Small Town Water Utility, Big Time Politics

Over the past twelve months two DSWSC board trustees have exceeded their authority as they engaged in a virtual takeover of the water operations, culminating in a plan to fire en mass DSWSC employees



Note: One has to wonder, what are these guys on the board up to? Why are they trying to force the general manager, Cones, and staff out the door after many years of apparent competent management of the water system? In this day and age with water such a valuable commodity, is their aim to dissolve the customer owned corporation, sell out to a private entity and engage in some profit taking of their own? Mr. O'Dell's excellent report raises many questions that DSWSC customers should be asking the board directly.

Send your comments and news tips to online.editor@gmail.com, to Mr. O'Dell at codell@austin.rr.com, call DS Water Supply at 512.858.7897, or click on the "comments" button at the bottom of the story


“Experience hath shown, that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.”

~Thomas Jefferson

By Charles O'Dell
Contributing Editor

A rogue board president may soon accomplish what several hostile outside interests failed to accomplish – a takeover of the Dripping Springs Water Supply Corp (DSWSC).

DSWSC water rates are among the lowest in Texas and the public water system has never received less than a Superior rating from state regulators. Over the years, several unsuccessful attempts to purchase the member owned public water supply have been made by outside interests, including a group of secret investors led by then County Judge Jim Powers. Just last year, Dripping Springs City officials sought help from State Representative Patrick Rose in an unsuccessful bid to gain control of the local water system.

Now, the member owned water supply is under siege from its own board of trustees. Over the past twelve months two DSWSC board trustees have exceeded their authority as they engaged in a virtual takeover of the water operations, culminating in a plan to fire en mass DSWSC employees, including the General Manager and his administrative staff. There is also concern that the corporation’s outside attorney may have failed to provide adequate counsel against the de facto takeover by two board members in what appears to involve numerous and repeated violations of the Open Meetings Act, and against board actions taken to conceal from the public and from DSWSC members those board actions that place the corporation at great financial and operational risk.

The trouble begins

Doug Cones

Steve Harris

Steve Harris, a board member for about eleven years and president of the board for the past five years, began intimidating and harassing Corporation employees in early 2009, about the same time Harris negotiated a long-term employment contract with the General Manager, Doug Cones. Cones has been General Manager of the exemplary public water supply for twenty three years.

Our review of board agenda and minutes revealed that one office employee filed a harassment complaint against Harris in January 2009, but the board failed to take any action on the matter for over a year. When the complaint was introduced at the July 12, 2010 board meeting it became part of the draft minutes and subject to public scrutiny. Harris and his accomplice board members are now engaged in an apparent cover up of the matter that could result in costly legal suits.

Larry Brewer
These unwarranted actions taken by board members against employees culminated in an attempted coup d'état this past Monday night when board member Larry Brewer made a motion to fire General Manager Cones for “insubordination to the board,” and to fire the two office employees who handle billing and other critical administrative functions.

Brewer didn’t specify the nature of Cones alleged insubordination, but Brewer’s motion was seconded by Harris who then asked attorney Phil Haag if they should go into closed session to discuss the matter before calling for a vote. Haag advised yes and the board and attorney went into closed session for nearly two hours.

After the board returned to open session the vote failed 2 – 3, when Secretary/Treasurer Gilbert Wolf, who often supports Harris, apparently thought that leaving the Water Corp without a General Manager and two critical administrative staff employees wasn’t a good idea, voted Nay. The mass firing is expected to be back on the October board meeting agenda.

It’s clear that the plan to fire all the employees had been cooked up outside any official board meeting, which constituted a “walking quorum” in violation of the Open Meetings Act. The plan was to have been executed at the September board meeting but Harris ran into an unexpected problem.

The board regularly meets on the first Monday of each month, but because the first Monday in September fell on Labor Day this year, the meeting defaulted to the following Monday (Sept. 13th) as was customary when a meeting date fell on a holiday. Notice of the next board meeting is also routinely included in customer water bills and this was the case for the Sept. 13th meeting. But when Harris was notified that Brewer would be unable to attend the Sept. 13th board meeting, Harris, without board approval, changed the September meeting date to Tuesday (Sept. 7th) so he would have his coconspirator to carry out the plan to fire the GM and his staff, and to make public scrutiny of that and other unsavory board actions more difficult.

When Harris attempted to convene the September 7th board meeting, HaysCAN President, Charles O’Dell, who had spotted the unauthorized change, submitted written notice to the board that because Harris did not have authority to change the meeting date HaysCAN would file an Open Meetings violation suit against the board if the board met and conducted business in an illegal meeting. Upon advice from counsel, the board members did not hold the meeting on September 7th.

