MPWUA ByLaws

ByLaws of the MOUNT PLEASANT Water Users Association, Inc., a California Non-Profit Mutual Benefit Association

As revised 01/12/2024

Article 1: Corporate Name, Officers and Fiscal Year

CORPORATE NAME. The name of this California non-profit mutual benefit Association is the Mount Pleasant Water Users Association, Inc. (referred to herein as the “Association”) The Association’s tax identification number is: 99-0699070.

PRINCIPAL OFFICE. The principal office for the transaction of activities and affairs of this Association shall be in such location as the Association’s Board of Directors may establish from time to time.

CHANGE OF ADDRESS. The Board of Directors may change the principal office from one location to another, and such changes of address shall not be deemed an amendment of these bylaws.

FISCAL YEAR OF THE ASSOCIATION. The fiscal year of the Association shall begin on the 1st day of January (i.e., January 1) and end on the last day of December (i.e., December 31) in each year.

Article 2: Purposes And Objectives

OBJECTIVES AND PURPOSES. The purpose of this Association is to provide a domestic, non-commercial, water service at cost to the Members, domestic water service being defined as service for household users, adjacent garden planting, and watering of domestic animals, and other such uses as the Board of Directors may approve.

MUTUAL BENEFIT ASSOCIATION STATUS. The Association is a non-profit mutual benefit Association organized under Sections 7110-8910 of the California Corporation Code, and is not organized for the private gain of any person.

FEDERAL TAX-EXEMPT STATUS. This Association is organized and operated as a trade association in accordance with Internal Revenue Code Section 501(c)(6). Notwithstanding any other provisions of these bylaws, the Association shall not, except to an insubstantial degree, engage in any activities or exercise any powers that do not further the purposes of the Association and shall not carry on any other activities not permitted to be carried on by a corporation exempt from federal income tax under Section 501(c) of the Internal Revenue Code.

CONSTRUCTION AND DEFINITIONS. Unless the context of these bylaws requires otherwise, the general provisions, rules of construction and definitions of the California Non-Profit Mutual Benefit Association Law shall govern the construction of these bylaws.

