||| FROM CHRIS BEAN-HEARNE |||
I am a member of the Eastsound Water Users’ Association – I have been for over 30 years. My opinion of Jim Nelson, Teri Nigretto, Mike Cleveland and Leith Templin is that they are immensely capable as directors of EWUA. They have integrity, honesty and are hardworking, not only in their position on this board, but as valued members of this community.
To recall these highly qualified people is foolish beyond belief.
Opposition to them is based on a desire by a group who want to take control of the association and turn it into a private business. And the reason for recalling Nelson, Nigretto,Cleveland and Templin who are opposed to this action, is to install in their place members of their choice who will vote to change EWUA which would no longer be a membership-involved commodity.
Our abilities to vote on how our association would be run – all gone (and incidentally this includes and affects water users of Rosario, Olga and Doe Bay)! No power to vote on costs spent and profits would be assigned to a single owner. Loss of protection by bylaws, no control of rate structure or any say in management practices.
Supporting this recall does not work in any way for the members of EWUA. We need our voting rights and voices heard to run our own association.
Please vote against this recall.
Not true Chris,
No one on the recall water group wants to take the Assn private. This is a falsehood to promote fear by the ESWU Assn.
a private water system does not make sense and needs to remain a public entity run by the members.
Chris, the evidence contradicts your statement about the integrity of the dominant Board faction subject to recall. See – Why Recall Jim Nelson – https://bit.ly/rw-RecallNelson.
The reasons for the recall of Nelson, Nigretto, Cleveland, and Templin are well documented on RecallWater.com
EWUA has been and is currently a private, nonprofit, member-owned cooperative. It is owned by approximately 950 members holding approximately 1,226 memberships. In order for EWUA to be sold, it would require more than 50% of the memberships to vote to sell. So, at least 613 memberships would have to want to sell for that to happen. That is extremely unlikely to occur. See – RCW 24.03A.890 (1) A sale, lease, exchange, or other disposition of assets, other than a disposition described in RCW 24.03A.885, requires approval of the corporation’s members that are entitled to vote on the disposition, unless the articles or bylaws otherwise provide. https://bit.ly/rw-SaleRequire
According to Article VII of the Articles of Incorporation (https://bit.ly/rw-Articles), modifying the bylaws also requires the agreement of more than half of the memberships.
All of the boogeyman theories you are citing are rumors based on lies. Why would someone lie to you? Why would things that are not true be endlessly repeated to the Members and general public? Why would some vouch for or purposely overlook wrong-doing?
Someone wants to distract (https://bit.ly/rw-distractions) everyone from the documented malfeasance that has been happening at EWUA for over a year.
If those who are hiding the books are recalled, the Members will continue to control the Association. In fact, the Members would be even more in control because they should then be able to vote in directors with true integrity, witness Board decisions, not be harassed or belittled when they ask questions, and get accurate information that has been withheld from them.
The Association cannot be sold and the bylaws cannot be changed without the approval of the Members.
The things you fear cannot legally happen.
Chris…there’s a lot of misinformation floating around about this topic…I believe the premise of your Letter, i.e., “a desire by a group who want to take control of the association and turn it into a private business” is completely untrue…
Like you, I’ve been a member of EWUA for 30+ years, and I consider Jim, Teri and Leith among my friends after engaging with them over many years on community affairs, nonetheless I am one of the Concerned Eastsound Water Users who believe that it would be in the best interests of our member-owned non-profit Association if at least two of the three no longer serve on its Board.
My reasons for reaching this conclusion are laid out in the following document:
https://bit.ly/rw-ProblemsDocumated
As a long time member, I agree with Chriss. This recall, would just be the first step in destroying our great association.
“The Eastsound Sewer & Water District has retained ownership of its well property and senior municipal water rights for the Eastsound area and continues to license them to the Eastsound Water Users Association.”
-https://eswd.org/faq/
Even if 600+ members voted to convert EWUA into an investor-owned company and somehow the water rights issues were worked out in the deal, EWUA would then be subject to the the Washington State Utilities and Transportation Commission (UTC).
Info on the UTC can be found here: https://www.utc.wa.gov/about-us/about-commission
Rules and regulations for investor-owned water companies can be found here: https://apps.leg.wa.gov/wac/default.aspx?cite=480-110
“Washington State law requires that utility and transportation rates must be reasonable to customers, giving regulated companies a chance to cover legitimate costs and earn a fair profit, so they can stay in business. What is fair to the company, and at the same time fair to the people and businesses it serves, is what the commission must decide many times over. ” – https://www.utc.wa.gov/about-us/about-commission
“The UTC regulates private water companies operating within Washington state that have 100 or more connections or if the utility charges more than $557 a year per customer.” – https://www.utc.wa.gov/regulated-industries/utilities/water
Wow, this is a lot of information that is opinions and fluffy words.
