It is certainly observed that proper protocol for the release of information in this community can be both confusing and elusive. While there have been attempts by leadership to address some of the issues raised in a previous post to this blog on the subject of our water, (1) questions submitted by this author to AsktheBoard@bigcanoepoa.org for inclusion in the May 14th board work session were ignored.
The request specifically asked if a written legal opinion had been obtained from Gaddis & Lanier, LLC, (the law firm representing the POA) stating whether or not property owner approval is required to cancel the water trust deed dated November 29th, 1984. And if so, would the opinion be posted to the POA website. Unfortunately, those questions were never mentioned at the work session much less answered. (2) Truly, exactly what is a property owner to do?
Now with those semantics out of the way, let’s indeed talk a bit more about that post and our water. It is duly noted and appreciated that the water trust deed (along with the first and second amendments) have now been posted to the POA website. In addition, a “Water History Presentation” by the Chairman of the Water Committee was included at the May 14th board work session. It was noted by the chairman that a legal opinion had been obtained indicating that property owner approval was not required to cancel the trust deed and that the opinion would be posted to the website. (3) Perhaps, this information was the rationalization for not including the above questions, but more importantly . . .
The legal opinion did not come from POA attorneys, Gaddis & Lanier, LLC
Instead the opinion is marked Privileged and Confidential Attorney Work Product and appears to be produced by the law firm that prepared the Service Level and Operating Agreement (“SLOA”) between the POA and UIG rather than the official POA legal counsel. And to be perfectly forthcoming, this memorandum was actually forwarded to this writer by a board member along with comments approximately two weeks ago. Unfortunately as the communication did not appear to have been copied to any other individuals on the board and contained the privileged communication verbiage, there has been no response or any discussion on this site. Once again, what is a property owner to do?
And now, with the board’s publication of the memorandum, a number of observations can finally be made. Obviously, one must first wonder why leadership would vote to spend POA funds seeking a legal opinion from any firm other than the attorneys currently retained to represent the association. Utilizing the terminology found in the trust deed along with the added familiarity with our governing documents should they also apply, the POA attorneys absolutely should have the expertise to make a determination about any questions regarding requirements for property owner approval and would have been the more appropriate choice for such opinions. Would they also come to the same conclusion that property owner approval is not required for cancellation of the trust deed? Perhaps. Perhaps not.
And exactly what did the POA agree to give up as trustee for the property owners?
Looking further into the legal opinion that has been provided, it is immediately confirmed . . .
The POA will NOT have the right to take control and operation of the water system IF the Trust Deed is canceled . . .
Clear and simple. Yet according to the memorandum, the POA determined that right to have little value. On the contrary, UIG must have believed the trust deed to have value since they offered the Service Level and Operating Agreement (SLOA) in exchange for it’s cancellation. Frankly, the remainder of the opinion sounds more like a justification for the April 2018 board decision.
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Perhaps more perplexing and contradicting, this opinion is issued by the same law firm that represented the now defunct Homeowners Association in 1996 regarding water issues. Estimates of the value and importance of the trust deed appear to have shifted. According to information found in a 2005 paper titled “Governance Discussion”, (4) the firm provided a written opinion, dated March 1996, stating that “the POA had the right and perhaps the obligation” to take prescribed trustee actions under the trust deed.
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To paraphrase, it appears, as trustee, the 2018 POA board agreed to exchange property owner rights and benefits regarding the water system conveyed in the trust deed for certain commitments found in the “SLOA” with UIG. It also can not go without notice that conditions contained in the “SLOA” happen to include a 12% guaranteed rate of return on “net book value of assets” for UIG. Obviously, any agreement or disagreement with this decision, will reside in the opinions of those affected property owners.
As for the 12% rate of return . . .
It can not be determined if the rate is reasonable as no documentation has been found for comparison to other communities. Available data does, however, appear to show the Big Canoe rate structure significantly exceeding other communities in Georgia serviced by UIG (5) as well as the public utility of Pickens County (6) which purchases water from UIG.
And where does all that water come from? Blackwell Creek of course . . .
It must not be forgotten that Blackwell Creek in the heart of Mother Canoe was believed to have been purchased in the 2016 land deal but was actually excluded from that transaction. (7) Instead, eight months later that property was transferred by Big Canoe Company to Big Canoe Utilities and later included in the sale of the water system to UIG for $8,460,000. (8) Really. Ponder that.
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Please feel free to share your comments on this site regarding these suggestions or contact me at thepcrosses@gmail.com for questions or further discussion. Should you like to see additional articles posted in the future, please subscribe for an email notification. Meanwhile . . . take care and stay safe.
Patricia Cross (10438 Big Canoe)
References:
1 “Let’s talk about our Water”, dated April 13th, 2020, bcmatters.org
2 POA Board of Directors Work Session, May 14th, 2020 at 1:05:00 (POAWebsite>login>POA>Meetings>Videos>SubscribeToOurYouTube)
3 Memorandum dated April 30th, 2020 (POAWebsite>login>POA>GoverningDocuments>MemoRe:WaterTrustDeed)
4 Governance Discussion, October 2005
5 https://efc.sog.unc.edu/sites/default/files/GARateSheets/2019UtilitiesofGeorgiaAllRates.pdf
6 https://pickenscountyga.gov/wp-content/uploads/2019/08/RateSheet-PickensCountyWaterDepartment.pdf
7 POA Board of Directors Meeting, Minutes, March 21, 2019 (POAWebsite>login>POA>Meetings>Minutes>March2019)
8 Big Canoe Utilities, Inc. to Utilities, Inc., of Ga, dated April 30,2018, Recorded in Deed Book 1147, Pg. 764, Pickens County, GA showing sales price of $8,460,000.