Let’s not give away the ranch . . .

Horse trading. That is the term used by one director to characterize the water and sewer mediation proceedings with Utilities, Inc. during his board update of those ongoing negotiations. (1) To be honest, while recognizing that the mediation process demands confidentiality, the use of that terminology, elicited a sense of uneasiness regarding the possible outcome of those private discussions.

Meanwhile, there is certainly no shortage of conversation on the subject as it can now be found everywhere from Town Hall Meetings, committee minutes, newspaper sources and Facebook group discussions.

Further, the UIG/BCPOA relationship involves even more than just water rates, easements and sewer expansions. That said, exactly what all is being negotiated? Hence, the uneasiness.

According to that director’s update, the POA is seeking relief in the calculation of the water rates while also trying to determine if the Association can control water and sewer outside the boundaries of Big Canoe. Shudder . . .

And for the record, this is not the first time this writer has publicly addressed the subject of the community’s water and sewer system.

The 1984 Trust Deed . . . (2)

Instead, that story began in the Spring of 2020 when this writer posted the recorded 1984 Trust Deed (in favor of Big Canoe Property Owners Association, Trustee) to this site and explored it’s significance as it had never been posted to the POA website. (3) https://bcmatters.org/lets-talk-about-our-water/

The article also included the following background on the 2018 acquisition of the water and sewer system resulting in a legally questionable agreement between UIG and the POA that was arguably flawed and disadvantageous to the property owners.

• • “On April 5^th, 2018, outside a regular board meeting and without property owner discussion, the POA board (Anderson, Wilson, Goldman, Farinholt, DeVore and Crawford) voted unanimously by consent to execute the Service Level Operating agreement between the POA and UIG along with the Third Amendment to a Trust Deed dated November 29, 1984 in favor of Big Canoe Property Owners Association, Trustee. The SLOA sought to institute certain controls and conditions, but most importantly, the Third Amendment removed certain protections provided to the property owners by the original Trust Deed. Further, if UIG meets key performance indicators outlined in the agreement for five consecutive years, the [Utility shall be entitled upon request to a full reconveyance of the utility system and property subject to the Trust Deed and the Trust Deed shall be canceled of record.]” (3)

It further questioned the legality of the board’s 2018 agreement with UIG to terminate that 1984 Trust Deed without majority approval of those owners of property attached to the water and sewer system. The board adamantly disagreed with this supposition.

Voila . . .

And while a reread of that article might first be required to fully follow this update, to paraphrase, it was noted that “under the Trust Deed, it appears the POA, as trustee for all owners of properties connected to the water system, was granted numerous rights regarding the water system and its assets.”

• • Considering the current negotiations, it should be emphasized that a 2005 second amendment to the Trust Deed includes a water easement at Exhibit A-1  (4)  which states that  “This Water Easement shall be limited to use in providing water to properties now or hereafter subject to the Amended and Restated General Declaration of Covenants and Restrictions dated March 26, 1988 . . .”.   This language should reinforce the board’s ability to limit and/or control any water and sewer service outside the boundaries of Big Canoe.

• •  IF  this 1984 Trust Deed is canceled, any benefits found in that second amendment will go away as well. So WHY would anyone EVER consider it’s termination?

Note: According to the 2018 Service Level Operating Agreement (“SLOA”), (5) this termination could take place as early as April 2023.

As clarification, UIG’s acquisition of the system or the quality of service were not called into question by this writer. Instead, the subject of the challenge was the agreement to “terminate” the Trust Deed without majority approval of the owners.

The 2020 Legal Opinion . . .

All that aside for now, for some reason, this writer’s April 2020 article was met with substantial push back and displeasure from a previous board president, who, however, did seek the requested legal opinion regarding the two questions posed in the article.

• • Exactly what did the POA agree to give up as trustee for the property owners?
  • Can the Trust Deed be canceled of record without property owner approval?

The opinion which was clearly marked “Privileged and Confidential Attorney Work Product” concluded that property owner approval was not required to cancel the Trust Deed. His opinion was discussed at a subsequent board meeting and posted to the POA website. (6)

• • In addition, apparently given the association’s current lack of security and internal controls, the entire opinion paper has been openly available to any interested audience via a simple google search of the internet. (7)  https://www.bigcanoepoa.org/files/Memo_Re_Water_Trust_Deed.pdf

• • Unfortunately, any attorney client privileges may have now dissipated with the publication of that attorney’s opinion.

• • It is also important to note that the legal opinion was provided by the attorney responsible for preparing the 2018 SLOA rather than the Association’s legal counsel or the attorney currently retained to conduct the mediation.

In response, a follow up article (8) https://bcmatters.org/more-water-talk/ was immediately posted to bcmatters.org that also addressed the details of the 2018 “SLOA” between the POA and UIG driving the annual water rate computation. (Now under discussion in the mediation proceedings.) It was emphasized that conditions in the “SLOA” included a 12% guaranteed rate of return on “net book value of assets” for UIG. It was further noted that available data appeared to indicate “the Big Canoe rate structure significantly exceeding other communities in Georgia serviced by UIG”.

The 1984 Trust Deed is not and can not be a bartering tool . . .

And now, in contrast to that original legal opinion, a recorded and documented example has now been found of another UIG community, Peachtree Acres Phase IV, subject to the same, precisely worded Trust Deed. In 2015, the homeowners association (as trustee) transferred “all rights, title, interest, and obligations set forth in that Trust Indenture set forth above unto Utilities, Inc. of Georgia;” via a quit claim deed (9). The recorded document further noted that “a majority of the beneficiaries of such Trust Indenture have consented to the transfer” while also including the actual signature of those owners on an attached exhibit referencing paragraph nine of the Trust Deed.

