Friday, December 10, 2010

Dripping Water Supply members call for removal of two board members

DSWSC attorney Phil Haag went out into the hallway in an effort to untangle the mess, and for about ten minutes the audience sat in awkward silence as Harris fumbled with papers on the table in front of him

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By Charles O'Dell
Contributing Editor

There were fireworks at a packed Dripping Springs Water Supply Corp. (DSWSC) board meeting this past Monday night as members pushed to oust two controversial directors.

When board president Steve Harris called for public comment, attorney Lynn Sherman immediately stood and announced that he represented about 135 DSWSC members and on their behalf was filing charges against Harris and fellow board member Larry Brewer.

Sherman walked over and handed the signed petition to Secretary/Treasurer, Gilbert Wolf. The petition calls for the removal of Harris and Brewer for, “violating their fiduciary duties, exceeding their authority and interfering with day-to-day Corporation operations, harassing the DSWSC General Manager and other DSWSC employees, multiple violations of the Open Meetings Act and for other actions injurious to the
Board member Brewer, left,
and board president Harris

Then Sherman called for a special membership meeting as provided for in the by-laws to remove Harris and Brewer from the DSWSC board, that they not participate in executive session or take part in any action related to this matter, and that a special membership meeting be called as soon as possible.

As Sherman sat down, board member Jim Walden began reading his motion that referenced the member charges just filed with the Secretary/Treasurer and calling for a special membership meeting for the purpose of removing Harris and Brewer.

Harris calls in deputy to squelch board member

Harris said that Walden was out of order but Walden continued reading his motion. “That’s twice,” said Harris, and when Director Walden continued with his motion Harris asked a Hays County Deputy Sheriff to “remove Mr. Walden.” Walden got up and left the meeting followed by the deputy as a member in the audience stood and questioned why Walden wasn’t allowed to make his motion.

Board member Brewer didn’t take the charges or Walden’s motion well. Brewer gathered his papers together, got up and said, “If this is what you want, it’s fine with me because you know what, you need a quorum. I’m excusing myself.” As he left the meeting, Brewer exclaimed that he hoped the dissident members had a good lawyer because, “I’ve got big bucks.”

DSWSC attorney Phil Haag went out into the hallway in an effort to untangle the mess, and for about ten minutes the audience sat in awkward silence as Harris fumbled with papers on the table in front of him.

When Walden returned and public comment resumed, a former corporate attorney for DSWSC continued with bad news for Harris. Attorney Joe Pool spoke about his research turning up three IRS liens against Harris, and along with his own civil suit against Harris said that, “I don’t want Harris representing me in any capacity, but especially having to do with budgets or discretionary spending.” The attorney called for Harris to resign.

After closing public comment, Harris pressed on with the meeting agenda.

In the first item of business, a motion to approve minutes of the previous three board meetings failed by a vote of two yeas and two abstentions. A quorum of three is required to conduct business and a majority vote of three was required to approve motions. Attorney Haag is paid $200 per hour to edit the minutes of each board meeting.

After establishing a date for the next board meeting (January, 2011), Harris moved on to the next agenda item. Walden called attention to agenda item 5b (other related business) that Harris had skipped. Walden then made his motion again under that item and called for a special membership meeting on December 27, 2010, for the purpose of removing Harris and Brewer. Harris asked attorney Haag if the motion could be considered under that agenda item and Haag said Walden’s motion needed to be taken up at the next regular board meeting or at a called special board meeting.

Motion to approve payment of unspecified legal services fails

GM Doug Cones
There was still more tension to come. During the Treasurer’s financial report, general manager Doug Cones presented an invoice from attorney Haag’s law firm (McGinnis, Lochridge & Kilgore) in the amount of just over $15,000, asking for board approval because portions of the invoice did not specify the basis for legal services billed. Haag explained that some of the legal costs were associated with the recent investigation conducted regarding the employee harassment complaint filed against Harris in 2009.

Harris’ motion to approve the legal services invoice failed by a vote of two yeas and two abstentions.

In his report on legal matters, Haag noted that he would review the member petition calling for removal of Harris and Brewer and would recommend, “a course of action to the board.” A course of action is clearly spelled out in the Corporation by-laws.

Later in the meeting, two board members severely criticized a Performance Review Plan for the General Manager that Haag prepared and was offering for board approval. Directors Garnett and Walden grilled Haag about the plan and made clear they didn’t see anything necessary, relevant or worthwhile with the Haag Plan. Walden expressed concern that Haag’s plan was just an employee harassment complaint against Harris being “buried,” and at great expense to the Corporation members.