Eastsound water is an association so in part it is private.
I say let’s start to district the water department.
Ooo that sounds scary, why because that would alleviate all this mess.
It would be a standard board voted in and counted by the county.
It would be audited monthly and not $1 would be miss accounted.
Not one board member or staff could cheat the system.
I also want to put out here that I have asked for copies of the accounting from 2020 to 2023.
And was denied the first time. I recently asked again over a week ago for accountability, with no response.
Now I get my letter in the haze of this mess is lower priority.
But if we made our water department a district well none of this would be an issue.
At this point I’m sad at the actions of the grownups in the room.
There are secrets that are being withheld.
Secrets that if I had done this community would have hung me upside down from a tree.
But I ask, why is all this swept under a rug?
Why when asked the board says let the past be in the past?
Stand up take responsibility, tell us the truth, and then let’s move on.
But nope stand firm in the wrong doings and continue to live up to the standards that are currently floating.
Want to know the truth. Sorry it’s not for us to know, we just need to keep paying up and not ask questions.
Sound familiar to anyone
Years ago my dad would do contract work with the water district, back then he would say “stay as far as you can from that situation as possible they are a mafia no matter who is on the board.”
I say too much unknown, too much coverup, and not enough people taking responsibility.
But what do I know.
Gentlemen,
There is a fully flushed out, pro forma and proposal, written solely by Steve Smith, titled “Water House” in existence . He was president of EWUA, at the time. It proposes that EWUA enter into a financial partnership with private investors and suggests that current elected EWUA directors be given seats on the “new board” if they would go along with the proposal. That is fact.
The then EWUA board wisely decided it was not in the financial interests of the membership to go with “”Water House” citing financial risks to the membership and conflicts of interest. They turned Steve’s proposal down. This is fact.
The board’s decision coincided with Steve Smith’s beginning a tirade against individual board members and Dan Butke who opposed his leadership. I wrote in the Orcasonian at the time that I saw an email from Steve to a then board member in which Steve threatened that “reputations will be ruined “ and I kid you not, “ some people may even die” if certain members of the board continued to oppose him (Ron Klaus was excluded as he did not oppose Steve).
Toby Cooper also wrote articles in the Sounder warning about “Water House” at that time. Shortly thereafter Steve was asked to resign and the Recall movement gathered steam with social media posts by Steve as to sexual harassment and stolen $100,000 dollars NONE of which turned out to be factual. Trial, ( and conviction,) by social media became the norm in this case.
What do Martha’s comments have to do with the recall? Nothing. What does it have to do with Cohen, Nelson, and Nigretto blocking access to the financial records? Nothing. Why does Martha, Cohen’s wife, talk about it? Because it can be confusing and distracting from the recall.
It is the old magician’s trick. “Look over there. Don’t pay attention to the recall.”
But, Martha’s diversion should not be ignored either. Just know why she is doing it.
In 2022, EWUA had purchased land with two small housing units. This was a purchase from Rick Christmas. Along with the housing units, there was an option to purchase an additional 1 acre of vacant land from Christmas for $550,000. This option was obtained at no cost to EWUA and was good for six months. This one acre in question was at the corner of Mt Baker Road and North Beach Road.
I proposed transferring the option over to a group of theoretical investors, whoever they might be. These investors would pay the cost of the optioned land directly to Rick Christmas on the condition that the investors would, then, build apartments for employees of community businesses. The cost to build the apartments would not have been incurred by EWUA. The construction would not have happened on EWUA land. There would have been no money spent by EWUA.
I also proposed transferring the land that is under the two housing units that EWUA had just purchased and do so in a structure that would have been very similar to how OPAL owns the land with the housing units. That would have allowed the two parcels to be combined. In turn, that would have allowed more apartments to be built on the one-acre optioned parcel, again, at no cost to EWUA.
I called the idea, “Water House.” You can find that proposal at https://bit.ly/WH-ProposaltoEWUA. This was published in August 2022. It is not secret. The concept has been public for several years. It never happened. Not all of my ideas come to fruition. Sometimes, others don’t like the idea. Sometimes, others like it enough they propose the same in a different way. That’s the nature of brainstorming. I still think this was a good idea, but I moved on because that, too, is the nature of brainstorming. If I dragged out every idea I hear from others, making sure they are judged by their ideas, that would kill the creative process.
