1. The Development WHITEHAWK RANCH MUTUAL WATER COMPANY (Offering Circular) WHITEHAWK RANCH is located in Eastern Plumas County, 230 miles from San Francisco and 150 miles from Sacramento via Interstate 80 to Truckee, then north on State Highway 89 through the scenic Sierra Valley. From Reno, the drive is less than 60 miles via U.S. Highway 395 north, west on State Highway 70 to Blairsden to Highway 89, then south six miles to WHITEHAWK RANCH. The original Development Agreement expired in May 2009. It called for a maximum of 455 residential dwelling units and 75 lodging units specifically designed to maintain the integrity of the developments 956- acres of natural beauty. Residence options range from resort-style townhomes to private estate lots suited for a primary residence or a second home. There are currently 190 residences, 70 undeveloped owner lots, 39 developer owned lots, and approximately 55 undeveloped lots described on tentative maps. The Water Company provides water and wastewater treatment services to two commercial customers, The Whitehawk Ranch Golf Club and The Lodge at Whitehawk Ranch. The Master Plan provides for additional commercial customers in the future. The WHITEHAWK RANCH design is one that blends with the natural beauty of this mountain setting, maximizing opportunities for optimum views. Residential units are clustered to minimize developed areas and to provide a sense of community, while buffering areas provide seclusion from recreational facilities. Roads have been designed to follow natural contours, to eliminate curbs and gutters and to minimize pavement visibility to emphasize the existing natural aesthetics. Landscaping, architectural design and uniform signage has been implemented to create continuity throughout the project. 2. The Water and Wastewater Systems The wastewater treatment facility and water services for the fire protection system to the subdivision shall be owned, managed and operated by the Whitehawk Ranch Mutual Water Company, a nonprofit mutual benefit corporation, organized under the laws of the State of California (the "Corporation"). The Corporation has as its primary purpose providing domestic water service and wastewater treatment service to the residential and commercial owners of properties within the boundaries of WHITEHAWK RANCH. At present, the water and wastewater treatment facilities have been extended/expanded to be able to service all anticipated residential and commercial customers at full build out. The Corporation obtains water from McKenzie Springs and West Stream. Untreated water is stored in an 80,000-gallon surface reservoir. The water treatment system has a 200 GPM treatment capacity and a 650,000- gallon treated water storage tank. In addition, the Corporation provides water service for fire protection within the boundaries of WHITEHAWK RANCH. The wastewater treatment facilities have a capacity of 75,000 gallons/day. 1
3. Engineer's Opinion The Corporation's project engineer is Daniel Bastian, Licensed Professional Engineer, License No. 45489. He has determined that the system, as designed and built, will be adequate to maintain normal operating pressure of not less than 25 pounds per square inch, nor more than 125 pounds per square inch, at the service connection. However, during periods of hourly maximum demand, or during peak seasonal loads, the pressure may be reduced to 20 pounds per square inch. Variations in pressure under normal operation should not exceed 50 percent of the average operating pressure. The quantity of water delivered to the distribution system should adequately, dependably, and safely supply the total requirements of all water consumers under maximum consumption, and should be sufficient to maintain the pressure specified above. The distribution system, as designed and constructed, provides at least one connection per dwelling unit and, to the extent feasible, is designed and will be constructed in a properly segmented grid so as to minimize the extent of interruption in water service when repairs are necessary. The project as designed and constructed, conformed to currently accepted engineering practices. particular: In (A) Water mains were installed below the frost level or otherwise protected to prevent freezing and do not have less than 30 inches of cover over the top of the pipe in the streets. (B) The size, design, material, and installation of service lines conformed to the reasonable requirements of the Mutual Water Company. The minimum size of the pipe is not less than one-inch nominal size for a single water service and 1 1/2 inches for a double water service Flow tests have been calculated on the basis of a residual pressure of 20 p.s.i.g. in the distribution system under flowing conditions. The facilities constructed, extended or modified were designed to be capable of providing a minimum fire flow of 1,000 gallons per minute from the treated water storage tank, plus the average daily demand for a period of at least two hours. Fire hydrants were attached to the distribution system at locations complying with ISO standards for hydrant placement. A minimum flow of 1,000 gallons per minute is available at each building site. All new mains to which a hydrant may be attached will be six inches in diameter or larger. The Corporation provides the maintenance, repair, or replacement of fire hydrants within the project. The Corporation uses two independent sources of water, McKenzie Spring and West Stream; the volume of water available from these sources is sufficient for the contemplated build-out requirements. The Mutual Water Company acquired the majority of the remaining water rights from the original developer, Mohawk Valley Ranch Inc. in February 2014. As a result of the action, the Corporation has numerous "Statements of Water Diversion and Use" filed with the State of California, Water Resources Control Board, Division of Water Rights, which allows diversions from Boulder Creek, and certain "Unnamed Tributaries" with which to supplement the McKenzie Spring and West Stream supply should this ever become necessary. The Department of Environmental Health of Plumas County (Director of Public Health) reviewed the 2
