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 WOWSC.org 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.

New Records for Water Company Production

The Windermere Oaks Water Supply Corporation set new water production record in August 2021, producing 2.6 million gallons for our neighborhood.

To produce that much water, extra costs must be incurred, for chemicals, electricity, pump maintenance and repair, man-hours, etc.

The graphic above shows how much water was pumped in the three hottest months of the year, for the last four years.
The graphic above shows the yearly increase or decrease of water produced in the three months of June, July, and August. This year, June and July were mostly the same as 2020, but August 2021 saw a good 11 percent increase over August 2020. Notice how much more was pumped in the Covid years of 2020 and 2021. Possibly seeing the result of more people in the neighborhood — more new homes and more people working from their lakehouse home. Again, more electricity, more chemicals, more man-hours, more maintenance, replacement and repairs required.

Response to Taylor on NextDoor

Hi Taylor. Great questions. I will be happy to answer them. I have tried to be as brief as possible below.

  1. What is the current status of the lawsuits? My understanding is the the courts have ruled in favor of WOWSC numerous times, so can we expect the lawsuits to come to a close soon?

a. Toma Integrity (Ffrench, Dial, Sorgen) Vs. WOWSC — decided in WOWSC favor. Judges denied remedies sought by TOMA. Appeals court agreed in 2019 and Texas Supreme Court agreed in Feb 2020.

b. 48292 — originally named “Double F Hanger Operations LLC, Lawrence R. Ffrench, Jr., Patricia Flunker and Mark A. McDonald v Friendship Homes & Hangars, LLC, and Burnet County Commissioners Court” and then recaptioned and filed as “Rene Ffrench, John Richard Dial, Stuart Bruce Sorgen, and as Representatives for Windermere Oaks Water Supply Corporation v. Friendship Homes & Hangars, LLC, WOWSC, and its Directors William Earnest, Thomas Michael Madden; Dana Martin; Robert Mebane; Patrick Mulligan, Joe Gimenez, Mike Nelson and Dorothy Taylor” — Final motion on the legal merits of the case were filed Wednesday of this week. It is available here. http://spicewoodnews.com/wowsc-court-documents. Dial, Ffrench and Sorgen can drop the case any time so that the corporation’s legal defense fees can stop.

c. Two cases filed to protect the company’s attorney-client privileged information (and one of which was settled positively with the Attorney General’s office before intervention by Danny Flunker) — withdrawn. No longer in court. See one final document here https://wowsc.org/documents/778/Order_Granting_Notice_of_Nonsuit__D-1-GN-20-007251___file_marked_2021.03.15_.pdf Another should happen any time.

d. Public Utility Commission Rate Case — Ratepayer Representatives walked away from mediation in January. An offer from the company for settlement in lower rates was ready but never entertained by ratepayer reps Josie Fuller and Patti Flunker because they dropped out of mediation. Case will continue through July. Ratepayer Reps can re-enter mediation to consider offers of lower rates or drop the case to stop additional legal fees. You can see the document describing discontinuance at this page http://spicewoodnews.com/wowsc-court-documents

  1. How were the rate increases calculated?
    WOWSC used the spreadsheet analysis tool created by the Texas Rural Water Association for use by its hundreds of member water systems across Texas. The same spreadsheet was used by WOWSC in 2017 for a rate hike in 2018. It had been tailored specifically for WOWSC in 2017 by the TRWA, WOWSC board members and the water company manager. All documents about the calculations are available on the Public Utility Commission website here:
    https://interchange.puc.texas.gov/Search/Filings?ControlNumber=50788
  2. With the increase, how long was it originally expected for the increase to remain to pay off the legal fees?

The Board had hoped the 48292 case would end in mid-2020. Mediation was attempted and is legally considered ongoing to this day. The Board wanted to lower rates in September 2020 but could not given the status of the case and mediation. See item 1b above. Also see item 1d because all legal fees incurred in defending the rate increase can be judged as being recoverable in the form of higher fees.

  1. How much longer do you plan for the rate increase to remain in place?
    The Board wants to decrease rates as soon as it responsibly can but the people suing the corporation — Ffrench, Dial, Sorgen in 48292 and Fuller/Flunker in the rate case — hold the cards. Their legal complaints against the company continue despite efforts at and offers of mediation. The rate increase provided about $16,000 per month in additional income to the corporation. The company pays about $20,000 per month to its law firms. (We were able to save the corporation about $24,000 per year by restructuring loans last year.) We also are aggressively pursuing the insurance company for about $300,000 it should pay. Contrary to what WOWSC opponents say, the truth is that the insurance company has NOT denied coverage. It simply has not responded despite a year of our asking for a decision.

All of this is in the president’s report which is available here https://youtu.be/cad8iOxO0bg and will be provided at the annual members meeting as well.

I hope that helps.

