Candidate Briefing #1 — Response to WOWSC Board Candidate

Greetings Neighbors,

I am the president of the Board of the Windermere Oaks Water Supply Corporation. I started this website some time ago to address questions which our members have from time to time. Please scroll down to see the history of posts which may address questions. But this post and subsequent posts are specific to some recent NextDoor comments.

One candidate for the Board election occurring March 19 has asked some questions on NextDoor and they deserve attention. If that candidate is elected, I want him to be up-to-speed from day one.

However, the candidate I support, Dorothy Taylor, is already versed in these matters and would make the better choice of candidate. But in the interest of the neighborhood, I will provide this briefing book in the event that the newcomer is elected. Let’s start with the candidate’s second question in his NextDoor post:

“Does anyone find it hard to understand why the person, who collects the election ballots from the office, has an “Elect Candidate…..” sign in their front yard?

I don’t find it hard to understand at all. Our water company manager rents that house from Norm Morse, a former WOWSC director. Mr. Morse has apparently approved the sign’s placement on his yard.

Incidentally, the Board appointed Dorothy Taylor to replace Mr. Morse when he was unable to attend six consecutive Board meetings, per the bylaws. The water manager did not sanction placement of the sign on the rental property, nor did he need to. He doesn’t own the property and is not voting.

By the way, our bylaws only permit property owners to vote in the election. The ballots are sent to the address on file for property owners, not to known renters. The water company manager will not be voting in the election.

Now, let’s tackle the candidate’s first question. There’s a lot there so let’s unpack it, in this and subsequent posts. The candidate says the following:

1) In the past 5 Years our Water Rates have risen 87%. That is a fact. This is mainly due to Legal Cost the WOWSC has incurred defending current and past Board Member actions.

True that the rates have increased in the last five years, but let’s be clear on the reasons and the timing.

There have been two rate increases in the last five years. I’ll handle the 2018 increase in this post and then describe other issues in subsequent post or posts.

After a lengthy year-long evaluation process with the help of the Texas Rural Water Association, the 2018 Board raised rates to keep up with infrastructure challenges that were affecting the company. Look specifically at meeting minutes from March 7, March 12 and March 20, 2018. Please realize those discussions had started some time before — in 2016 and 2017 — because those Boards were being advised that the water system was underfunded and suffering. We have a growing community and WOWSC Boards have always had a pay-as-you-grow-and-improve approach. This has involved the use of debt financing, selling land, and raising rates.

The 2018 Board also was dealing with a lawsuit filed by TOMA Integrity, LLC in December 2017 against the water company. That Board was composed of Bill Billingsley, Bill Stein, Jeff Hagar, Jerry Ingham and Dorothy Taylor.

TOMA Integrity LLC had been formed before the filing of the lawsuit by Dick Dial, Rene Ffrench, Danny Flunker and Bruce Sorgen. Clicking here will show you their company’s filing papers.

That lawsuit was not filed against Board directors.

Dial, Ffrench, Flunker and Sorgen filed suit against the company itself. The lawsuit sought $100,000 from the company, voiding of a 2015 land sale, and a judge’s order to the Board to regain the land. You can view the TOMA Integrity LLC filing here. Effectively, they were asking all WOWSC customers to pay them $100,000 plus the other likely costly remedies. (BTW, Flunker left TOMA Integrity LLC at some point.)

Again, let’s be clear here — the Board was in a defensive position. It could not ignore the lawsuit. It had to evaluate, with the assistance of legal counsel, the implications of either agreeing to all of Dial, Ffrench, Flunker and Sorgen’s demand, or using legal counsel to oppose their demands. That Board was composed of Bill Billingsley, Bill Stein, Jeff Hagar, Jerry Ingham and Dorothy Taylor. Ultimately, they voted to retain legal counsel to oppose the demands. Refer to the minutes previously provided and the other minutes in 2018 that are on the website.

TOMA Integrity LLC lost the suit in November 2018, and you can view the Judge’s order here. That year, 2018, the Board was required to pay attorneys about $38,000 to protect the company in that judgment.

While raising rates to pay for legal expenses may certainly have been a consideration to Billingsley, Stein, Ingham, Taylor and Hagar when they raised rates, that $38,000 was not part of the calculation in the TRWA rate analysis. In other words, they had conducted the rate analysis on the financials for 2017, when only a small portion of legal fees were included.

The larger point here is simply that the candidate’s broad statement about water rates having been raised exclusively to defend directors is not accurate to the facts in the first case.

Despite losing their case, the TOMA Integrity plaintiffs appealed through the Appeals Court system and then all the way to the Texas Supreme Court throughout 2019 and 2020. On Valentines Day 2020, the Texas Supreme Court ended any further appeals, upholding the decisions of the Trial Court Judge and the Appellate Judges. Just estimating here, but those actions ran up another $40,000-$60,000 in legal expenses to the WOWSC and its customers.

Okay, so that is enough for today. That should provide good background material for briefing of the candidate and any WOWSC member who has interest in these matters. I will tackle more in coming days.

P.S. — I want to nitpick my own post here. The newcomer candidate’s assessment was that the rate increases were “mainly due to Legal Cost the WOWSC has incurred defending current and past Board Member actions.” I did not fully address the “Board Member actions” portion of his sentence. I will do that in a subsequent post.

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