application of the Corporation to obtain a water supply permit, and based on such review determined that the water system is in compliance with Sections 4010 through 4037 of the California Health and Safety Code. A water supply permit was issued to the Corporation on October 22, 1990. In 1994 oversight authority of water systems was transferred to the State of California, Department of Health Services. A permit was issued by the State upon transfer to their authority. Oversight authority of water systems was transferred back to the Department of Environmental Health of Plumas County in 2005. Current oversight of the water system is the responsibility of the State of California, State Water Resources Control Board, Division of Drinking Water. 4. One Membership Per Lot Owners of lots shall, upon lot purchase, become members of the Corporation and shall be issued memberships on the basis of one membership per subdivided residential lot entitled to receive water. The latter phases of development of the subdivision contemplates planned unit developments such as townhomes, and other units that may or may not have common walls. It is contemplated that a membership shall be apportioned on the basis of one membership to each individual residential unit. 5. Water Entitlement There currently is no fixed water quantity per membership, but so long as water is available each member shall have a right to such water as the member may need to put to beneficial use, provided the member pays the cost therefor as determined by the Board. The rights of members, however, to receive water from the Corporation are correlative, and in the event the Corporation should not have sufficient water to meet all demands of members, water shall be allocated proportionately among the members in accordance with the number of memberships which each member owns. The Golf Club and The Lodge at Whitehawk Ranch are considered commercial or non-residential users. A separate rate has been established for non-residential or commercial users. Any charge to members for supplying irrigation water, shall bear a reasonable relation to the actual cost of supplying said water by the Corporation. 6. Rates and Assessments The Corporation shall fix, determine, levy and collect such rates or charges based upon sewage collection and treatment services and deliveries of potable water. Standby charges, or non-use fees, are based on the availability of these services. Assessments upon all members in the Corporation will be levied as necessary for the purpose of paying its debts and expenses, either incurred or estimated to be incurred, and for the creation of reserves. 7. Repair and Replacement Funds The Corporation shall levy and collect an assessment upon the outstanding memberships for the purpose of creating a maintenance and system replacement reserve. This reserve shall be funded in a manner that will provide the necessary revenues for all normal maintenance and system replacement over the expected life of the water system. The Corporation shall establish a rate structure that will result in the accumulation and maintenance of a fund for the repair and replacement of the water supply, distribution and fire protection system (the "repair and 3
replacement fund"). The rate charged will bear a reasonable relationship to the cost of furnishing water. Unimproved lots included within the service area will also bear a proportionate share of the cost of repair and replacement of the water supply, distribution and fire protection system, as well as a proportionate share of the cost of maintaining the repair and replacement fund. In addition, the Corporation has entered into an agreement with the sub-divider whereby the sub-divider has agreed to pay monthly a proportional part of the repair and replacement fund according to the number of lots owned and offered for sale by the sub-divider to the total number of lots in the subdivision. The Corporation also accepts commercial development and development as may be included and defined in Sections 11000, 11000.1, 11000.5 and 11004.3 of the Business and Professions Code. Memberships in the Corporation will only be sold or issued to purchasers of these lots or units, or to the successors in interest of purchasers. 8. Expansions or Annexation All extensions/expansions of the water system have been constructed in accordance with the requirements of all governmental bodies having jurisdiction, and pursuant to plans and specifications approved by the Corporation. 9. Rules and Regulations The Corporation shall make such rules and regulations concerning delivery of water as may from time to time be required or appropriate. 10. Incurring Indebtedness The Corporation shall have the power to borrow money or otherwise incur indebtedness in the name of the Corporation, and to issue evidence thereof. 11. Contracts The Corporation may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name and on behalf of the Corporation and such authority may be general or confined to specific instances; provided, however, that there shall be reasonable limitations on salaries paid persons operating, or employed by, the Corporation. Unless the Bylaws of the Corporation are amended, the Corporation's directors are not entitled to compensation. 12. Memberships Appurtenant to Land All memberships shall be appurtenant to the land where the water is used, and such land shall be described in the membership certificate. All transfers of real property shall be subject to said appurtenance, except after sale or forfeiture for delinquent assessments thereon as provided in Section 331 of the Civil Code. All such land must be within the service area of the Corporation. All persons who become owners of lots or parcels within the service area of the Corporation shall, by reason of said ownership, become members of the Corporation and be issued membership certificates upon providing such consideration to the Corporation. Notwithstanding this provision, this Corporation may sell water to the State, or any department or agency thereof, or to any school district, or to any public agency, or to any other mutual water company, or, during 4
