarthy “and direct Pennichuck Corporation to disperse, on behalf of the City, $250,000 of the recently declared shareholder’s dividend to pay the City obligations to the other seven (7) municipalities that comprise the district. Pennichuck Water Special Committee -11- 10/09/13 Alderman Pressly I agree with that. Chairman McCarthy That’s the motion that’s on the floor. Alderman Pressly Right. The statement I don’t agree with is in the second paragraph from the bottom. Chairman McCarthy We’re not taking action. Alderman Pressly Right but we’re accepting this communication. It says the City has fulfilled one of its promises to the District by dedicating one seat on the Pennichuck Board of Directors to the District. Chairman McCarthy It says that was the agreement that was reached. Alderman Pressly It says has fulfilled one of its promises. The second paragraph from the bottom, about the middle of the paragraph. Chairman McCarthy And we, the City, have fulfilled that promise by creating a set of by-laws that require that seat to be open. The seat has not been filled but there is nothing left for the City of Nashua to do to address that issue,. Alderman Pressly The promise as it says in the agreement with PUC that they will have a voice. Chairman McCarthy The promise is that we will dedicate one seat to the District which was done in the charter and by-laws of the corporation. Alderman Pressly I’ll see if I can find it, but very clearly. Chairman McCarthy I’m reading out of the Mayor’s memo. What she says is: “An agreement was reached with the district consisting of three components: (1) Dedicating one (1) seat on the Pennichuck Board of Directors to the district;…” The only thing the city can do there is what it did which is to amend the bylaws and the charter of the corporation to include that seat. “ (2) Payment of the district's costs incurred during the acquisition Pennichuck Water Special Committee -12- 10/09/13 process at an agreed-to amount of $250,000.” That’s what the issue is that’s on the table. “(3) The district's concurrence on the petition for approval of the acquisition of Pennichuck by the City of Nashua.” That was done. This is the last leg of the three legs of that agreement. Filling the seat is an issue between the District and Pennichuck. The District has sent a nomination to Pennichuck which is before the Board of Directors at the moment to take action on. That does not involve the City of Nashua. That is between the corporation and the regional water district. Alderman Pressly Excuse me, Mr. Chairman, but I do disagree. I believe it was clearly understood by the PUC, by all the towns, by everybody that they would have a voice. A voice is not an empty seat. Although I can’t find it, if you want to take time, I will find it on the PUC settlement. We are the sole shareholder. I guess we have to ask Pennichuck: Have you ever asked anyone? I believe Mr. Chairman, you were part of the interview for the delegates. Did the City of Nashua ask the District if they had a nominee? Has anyone ever communicated with the District? Chairman McCarthy The district presented a nominee to the corporation six months ago. That name is still before the Board of Directors of Pennichuck. Alderman Pressly So for a year and half there was no effort to reach out to them as far as you know. Chairman McCarthy That’s absolutely untrue, and I didn’t say that. Don’t quote me with things I didn’t say. The Board understood that it had that position. It nominated somebody in I believe it was November or December of 2012. There were some issues with that nomination and the language of the charter. After those were resolved that was submitted to the corporation I believe the day after the shareholder’s meeting in March. That name was transmitted to the corporation in March and had been selected a couple months before that. I don’t remember the exact sequence, but I believe November was when the name was selected. Alderman Cookson I don’t want to belabor the point. I know the motion is to accept, place on file and recommend the Board of Aldermen move forward with the $250,000. I recall at one of our last meetings, it may not have been the last one but maybe the one prior to that, when Mr. Patenaude and Mr. Leonard joined us, and we were talking about the communication between the two bodies. I know we had a conversation about Mr. Gaydos and his nomination. I can look at the minutes if you’d like me to. I certainly recall that both of you indicated that Mr. Gaydos had removed his name from consideration. I think that was the position that was taken that night. Is my memory correct? Mr. Leonard So first off, I get concerned. We keep nominations confidential until they are actually approved. Alderman Cookson My apologies. Is my memory correct with regard to the nominee? Pennichuck Water Special Committee -13- 10/09/13 Mr. Leonard And let me also say that I’m not willing, and this is probably a little out of line for me to say this, but I am not willing to be here as disposed. I’m here to cooperate. I’m going to answer your question, but I object to the attitude, and I think we need to work together. I am not against you, I don’t want to feel like I’ve got to watch my words so carefully that I’m worried about what I say. Alderman Cookson Certainly. Mr. Leonard And I’m not going to worry about that. Now the answer to your question is at the last meeting, it came up. We have a nomination. Mr. Patenaude and I understood that the nomination was withdrawn. It was through attorneys so we did not personally talk to the individual nominated. That was our understanding at the last meeting. I understand that has changed and we have left it up to the Regional Water District to decide they want us to go forward. We’re happy to go forward, we actually started the process in May and things got off track. We’re happy to go forward. There is no issue. For you to suggest that we don’t want to address this matter is just not accurate. Alderman Cookson That certainly wasn’t the