Harris made a motion to table the item but it failed for lack of a second. Then the general manager, Doug Cones, said that he could live with Haag’s Performance Plan because it described what he had been doing for the past twenty four years, and, “if it would help stop the nonsense” he would be OK with the Plan. Cones already operates under a management contract negotiated by Harris. Wolf moved to approve and the motion passed 3 - 0.

Conflicts over audit and a conflict of interest

Harris continued to demonstrate a lack of understanding about the role of a capital budget, and despite repeated assurances from the auditor that the financial audit showed a “clean” and healthy financial condition of the corporation, Harris did not want to approve the audit report.

While the board was considering Code of Conduct for employees and board of directors, Walden made a final attempt to implement the conflict of interest provision contained in the by-laws when he made a motion to include in the code of conduct for board of directors prohibiting a board member voting on a motion pertaining to removal when that board member was the subject of charges seeking his/her removal.

The motion failed when Harris joined Wolf in voting nay, creating a 2 – 2 tie. Attorney Sherman leaned over and suggested to Haag that he check with the DSWSC’s Error and Omissions policy about Harris voting on his own removal as being a conflict of interest.

DSWSC members have filed charges against Harris and Brewer as called for in their by-laws, and are seeking to have both of them removed from the board if they do not resign.

The next step is for the board to convene a special membership meeting at least twenty days following the charges being filed with the Secretary/Treasurer, when the Vice President, Travis Garnett, will preside according to the by-laws, since charges have been filed against the President.

Then the matter will be up to the membership to decide because only the DSWSC members have the power to remove those who they have elected.

Harris did not respond to a request for an interview.


Peter Stern said...

Where have all the good leaders gone?

Anonymous said...

They are staying out of public service for fear of their lives and families being ostracized and lied about by the likes of Charles O'Dell's flim-flam reporting. Good reporting of the truth is nothing to be feared by the honest and hard-working good leaders, but most just don't want to subject themselves and their families to such idiots as Charles and the Roundup who enables idiot reporters like Charles to make up conspiracy theories about people all the while it being a lie. Good work O'Dell in regards to this one story; but one good story does not a good reporter make. A broke clock is right twice a day, and one of your twice a day chances of being right has just occurred.

lao tzu: search for balance said...

Anonymous after Stern:

You are giving way too much power to O'Dell and the RoundUp. They are little fish in a very large pond.

You should search yourself to see why you are doing that. You apparently have issues with Bob and Charles that have blossomed into legendary proportions.

A wise man knows his own short-comings. You need to learn yours better.

DSWSC Member said...

The Members of the water corp. should remove all 5 directors and the manager. This little company is as tainted as PEC was prior to the PEC board and management being flushed. Fresh blood and a new attitude about service to customers and community would be welcomed.

It will be interesting to see mild-mannered Phil Haag try to out maneuver the brilliant Lynn Sherman on the legal field. And who will pay these legal geniuses? Probably the Members of the corp.

Cones deserves the same retirement package he provided 23-year DSWSC veteran bookkeeper Mary Galloway. A warm "good-bye" and nothing else. It's what he deserves for his years of posturing, primping and playing Mr. Big Shot.

Too bad LCRA has decided to exit the water business. They could manage this backward operation and bring it into the 21st century.

Good riddance to bad rubbish! The board and manager should resign or be replaced by the Members. Resignations would save all involved legal fees, depositions and the likelihood that their poor management skills will be seen by the entire community.

Merry Christmas! All I want this year is an honest, intelligent board and management team at DSWSC!

Waterfoul said...

I have read all of Mr. O'Dell's stories on this topic and I still do not see nor understand the motives of the two board members who seem bent on ousting the general manager, Cones. For all their effort, it now looks like they themselves are about to get the boot. Maybe it serves them right. But if this is nothing more than a small town internal pissing contest, then it seems to me to be a lot of wasted ink and energy. If it is nothing more than a power play by two control freaks, Harris and Brewer, who are trying to fix something that ain't broke, then they have an obligation to resign since their foremost interests are not proper management of the water company and customer service. If this is a palace coup and attempted takeover by outside forces (the DS Mayor, city and perhaps others), then the reporting is rather murky on that score and does answer the WHY question. The stories give an image of a big wrestling match with chairs flying and knees to the groin between Cones and staff and Brewer and Harris. Could it be the moral of the story will be, two board members ejected from board by water company customers for being a couple of dumb country boys who don't know their water business arse from a hole in the ground. If there are more stories to follow I hope they will shed more light on the central issue and question of MOTIVE. Perhaps then it will shed more light on shadowy water management and supply manipulation that I am sure is taking place every day across the county and region.

Charles O'Dell said...

“This little company is as tainted as PEC was prior to the PEC board and management being flushed.”