This example would certainly support the opinion that approval of a majority of the owners or beneficiaries is indeed required in order to reconvey “the utility system and property subject to the Trust Deed” and cancel the Deed of record. (5)

Note: As clarification, only those owners of property “attached” to the Big Canoe water system are the “beneficiaries” of the 1984 Trust Deed.

And remarkably, again looking back on the 2020 legal opinion provided to Big Canoe, the attorney actually partially quotes (in italics) paragraph one of the 1984 Trust Deed stating: “This grant is for the benefit of the present and future owners of all and each of the properties now or hereafter connected to the said utility system, as well as the holders of mortgages covering each of the said properties, and Trustee “shall hold the title to the property granted by this Trust Deed until either (a) the utility system is taken over by either a governmental authority or public utility for maintenance and operation, or (b) other adequate utility service is provided by either a governmental authority or public utility through means other than the operation of the utility and facilities now transferred to the Trustee herein.” (2) (6) (7)

Again, as noted in the original post, (3) Utilities, Inc. of Georgia is not a governmental authority or public utility. It doesn’t get any clearer than that.

And frankly, given that UIG was a party to the aforementioned Peachtree Acres Homeowners Association example, it would be unrealistic to believe that UIG was not keenly aware of any required owner/beneficiary approval of the requested BCPOA reconveyance.

A few other sundry questions to consider . . .

While it is not appropriate to list all possible legal considerations here, a few do warrant mention.

• • Considering this water and sewer debacle involves the POA in the capacity of “trustee”, one might wonder if acting in it’s behalf could subject one to any personal liability.

• • The 2020 legal opinion included the argument that the Georgia DNR no longer requires Trust Deeds (for water systems) as though that 2016 change should render it’s dissolution. And yet, interestingly, all parties sought to record amendments to the Trust Deed in 2018.

• • There are currently multiple Trust Deeds on record in favor of UIG, yet no terminations of any of these agreements has been located since the DNR’s 2016 decision.

• • Further, although not currently enforced, the DNR has not released sewer systems from the Trust Deed requirement. (6) (7)

• • A trust does not simply disappear because a governmental agency no longer requires it.

As for the Water Rates . . .

And finally, current leadership must have also recognized the other disadvantages to the Service Level Operating Agreement (“SLOA”) as the community was informed that the board was seeking relief via mediation because the Big Canoe water rates were higher than the other communities in Georgia serviced by UIG (1) Ditto. (8) Unfortunately, that ship may have already sailed when the 2018 POA Board voted unanimously to execute the SLOA. (3)

And to be fair, if computed according to the SLOA, our water rates are what they are because of that 2018 Board’s poor judgment, and it would be frankly disingenuous to now pretend otherwise by attempting to cover that up and/or negotiate it away with some other equally unwise compensation or exchange. There is entirely too much at stake here.

The dilemma . . .

It certainly continues to appear that the 2018 Board of Directors may have agreed to something that the Association may be unable to legally deliver. If true, rescission of the agreement to terminate the trust deed (as soon as April 2023) should be required and any resulting fallout owned by the individuals on that previous board. Likewise, it can not be forgotten that based on past experience with Trust Deeds, UIG clearly should have known that owner approval would be necessary for any termination or reconveyance.

In Closing . . .

The challenges presented on these pages are not intended to imply that this writer has any certification in the legal field but rather to convey serious questions that should be vigilantly vetted and considered by leadership as they concern not only our water and sewer system but also the beautiful community we all love and choose to live in.

That said, this writer requests only that these and all questions and potential issues be thoroughly researched and transparently discussed with the affected property owners prior to any uninformed, erroneous decisions and agreements are made in haste which might further compound the mistakes of the past.

Seriously, all horse trading aside, let’s be sure we do the right thing for Big Canoe.

. . . . .

As always, please feel free to post comments or contact me at thepcrosses@gmail.com for questions or further discussion. Likewise, should you wish to see additional articles posted in the future, please subscribe for an email notification or check back frequently. Meanwhile, take care and stay safe.

Patricia Cross (10438 Big Canoe)

References:

1) Big Canoe POA Board meeting, September 29^th, 2022, video on Youtube beginning at 48:00

2)  WaterTrustDeed11291984

3) “Let’s talk about our water”, bcmatters.org, April 13^th, 2020, https://bcmatters.org/lets-talk-about-our-water/

4) 2005 Second Amendment to the Trust Deed,  Exhibit A-1  (POAwebsite>login>POA>meetings>BoardDocuments>UtilitiesIncDocuments>Amendments)

5) Service Level Operating Agreement, April 18, 2018

(POAwebsite>login>POA>meetings>BoardDocument>UtilitiesIncDocuments>ServiceLevelOperatingAgreement)

6) Memorandum dated April 30^th, 2020 (POAwebsite>login>POA>GoverningDocuments>MemoRe:WaterTrustDeed) Note: This link may have recently been removed from the POA website, appropriately so.

7) https://www.bigcanoepoa.org/files/Memo_Re_Water_Trust_Deed.pdf

8) “More Water Talk”, bcmatters.org, May 18^th, 2020, https://bcmatters.org/more-water-talk/

9) Quit Claim Deed between Peachtree Acres Phase IV Homeowner’s Association, Inc. and B. Robert Dinkins, Jr., Individually and Utilities, Inc. of Georgia dated January 15^th, 2015 and recorded in Brooks County,Georgia superior court records, Deed Book 00731, Pages 0341 through 0347