intention, not within my statements that I said this evening. Mr. Leonard Let me just leave it right there. I’m happy to answer your questions. I’m not willing to be grilled. Thank you. Alderman Cookson I didn’t believe that I was grilling anybody. I just said that there was confusion about the nominee, and I was just trying to understand what was said at the last meeting. I believe that the President also made the identical statement that both of you stated which was it was his understanding as well that the nominee had removed his name from consideration. So I think that’s just adding to the confusion especially when we’re hearing timelines of November and March saying that the Merrimack Valley Water District has submitted a name. I believe at the last meeting that we had, if I’m correct, was in August. Mr. Leonard I think we came in here probably in August, maybe July. And yes, I agree that that was our impression at that time. Alderman Cookson Okay. That’s what I was just trying to understand. There were statements that were made that contradicted the timeline that Alderman McCarthy just mentioned. I was just trying to understand it because at one point we thought we had a nominee. At one point we thought the nominee had removed his name from consideration. Now the process has always been moving forward and I just honestly I didn’t understand it. Chairman McCarthy There was a period of time, about 24 hours, when there was apparently some misinformation in play. I had understood from the same series of conversation that Mr. Leonard and Mr. Patenaude had understood it from Pennichuck Water Special Committee -14- 10/09/13 that that name might be removed. Attorney Judge contacted me the following morning to indicate that that was no in fact the case. It was discussed at length at a non-meeting of the Board of Directors of the Water District which failed to achieve a quorum last month, and the nomination stands at the moment. Alderman Cookson So next steps. No additional action from the Merrimack Valley Water District. They’ve submitted the name. The ball is now in the Pennichuck Board of Director’s hands to move forward with their nomination process to determine if it’s an appropriate candidate? Chairman McCarthy That’s my understanding. Mr. Leonard I’m not even sure we know that but I can understand that now if that’s the case now. We haven’t had any communication recently about that. We are prepared to go forward if that is the nomination. Alderman Cookson Hopefully this little dialogue that just took place helps with that communication between the two bodies. I think Alderman McCarthy just stated that that was his understanding that you guys are moving forward with that nomination process. Mr. Leonard Should we understand that? Chairman McCarthy Ya. Mr. Leonard Okay, sure. Alderman Cookson Okay. Good. You’re welcome. Alderman Pressly I’d like to explain where I’m coming from. Long before you guys knew much about this at all, in 2001 when Pennichuck announced that they were going to sell our water delivery system to an out-of-state company, a lot of us got sort of excited about it. We organized. We formed a group and at that time we were told that it was impossible to buy the stock. That was the first thing people thought of: why don’t we just buy the stock of the company. We were told for five years we could not do that. Chairman McCarthy And for those five years it was not in fact possible to do so. Pennichuck Water Special Committee -15- 10/09/13 Alderman Pressly Okay, but my point is this: The next possibility was to form a regional. Of these 23 towns, and jump in President McCarthy if I’m incorrect, my memory is kicking in here, of the 23 towns, I think at least 15 played a role in trying to form a district. They all went to the PUC, they intervened. I was told by reliable sources that more people intervened to stop the sale of Pennichuck to Philadelphia Suburban than showed up to fight the Seabrook Nuclear Plant. They had never seen so much interest. A lot of it were these little towns. For five years there was the possibility that the only way we could buy it was by forming this District. McCarthy worked really hard on putting together sort of a one of a kind charter so the City of Nashua is probably the key player in this group. Nashua has a huge say and a role to play within what is now formed was this Regional Water District. It was really interesting because of all these towns, there were no two alike. Some of them bought water, some of them sold water. There were not two towns that had the same relationship with the company. For the first five years these small towns all over the state played a key role in this purchase. It was because of that that we had an entity to go to and say when things changed and we found a way to purchase the stock, the role of the towns sort of diminished, and of course, they lost a lot of interest too. Just to set the record straight of all these 23 towns grouped together, they formed 25 percent of the use of the water company. As a group, they have a significant impact on the company. As time went on and they changed the method of purchase, the role of the towns, they lost interest. They didn’t have a significant role to play. A lot of towns they were able to kick in $5,000. For a small town that was like ½ million for us. But these towns really worked pretty hard. They were the little guys. We were the, what do they say, 800 lb gorillas is what they called Nashua. We could not have bought the water company the way we did if we had not formed this group. They were able, they had their own lawyer which they still have today. They had a voice and they were able to tell the PUC, we as a group of towns, support Nashua buying and being the one share. We wouldn’t be here today if it were not for them. They are the little guys. I don’t know why they’ve been so overlooked. I have no idea why, but it really bothers me. If you recall I’m the one person that has consistently asked you: what about the