How so? A thorough outside audit gives DSWSC a clean bill of financial health, the Texas Commission on Environmental Quality (TCEQ) has awarded the public water supply a Superior Rating for twenty years, and allegations of malfeasance by two board members are being addressed with procedures specified in the Corporation’s by-laws.

“Fresh blood and a new attitude about service to customers and community would be welcomed.”

President Harris doesn’t agree with you. DSWSC board member Jim Walden takes his fiduciary responsibilities seriously in opposing the destructive actions of Harris and Brewer. Walden is the only board member living in the Dripping Springs Extraterritorial Jurisdiction (ETJ). Harris recently engineered an amendment to the by-laws that requires all new directors to be DSWSC customers. This will keep out directors like Walden.

Harris cannot use attorney Haag or Corporation funds in responding to the charges filed against him by members, and there have been no Corporation funds used for attorney Sherman.

Clearly, had the thirty retail public water supply entities purchased during the reign of LCRA General Manager Joe Beal been run as well as the DSWSC, LCRA wouldn’t be selling them now.

Regarding customer service, reports are that a DSWSC crew headed by General Manager Cones was out repairing a water line break in the cold last night so DSWSC Member could have uninterrupted water service.

Give DSWSC its due credit.

Charles O'Dell said...

Specific motive aside, public water supply is the heartbeat of future development in and around Dripping Springs. In the right hands DSWSC could become a blunt object for development and a very profitable business instead of an efficiently run member owned and operated public water supply.

So the importance of what appears to be an internal dispute threatening member interests has far wider consequences to the public at large.

If DSWSC were to fall into the hands of City of Dripping Springs officials or private investors such as Aqua Texas, Jim Powers---who attempted to purchase DSWSC several years ago---or other water marketers, the impact would be felt far beyond the 1,300 or so DSWSC member owners.

DSWSC would be used by City officials to finance their insider projects, or by water marketers to generate huge private profits at public expense.

Regardless of Steve Harris’ motive, his actions threaten the interests of DSWSC member owners and taxpayers in the huge Dripping Springs ETJ. Theories of motive abound, but only Harris knows for sure, and he isn’t telling us.

Anonymous said...

The WSC does not oppose development Chuckles as you seem to intimate with your drivel. It didn't stop for a minute to serve McDonalds, HEB, Home Depot, et al.

Aside from that minutiae keep in mind that should a company or person buy property within the CCN of the WSC, the WSC is beholden to serve them, or release them, in which case they are open to being served by either well water, or another entity capable of serving them.

The WSC would NOT be a "blunt instrument" to development as you seem to think. Dang, just when I thought you had done gone and grown a brain...

Anonymous said...

Is Lynn Sherman available to take up our cause against Aqua Texas?

I think I'll give him a call.

Anonymous said...

To the readers and members of the DSWSC,

The time has come to end this conflict. Over the last several months the conflict has been building and is diverting the attention from the real issues that need to be dealt with. The membership has presented a recall petition which requires a vote of the members to determine the outcome. That petition will not go away. In the end, holding a membership vote is the only course which will settle this matter. Mr Harris, is attempting to delay any action on the meeting for his personal interest. At present, he and other board members are refusing to sign checks for employee's pay and bills. Such actions are not in the best interest of the Water Supply company since the recall issue will not go away.

The meeting should be called to let the full membership speak on the issue. Only through their voice will this issue be completed.
I encourage everyone, whether for or against removal of these directors to call Mr Harris, Mr Brewer and Mr Gilbert and ask that they vote to hold the meeting soon.
Roy D Pursley, member

Anonymous said...

Phone number for directors mentioned in previous article; please call!

Mr. Harris 512-470-2073
Mr. Brewer 512-554-4641
Mr. Wolf 512-858-2391

Anonymous said...
This comment has been removed by a blog administrator.
roy pursley said...

I would like to thank Director Wolf for signing the employees paychecks on Dec 15 so that they could continue their personal lives. The directors are still not paying other corp bills, but there is a meeting on Dec 16 to discuss this issue.

Anonymous said...

Well another meeting and the highlight was "Big Bucks", Larry Brewer, complaining that he had been receiving calls from members. He did not mention what the calls were about but was more interested as to how those people got his number. Seems "Big Bucks" does not like to be put into a position where he has to explain his actions. Such as making a motion to fire the the General manager and all the support staff without explaining why he would leave the entire water corporation and it"s members at risk. What a ignorant move on his part. Appears to be an act of retaliation from the complaint by an employee concerning his buddy"s actions. Brewer, get down the road!

Anonymous said...

Mr Harris choose not to attend the meeting claiming that it was an illegal meeting since he did not personally call it. I guess he would have rather had the bills go unpaid and the employees not had a paycheck for christmas.