Surfside Water Meter Testimony

Testimony Before the Board of Trustees of the Surfside Homeowners Association

Water Meter Resolution 01-2011

December 3, 2011  10:00 AM

By

Dr. Jimmie R. Applegate

I am Jimmie R. Applegate.  Sabine and I have had a home in Surfside for 40 some years.  And Mr. Miller,  you are welcome to record my comments.  Thank you for doing so.

And to the Trustees thank you for holding this “after the fact” meeting to solicit reactions to the Water Meter Resolution you adopted November 19.  All parties involved would have been better served had you conducted this meeting before you adopted Resolution 01-2011.  At least, with all due respect, you might not have been caught with your pants down as you are now with your official approval of a problematic and poorly written Resolution that arguably suggests actions that potentially violate SHOA governing documents.

The Surfside Homeowners Association is governed by a Board of Trustees.  Each elected member of the Board is a Trustee.  Trustees individually and collectively are charged with acting in the best interests of all members; i.e., to keep SHOA “in trust” for all members.  You are not a Board of Directors, although you attempt to act as though you are.  Directors are professionals who know what they are doing and who are employed for specific management roles.  When Trustees assume Director roles many unanticipated things happen because their roles are different.  SHOA governance is a prime example.

Many of your actions as Trustees do not appear to have been made on behalf of all members.  In fact some of your actions appear to have insulted the intelligence of some members.  You have demeaned your constituents by treating them as antagonists rather than as electors to whom you owe your election.

For all intents and purposes SHOA’s long established committee structure has been destroyed.  Committees have been abolished, or do not meet.  Committees are loaded with active Trustee members under the guise of “keeping a finger on the pulse” of the membership.  And there are allegations of violations, or ignorance, of Committee Charters.

Repeated questions and concerns from members have been ignored, left to die on the vine, and insufficiently or incorrectly answered.

There have been apparent violations of the Articles of Incorporation.

There have been apparent violations of the ByLaws.

There have been violations of the Operations Manual.

There has been an apparent concerted effort to limit the information available to SHOA members by approving and publishing allegedly incomplete minutes.

Concerns have been raised regarding “appearance of fairness” actions at least and “conflict of interest” actions at the most on the part of individual Trustees and at least one employee.

Information in the WeekEnder has been limited primarily to “What’s to do in Surfside and on the coast”.

Allegations have been levied against Board members for alleged discriminatory and other actions that resulted in the termination or loss of employees and/or a trustee, committee members and chairs.

And members of the BOT are alleged to have failed to protect and defend control of SHOA’s water rights by questionable employment procedures.

Each of these allegations is worthy of a complete discussion; however the topic for today is directed to various apparent violations of the SHOA governing documents specifically the Articles of Incorporation and the ByLaws regarding Resolution 01-2011, A Resolution of the Board of Trustees of the Surside [sic] Homeowners Association of Pacific County, Washinton [sic] Regarding Metering of Member Water Use… adopted November 19, 2011.

If I understand the poorly written Resolution correctly 370 meters will be connected each year for five years.  That is a total of 1,850 meters at $550 per meter for a total of $1,017,500.  However Resolved 4 adds another 370 meters to be installed without a due date.  In any case, $1,017,500 is a lot of money.  Given the current member concerns about double counting with allegations of wages and salaries appearing in more than one budget category it is insane to expect members to believe you are meeting your fiduciary responsibilities as Trustees.  You propose to set up a separate budget account for the water meter project and at the end of five years to conduct an audit.  That does not cut the mustard.  You must develop a plan and implement a budget format that is audited each and every year to assure the members the charges collected  are being managed appropriately as required in the Articles of Incorporation and the ByLaws.  Some members appear to mistrust your management while others apparently are tired of your alleged violations of SHOA governing documents.