towns? Did anybody call their lawyer? President McCarthy, I think not that whole time but recently he’s been the chairman, did anybody contact him and say where’s your nominee? I don’t know if that took place or not. But it really, really bothers me knowing how the key role and the significant role that these small towns played and together they form 25 percent of the use of the water, that they’ve been so overlooked. I don’t know why that is, but it’s reaching two years now. I don’t know why they’ve been overlooked, and I do also know because I attended most of the PUC meetings up in Concord that the staff and the consumer advocate they wanted to know how the towns were going to be treated. They brought it up regularly. That was there biggest concern. If Nashua buys this, how are the towns going to be treated. They were assured they would have a nominee or a person or whatever and it hasn’t happened. I’m feeling like the City of Nashua and maybe the company has been a bit of a bully to overlook these towns. I don’t know if you even talk about it. I don’t know if your Personnel Committee has even tried to chase down a nominee. They’re important and they’ve been totally overlooked and that really does bother me. Chairman McCarthy Actually the history is a little different from that. Alderman Pressly Is it incorrect or you just going to add some? Pennichuck Water Special Committee -16- 10/09/13 Chairman McCarthy No, it’s not quite correct. No one could buy the stock of the corporation. No us, not the regional district. The only option was to buy the assets of the corporation which the corporation was unwilling to sell. The only method to obtain them was through eminent domain which only the city could perform because the water district, although the state passed legislation allowing for a water district to be formed, it did not give the water district eminent domain authority. The intent was if we were to take all of the assets by eminent domain that we would transfer them or the non-Nashua part of those that was an issue to be resolved later to the Regional Water District who would then have authority over running that. As you know, our eminent domain petition was acted upon favorably by the PUC but the price that was established was non-maintainable. At that point we went into negotiations with the company. Simultaneous to that the legislature passed an act that allowed Nashua to own Pennichuck Corporation. As far as I know we are the only municipality that is allowed to own stock in any company and that is the only company we’re allowed to own the stock of. We were able to purchase it in that way. The District, while it may have started out with 23 potential members and 15 may have discussed it, only 8 including Nashua joined. Merrimack and Milford, in fact, filed as interveners in opposition to our acquisition. Of the eight towns that joined, Raymond vehemently denies that it is a member of the district at all. Pittsfield, I don’t think remembers that it is a member of the District and never attends, Bedford has expressed in various ways that it is happy with Nashua owning the utility and their concern is the reimbursement that’s in front of us primarily which basically only leaves us four other towns that are substantially interested in the continuation of the District’s role assuming that we think Nashua isn’t, and I think Nashua is for reasons that I will get to in a minute. Over the past year it has been virtually impossible to get that group to meet. I had Mr. Sawyer organize a meeting for September, five towns which is exactly a quorum said they would be there. It requires six towns to have a quorum by the way the Charter is written. Since Raymond and Pittsfield will not come, that requires full attendance by everybody. One of the members did not attend after saying he would be there so we didn’t have a quorum. We’re trying to have another meeting next week. We did have a discussion at the last meeting about the director position. Mr. Gaydos indicated that he did in fact want to continue pursuing that position. That’s where we went. The Board couldn’t take any action on it because we didn’t have a quorum. I believe that in the end the District is important in the future planning of resources for expansion of the system. The district cannot support the debt that would be required to own the corporation. The only entity that can possibly back the bonding required with its full faith and credit was the City of Nashua which is what we did. It’s got to stay the way it is. The towns would like to have a director on there. Frankly one of the problems was for the best part of the time we were doing the negotiations I, as the Chair of the Water District, could not tell the other members of the district what was forming in terms of the resolution of the issue because we were under confidentiality with Pennichuck in the negotiations. It came as somewhat of a surprise to them that we were going to buy the corporation. But when it was explained to them that’s the only way it could happen most of them agreed with that. We got to the point where we said we’ll pay back as much of the expenses as is practicable. I think the number is they spent $328,000. One of the reasons we were trying to accelerate it and pay them all back in year one is the District’s attorneys are still owed $128,000 in work that they did prospectively hoping that they would get that back. They are now at the point where Attorney Judge actually has to make copies of stuff that he’s going to bring to the water committee himself because the firm will not pay his secretary to work on it. I frankly am a little embarrassed that it’s taken us this long to make sure that something that was done in good faith is paid for. I think Attorney Judge should get a medal for his commitment to the concept of the District. The position is in place. I don’t know what we can do now to have made that work better. The nomination is in play. We’ll see where it comes out. It’s not the city’s