Article 3: Members

MEMBERSHIP.
1. Member Defined. Any person or legal entity who acquires record title to all or a controlling interest in a parcel of land within the Association Service Area (attached hereto as Exhibit A and incorporated herein), and who receives a valid water right with such title, shall become a Member of the Association (“Member”). Such water right and membership shall not, however, become active until all five conditions below are met:
  1. The Association has received written notice of the title transfer.
  2. The water right is clear of any sums owed to the Association.
  3. The transfer fee or hook-up fee has been paid to the Association.
  4. Such evidence of land ownership as required by the Association is presented.
  5. The delivery of a signed Acknowledgment of these bylaws (page 16 hereof) and the agreement to abide by same. In the event a signed Acknowledgement is lost or unobtainable, a record of payment for water service by the Association shall constitute an agreement to abide by the Rules and Regulations.
2. Membership Appurtenant to Land. Membership in the Association and the water right and interests conferred by such membership shall be appurtenant to land served by the Association and shall pass to any transferee of such land subject to their agreement, provided that no connection right may serve more than one household.
3. Membership Terminates upon Transfer. Membership shall cease and all water rights and interest terminate for any Member upon record transfer from his or her ownership of all his/her land within the Association Service Area.
4. One Vote per Membership. A Member shall have but one membership regardless of the number of water connection entitlements appurtenant to his or her land. At Association meetings active Members may cast one vote. Members having a joint tenancy or tenancy in common membership may exercise but one vote.
5. No Fractional Membership Interests. The Association is prohibited from issuing any fractional memberships.
REGULAR MEETINGS. There shall be a regular biannual meeting of the Association in January (the “Annual General Meeting”) at such time and place as may be directed by the president and Board of Directors. At each Annual General Meeting, directors whose terms are then expiring shall be elected and any other proper business may be transacted, including passing upon reports for the previous fiscal year and transacting such other business as may come before the meeting. Failure to hold the Annual General Meeting at the designated time and date shall not work a forfeiture or dissolution of the Association, and in the event of such failure, the Annual General Meeting shall be held within a reasonable time thereafter.
SPECIAL MEETINGS. A special meeting of the Members may be called at any time by the Board of Directors, or by the Chairperson of the Board, or by the president, or by one or more Members holding memberships in the aggregate entitled to cast not less than ten percent (10%) of the votes.
NOTICE OF MEMBERS' MEETINGS. All notices of meetings of Members shall be sent or otherwise given in accordance with Section 5 of this Article III not less than ten (10), nor more than ninety (90), days before the date of the meeting. The notice shall specify the place, date and hour of the meeting and (i) in the case of a special meeting, the general nature of the business to be transacted, or (ii) in the case of the Annual General Meeting, those matters which the Board of Directors, at the time of giving the notice, intends to present for action by the Members.
MANNER OF GIVING NOTICE. Notice of any meeting of Members shall be given either personally or by first-class mail, electronic mail, or other written communication, as allowed by law, charges prepaid.
QUORUM. One-third (33.33%) of the eligible Members of the Association, represented in person or by proxy, shall constitute a quorum for the transaction of business at any meeting of the Association’s Members.
ADJOURNED MEETING AND NOTICE THEREOF. Any Members' meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of the majority of the Members represented at that meeting, either in person or by proxy.
VOTING. Only Members shall have the right to vote on matters affecting the Association, including the election of directors. At all meetings, every Member entitled to vote shall have the right to exercise its vote in person or by proxy; one vote per Member. Such vote may be by voice or by written ballot; provided, however, that all elections for directors must be by written ballot.
If a quorum is present, the affirmative vote of the majority of Members at the meeting and entitled to vote on the matter shall be the act of the Members, unless the vote of a greater number of memberships is required by law.
ACTION WITHOUT A MEETING. Any action which may be taken at any regular or special meeting of Members may be taken without a meeting if the Association distributes a written ballot to every Member entitled to vote on the matter. If approved by the Board of Directors, the Association may send that ballot and any related material by electronic transmission pursuant to Cal. Corp. Code Section 20 and responses may be returned to the Association by electronic transmission pursuant to Cal. Corp. Code Section 21. That ballot shall set forth the proposed action, provide an opportunity to specify approval or disapproval of any proposal, and provide a reasonable time within which to return the ballot to the Association. Approval by written ballot pursuant to this section shall be valid only when the number of votes cast by ballot within the time period specified equals or exceeds the quorum required to be present at a meeting authorizing the action, and the number of approvals equals or exceeds the number of votes that would be required to approve the proposal at a meeting at which the total number of votes cast was the same as the number of votes cast by ballot.
PROXIES. Every Member entitled to vote for directors or on any other matter shall have the right to do so either in person or by one or more agents authorized by a written proxy signed by the Member and filed with the secretary of the Association. Exercise of proxies shall be governed by Cal. Corp. Code §7613.