Best regards,
Joe Gimenez
PS — Please vote for Gimenez, Nelson and Schaefer. Our accomplishments and plans for WOWSC are available here:
http://spicewoodnews.com/gimenez-nelson-schaefer-accomplishments-for-the-neighborhood-water-company

Gimenez, Nelson, Schaefer accomplishments for the neighborhood water company

  • Purchase of new backup generator–kept the power on at the water treatment plant during the February 2021 blizzard when so many local communities were without water.
  • Secured $14,000 LCRA grant—saves 100,000 and soon 200,000 gallons of water each month
  • Refinanced loan lowering interest rate—saves us untold thousands of dollars
  • Secured financing for capital projects
  • Secured pre-approved financing for new clarifier tank (planned future project to meet growing needs of community)
  • Repaired and improved wastewater dispersal fields
  • Completed water intake barge rebuild and repairs
  • New SCADA system (WOWSC Water Treatment Plant computer system)
  • Installed new security system
  • Initiated independent Financial assessment of WOWSC done by New Gen Strategies & Solutions and implemented recommendations Creating a WOWSC Financial Policy
  • Created the WOWSC Conflict of Interest Policy
  • Working with SAPA (Spicewood Airport Pilots Association) to add at their cost, additional waste water dispersal area
  • Continued our access to clean, safe, healthy, and affordable water
  • Completed much of the WOWSC 5 year plan

*These important achievements were accomplished, all while defending your water company against several member-initiated lawsuits/petitions (essentially members suing themselves and you) and dealing with unprecedented numbers of public information requests from the supporters of the lawsuits.

Re-elect Gimenez-Nelson-Shaefer so they can continue working for you! They are honest, ethical, and dedicated volunteers who have a proven record and have worked tirelessly for you. Don’t be fooled by their opponents who are supporters of the lawsuits, have been or are directly involved with the lawsuits, or directly involved with publicly defaming our water supply company and its past and present volunteer board members.  

What’s Next:

  • Roll back water and sewer rates when lawsuits end and litigation costs are paid
  • Implement E-billing and auto-payment
  • New water clarifier to accommodate growth of the community—loan pre-approved
  • Water Treatment Plant recycling project—will save an additional 100,000 gallons per month
  • Mitigation of zebra mussels
  • Purchase a backup generator for the wastewater plant
  • Continue our access to clean, safe, healthy, and affordable water

VOTE for JOE GIMENEZ, MIKE NELSON, RICH SCHAEFER

On or before Saturday, March 27th, 2021

Please don’t let a small group of disgruntled people destroy our beautiful peaceful community with lawsuits (which you are paying for and are the direct cause of the rate increase), falsehoods, twisting of the facts, and their personal vendettas. There is already too much fighting and extreme negativity in our society. Our neighborhood and home should be a respite from these negative forces. Let’s end this madness!

For more information: WOWSC.org, Spicewoodnews.com, www.ipetitions.com/petition/save-windermere-oaks

Information about PIA Requests that Members Need to Know

Water company members have a right to know about the company, including the costs it incurs for facilitating that right to know.

I was elected to the Board on March 9, 2019. Soon after that the water company began receiving a large number of Public Information Act requests, mostly from the plaintiffs suing the water company and their allies in the neighborhood.

The Board has done everything it can to honor these requests in hopes that they might help everyone learn more about our neighborhood water company.

To familiarize yourself with how the company handled this situation as it began to unfold in the spring of 2019, please take a look at meeting minutes here, here, here and here. The corporation had never had to fulfill so many PIA requests in all its years of operation and the Board was on new ground. In 2019, there were 46 requests which required delivery of hundreds of documents. There were approximately 3-5 requests in 2018, and a few in 2017. Before that, it was probably zero. In 2020, the company has received 32 requests thus far.

So recently, at the September 22, 2020, the Public Information Officer (me) and the company’s attorney reported to the Board on the number of requests and some special situations. All requests need some degree of legal review because the corporation has been sued. The company’s lawyers have advised us to retain the company’s rights to attorney-client privileged information contained in their invoices to the WOWSC so that opposing counsel cannot glean litigation strategy from their content.

This matter was discussed in the 9-22-20 Board meeting, particularly with regards to our law firm’s efforts to minimize their charges for response to multiple requests from the same person for the same attorney-client privileged material.

I found the time recently to excerpt that portion of the 9-22 meeting, which you can now view here, on a Zoom-recorded video. I encourage you to spend the 8+ minutes familiarizing yourself with these requests and our attorneys’ efforts to deal with them as inexpensively as possible.

Previously, our handling of this matter was described on NextDoor in this way: “The WOWSC board spent the better half of an hour disparaging me due to my PIA requests.” I hope you will watch the eight-minute discussion and determine for yourself whether the comments were disparaging — or just informative about the costs being incurred.

Please also remember that the continuing kerfuffle over these invoices is also a significant issue in the rate case filing, and you can click here to see a document describing all the legal entanglements these requests are causing — and costing.

Water loss reductions continued in September

Another update on the progress which our water company manager and Corix Utilities have made in reducing the amount of water lost in September compared to water lost in September of last year.

Look for more information on water conservation and water process expansion projects in future posts. Every opportunity is being looked at closely so that our system can keep pace with new demand from 46 new homes/taps in the last few years.

With regard to the benefits of reducing loss, utilities produce water using chemicals, processes, and pumping equipment. So any leaks that take processed water out of the system before reaching paying customers’ homes cause real financial loss to the water company.