responsibility. I think it’s important for us to reimburse the $250,000 to the District at this point. The towns, as Alderman Pressly said, put money Pennichuck Water Special Committee -17- 10/09/13 into this themselves. I don’t know how much we actually paid into the original dues process. I think we sent them a check at one point. It may have been as little as $5,000 but the towns will absorb some of the cost because we’re not reimbursing everything. Some of the rest of it will be given back to them. In return for that, they all intervened on our behalf in terms of the acquisition. I think we do owe them those things. I think they are pretty much made whole by the $250,000 and the fact that the water rates, they will be spared a great deal of expense in water over the years because of Nashua’s diligence in pursuing the acquisition. Alderman Cookson There’s seems to be only a delta of about $78,000 between the $250,000 and the $328,000. Chairman McCarthy Ya. Alderman Cookson If this gets approved and we do reimburse the water district the $250,000, does the water district have a methodology that establishes priorities of who gets paid first, which expenses get paid first? Do the seven towns get percentages of that amount? How is the compensation back to the town rectified by the water district? Chairman McCarthy I think the way it’s going to work is this, and we haven’t taken a vote on it because there’s no money to divide, but basically what I believe will happen is the outstanding obligation to Wadleigh, Starr, Peters will be paid first. We’ll then take the list of who paid what into the Charter derivation, (inaudible) Nashua because we haven’t asked to get any back from them in addition to that. Basically that will be prorated so if somebody who paid $50,000 out of the $200,000 will get a quarter of whatever the amount of money is that’s left to pay out. Alderman Cookson But that’s a decision for the water district to determine? Chairman McCarthy Ya. Alderman Cookson Okay, thank you. Alderman Pressly Just to reiterate, I have no difficulty with asking Pennichuck to pay it directly. I guess I disagree because we are the sole shareholder of the corporation. We do have a role in what they do. The city did make a promise that they would have a person on there. I keep coming back to that. Again I have no idea why they’ve been so neglected and ignored, whatever. Maybe they have been and I just have not been and I don’t know about it. I do believe that the city’s role has not been met because we are the shareholder of the company and we made the agreement as a city. It seems to me we have a double role here in this hybrid that we’re struggling with to try to figure out how to manage it. I’m happy to vote for this motion with the understanding that I disagree with some of the statements made by the Mayor within the letter. Every chance I have I will be asking what are you doing for the towns. Thank you. Pennichuck Water Special Committee -18- 10/09/13 Alderman Tabacsko I just wanted to note for the record that I really do appreciate the comprehensive description that you just offered that brings some of the historical perspective into light. I think it’s important to understand that context. I just wanted to say I appreciate you taking the time to go through that. I took from that that this process has had a lot of bumps and turns and a lot of things didn’t go as they may have been initially expected to go. In my own personal involvement in this going from eminent domain to acquisition to this hybrid organization that’s a unique situation in the country, it’s had a lot of changes. I have a little bit of concern that the question about this particular seat keeps coming up. I don’t think there’s been anything other than circumstances have changed and things have happened along the way and it’s in the process. It just takes time. That’s how I’m perceiving it. I just put that out there as my personal thought on that. Alderman Cookson My last comment is I appreciate the conversation. Thank you for expounding upon the effect on the Spending Cap by having the city disperse the funds versus Pennichuck. I’m not willing to put the city at risk by approaching the Spending Cap so closely with the disbursement of this $250,000 from us. I’m going to support the recommendation to reaffirm the city’s obligation to the regional water district by having the reimbursement done by Pennichuck. MOTION CARRIED NEW BUSINESS - None UNFINISHED BUSINESS – None TABLED IN COMMITTEE Chairman McCarthy I had asked Mr. Leonard and Mr. Patenaude here so we could take O-13-37, Establishing Rules for the Shareholder Voting. What I’d like to do is discuss that with them and make sure that we understand the timelines and the interaction with the corporation in terms of the proxy card so we then set our process. I believe that makes it possible for us to also take R-13-97 and dispose of it since the rules in O-13-37 would in fact be effective for next year. We either do that or we can just leave it tabled in committee. MOTION BY ALDERMAN COOKSON TO TAKE FROM THE TABLE O-13-37 MOTION CARRIED O-13-37 Endorser:Alderman Daniel T. Moriarty Alderman-at-Large Brian S. McCarthy Alderman-at-Large Barbara Pressly Alderman-at-Large Mark S. Cookson Alderman Arthur T. Craffey, Jr. Alderman-at-Large David W. Deane Alderman Diane Sheehan Alderman Michael J. Tabacsko Alderman-at-Large Jim Donchess Alderman Richard A. Dowd ESTABLISHING RULES FOR PENNICHUCK CORPORATION SOLE SHAREHOLDER VOTING Pennichuck Water Special Committee -19- 10/09/13 MOTION BY ALDERMAN COOKSON TO RECOMMEND FINAL PASSAGE OF O-13-37 ON THE QUESTION Chairman McCarthy Basically it adds a new section 5-29 in the ordinances which reads as follows: “ A. All decisions necessary to enter the city's shareholder vote by proxy at the Pennichuck Corporation Annual Meeting of the Sole Shareholder shall be made by vote of the board of aldermen and the city shall submit its vote via proxy card mailed to the Pennichuck Board of Directors. B. All