Article 4: Corporate Governance and Directors

NUMBER AND QUALIFICATIONS. The Association Board of Directors shall consist of eight (8) members: the president, Vice president, Secretary, Treasurer and four (4) other directors (two of whom will be Members from the Lower Tank and two of whom will be Members from the Upper Tank), each of whom will serve for a term of two years. The number of directors may be changed by amendment of these bylaws, or by repeal of these bylaws and adoption of new bylaws.
GENERAL POWERS. The business and affairs of the Association shall be managed, and all corporate powers shall be exercised, by or under the direction of the Board of Directors.
DUTIES AND PERFORMANCE. Without limiting the general powers described in Section 2 of this Article, the directors shall have the following duties and powers, as well as the authority to perform any and all duties imposed on them collectively or individually by law, by the Association’s articles of incorporation, or by these bylaws, including:
1. Perform any and all duties imposed on them collectively or individually by law, by the Association’s articles of incorporation, or by these bylaws;
2. Appoint and remove, employ and discharge, and, except as otherwise provided in these bylaws, prescribe the duties and fix the compensation, if any, of all officers, agents, and employees (if any) of the Association;
3. Supervise all officers, agents, and appointees of the Association to assure that their duties are performed properly;
4. Meet at such times and places as required by these bylaws;
5. Conduct, manage and control the affairs, transactions, and services and activities of the Association, including the implementation of policies, rules and regulations for such purposes and the election, from time to time, of the Board of Directors.
6. Upon approval by two-thirds of the Board of Directors, borrow money and incur indebtedness for the purposes of the Association and to execute and deliver, in the Association’s name, promissory notes, bonds, debentures, deeds of trust, mortgages, pledges, hypothecations, or other evidences of debt and securities.
7. A director shall perform his or her duties as a director with such care, including reasonable inquiry, as an ordinarily prudent person in a like position would use under similar circumstances.
INITIAL APPOINTMENT AND TERM OF OFFICE. The Members of the Board of Directors as of the initial meeting of the Board shall be those persons whose names are attached to these bylaws as Exhibit B. Those directors shall serve until the next Annual General Meeting of the Association’s Members. Thereafter, directors shall be elected at the Annual General Meeting, as applicable, to serve terms of two (2) years; provided, however, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until a successor has been elected and qualified, unless the director has been removed from office. The Chairperson of the Board shall be selected by a majority vote of the directors following the appointment or election of directors at each Annual General Meeting.
ELECTION OF DIRECTORS. The President and Board of Directors shall at the November Board meeting to appoint a Nominating Committee to select candidates for the Board. The Nominating Committee shall make its nominating report at the directors’ December Board meeting, at which time any Members may attend and additional nominations may be submitted. The final list of nominees shall be placed onto the ballot sent to the membership to be voted on at the Annual General Meeting in January. Any Member unable to attend the Annual General Meeting may mail or deliver his/her ballot as directed on the ballot prior to the meeting where it shall have the same value as if the member were present. Unless as otherwise provided herein, each Director shall serve for two (2) years.
COMPENSATION. Directors shall serve without compensation except that, as may be specifically agreed by the Board of Directors in advance, they may be allowed reasonable advancement or reimbursement of expenses incurred in the performance of their duties.
PLACE OF MEETINGS. Meetings shall be held as designated by the Board of Directors. Any meeting, regular or special, may be held by electronic mail, conference telephone, electronic video screen communication, or other communications equipment. Participation in a meeting through use of conference telephone constitutes presence in person at that meeting.
ANNUAL AND REGULAR MEETINGS. The Board of Directors shall meet a minimum of six (6) times per year to conduct regular Association business. The Board of Directors, in its discretion, shall designate a place, date and hour for an annual business meeting of the Board of Directors. If the designated day falls on a legal holiday, the meeting shall be held at the same hour and place on the next business day. Each director shall have one vote at such meetings. Other regular meetings of the Board of Directors shall be held as designated from time to time by Board of Directors and at a place designated or consented to in accordance with this Article.
SPECIAL MEETINGS. Special meetings of the Board of Directors may be called by the president or a majority of the Board of Directors, and such meetings shall be held at the place, within or without the State of California, designated by the person or persons calling the meeting, and in the absence of such designation, at the principal office of the Association.