At the bottom of my proposal , you will find the counter proposal by Directors Joe Cohen and Jim Nelson. It is very similar in nature to my proposed idea.
Then, the Board met, discussed it, and declined to participate. That was fine with me. The option EWUA held expired. The land was retained by Rick Christmas and put back up on the market. This parcel is where the EPRC prefers apartments be added to Eastsound, The Planning Commission agreed. The County Council agreed. That corner can now have 12 units per acre. It is currently platted for two units per acre.
Martha is correct in that I warned her husband, Joe, that if EWUA continued to block access to the financial records, reputations would be ruined. That turned out to be an accurate prediction. All this could have been avoided if the GM and the Board would have allowed the Treasurers access to the records. They still refuse.
Steve, please explain to these kind people exactly what you mean by “access.” Specifically. What is your definition of “Treasurers access to the records” in detail.
Thank you.
I certainly read Toby Cooper’s “Water House” article in the Sounder, and believe the EWUA Board made the correct decision in deciding not to pursue it, as it’s core mission is production and distribution of water, not real estate.
But I’m unaware of the charges made in the last paragraph, and especially the last sentence, about threats made by Steve Smith in social media. As they are serious charges, they demand EVIDENCE. If such evidence cannot be provided — in an email to me if necessary — this statement should be retracted, with an apology.
The EWUA is organized as a 501(c)(12) under Internal Revenue Service Code 7.25.12.5.
A cooperative is an organization established by individuals to provide themselves with goods and services or to produce and dispose of the products of their labor. The means of production are owned in common by the members and the earnings revert to the members, not on the basis of their investment in the enterprise, but in proportion to their patronage or personal participation in it.
If a 501(c)(12) cooperative is sold, several key things happen:
Distribution of Assets: The gains from the sale of any appreciated assets must be distributed to all people who were members during the period that the organization owned the assets. This distribution is typically proportional to the amount of business each member conducted with the cooperative during that period.
Tax Implications: The cooperative may face tax implications depending on the nature of the sale and the distribution of assets. It’s important to consult with a tax professional to understand the specific tax consequences.
Loss of Tax-Exempt Status: Once the cooperative is sold, it may lose its tax-exempt status under Section 501(c)(12). This status is contingent on the cooperative operating for the benefit of its members and meeting specific income requirements.
Member Approval: The sale usually requires approval from the cooperative’s members, as they have a say in significant decisions affecting the organization.
Additionally, the IRS sets out additional organizational and operational cooperative requirements that an organization must meet for exemption under IRC 501(c)(12). Rev. Rul. 72-36, 1972-I C.B. 151. These requirements are:
The organization must keep adequate records of each member’s rights and interests in its assets.
The organization must distribute any savings to members in proportion to the amount of business done with them based on the “operation at cost” principle.
The organization must not retain more funds than it needs to meet current losses and expenses.
The organization cannot forfeit a member’s right and interest in the organization upon termination of membership.
Upon dissolution, the organization must distribute the gains from the sale of any appreciated assets to all persons who were members during the period that the organization owed the assets, in proportion to the amount of business done by the members during that period.
Additional information can be found under 26 U.S. Code 501(c)(12). Benevolent Life Insurance Associations, Mutual Ditch or Irrigation Companies, Mutual or Cooperative Telephone Companies, etc.
Does EWUA have “adequate records of each member’s rights and interests in its assets” (going back to 1955?)? I sincerely doubt it, given the records I’ve seen of recent years’ activities. So then what would be done if EWUA were indeed sold to a private entity (which requires membership approval)?
Can’t we just get everyone in the same room, hear the facts and let the members make their own decisions?
As a member of EWUA for 9 years and a person who knows the character and integrity of Jim Nelson, Teri Rigretto, Mike Cleveland, and Leigh Templin, I agree with Chris’s position and statement on this. No one is perfect and without mistakes. These board members admit when they make mistakes and do what is right to correct them. And they treat confidential information as it is supposed to be treated and respect the reasons for confidentiality, despite pressure to do otherwise. I strongly encourage voting AGAINST this recall.
I will not speculate on what is driving this opposition to them. What I hope is that character and integrity will prevail over all this slickly worded and never-ending criticism that seems to bombard every supportive comment made. It is scary to think about what we’d end up with if these four good community minded voluntary board members were suddenly not there.