Information

FVAWD draws fire over rate increase

By: Nicole Osborn, Tri-Lakes Tribune

03/28/2006

Residents of Forest View Acres Water District questioned the board about its debt and fee increases at the monthly board meeting Thursday, March 23.

The board fielded questions from residents in attendance. Most of the questions stemmed from the debt the district has acquired.

It is alleged that Patricia Unger, who worked independently under contract for the district for more than a decade, embezzled as much as $625,000 from the district.

Her criminal trial will be held April 18.

Responding to one citizen's question, the district's attorney Paul C. Rufien, PC gave three reasons why the board is not liable for the monetary losses the district has taken from the alleged embezzlement.

Rufien said there has to be intent to be defrauded, nobody has sued the district to find them liable for the money that has been lost and there is government immunity to protect the current board. He added, so far, indications are that a contractor working for the district is at fault for the debt.

Board President Barbara Reed-Polatty questioned Rufien as to how much it would cost the district to defend against a lawsuit if one were filed by residents.

Rufien said, for a class-action lawsuit, cost would depend on a number of factors, but could add up to around $100,000.

Rufien said, for an individual taxpayer, he or she would have to prove individually how he or she was affected. He added the taxpayer would be suing to prove a point because it would cost them more to hold a trial than he or she could get from the district. He said, if the district were sued, it would probably come in the form of a class-action law suit.

District resident Ted Hatzenbuhler questioned the board about a $90 water bill he received. He said he knows what the district is going through, but claimed he thought it had insurance.

Reed-Polatty said the district was insured, but crimes against the district were not covered.

She explained some of the water bill is being paid based on property tax. She added other reasons for a high water bill are that the board voted to increase the service fee by $25 at the board meeting Jan. 26. Also, the district is paying for Special District Management Services Inc to help the district get back on track.

Residents now pay $43 as a service fee, $26 for a debt service fee, plus water usage. Neither the debt service fee nor water usage fee were increased along with the service fee.

"The bottom line is the rates were raised to balance our budget," said Treasurer Brian Cross, adding that not only is the district paying for the debt associated with the alleged embezzlement of money, but they are also faced with debt to maintain the district.

"It's just me and my wife and we don't even use that much water," Hatzenbuhler said.

"(The district was) robbed, we're hurting badly," said Assistant Secretary Ketch Nowacki.

Hatzenbuhler questioned why the district does not go to the town of Monument. He said he did not see how it could cost as much as FVAWD residents are paying now.

Reed-Polatty responded that the town would assume the debt of the water district.

Nowacki said it would cost residents as much, if not more, than they are paying now to join Monument's water system.

In response to another question, Rufien said in order for the district to declare bankruptcy, it would have to prove an increase of 100 mills would not cover debt.

"Believe me, it'll be more than $25," Zimmermann said.

The board also reviewed letters it received from residents with concerns about the $25 increase.

"(The board members are) not trying to make light of the situation," Cross said. "We're trying to balance the budget."

District resident Judy Michali said she plans to get involved with the board and said if she had known Rich Crocker, a member of a previous board was taking an open seat this May, she would have run herself.

"You have the solution, and that's getting involved," Cross said, encouraging all residents to do the same.

In other news:

* The Forest View Acres May election has been canceled because no more petitions than open positions on the board were submitted.

Rich Crocker, Ketch Nowacki and Eck Zimmermann will be sworn in at the May meeting.

Nowacki and Zimmermann are presently on the board and Crocker is returning to the board after stepping down in 2000.

Lisa Johnson of Special District Management Services Inc. took over as secretary to the board. Johnson is replacing Kammy Tinney who left SDMS.

©Colorado Community Newspapers 2006

Our Community News, July 1, 2006

Forest View Acres Water District, June 22: Unger pleads guilty, gives back $300,000

Below: Patricia Unger confers with her attorney Tim Bussey in court June 22 prior to entering a plea of guilty on the charge of embezzling funds from the Forest View Acres Water District. Unger paid the water district $300,000 as partial restitution. Sentencing is set for September 7. If the judge accepts the plea bargain agreement, Unger’s sentence will include six months of work release incarceration and 6 years of probation. Photo by Fred Malmstrom

Below (L to R): Attorney Paul Rufien, SDMS President Debbie McCoy, SDMS Manager Lisa Johnson, board members Ketch Nowacki, Barbara Reed-Polatty, Rich Crocker, Jeff Walker, Ekhardt Zimmermann, and Operations Manager Don LaFontaine. Photo by John Heiser

By John Heiser

On June 22, at the regular monthly meeting of the Forest View Acres Water District (FVAWD) board of directors, it was announced that as part of a plea agreement to settle the criminal and civil suits against the district’s former contract office manager, Patricia Unger, she had pleaded guilty that day to theft of checks, a class 3 felony. Two other felony charges were dropped. As part of the agreement, Unger immediately gave the district two cashier’s checks totaling $300,000. The sentence recommended to the judge under the terms of the agreement is six months with work release during the day, six years probation, and restitution of an additional $15,000 at $250 per month over six years. Any violation by Unger of the conditions would carry an immediate eight-year prison sentence. Unger’s sentencing is scheduled for Sept. 7.

Contract water manager resigns

In an unrelated action, it was announced that Dan LaFontaine of Independent Water Services, the district’s contract water operations manager, had submitted his resignation effective Sept. 15. LaFontaine has been the district’s water operations manager for the past seven years. LaFontaine is responsible for maintaining the equipment and infrastructure and for managing all aspects of water delivery.

