Tuolumne City Sanitary District board members Wednesday sharply changed course, agreeing to fire their attorney, whom they’ve stood behind for months amid controversy, and pondering ways to get out of a settlement agreement with the Tuolumne Band of Me-Wuk Indians over $2.9 million in bills the district says it’s owed.

The agreement, which was recommended by the district’s attorney, Pat Greenwell, gives the tribe more say in the district’s billing methods and allows the district to secure a $1 million 7 percent to 8 percent variable-interest-rate loan from the tribe’s Tuolumne Economic Development Authority — so long as the district drops the $2.9 million in past-due sewer charges.
 

 Neither Tribal representatives nor Greenwell attended Wednesday’s meeting.

The board’s change of heart reflects the replacement of two members. Evan Royce and Charles Conn started their new positions Wednesday. They replaced Walt Harris and Clay Peterson, who resigned last month from the five-member board.

Royce was voted in as chairman Wednesday, replacing Kevin Burns, and he immediately went to work finding ways for the beleaguered district to clean up its act. He even drew applause from a usually hostile audience at one point when he said the agreement appeared illegal and suggested hiring a new attorney to find out if that’s so.

Royce’s first proposal was to eliminate a $50-per-meeting stipend and $1,500 cash benefit for dental service each board member receives. His motion passed by a 4-0 vote.

Royce said it would be unethical for board members to continue to receive the money considering the financial shape the district is in. The district is nearly $1 million in the red.    

Therein lies the rub. The settlement agreement with the tribe was the result of the district’s precarious financial footing. The district had been looking for a bank loan for several months after the tribe delayed paying the district $2.9 million for its share of the construction of a roughly $6 million sewer plant, designed largely to accommodate growth related to the tribe’s Black Oak Casino.

But the payment never came, so board members approved the agreement after the tribe refused to pay.

The agreement is chock full of terms and conditions giving the tribe more control in how the district bills the tribe.

Greenwell refused to give members of the public complete copies of the settlement agreement in December though the document was signed by former board Chairman Kevin Burns on Nov. 18. Greenwell had said parts of the agreement weren’t yet finalized. 

The tribe argues that a 2006 district-tribal contract regarding the sewer plant construction makes no mention of the $2.9 million bill, a detail Greenwell used as the basis for recommending the settlement to the board.

Furthermore, the tribe points to the money it’s already paid the district since the sewer plant was proposed: $4.26 million for the casino’s share of the plant and $2.19 million for new connections to its proposed West Side subdivision.

The once-disputed $2.9 million bill followed a 2007-08 district study that, the district claimed, showed the casino was using more sewer plant capacity than what the tribe was paying for. District engineer Harold Welborn — often at odds with Greenwell — believes the district is entitled to bill the casino for the extra loading, contract or not.

Welborn had been locked out of closed-door negotiations between Greenwell and tribal lawyers for months, despite repeated pleas to be included.

Welborn worries that without the once-expected $2.9 million influx, new user fees — amounting to an extra $20 per month — will have to be implemented to finish the substantially completed sewer plant. A solids handling facility and multipurpose building remain to be built.

Welborn noted that the casino’s water usage has gone down dramatically over the past several months, likely due to fewer customers and water-conservation measures the tribe has undertaken at the casino, like installing waterless urinals. Welborn suspects the tribe is skeptical of its bill because of these realities.

But, he said, by using less water, the casino’s sewage is actually stronger, meaning it requires more treatment. Furthermore, the economy will recover, he said, and the plant needs to be completed when business picks up.

Royce had harsh words for the agreement, saying, “I think there are major flaws with this.”

He also said the agreement seems to include items that suggest it violates the Brown Act, California’s open-meetings law.

“These terms should be void,” Royce said.

Welborn also issued a dire assessment, saying, “This agreement gives away most of the control over our industrial client. It decimates our ability to control.”

Even board members Kevin and Jeff Burns, who had regularly defended the move to settlement, expressed concern, saying they were essentially duped by Greenwell and didn’t read the agreement as thoroughly as they should have.

“I don’t know if we went over this page by page,” Jeff Burns said.

“I don’t remember seeing everything that’s in this agreement,” Kevin Burns said.

In addition to zeroing out the tribe’s $2.9 million bill, the agreement also gives the tribe an ex-officio member on the board who can sit in on closed sessions; requires that a neutral party conduct the testing of the casino’s wastewater; reduces testing frequency; stipulates that the tribe and district agree on a new billing formula if the tribe needs to purchase more sewer capacity; allows the tribe to put connection fees that were once a part of the tribe’s Westside subdivision toward casino operations; and prohibits Sewer Plant Manager Danny Tuel from going onto tribal property “unless there is an emergency that requires his presence.”

Last summer, the tribe had accused Tuel of doctoring sewer samples from the casino to make it look like it was using more sewer capacity than it actually was, and, therefore allowing the tribe to be overcharged. Subsequent testing appears to have cleared Tuel.

Royce also touched on that issue, saying the district should issue an official statement declaring Tuel’s innocence. Board members agreed.

An announcement by Welborn that the district appears to be in line for a $1 million bank loan, with a 4.75 percent interest rate, seemed to make the settlement agreement even less palatable for board members.