At the beginning of the September 13th board meeting, Harris quickly made a motion to prohibit staff from taking any minutes and instead to have attorney Haag take notes, “to save corporation members money.” Haag charges $200.00 an hour for his services. Brewer seconded Harris’ motion and it passed by a 3 – 2 vote.

Harris then made a motion to prohibit the General Manager or staff from making any recordings of the board meeting and to stop including board meeting dates in water bills. Brewer seconded Harris’ motion. Recordings of board meetings were routinely made to ensure accurate board minutes. But Harris and attorney Haag had made statements during previous recorded board meetings they wanted excluded from the official minutes. This explains why board minutes for May, June, July and two August meetings had been tabled month after month until Haag could “clean” the minutes for the board to approve.

Gilbert Wolf
At the August 2, 2010 board meeting, Secretary/Treasurer, Gilbert Wolf made a motion to:

“Have Dripping Springs Water supply Corporation Attorney Phil Haag’s firm, McGinnis, Lochridge & Kilgore, proof read the Dripping Springs Water Supply board of directors meeting minutes for February, 2010 through July 2010 to make any changes, modifications or deletions that are needed.”

According to the DSWSC by-laws, one of the duties of the board Secretary is to take notes and construct minutes for board members to proof read before approving them each month – for free.

Insufficient public notice – more open meetings violations

The employee harassment complaint against Harris was identified on the August 2, 2010 agenda as, “Review of and possible action regarding employee report,” but the board went into closed session to discuss the item. The vagueness of this language is designed to conceal from the general public the real subject to be considered during the meeting and thereby violates the Open Meetings Act.

A transcription of the August 2, 2010 board meeting recording shows that no discussion or action was taken in open session regarding the “employee report.” However, counsel was apparently charged by the board to have the employee complaint investigated and to report findings. There is no reference in any of the board minutes of such action but several parties have acknowledged being interviewed regarding the complaint. Failure of the board to take official action and to make such action available to the public violates the Open Meetings Act.

The Board overreaching its authority

In a February 2, 2010 letter to the board from their outside auditor, the Auditor addresses the board overreaching its authority in day-to-day operations and thereby “subverting and undermining” the internal financial control procedures that were in compliance with the1997 OMB Circular A-133 and implemented for over ten years at DSWSC. The board chose not to cease its interference, causing the Auditor to decline an invitation to perform an audit of financial statements for the year 2009. Then, in a “cover your ass letter” dated April 9, 2010, and addressed to the Auditor, Harris explained that the board had, “decided at its Aril 5, 2010 Board meeting to seek a new auditing firm for this year’s annual audit.” The Auditor had already advised Harris the previous month that his firm would not be conducting an audit for DSWSC and the reasons why. The problem isn’t the accounting firm, it’s the board’s subverting and undermining the internal financial controls, and no certified accounting firm will conduct an audit so long as those conditions exist at DSWSC.

Perhaps nothing better exemplifies the Harris led board harassment of the GM, and the board’s interference in day-to-day operations than the list of twenty seven Manager’s Directives of Operation Goals sponsored by Harris at the April 5, 2010 board meeting. In addition to endless detailed micro management directives, item 25 requires a functioning GPS system be installed in the GM’s truck and monthly reports of 24/7 as to the vehicle location. This is not only another Harris harassment tactic but it also violates the GM’s employment contract.

To further cement his control over the DSWSC operations, Harris also eliminated the GM’s function of identifying operational items for the board agenda and Harris routinely includes items that are vague, repetitive or misleading to the public but which he uses to harass the GM and staff. The board is responsible for policy and general oversight, but Harris’ agenda items often deal with day to day operations that the GM was hired to manage.

Our review of public documents revealed evidence of other possible improprieties by Harris and inappropriate efforts to tighten his grip on the DSWSC operations. These include spending large sums of DSWSC funds without board approval which could be criminal, and a by-law change that restricts board positions to DSWSC members only.

Employees of the Dripping Springs Water Supply Corporation deserve the support of its members and of the general community. Call them at 512-858-7897, and let them know that you do not approve of how Steve Harris is harassing employees, interfering with daily operations and putting the member owned water supply at great risk.

HaysCAN is continuing its investigation and will report any new findings to RoundUp readers.

As co-founder of Hays Community Action Network (HaysCAN) in 2003, Mr. O'Dell strives to carry out the mission of ensuring open, accessible and accountable government. He is a long time and close observer of the workings of the Hays County County Commissioners Court. He earned a degree in Agricultural Education and a Masters in Ag Economics at Texas Tech, and, later a Ph.D. at The University of Maryland while employed as a Research Economist with the U.S. Department of Agriculture (USDA) in Washington, D.C. Texas born and raised on a family farm, O'Dell is a Hays County Master Naturalist and is a past president of the board of the Ethical Society of Austin.