individual proposals listed on the proxy card for the Annual Meeting of the Sole Shareholder shall be separately raised and discussed by the full board of aldermen. C. For the election of directors for the board of directors, the qualification of each nominee shall be reviewed and discussed individually." Mr. Leonard Would you like basically a comment on that? Chairman McCarthy That and anything that we’ve missed in terms of the interaction with the corporation because I know you have to give us the slate of directors and proposals for changes to the bylaws. Mr. Leonard Yes. As I remember this came up before the last meeting. This all relates to the annual meeting. The question is how do we go forward, how do we get information from the soles holder or how do you get information from us. We’re in the process of developing a timeline. You should be getting that sometime in the near future. Some of the issues that are going to be discussed in the timeline we have of course some nominations to make. We’re going to give you some information and dates on when we expect that. We learned today that our financial statements, the first go around will get to our audit committee sometime in late March. I think realistically our annual meeting, we’re probably looking at late April or May. The timeline will give you some heads up on that. As far as this particular process, this is fine. We talked about it and that’s basically how we, I think, worked last annual meeting. I think that’s fine. Our main goal in all of this is really just to respect the entity of Pennichuck and this meets that. It makes sense. I think Alderman Moriarty brought up a couple of months ago, probably six or eight months ago now, that it makes sense that actions by the shareholder are actions of this Board and the City. That all makes sense. Alderman Moriarty My question is just one of sort of process and formality. The ordinance discusses how we are going to respond. It sort of assumes that you’ll do what you did this last go-around where you send out a proxy to everybody far enough in advance so our deliberative and tedious process that we have can happen in time. I don’t think we can put that in an ordinance to require you to do that because that’s something that would have to be in the bylaws. Pennichuck Water Special Committee -20- 10/09/13 Mr. Patenaude We’re backing up to when we can a proxy. The plan would be to give the city, and tell me if it’s not enough time, anywhere between four and six weeks to go through that process. I know the Board of Aldermen brings it to the committee and then back and forth. What we’re trying to do is give you, the Board of Aldermen and the committee, time for your process which we’re thinking four to six weeks. Chairman McCarthy I think that works. Alderman Moriarty That seems right. Chairman McCarthy We can’t put a direct timeline in there. What we can do is put in something that says upon receipt of the…What is the actual conveyance to us? Is it the notice of the annual shareholder meeting? Mr. Patenaude That’s correct with the proxy card and with the discussion of the nominees and Mr. Leonard And any other action. Mr. Patenaude And some of the process. Mr. Leonard Any other action that has to occur at that meeting. I don’t mean to interrupt, John. We can’t deliver the proxy to you until we know we’ve gone through the nominating process and until we put together all that needs to be put together for the annual meeting, all the agenda. That’s also driving this timeline. We do plan to give you the timeline. I think last year I’m not sure we gave you the timeline in advance. Our plan is to do the same thing we did last year plus give you a little bit of a timeline on what we hope to meet late fall, early winter. I will also tell you that this is already in the works, all these different things have been discussed at committee meetings at some length the last couple of weeks. Alderman Pressly My recollection of how this was handled last time is basically we wished we had had more time to look it over. Having attended all the previous Pennichuck shareholder meetings, I could see that you followed the same format that they had used. I think what we prefer is that the issues be broken up in a way so we can deal with each one separately, just for our conveyance and for the way we do business. We needed more time and we needed to have the issues presented in such a way that we were able to check the boxes individually instead of as one large group. Not only issues but the nominees; the breakdown of what the proposals were. That’s sort of my general recollection of it. Is that something you think you can do? Pennichuck Water Special Committee -21- 10/09/13 Mr. Leonard Yes. Alderman Pressly Thank you. Mr. Leonard I think we agreed to do that a couple of months ago. Chairman McCarthy I have an amendment I’d like to propose. MOTION BY ALDERMAN MCCARTHY TO AMEND O-13-37 BY ADDING A NEW SECTION A WHICH READS: UPON RECEIPT OF THE NOTICE OF THE ANNUAL SHAREHOLDER MEETING AND THE PROXY CARD, THESE MATERIALS SHALL BE SUBMITTED FOR APPROVAL TO THE BOARD OF ALDERMAN” AND THEN THE REST OF THE SECTIONS MOVED DOWN BY ONE LETTER ON THE QUESTION Alderman Tabacsko Where does that material come initially? Chairman McCarthy It needs to get referred to the Board. It would be sent to the Mayor’s Office, I would assume, because that’s the way the city interacts. Mr. Patenaude We can do as we have been in the last few months with the correspondence: send it to the President of the Board of Aldermen with copies to all the aldermen. Chairman McCarthy I think that’s the thing to do. I think we need to record that somebody needs to submit it to get it. Any discussion of the amendment? Alderman Cookson Read it again please. Chairman McCarthy “Upon receipt of the Notice of the Annual Shareholder meeting and the Proxy Card, these materials shall be submitted for approval to the Board of Aldermen.” MOTION CARRIED Pennichuck Water Special Committee -22- 10/09/13 Chairman