NOTICE OF MEETINGS. Regular meetings of the Board of Directors may be held without notice. Special meetings of the Board of Directors shall be held upon forty-eight (48) hours' notice delivered personally or by electronic mail or telephone, including a voice messaging system, facsimile and electronic mail. If sent by mail, notice shall be deemed delivered upon deposit in the mail. If sent by facsimile or electronic transmission, notice shall be deemed delivered upon confirmation of transmission.
WAIVER OF NOTICE AND CONSENT TO HOLDING MEETINGS. The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, are as valid as though the meeting had been duly held after proper call and notice, provided a quorum, as hereinafter defined, is present and provided that either before or after the meeting each director not present signs a waiver of notice, a consent to holding the meeting, or an approval of the minutes thereof. All such waivers, consents, or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.
QUORUM FOR MEETINGS. For the transaction of any business except adjournment, a quorum shall consist of the majority of the authorized number of directors. Except as otherwise provided in these bylaws or in the articles of incorporation of this Association, or by law, no business shall be considered by the Board of Directors at any meeting at which a quorum is not present.
MAJORITY ACTION AS BOARD ACTION. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present is the act of the Board of Directors, unless the articles of incorporation, these bylaws or provisions of the California Non-Profit Mutual Benefit Association Law require a greater percentage or different voting rules for approval of a matter by the Board of Directors.
CONDUCT OF MEETINGS.
1. Meetings of the Board of Directors shall be presided over by the chairperson of the Board of Directors, or, if no such person has been so designated or, in his or her absence, the president of the Association or, in his or her absence, by the vice president of the Association or, in the absence of each of these persons, by a chairperson chosen by a majority of the directors present at the meeting. The secretary of the Association shall act as secretary of all meetings of the Board of Directors, provided that, in his or her absence, the presiding officer shall appoint another person to act as secretary of the meeting.
2. Meetings shall be governed by Roberts Rules of Parliamentary Procedure or such other rules as the Board of Directors may adopt or revise from time to time, insofar as such rules are not inconsistent with or in conflict with these bylaws, with the articles of incorporation of the Association, or with provisions of law.
ACTION BY UNANIMOUS WRITTEN CONSENT WITHOUT MEETING. Any action required or permitted to be taken by the Board of Directors under any provision of law may be taken without a meeting if all members of the Board of Directors individually or collectively consent in writing to such action.
VACANCIES.
1. A vacancy on the Board of Directors shall be deemed to exist at the occurrence of the death, resignation, or removal of any director
2. The declaration by resolution of the Board of Directors of a vacancy in the office of a director who has failed to attend at least three (3) consecutive Board of Directors’ meetings without an excuse acceptable to the Board of Directors in its reasonable discretion; provided that at least one (1) of such absences shall have occurred after the Board of Directors has provided the absent director with notice of the possibility of having the director’s position be declared vacant if the absent director fails to attend a subsequent Board of Directors’ meeting.
3. Except as provided in this section, any director may resign, which resignation shall be effective upon receipt of written notice by the chairperson, the president, or the secretary, unless the notice specifies a later effective date for the resignation. No director may resign when the Association would then be left without a duly elected director or directors in charge of its affairs.
4. The Board of Directors shall fill any vacancy caused by death or resignation of a director; provided, that if the Board of Directors fails to fill such a vacancy, the Members may fill that vacancy. A vacancy created by the removal of a director under subsection (b), above, shall be filled by the approval of the Members.
NONLIABILITY OF DIRECTORS OR OFFICERS. The directors shall not be personally liable for the debts, liabilities, or other obligations of the Association. Further, except for transactions described in Sections 7233 and 7236 of the California Non-Profit Mutual Benefit Associations Law, or any action or proceeding brought by the California Attorney General, a person who performs his or her duties as a director or officer in accordance with these bylaws shall have no liability based upon any alleged failure to discharge that person’s obligations as director or officer, as applicable, including any acts or omissions which exceed or defeat the Association’s public purpose.
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHER AGENTS. To the extent that a person who is, or was, a director, officer, employee, or other agent of this Association has been successful on the merits in defense of any civil, criminal, administrative, or investigative proceeding brought to procure a judgment against such person by reason of the fact that he or she is, or was, an agent of the Association, or has been successful in defense of any claim, issue, or matter, therein, the Association shall have the right to indemnify such person against expenses actually and reasonably incurred by the person in connection with such proceeding.