LaFontaine said that a recent letter from the district regarding his alleged non-compliance with requirements of his contract was "the straw that broke the camel’s back." LaFontaine said, "I put my heart and soul into this district. I feel I deserved more consideration." He cited the protracted negotiations on the new contract and a lack of response from the board to concerns he raised. Noting the district’s use of management company Special District Management Services, Inc. (SDMS) for administrative, bookkeeping, billing, and accounting services, he added, "I’m too small a company. The district is going places I can’t follow." In response to a question, he said, "I’m getting out of operations." He concluded his remarks by expressing appreciation to the residents and the board for his time as the district’s operations manager.

Background

The board consists of Rich Crocker, Ketch Nowacki, Barbara Reed-Polatty, Jeff Walker, and Eckehart Zimmermann.

Lisa Johnson, SDMS district manager, serves as facilitator and secretary at the board meeting. Deborah McCoy, President of SDMS, was also present.

Attorney Paul Rufien provided legal advice.

Appointment of officers

The following appointments were unanimously approved: Reed-Polatty, president, Johnson, secretary, and Zimmermann, treasurer. The other board members were appointed assistant secretaries.

Financial matters

Johnson presented a list of claims paid through June 22 totaling $7,753 that included $4,515 for LaFontaine’s services and $1,088 for supplies and chemicals.

The net cash balance for all funds as of May 31 was $46,449.

Johnson said the total for accounts payable is $155,111 consisting of $59,969 due attorneys Petrock and Fendel, $79,316 due SDMS, and $15,826 due Rufien. Johnson added that the district’s total debt is $741,532.

Johnson reported that the district had received the $150,000 negotiated tap fee for the Red Rock Reserve Subdivision, formerly known as Raspberry Ridge and located north of Pixie Peak Road and west of Red Rock Ranch. The project involves 23 single-family lots on 67 acres.

Operations report

LaFontaine said a leak was reported on May 7 and repaired May 19. He noted that during the excavation to repair the leak an unexpected water line was found and two lines were found to be not where they were shown on the district’s maps.

During May, the district’s surface plant produced 2.68 million gallons, averaging 60 gallons per minute over 31 days. The district’s well in the Arapahoe aquifer produced 259,200 gallons, averaging 108.4 gallons per minute over 1.7 days. The net monthly production was 2.91 million gallons.

Water sales for May totaled 2.07 million gallons.

LaFontaine calculated the net loss from the system during May was 837,148 gallons or 28.8 percent of total system use.

Disposition of the $300,000 restitution

Nowacki said that in addition to addressing the accounts payable, the $88,000 reserve account for the state loan should be restored.

McCoy agreed and suggested that one year’s interest on the loan be set aside as well.

The board unanimously approved McCoy’s suggestion that the district deposit excess funds in a ColoTrust account. She said the account is like a money market account for governmental entities, earns about 5 percent, and the assets can be transferred to any of the district’s other accounts within about 24 hours.

The board decided to postpone further discussion on the disposition of the $300,000 and continued the meeting to June 26 at SDMS.

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The next meeting will be held July 27, 5:30 p.m., at Tri-Lakes district station 1, 18650 Highway 105 (near the bowling alley). Board meetings are usually held on the fourth Thursday of each month. Those wishing to attend should check the date, time, and location by calling SDMS at (800) 741-3254 or 488-2110.

A work session is scheduled for Friday, July 14, 9 a.m., at SDMS, 141 Union Blvd., Suite 150, in Lakewood.

Unger admits guilt

By: Nicole Osborn, Tri-Lakes Tribune

06/27/2006

Patricia Unger, accused of embezzling as much as $625,000 from the Forest View Acres Water District, pled guilty to class 3 felony theft during a mediation led by Judge Richard Toth Thursday, June 22.

Unger paid the water district $300,000 in restitution and will pay an additional $15,000 plus 12 percent interest in monthly payments to be made to the district during her six year supervised probation.

She will also have to write a letter of apology to the water district and will serve six months of jail time with work release.

"It is what it is," said president of the Forest View Acres Water District board of directors Barbara Reed-Polatty. "It's closure."

"I'm relieved that we're at a point of closure," she added.

One of the conditions of the settlement is that the civil case against Dennis and Patti Unger be dropped, which the district will comply with.

The district continues to operate.

"(The settlement) will allow us to get on with the business of addressing some of the other problems (the district has)," Reed-Polatty said.

With a revenue bond creating debt, water delivery issues, leaks and an engineering assessment which shows a need for improving the infrastructure, the district has to figure out how to finance all that needs to be done to continue to operate.

FVAWD has been around since 1957, so a lot of pipes need replacing, Reed-Polatty said.

Reed-Polatty said that while the money Unger has paid and will continue to pay the district will make right some of the financial issues, it will certainly not take care of all of the district's debt.

FVAWD is presently looking at which accounts to put the money in.

"The theft by Ms. Unger has left a permanent, serious impact on the community of Monument," said Deputy District Attorney Lisa Kirkman in a statement issued to the Tribune. "This agreement allows for an immediate substantial payment of restitution."

If Unger violates any conditions of her probation, she will serve an eight-year sentence with the El Paso County Department of Corrections.

"(Those at the DA's office) believe this agreement meets the interests of the community and is an appropriate result," Kirkman said.

Unger is scheduled for sentencing Sept. 7.

"Sentencing at a later date is part of the felony process," Kirkman said.

She explained a pre-sentence report will be written by a probation officer to make a recommendation to the judge.

The Tribune was unable to reach Unger for a comment.