McCarthy I think the rest of it is straightforward and pretty much what we need. The only issue that came up last year that I would like to resolve is who signs the proxy card. Last year it was me because the Mayor was a director. I believe the Mayor’s term is up at the end of this year. Mr. Patenaude At the next annual meeting, yes. Alderman Pressly Since that subject came up, I presume that you’re working on a process of a new person to bring on the Board to replace the Mayor. Mr. Leonard Yes. I don’t know if we formally adopted the process or not, but we either have adopted the process or have gone a long way in developing it. We’ve already done some work is what I’m trying to say. Alderman Pressly You have about six months. Mr. Leonard Right and that’s part of what I mean in the nominating process. It’s driving this timeline. Alderman Tabacsko One of the things I recall, and I apologize I don’t have my copy of the legislation in front of me, from last year was the idea of separating the issues. I think that’s a good idea. The question for the committee is as we deliberate and discuss those and then ultimately vote on the individual issues related to the kind of timeline that we’re going to be dealing with that we need to have a resolution, the issues have to an either or is what I’m trying to get to. We have a this or a that. We agree or we disagree and we just move on so we don’t find ourselves in the position where we keep referring back and having multiple committee meetings to keep going to other alternatives. I don’t know how or if at all, that may be more of a function of how the proxy is presented. The wording on that is this what you recommend. If we choose not to take that recommendation that’s one answer and then that’s the end of the discussion. We either agreed or we didn’t is what I’m getting at. Am I oversimplifying that? It seems like we got bogged down in some of the details on this the last time around. Chairman McCarthy There is an issue with trying to resolve complex questions with yes-no answers. I don’t know that anybody knows how to avoid that in this case. If there’s an issue that has to be handled in one of three ways and you do that by putting three yes-no questions on a proxy card, you run the risk that either zero or two or three of those will pass. Alderman Moriarty It seems that the proxy was written in the style that most proxies are where it’s like a ballot. Everything is yes or no, individually, independent. As long as we continue to write them that way, which you did, then the question can be generalized to any ballot that has ever come before anybody for like a Charter amendment. Pennichuck Water Special Committee -23- 10/09/13 Every question stands on its own. The burden of creating that proxy for it to be in that form falls on Pennichuck Corporation. Then the burden of trying to come up with advice to impart on them does not go on the Proxy. As long as we have the ability to provide advice in some sort of letter then that separates the complexity to something that can be done with just a yes or no, item by item. Chairman McCarthy I’ll give you a concrete example of where this gets to be a problem. I won’t mention names, but there’s two towns. One of them has a long term agreement with the other to send its high school students to the high school in that town at a particular cost. And this is a real example. That agreement is about to expire so this town must do something about its high school students. It puts two questions on the warrant, one of which is shall we build a high school. The other one is should we sign a new long term agreement with the town next door at a fixed rate. Neither of those questions passes. The default action is they have a short term agreement that is the most expensive, least advantageous possible solution which is the one that was selected because the questions on the warrant are yes-no at town meetings. It’s important for the corporation to figure out how to avoid that or how to give us adequate knowledge that you can’t vote no on both of them. You have to pick one of them and approve it. Mr. Leonard I think from our standpoint, the corporation, we will tend to follow the typical proxy. It will be either yes or no. If the shareholder has a particular item that they would like considered at the annual meeting and it is an appropriate item, in other words we will follow corporate practice as regards shareholder items, but that may be something that this board would want to do. I think this particular legislation should require if it doesn’t, and maybe it’s not geared towards this, but the corporation, Pennichuck, is understanding that in order for the shareholder to request something on the annual meeting agenda, it would have to come from this full Board. It wouldn’t’ be an individual alderman. It would be an action of this Board for a particular item. I think that might answer some of the questions. We really can’t have a discussion on the proxy. It’s got to be a simple yes or no. Chairman McCarthy But you can transmit some advisory information along with the notice. Mr. Leonard Yes. I think I agree with you; I would add to that though that it should be language that has been agreed to by the body, by your Board of Aldermen. Chairman McCarthy And we have not taken up the issue of if someone wants to have something addressed, when they have to get it submitted. I think we’ll leave that for the moment. I wanted to put an additional Paragraph E. I’ll make a motion to amend. MOTION BY ALDERMAN MCCARTHY TO AMEND TO ADD A NEW SUBSECTION E: THE BOARD OF ALDERMEN SHALL AUTHORIZE THE MAYOR TO SUBMIT THE PROXY CARD, IF THE MAYOR IS NOT A MEMBER OF THE BOARD OF DIRECTORS OF THE CORPORATION, AND SHALL OTHERWISE AUTHORIZE THE PRESIDENT OF THE BOARD OF ALDERMEN TO SUBMIT THE PROXY CARD. ON THE QUESTION Pennichuck Water Special Committee -24- 10/09/13 Alderman Moriarty Does anybody have handy the by-laws’ first page, paragraph six, by any chance? I think I will begrudgingly admit