If such person either settles any such claim or sustains a judgment against him or her, then the Association shall have the right to indemnify such person against expenses, judgments, fines, settlements, and other amounts reasonably incurred in connection with such proceedings, but only to the extent allowed by, and in accordance with the requirements of, Section 7237 of the California Non-Profit Mutual Benefit Association Law.

Article 5: Officers

OFFICERS. The officers of the Association shall be appointed by the Board of Directors. The officers of the Association shall be a president, a vice president, a secretary, and a treasurer. Any number of offices may be held by the same person except that neither the secretary nor the treasurer may serve as the president or chairperson of the Board of Directors. All officers shall serve without compensation, subject, however, to any agreements between an officer and the board.
QUALIFICATION, APPOINTMENT, AND TERM OF OFFICE. Any active Member in good standing who shall have been a Member of the Association for a period of not less than one year may be appointed as an officer of the Association. The officers of the Association will serve at the pleasure of the Board of Directors. Unless otherwise removed at the discretion of the Board, each officer’s term shall be for one (1) year from the date of his or her appointment.
REMOVAL AND RESIGNATION. Any officer may be removed, either with or without cause, by the Board of Directors, at any time. Any officer may resign at any time by giving written notice to the Board of Directors or to the president or secretary of the Association. Any such resignation shall take effect at the date of receipt of such notice or at any later date specified therein, and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.
VACANCIES. Any vacancy caused by the death, resignation, removal, disqualification, or otherwise, of any officer shall be filled by the Board of Directors. In the event of a vacancy in any office other than that of president, such vacancy may be filled temporarily by appointment by the president until such time as the Board of Directors shall fill the vacancy.
DUTIES OF PRESIDENT. The president shall be a director of the Association, and is the chief executive officer of the Association and shall, subject to the control of the Board of Directors, supervise and control the affairs of the Association and the activities of the officers. He or she shall perform all duties incident to his or her office and such other duties as may be required by law, by the articles of incorporation of this Association, or by these bylaws, or which may be prescribed from time to time by the Board of Directors. Unless another person is specifically appointed as chairperson of the Board of Directors, he or she shall preside at all meetings of the Board of Directors, except as otherwise expressly provided by law, by the articles of incorporation, or by these bylaws, he or she shall, in the name of the Association, execute such contracts or other instruments which may from time to time be authorized by the Board of Directors. The president, or his/her designated appointee will have the authority to sign all Association checks and authorize the transfer of Association funds. While serving in the capacity of the chairperson, the president will not make or second any motion proposed to the Board.
DUTIES OF VICE PRESIDENT. The vice president must be a director of the Association. In the absence of the president, or in the event of his or her inability or refusal to act, the vice president shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to all the restrictions on, the president. The vice president shall have other powers and perform such other duties as may be prescribed by law, by the articles of incorporation, or by these bylaws, or as may be prescribed by the Board of Directors.
DUTIES OF SECRETARY. The secretary must be a director of the Association. The secretary, or his or her designee, shall:
1. Certify and keep at the principal office of the Association the original or a copy of these bylaws as amended or otherwise altered to date.
2. Keep at the principal office of the Association or at such other place as the Board of Directors may determine, a book of minutes of all meetings of the directors, recording therein the time and place of holding, whether regular or special, how called, how notice thereof was given, the names of those present or represented at the meeting, and the proceedings thereof.
3. See that all notices are duly given in accordance with the provisions of these bylaws or as required by law.
4. Be custodian of the records.
5. Exhibit at all reasonable times to any director of the Association, or to his or her agent or attorney, on request therefor, the bylaws, and the minutes of the proceedings of the directors of the Association.
6. In general, perform all duties incident to the office of secretary and such other duties as may be required by law, by the articles of incorporation of this Association, or by these bylaws, or which may be assigned to him or her from time to time by the Board of Directors.
7. In the absence of the president and the vice president, or in the event of their inability or refusal to act, the secretary shall perform all the duties of the president, and when so acting shall have all the powers of, and be subject to all the restrictions on, the president.
DUTIES OF TREASURER. The treasurer must be a director of the Association. The treasurer, or his or her designee, shall:
1. Have charge and custody of, and be responsible for, all funds and securities of the Association, and deposit all such funds in the name of the Association in such banks, trust companies, or other depositories as shall be selected by the Board of Directors.
2. Receive, and give receipt for, monies due and payable to the Association from any source whatsoever.
3. Disburse, or cause to be disbursed, the funds of the Association as may be directed by the Board of Directors, taking proper vouchers for such disbursements.
4. Keep and maintain adequate and correct accounts of the Association's properties and business transactions, including accounts of its assets, liabilities, receipts, disbursements, gains and losses.
5. Exhibit at all reasonable times the books of account and financial records to any director of the Association, or to his or her agent or attorney, on request therefor.
6. Render to the president and directors, whenever requested, an account of any or all of his or her transactions as treasurer and of the financial condition of the Association.
7. Prepare, or cause to be prepared, and certify, or cause to be certified, the financial statements to be included in any required reports, and prepare and file, or cause to be prepared and filed, any state and federal tax returns of the Association.
8. In general, perform all duties incident to the office of treasurer and such other duties as may be required by law, by the articles of incorporation of the Association, or by these bylaws, or which may be assigned to him or her from time to time by the Board of Directors.
BOARD APPOINTEES. The Board of Directors shall appoint individuals to the following roles and responsibilities and compensate them for their work upon submission of invoices for services performed.
System Operator. The System Operator shall perform the following functions:
1. Maintains water system in operating order
2. Troubleshoots system when problems arise
3. Maintains log of complaints
4. Collects water samples for required testing
5. Will be responsible for identifying members needing “back flow preventers”
6. Will be responsible for having system hydrants and valves tested annually
Meter Reader. The Meter Reader shall perform the following functions:
1. Periodically reads member water meters and reports information to Accountant
2. Monitors meter function and reports malfunctions to appropriate individuals
Accountant. The Accountant shall perform the following functions:
1. Issues periodic invoices for water to members.
2. Collects monies and makes bank deposits.
3. Maintains water rate information.
4. Pays bills for Association expenses.
5. Prepares annual report of Association monies received and disbursements made
6. As designated by the president, the Accountant is authorized to sign checks on behalf of the Association.
7. As designated by the treasurer, the Accountant may perform any function described in Section 8 of this Article.