To begin, let’s be clear about the purposes for which SHOA was established.  Article ll, Section 13 of the Articles of Incorporation states without equivocation the purposes of the corporation are to:

“To appropriate, purchase, divert, acquire and store water from streams, water courses, wells or any other source, and to distribute the water so appropriated and acquired to its members for use upon lands of said members and for domestic purposes; to acquire, own, construct, hold, possess, use and maintain such pumping plants, tanks, pipe lines, reservoirs, ditches, buildings, roads, trails and appliances, and such other property, including water rights and shares of stock in other corporations as said corporation from time to time may desire to acquire or purchase for furnishing and supplying water to its members; provided that this corporation shall not use or dispose of such water as a public utility, but solely for the use and benefit of its members and for the irrigation of lands and domestic and other useful and beneficial purposes.”

Article lX of the ByLaws is clear that “Charges and assessments against all members shall be levied by the board of trustees at a uniform rate per member or lot without distinction or preference of any kind”.  What part of that sentence is so difficult to understand?  Let me repeat just to be perfectly clear: “Charges and assessments against all members shall be levied by the board of trustees at a uniform rate per member or lot without distinction or preference of any kind”.

Former General Manager Kenneth Karch recently searched the Articles of Incorporation and the ByLaws for the words “assess,”  “charges”, ”levy” and “dues” and  he found  two words that were used almost exclusively in the documents thus implying at least these were the “only forms of assessments contemplated” by the first Incorporators.  The two words were “assess” and “charges”.

Historically, charges and assessments have been levied according to the provisions in the governing documents.  That is until recent Boards of Trustees began playing word games by substituting the word “fee” for the words “charges” or “assessments” in the Articles and ByLaws as they deemed appropriate to meet their agenda.   I wrote earlier that such semantic games would continue until the Trustees were “hoisted with their own petard”.

Well that time has come.  There is no wiggle room left.  The language in Resolution 01-2011, Section 12 you approved clearly states that monies “from members meter charges”—I repeat “from members meter charges”.  You can’t talk out of both sides of your mouths.  You have been hoisted with your own petard by the language in an official document you approved in a regularly scheduled public meeting.  In addition, Section 7 of your official Resolution includes the words “Payment of metering charge is independent of installation schedule”.  I repeat “Payment of metering charge”.

You have shown how shallow and demeaning your attempt was to label charges for the meters as “fees” to get around the requirement in Article lX that “Charges and assessments against all members shall be levied at a uniform rate per member or lot without distinction or preference of any kind.”  Additionally your intention to collect metering charges independent of the installation schedule is questionable.  In other words you intend for some members to pay now but maybe not receive a meter until possibly 2016 or 17.  Or do you intend to bill members at one time?  Or when they become part of the 370?  Also the language in the Resolution that states “if the project comes in under budget excess monies will be transferred to the Surfside Homeowners Association Reserve Account” appears to violate Article ll, Section 19.  Article 11, Section 19 states “…wherever it [the corporation] is authorized to collect charges or assessments “it shall have no power or authority to use said charges or assessments except as necessary to cover the actual cost or expense of the act, duty, power or transaction performed”.  A layman could read that as meaning “monies collected for a specific charge shall be used for that purpose only”. 

SHOA’s water system is arguably the largest piece of SHOA’s infrastructure.  As such it is owned equally by all members.  Whenever a coequally owned piece of infrastructure is “improved”, or added to, it increases in value to the members be they full-time or part-time residents or owners of developed or undeveloped lots.  Should SHOA dissolve or should the water system be sold all SHOA members will receive a pro rata share.

I have heard ownership of the water meters described as “mine” or “your” water meter.  This is false because the water meters are “ours” as SHOA members.  I cannot take “my” meter with me when I leave Surfside.  The meter must remain as part of the equally owned infrastructure of SHOA.  Although I pay for the meter it is not mine, it was never mine and it never will be mine.  In other words, I am being charged—while other SHOA members are not—for an improvement to the equally owned infrastructure in violation of the Articles and ByLaws!  All costs for water meters and their installation are charges or assessments that should be shared equally by all 2,000+/- members or lot owners since upon the dissolution of SHOA or sale of SHOA infrastructure all members will receive a pro-rata share of the proceeds.