that I agree with that amendment. And why do I say begrudgingly? Because I was personally so attached to the idea of the Board of Aldermen fulfilling the obligation. That was due to my interpretation of paragraph 6 on page 1 which talks about this exactly. I’m going to try to go by memory until we get this and see how good my memory was. It said the actions of the sole shareholder shall be taken by the Board of Aldermen through its usual process, I think is what it said. Being a person who embraces processes as much as I do, in principle my main purpose for drafting this in the first place was just to make it so that we had a process to engage so we had an agenda. We had an opportunity where the public could comment on items expected to be discussed to the public can comment and we could provide advice. That’s why I wanted to make sure it was a formal process that the Board of Aldermen had to agree. I think we all kind of agree on that with the fact that it was endorsed so well. But in that paragraph it mentions something, on the bottom of the front page, I think its paragraph 6. Mr. Leonard It says just for everybody’s information: “…adopted in accordance with applicable law and the provisions of the city’s Charter.” Alderman Moriarty Somewhere it mentions Board of Aldermen, right? Mr. Leonard Ya. The whole sentence says: “The sole shareholder shall exercise all powers and rights of the sole shareholder pursuant to vote of the Board of Aldermen of the City of Nashua considered and adopted in accordance with applicable law and the provisions of the city’s Charter. Alderman Moriarty The first half says we have to make sure that the Board of Aldermen discuss it and that provides the opportunity for the public’s input. Then the second half is the city’s government has an executive branch and a legislative branch and everything can be vetoed by the Mayor. Essentially this is implying that if we add this section that in some sense what we come to in agreement the Mayor could veto. Then it comes back to the Board of Aldermen to override the veto. That’s sort of what I’m getting at. Chairman McCarthy The Mayor can always veto. By Charter anything that the Board of Aldermen does, the Mayor has a negative on other than our rules. I don’t think it’s out of keeping with your intent because you said by its usual process. Our usual process on anything the city has to do is to authorize the Mayor to take the action. When we bond for something we say we authorize the Mayor and City Treasurer to apply for bonds. I think the normal process is to authorize the executive branch to execute the policy that the board has set. I think that’s what it does. Excluding the Mayor when the Mayor is a director simply eliminates the conflict that might otherwise arise. Alderman Cookson This is the last year that this situation will occur. Pennichuck Water Special Committee -25- 10/09/13 Chairman McCarthy Yup. Alderman Cookson It’s half dozen of one, six of another. It really doesn’t matter. We could just leave it the way it is without the additional language. We could have it be the President of the Board this year and then from that point forward the Mayor would be able to submit the proxy. I think its additional language that’s not necessary but it doesn’t hurt anything. Chairman McCarthy If it were just the mayor I would agree that it’s probably not necessary. But if you want to make it so that the President of the Board does it for one more year until the Mayor is off the Board of Directors then it has meaning. Alderman Moriarty Again I am supporting the amendment. I would advise that we vote yes on the amendment, that particular one, but I’ll follow up with a brief question. Again the interpretation of that sentence one could almost say because the bylaws say through action of the Board of Aldermen, if you had a very ambitious Board of Aldermen you could almost say the Mayor is specifically said not to be involved in which case the mayor would not have the ability to veto it. Adding that sentence clarifies that. Chairman McCarthy I don’t believe that the Board of Aldermen has the power to do that. The Charter gives the Mayor a negative on anything done by the Board except for setting its rules. Regardless of what ordinances we pass I think that any action could be vetoed by the Mayor. MOTION CARRIED TO FURTHER AMEND Alderman Pressly I think we’ve skirted around the issue of having a chance to meet with you say six months before the shareholder’s meeting to sort of hash out and bring up questions at that time. What are your thoughts on that, to have a time certain to meet with you sort of in preparation so any questions that we have could be hashed out and included or excluded? Mr. Leonard My understanding is we basically come when you ask us to come. That’s what we’ve been trying to do. Alderman Pressly But we don’t know when you have something that’s coming up. It might be nice to have more of a lead time and a chance to discuss it and understand it. We don’t know what you’re going to be doing. Mr. Leonard I’m not sure what you might be referring to, but I can tell you that we’re trying very hard to put everything online. It’s all on our website. We, of course, post all of our agendas and have minutes. We’re trying very Pennichuck Water Special Committee -26- 10/09/13 hard to put it all right out front there so if there’s something you would like to raise. I don’t really know how to respond. We’re happy to come here whenever you like. Alderman Pressly I guess I didn’t make it clear. It’s awfully hard. You have no idea the number of minutes and groups that we have to watch. I’m thinking that only you know what is relatively knew or out of the ordinary. Instead of having us read your minutes carefully to figure out what that is, only you know if you’re coming in with something that’s a little bit out of the ordinary that you think might be worth a discussion. You can also ask to meet with us, can’t you, if you have something going on? Chairman McCarthy The corporation