As mentioned in my last post on this topic, KXAN has done stories on water loss at the city of Austin’s water company due to their aging pipes and valves. They lost 6.1 billion gallons in 2018 costing Austin’s utility $2.37 million. https://www.kxan.com/investigations/austins-losing-more-water-through-leaks/ Our system is aging as well and we occassionaly have valves that fail or tree roots that break pipes.

Congratulations to our water manager and Corix operators for greatly reducing our losses in September.

NextDoor post misstates rate case particulars

More cleanup work here regarding what you may have seen on NextDoor.

The water company lawyers recently asked a judge to “abate” the ratecase to a time when judgements on a previously filed case against the company are final.

The word “Abate” does not mean “dismissed,” which is how the poster on NextDoor interpreted it.

“Halted” or “postponed” might be better synonyms in the context of the water company’s actual request. You be the judge. The water company pleading said: “WOWSC respectfully requests that the Honorable ALJ issue an order granting this motion and abating this proceeding and the procedural schedule set forth in SOAH Order No. 2 until all pending related litigation is final and no longer appealable.” (emphasis added)

Such abatement to a future date would have saved the corporation and our ratepayers money, by deferring the lawyers’ rate case fees to a future date. By opposing this postponement, the ratepayer reps are adding to the company’s legal bills in the near term.

The following link provides the water company’s motion for abatement. It also provides an informative history of the multiple lawsuits which a small group of people have lodged against the water company over the years.

http://spicewoodnews.com/download/121/

The same poster on NextDoor then asked a rhetorical question, “Why would WOWSC try to halt mediation.”

A mediation had already been set for early October. It had to be postponed due to the need for rulings on these matters, particularly with regard to disclosure of lawyer invoices.

The administrative law judge did not rule against the water company in the matter of disclosure of the invoices which contain attorney-client privileged content. The Texas attorney general’s office agrees that these invoices are privileged.

The Administrative Law Judge in the rate case hopes that a future mediation can bridge the two parties’ concerns. Another mediation is being scheduled.

For reference, here is what the NextDoor post said, in part:

“WOWSC tried to get the rate case abated (dismissed). Late yesterday the PUC judge ruled the case must go to mediation. 1) Why would WOWSC try to halt mediation?”

Another Fiction — $600 bill due to rate increase

Last week another water company hater took a swipe, contending her $600 water bill was due to the rate increase enacted by the Board earlier this year.

$600 indicates that a lot of water was used, but the rate for water consumed did not increase.

Instead, the monthly increase was about $70 and was made to the “Monthly Base Rate.”

The monthly base rate is the amount we all pay regardless of whether we even turn on the water in a given month. The monthly base rate is $156.80. You can view all the rate information here.

As the Board discussed in February, the extra $70 per month adds about $16,000 to the amount of income the water company receives, and was needed for the reasons explained here. A few excerpts:

The amount of increase was determined after analysis performed in consultation with Texas Rural Water Association (TRWA) staff of the WSC’s 2019 operating expenses, which included $169,000 in legal fees, and of the FY2020 budget for WOWSC.

The analysis considered all expenses, specifically taking into account unprecedented legal expenses facing WOWSC. These historically high legal fees have been and will be incurred in large part due to two lawsuits brought against WOWSC by TOMA Integrity, Inc., and by Rene Ffrench, John Richard Dial, and Stuart Bruce Sorgen.

FAQs regarding WOWSC 2020 Rate Increase

We hope the person who had the $600 water bill will find a plumber to see whether they have a leak somewhere. Even a running toilet, with worn-out flapper gasket, can add hundreds of gallons to your usage. Other common water losses are caused by broken pipes due to shifting ground.

Apples, Oranges, Covid-19, Corporations and Governmental Entities

The water company haters continue to confuse people in our neighborhood with the fiction that our water corporation is a governmental entity. It’s not.

On NextDoor last week they were pressuring the water company for in-person meetings. They said in-person meetings are occuring at the Lakeway City Council and Burnet Commissioners’ Court.

The City of Lakeway and Burnet County are governmental organizations which have “sovereign immunity,” which means they can’t easily be sued or held liable.

Our neighborhood non-profit water corporation is not a governmental organization and as such does not enjoy the privileges of “sovereign immunity.” The corporation can be sued (and has been by a small group of people in the neighborhood in the last few years).

Nationwide there are Covid-19 related suits of all sorts being filed against companies. Learn more here, here, here and here. Why do the water company haters want the water company to take the risk?

Liability insurance and general business insurance will not likely cover the water company in the event that someone were to get sick, become grievously harmed, and allege that the they were contaminated at a water company meeting. Even if all the Covid-19 guidelines issued by national, state and county health organizations were followed, a lawsuit could happen.

Were a lawsuit to occur the water company insurance company would not likely even cover litigation related to that suit, which means the water company — and ultimately its members — would have to pay for litigation costs — or settle. That settlement money would also come directly from water customers.

The water company’s open meetings on Zoom have been great and safe. They protect the water company from liability issues in this Covid-19 era. And they continue to be allowed by act of the Governor.