Article 6: Execution of Instruments, Deposits and Funds

EXECUTION OF INSTRUMENTS. The Board of Directors, except as otherwise provided in these bylaws, may by resolution authorize any officer or agent of the Association to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Association, and such authority may be general or confined to specific instances. Unless so authorized, no officer, agent, or employee shall have any power or authority to bind the Association by any contract or engagement or to pledge its credit or to render it liable monetarily for any purpose or in any amount.
CHECKS AND NOTES. Except as otherwise specifically determined by resolution of the Board of Directors, or as otherwise required by law, checks, drafts, promissory notes, orders for the payment of money, and other evidence of indebtedness of the Association shall be signed by at least one of the president (or his or her designee), secretary or treasurer.
DEPOSITS. All funds of the Association shall be deposited from time to time to the credit of the Association in such banks, trust companies, or other depositories as the Board of Directors may select.

Article 7: Corporate Record and Reports

MAINTENANCE OF CORPORATE RECORDS. The Association shall keep at its principal office in the State of California:
1. Minutes of all meetings of directors of the Board of Directors, indicating the time and place of holding such meetings, whether regular or special, how called, the notice given, and the names of those present and the proceedings thereof;
2. Adequate and correct books and records of account, including accounts of its properties and business transactions and accounts of its assets, liabilities, receipts, disbursements, gains and losses; and
3. A copy of the Association's articles of incorporation and bylaws as amended to date, which shall be open to inspection as set out in these bylaws.
DIRECTORS' INSPECTION RIGHTS. Every director shall have the absolute right at any reasonable time during normal business hours to inspect and copy all books, records, and documents of every kind and to inspect the physical properties of the Association.
RIGHT TO COPY AND MAKE EXTRACTS. Any inspection under the provisions of this Article may be made in person or by agent or attorney and the right to inspection includes the right to copy and make extracts.
ANNUAL REPORT. If the Association receives more than Ten Thousand Dollars in gross revenues or receipts during a fiscal year, the Board of Directors shall cause an annual report to be prepared not later than one hundred and twenty (120) days after the close of the Association’s fiscal year. The Association shall notify each Member each year of the Member’s right to receive the annual report to be prepared pursuant to this section. The annual report shall be provided to all directors of the Association and to any Member who requests it in writing, which report shall contain the following information in appropriate detail:
1. A balance sheet as of the end of the fiscal year, and an income statement and statement of cash flows for the fiscal year; and
2. A statement of the place where the names and addresses of current Members are located.
3. The annual report shall be accompanied by any report thereon of independent accountants, or, if there is no such report, the certificate of an authorized officer of the Association that such statements were prepared without audit from the books and records of the Association.

Article 8: Amendment of Bylaws or Articles; Rules

AMENDMENT OF BYLAWS. Subject to these bylaws or any provision of law applicable to the amendment of bylaws in the Non-Profit Mutual Benefit Association Law, these bylaws, or any of them, may be altered, amended, or repealed and new bylaws may be adopted or approved by the Board of Directors.
CERTAIN AMENDMENTS. Notwithstanding Section 1 of this Article, the bylaws may only be amended by the approval of the Members if any such amendment would:
1. Materially and adversely affect the rights of Members as to voting, dissolution, redemption or transfer;
2. Increase or decrease the number of Members authorized in total or for any class;
3. Effect a change, reclassification or cancellation of all or part of the memberships;
4. Authorize a new class of membership;
5. Change the number of directors from a variable number to a fixed number;
6. Increase the length of directors’ terms;
7. Authorize the Board of Directors to fill vacancies created by the removal of directors;
8. Change the number of memberships necessary for a quorum at membership meetings;
9. Change proxy rights;
10. Change to cumulative voting; or
11. Otherwise be specified in these bylaws or required under applicable law.
MEMBER INITIATED AMENDMENTS. Any Member may propose amendments to these bylaws in writing at any regular Board meeting. The proposed amendment shall be read to the directors present and referred to a “Committee on Amendments” for study and report thereon at the next regular meeting of the Board. Notice of the proposed action shall be presented to the directors in writing, together with a ballot indicating approval or disapproval of such amendment. Each director will return his or her ballot to the Board within ten (10) days of receipt. If ratified by not less than two-thirds (2/3) majority of ballots issued, such amendment(s) shall become valid and incorporated into these bylaws.
COMPLIANCE WITH CALIFORNIA CORPORATION CODE SECTION 14312. This Association is organized for, or engaged in, the business of selling, distributing, supplying, or delivering water for domestic use. It hereby provides, in these bylaws, that water shall be sold, distributed, supplied or delivered only to owners of its shares (Members) and that the shares shall be appurtenant to certain lands when the same are described in the certificate issued therefor; and when the certificate is so issued and a certified copy of these bylaws are recorded in the office of Recorder for the County of Santa Clara, the shares shall become appurtenant to the lands and shall only be transferred therewith, except after sale thereof, or for forfeiture for delinquent assessments thereon as provided in Cal Corp. Code Section 14303.
SUPERSEDED PRIOR BYLAWS. These bylaws, when ratified, set forth the complete and entire understanding of the Association and its governance and supersedes all prior versions, editions or iteration of prior bylaws, including but not limited to the bylaws adopted by the Association’s predecessor association dated August 1949, November 1977, June 2002, June 2009 and July 2014, and any amendments or revisions thereto.
ASSOCIATION RULES AND REGULATIONS. The Association Rules and Regulations shall be amended from time-to-time as required in order to serve the protection and benefit of all Members and comply with Federal, State and Local regulations. A copy of the current Rules and Regulations is attached as Exhibit C. Any proposed amendment to the Rules and Regulations would require approval by not less than two-thirds (2/3) of the Members and ratification by not less than two-thirds (2/3) of the Board of Directors. Upon the ratification of any amendment to the Rules and Regulations, a copy will be distributed to each Member.