has been very forthcoming with sending us notices of anything that was important over the last year and sending it to all of the members of the Board. Mr. Leonard We send out quarterly letters or information. Just to give you an example, we didn’t think the dividend was that big a deal. We just thought it was part of the whole ordinary course of things and it turns out to be more. Chairman McCarthy It’s more important to tell me what when you’re not going to send me a check. Mr. Leonard I really don’t know with all due respect. I’m just not sure what people want to hear about. Mr. Patenaude The other thing we do with certain important things like the rate case, when specific events occur, that’s when we send you a notice and say this event has occurred or will occur. We’ve been trying to stay ahead of that curve so to speak. Ordinary day-to-day business we just run with that and try to cover it in the quarterly reports. Stuff like rate cases and hearings when the PUC gives us an order, we try to get that to you on a prompt basis. If we see something extraordinarily we try to bring it up to the Board. Mr. Leonard The only thing I would say and I hope this makes sense from everybody else’s standpoint, but we as a company, of course, if it’s a negotiation, we don’t notify people until it’s accomplished because part of what we need to do is make sure we get the best negotiated deal that we can. In those kinds of things we wouldn’t notify people ahead of time. They are a part of the board process. Alderman Pressly Generally I think you learned and we did too that our process takes much longer than what you’re used to. The more time you can give us the better for our process. Mr. Leonard I hear you. I think it does take a lot longer and that’s probably one of the reasons why we want to run as a business rather than a municipality. We do of course make every day business decisions or policy or strategic Pennichuck Water Special Committee -27- 10/09/13 decisions basically every meeting. We view that as the obligation and the role of the board of directors. We don’t view that as the responsibility of the shareholder. That’s another component in making a decision. MOTION CARRIED TO RECOMMEND FINAL PASSAGE AS AMENDED Chairman McCarthy Alderman Moriarty, what’s your pleasure on R-13-97? I think we just did the equivalent of it. We can just leave it tabled for the rest of the term or… Alderman Moriarty If it’s tabled it just takes up space on a piece of paper. I’d be content to recommend indefinite postponement and get it off the table. Chairman McCarthy Okay. Alderman Moriarty I won’t take offense. MOTION BY ALDERMAN WILSHIRE TO TAKE FROM THE TABLE R-13-97 AND RECOMMEND INDEFINITE POSTPONEMENT R-13-97 Endorsers: Alderman Daniel T. Moriarty Alderman-at-Large Jim Donchess Alderman-at-Large Barbara Pressly Alderman Arthur T. Craffey, Jr. Alderman-at-Large David W. Deane PROCEDURE FOR A PROXY VOTE FOR PENNICHUCK CORPORATION’S ANNUAL MEETING OF THE SOLE SHAREHOLDER Tabled 2/28/13 MOTION CARRIED PUBLIC COMMENT REMARKS BY THE ALDERMEN Alderman Moriarty Is there any other way to get something off of the table without such a painful death? Chairman McCarthy You can kill it or you can let it die. Alderman Tabacsko At this point in the term letting it die is probably not a bad option either. It’s only a few week. Pennichuck Water Special Committee -28- 10/09/13 Alderman Pressly I have a question for our guests. I was surprised to learn that your new attorney is Attorney Ardinger who happened to be the city’s attorney. I’d like to ask who did he replace and is he a full time employee or is just a specialist? Who is your full time attorney these days? Mr. Patenaude We really don’t have a full time attorney. We use attorneys as needed and different attorneys for different projects. There are certain attorneys that specialize. Bill Ardinger from Rath, Young & Pignatelli is a person who knows the transaction from its historical perspective. On a number of items we use his expertise so-to-speak. There are other items. For instance on a real estate deal, we’ll use an attorney called Paul Buffim out of Wilton. He’s very inexpensive in comparison to other large firms and he’s well versed in real estate and does a great job for us. It really depends on the issue and who we use relative to that. We tend to look at expertise because not all firms have a definite expertise in one area. Chairman McCarthy There was a full time counsel prior to acquisition. Mr. Patenaude Yes. Roland LaLiviere was a full time counsel. As part of a restructuring we didn’t think we’d need his services on a full time basis. He was severed from the company back in I want to say March of 2012. Chairman McCarthy That’s one of the savings we have by the acquisition. Everybody likes it when you don’t pay the lawyers. Alderman Wilshire I’d just like to thank Mr. Leonard and Mr. Patenaude for their willingness to come in and communicate with us and be here every time we ask them to come in. I appreciate what you do. I appreciate how difficult the transition has been keeping an arm’s length between the Board of Aldermen, the City and the Corporation and I know it hasn’t been easy. You’ve handled it admirably, and I just want to thank you for that. Alderman Tabacsko I concur with Alderman Wilshire’s comments. Thank you guys. Alderman Moriarty Again thanks for holding such a large room. The last time around I don’t know if you’re going to downsize a little bit but it will be nice to have another shareholder’s meeting. Hopefully more people from the public will attend. Chairman McCarthy Thank you both for coming. We’ll probably try to set something up towards the end of the year or early January to start our understanding of the process for the shareholder meeting. Pennichuck Water Special Committee -29- 10/09/13 ADJOURNMENT MOTION BY ALDERMAN WILSHIRE TO ADJOURN MOTION CARRIED The Pennichuck Water Special Committee meeting was adjourned at 8:38 p.m. Alderman-at-Large Mark S. Cookson Committee Clerk