- About Us
"Funds transfer could cost sewer district $300,000"
"A reserve account that was never established could cost the legally-embattled Holmes Harbor Sewer District and its ratepayers up to $300,000.In an audit report released by the state Auditor's Office Friday, report authors note that the deficiency has existed since 1994, when the sewer district sold $4.35 million in municipal bonds to fund the construction of the district's sewage treatment plant and the creation of a utility local improvement district (ULID). In a resolution passed that year by the district's board of commissioners, the district was to create a reserve fund containing $401,000. That, according to the audit report, never happened.Financial documents prepared by the district for the Auditor's Office show that the reserve account currently has a zero balance. The auditor's report states that some of the money that should be in the account, $300,000, is currently invested in the district's sewer plant maintenance account. That money, plus $101,000, and possibly another $176,000 in interest the money should have earned during the past seven years, now must be repaid, according to the audit.Like the recent furor over an apparently illegal $20 million bond sale undertaken by the district's commissioners last year, the fund deficiency seemed to come as a surprise to the commissioners and ratepayers. At the district commissioners' meeting Thursday night, then-board president Linda Zoll announced the problem to more than 40 people gathered at the Holmes Harbor Golf Course clubhouse.There is a problem with our own ULID, she said.Meg Wingard, a sewer district resident who was appointed as a commissioner Thursday, said the fund shortfall became real to her when the audit report came out Friday.I had heard rumors of it a couple of weeks ago, she said.In the report, the Auditor's Office recommends that the district fully fund the reserve account, but does not give a method for doing this. Figures generated by district staff for the audit show the fund may need not only the $401,000 specified in the 1994 resolution, but up to $176,000 more to make up for the interest the account should have earned.The Auditor's Office places responsibility for the mistake with the district and the Island County Treasurer's Office. During the agency's investigation of the matter, auditors learned that the county treasurer never received the full text of the resolution establishing various accounts for the sewer plant ULID. Consequently, the account was never delineated. Sewer district commissioners, the report says, did not realize this had occurred.Island County Treasurer Maxine Sauter said Monday that her office is looking into the matter. She said she cannot find a way for the district use its existing funds and investments to make up for the non-existant reserve account.There's no way that they could pay it back that I could see, Sauter said.In its response to the audit, the district has acknowledged that the fund must be replenished. Commissioner Wingard said she is assuming that district ratepayers will have to make up for the shortfall with higher sewer rates. "