When former board member Dave Barfield spoke at the recent POA Board of Directors meeting, he had one concern. Can water department funds be used legally outside the water department?
The online minutes from the May board meeting contain a summary describing an executive session on May 3. The Trafalgar Road fire and the funds needed to fight it seemed to be the topic of that meeting. The line that caught Barfield's attention, he said after the meeting, was, "The board granted Tom Judson, president of the Bella Vista Property Owners Association, the authority to utilize all available funds, including the emergency funds, including but not limited to transferring funds from the water utility."
"I don't care if I can play golf or not, but when I turn on the tap, I want to get water," he said. He's afraid that using the emergency funds from the water department may cripple the water system if there was an actual emergency.
The issue came up earlier this year when Pat Laury, speaking at one of his last meetings after he was not reelected to the board, asked to go into executive session and was refused.
"I wanted us to be aware of what we are doing," Laury explained in an interview after that May meeting. "I want to make sure we are not opening Pandora's box."
His concern was also the legality of using the water department funds.
Barfield who served on the board from 2013 until 2015 had a prop with him when he spoke at the open forum. He brought along a notebook containing POA governing documents that he explained was given to him during an orientation meeting for new board members. At the time Chastity Clark was the POA attorney and she outlined some important legal decisions for the future board members. One of them was a suit settled in 1990 in the Chancery Court of Benton County.
The suit was brought because of a $5 water availability fee which is no longer collected as part of the water bill. But the "Order for Declaratory Judgment" also warned that "any funds collected for the purpose of meeting the cost of the water system must be allocated by a separate line entry in the adopted accounting procedure."
The same document later states, "Any funds collected pursuant to Article VI, Section 1 (of the Declaration), must be segregated from other revenue by an established accounting procedure as may be adopted by the BVPOA, and used for the purpose stated, being to meet the cost of the water system only."
Barfield said his goal was to make sure that, if water department money was used by the POA outside the water department, it was considered a loan. The lawsuit did not include an opinion on the legality of loaning funds from one department to another, he said.
"There has to be a plan for the loan," Laury agreed. "If the money is from the water account, it should be accompanied by a plan with an interest rate. It can be done, but it has to be stated it's a loan."
The current POA staff attorney, Doug McCash, also agrees.
"It will be structured as a loan with interest paid," he said. They will use Wall Street's prime rate to figure interest. He said the matter was already discussed with another attorney -- outside the POA -- who agreed as well.
It is all POA money, McCash said. The POA has only one tax ID number for both the water department and the rest of the POA, but he agrees that the 1990 lawsuit requires the separation of water department funds.
Financial Director Dwain Mitchell produced the POA balance sheet for December 2018 when water department funds were borrowed to cover expenses. The funds were listed under "Liabilities" on the POA balance sheet and under "Assets" on the Water Utility balance sheet. That money was repaid earlier this year, he said. If there is another loan, it will be handled the same way.
General News on 07/10/2019