Water, sewer auditor awaits Freeland’s response

Freeland Water and Sewer District commissioners will meet Monday to discuss a response to a sometimes-neg- ative state auditor’s report presented this week in a small meeting room packed with approximately 20 people.

Freeland Water and Sewer District commissioners review the state auditor's report. From the left are Lou Malzone

Freeland Water and Sewer District commissioners will meet Monday to discuss a response to a sometimes-neg- ative state auditor’s report presented this week in a small meeting room packed with approximately 20 people.

Next Monday’s meet- ing will begin at 5:50 p.m. in the district office at 5421 Woodard Ave., Freeland, and will be public only until the commissioners can announce an executive session with their attorney, who will be present, said Commissioner Marilyn Abrahamson. She didn’t know if any announce- ments would be made after the executive session.

Lead auditor Spencer Bright presented his audit exit findings March 25, with help from Assistant Audit Manager Courtney Monson. The audit will not be com- plete until the sewer district responds to several negative “findings,” and those respons- es included in the final audit report, a process that could take weeks.

Commissioner Eric Hansen was on the board during the audit period of 2009 to 2011. The other two com- missioners, Lou Malzone and Abrahamson, did not take office until after the audit period.

The key audit findings presented by Bright are that the district used funds from both Island County and the state Department of Ecology for the same land pur- chase, a process that is not allowed; that it did not fol- low state law when it charged fees to empty lot owners after the purchase of the private Harbor Hills Water System; and that it used funds from both the county and state Department of Ecology to purchase the same property to use in a future sewer proj- ect. Freeland presently has no sewers.

The commissioners figu- ratively bit their tongues at times, but made statements that seemed to be in the district’s defense. “Had there been a red flag with the two grants at once?” Malzone asked the auditor, perhaps suggesting no one told them mix- ing DOE and county funds was wrong in the property purchase.

“Probably not,” respond- ed Bright. Regardless, he said, “the district received dou- ble payment for this land purchase.” “I do not believe the cause of the condition is correct,” Malzone said. “The money should never have been sent.” “We should look at the timing,” added Commissioner Hansen.

The district has since set- tled its differences with the county, repaying all but about $34,000 in costs attributed tothe local grant for economic development.

“The district does not owe the county any more money,” Bright said.

Malzone pointed out the district is continuing to plan for a sewer system, but is using a different grant from the Department of Ecology.

The district also erred in billing owners of empty lots for water after purchasing the Harbor Hills Water District for $1.2 million in 2007. As a result, it owes $115,674 in fees that have to be paid back, along with the cost of liens placed on properties.

Bright said private water districts can charge owners of unimproved lots for water ser vice because those dis- tricts are governed by the Washington Utilities and Transportation Commission. But once they become part of a public water system, such fees are not allowed under the Revised Code of Washington.

Malzone told Bright the district’s accountant at the time, a representative from Edwards & Associates, “told us she called the state auditor and it was OK.”

Bright said he had talked the accounting firm. “They were unable to provide me with any correspondence” saying the practice was allow- able, he said. The district now uses a different firm, Whidbey Water Services, to manage its accounting and billing.

Abrahamson asked if the money would have to be paid back and Bright answered in the affirmative, but did not advice how that should be done. “It’s up to the district to decide how to remedy that situation,” he said.

According to the audit report, the Freeland Water and Sewer District has 453 metered connections, plus the 390 metered connections that came with the purchase of the Harbor Hills Water System.


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