Article 9: Dispute Resolution

PURPOSE. The purpose of this Article is to provide prompt and effective procedures for the resolution of any Association dispute (“Grievance”). The procedures hereinafter set forth shall be the sole and exclusive method for the resolution of Grievances arising out of issues covered by the Association’s bylaws, Rules and Regulations or administration of the Association’s business.
PROCEDURE.
1. Board Level Resolution. The Member with the Grievance (the “Grievant”) and the Board will work together in good faith to resolve the Grievance. All references to “days” in this Article shall mean “calendar days.”
2. Any Member having a Grievance should bring such matter to the attention of the Board as soon as the situation or issue is known. For purposes of this Section, Grievance shall mean an allegation concerning a claimed violation, misapplication, or misinterpretation of a specific term or provision of the bylaws by the Association or its Board. It shall also include any action or complaint against the Association or the Board or its Members for any reason, including, but not limited to, alleging a failure to comply with the bylaws or proper administration of Association business, failure to provide water, any Board or Association fees or charges, damage to a member’s property alleged to have been caused by the Association or its water system, or an injury to a member for any reason caused by the Association or its water system.
3. An Informal Grievance shall be considered one in which a Member requests clarification or interpretation of a provision of the bylaws or has a concern about a minor issue. An Informal Grievance may be filed by phoning any Board member who shall deliver the request or concern to the Chairperson of the Board within five (5) days of its receipt for inclusion on the next Board meeting agenda.
4. A Formal Grievance is a more serious dispute that shall be in writing and should be promptly delivered to the Board by either: (i) being mailed to the Association’s mailing address (where members send their water payments, currently: P.O. Box 730875, San Jose, California 95173) or (ii) physically delivered to the Board at its next monthly Board meeting. A formal grievance shall include the Member’s name and address, a detailed description of the grievance, the date(s) of the alleged violation(s), the Member’s requested remedy/resolution, and the signature of the Member or his/her designated representative.
5. The Board will endeavor to schedule a dispute resolution meeting with the Grievant at the next scheduled Board meeting. The Board shall provide the Grievant (and any Member(s) who are a party to the Grievance) with notice of not less than five (5) days’ advance notice of the scheduled dispute resolution meeting. In the event there is inadequate time for such notice or that the Grievant (or any Member(s) who are a party to the Grievance) is unable attend the scheduled dispute resolution meeting, an alternate dispute resolution meeting will be scheduled for the next scheduled Board meeting. The Board will issue five (5) days’ advance notice to the Grievant (and any Member(s) who are a party to the Grievance) of the rescheduled alternate dispute resolution meeting. The Grievant, and his or her representative, is expected to attend the dispute resolution meeting; any Member(s) who are a party to the Grievance is strongly encouraged to attend.
6. The dispute resolution meeting will be an informal hearing where all parties in attendance will have an opportunity to explain the circumstances of the Grievance. This meeting is not an open forum; only persons identified in the Grievance, and their representatives, may attend.
7. The Board will endeavor to issue its final written determination (“Determination Letter”) not greater than twenty (20) days following the (alternate) dispute resolution meeting.
8. If the Grievant is not satisfied with the Board’s determination, he or she will have twenty-one (21) days from the date of the Determination Letter to file a request for binding arbitration. Failure to file such a request for binding arbitration within these twenty-one (21) days shall cause the Grievance to be deemed resolved pursuant to the Board’s Determination Letter.
9. Arbitration. A Grievant dissatisfied with the Board’s Determination Letter will have twenty-one (21) days by which to file for binding arbitration with JAMS/Endispute (www.JAMSADR.com) (“JAMS”) in the city of San Jose, county of Santa Clara, California, in accordance with the Commercial Arbitration Rules then applicable to JAMS. The arbitration shall be conducted before a single arbitrator. The Parties shall use their reasonable efforts to select a mutually acceptable arbitrator. If the Parties have not selected a mutually acceptable arbitrator within thirty (30) days after the commencement of the arbitration, the arbitrator shall be selected in accordance with the rules of JAMS. The arbitrator shall establish discovery procedures reasonable in light of the amount in controversy and the nature of the dispute and discovery shall not be limited to the discovery procures set forth in the JAMS Rules. This agreement to arbitrate shall be specifically enforceable. Any award rendered in any such arbitration proceedings shall be final and binding on each of the parties, and judgment may be entered thereon in any court of competent jurisdiction. Any arbitration shall be conducted in private and neither party shall make any public announcement or disclosure about the conduct, status or result of any arbitration without the prior written consent of the other party; provided that, on not less than fifteen (15) days prior written notice thereof to the other party, which notice shall include a copy of the proposed announcement or disclosure, a party may make such public announcement or disclosure regarding the arbitration as may be required by law.
SUBMISSION TO JURISDICTION. Each of the parties irrevocably consents that any arbitration, action or other legal proceeding against it or any of its property with respect to these bylaws or any other agreement executed in connection herewith will be subject to the venue and jurisdiction of city of San Jose, county of Santa Clara, California.
ATTORNEYS’ FEES. In any action between the parties seeking enforcement of any of the terms and provisions of these bylaws, the substantially prevailing party in such action shall be awarded, in addition to damages, injunctive or other relief, its reasonable costs and expenses, not limited to taxable costs, and reasonable attorneys’ fees. The “substantially prevailing Party” shall be the Party who substantially obtains or defeats the relief sought, as the case may be, whether by, award, judgment or abandonment by the other Party of its claim or defense, as determined by the sole discretion of the arbitrator/judge who presided over the matter. In the event the arbitrator/judge fails to, or chooses not to, identify the substantially prevailing Party, none shall be deemed to have been identified and each party shall bear its own respective costs and expenses.