any emergency resulting from fire or other disaster involving danger to public health or safety, to any person at the same rates as to members of this Corporation; and provided further, that this Corporation may enter into a contract with a county fire protection district to furnish water to fire hydrants and for fire suppression or fire prevention purposes at a rate agreeable to both parties. In the event lands to which any membership is appurtenant are owned or purchased by the State, or any department or agency thereof, or any school district, or public agency, such membership shall be canceled by the secretary, but shall be reissued to any person later acquiring title to such land from the state department, agency, school district, or public agency. 13. Membership Certificates Such forms of certificates shall evidence memberships in the Corporation as the Corporation shall designate and shall be issued over the signature of the president and secretary. A certificate book shall be maintained which shall contain a margin on which shall be shown the number, date and name of the member, as set forth in the corresponding certificate. 14. Transfer No membership shall be transferred until all assessments; water charges or other indebtedness of the transferring member to the Corporation have been paid in full. No transfer of a membership shall be binding upon the Corporation unless and until duly entered upon its books. The party requesting transfer of a membership shall deliver to the Corporation either a copy of the conveyance to him of the land described in the membership certificate, showing the same to be duly recorded, or a written statement from a reputable title company, showing that he is the owner of the land to which the membership is appurtenant. The Corporation may determine such additional terms and conditions of transfer from time to time, as it deems necessary to ensure the proper transfer of a membership and the water rights accompanying the membership. 15. Assessments All assessments shall be levied by resolution of the Board of Directors of the Corporation, and written notice thereof shall be mailed to all members at their addresses as they appear on the books of the Corporation. The Corporation shall determine the date by which the assessment shall be paid and which shall be paid not less than thirty days after the notice of assessment has been mailed. Assessments not paid by this date shall become delinquent and shall bear interest at the rate of one percent per month or any fraction thereof. The Corporation shall send written notice by certified or registered mail to all members whose assessments have become delinquent advising them that such assessments must be paid within thirty days after such notice or their membership will be forfeited or legal action will be taken against them to collect the assessment. Such written notice shall be sent to the address of the delinquent member as it appears on the books of the Corporation, or if such address is different, also to the land to which such delinquent membership is appurtenant. If such delinquent assessments are not paid within thirty days as specified in the notice, then the Corporation may order such delinquent membership forfeited to the Corporation. The Corporation may adopt such additional rules and regulations concerning assessments and procedures upon delinquency as may from time to time be required, including, but not limited to, the adoption of rules and regulations authorizing the commencement of legal actions to collect delinquent assessments as authorized by the Articles of Incorporation. The Corporation may permit redemption of forfeited memberships, which have not been reissued, upon payment of all assessments, together with interest thereon at the rate of one percent per month or any fraction thereof, and together with such other charges as the Corporation may deem appropriate, but the Corporation shall not be required to allow such redemption. 5
16. Price of Memberships Each prospective member of this Corporation shall pay $2,000.00 as the purchase price of one membership in the Corporation. In virtually all situations, Buyer shall pay this sum to the Corporation at the time a "lot" is purchased and shall be included in the purchase price of the "lot". 17. Corporate Records The Corporation shall maintain adequate and correct books, accounts and records of its business and properties, all of which shall be kept at its principal place of business, and shall be open to the inspection of members in the manner provided by law. 18. Voting Rights Any member whose name appears on the books of the Corporation as a member shall be entitled to be present and vote at all members' meetings, and shall have one vote for each membership which he or she owns as shown by the books of the Corporation. Voting may be by voice or by ballot, provided that all elections for directors must be by ballot upon the demand of any member made before the voting begins. Members may not accumulate their votes for directors as provided in the Corporations Code. The candidates receiving the highest number of votes shall be elected. All other questions shall be decided by a majority of the votes cast, unless otherwise provided by the Bylaws or the Articles of Incorporation. 19. Further Information Any further information desired by prospective members may be obtained by contacting the Whitehawk Ranch Mutual Water Company, PO Box 147, Clio, California 96106, (530) 836-4066. DATED: December 1, 2016 WHITEHAWK RANCH MUTUAL WATER COMPANY By President 6