Article 10: Prohibition Against Sharing Corporate Profits and Assets

PROHIBITION AGAINST SHARING CORPORATE PROFITS AND ASSETS. No director, officer, employee, or other person connected with this Association, or any private individual, shall receive at any time any of the net earnings or pecuniary profit from the operations of the Association, provided, however, that this provision shall not prevent payment to any such person of reasonable compensation for services performed for the Association in effecting its public purpose, provided that such compensation is otherwise permitted by these bylaws and is fixed by resolution of the Board of Directors; and no such person or persons shall be entitled to share in the distribution of, and shall not receive, any of the corporate assets on dissolution of the Association. On dissolution of this Association, the Board of Directors shall cause the assets herein to be distributed to another non-profit corporation with purposes similar to those identified in the Association’s Articles of incorporation.
PROHIBITION AGAINST LOANS OR GUARANTEES. The Association shall not lend any money or property to nor guarantee the obligation of any director or officer.
PROHIBITION AGAINST SELF-DEALING. The Board of Directors shall not cause the Association to enter, directly or indirectly, into any contract or transaction with any director of this Association or with any corporation, firm, association, or other entity in which one or more directors of this Association has a material financial interest or in which one or more directors of this Association are otherwise involved, unless all of the following apply:
1. the material facts regarding the financial interest of such director(s) in the contract or transaction or the involvement or financial interest of such director(s) in the other corporation, firm, association are fully disclosed in good faith and noted in the minutes, or are known to all directors of the Board of Directors prior to the Board of Director’s consideration of such contract or transaction;
2. before authorizing or approving the transaction, the Board of Directors considers and in good faith decides after reasonable investigation that the Association could not obtain a more advantageous arrangement with reasonable effort under the circumstances;
3. a majority of the Board of Directors by a vote sufficient for that purpose, without counting the votes of the interested directors, authorizes or approves the contract or transaction in good faith; and
the transaction is in fact fair and reasonable to the Association at the time of its entry and the transaction is entered into for the Association’s benefit.