By Brian Kelly
Herald Writer
FREELAND — After being stung by accusations and decimated by resignations, the embattled Holmes Harbor Sewer District Commission will hold a special meeting on Tuesday, the first such gathering since details of a questionable bond deal surfaced.
The district has been under intense fire since the release last week of a state audit that said the district violated numerous state laws when it authorized a $20 million bond sale for a private developer to build an office complex in Everett. The meeting Tuesday will be to hire a new lawyer for the district.
"There are principal and immediate concerns that we have new district counsel to the sewer district," said Margaret Wingard, a commissioner appointed to the board after the controversy erupted. "I think that it’s important that we have an attorney that represents us who is in no way implicated in the bond issue itself."
The five-member board has seen two members resign in the last week. Heather Hoolihan resigned on Wednesday, and Linda Zoll resigned when the audit was released on Aug. 3. Another member, upset with the board’s actions, resigned late last year just before the board voted to sell the bonds. One new member has been appointed since then.
The board is expected to appoint new members to the board and elect officers at the meeting on Tuesday.
The bond sale controversy revolves around the district’s creation of a special assessment district in south Everett, which commissioners approved so developer Terry Martin could build a six-building office complex called Silver Sound Corporate Center. Martin used $6.2 million of the bond sale proceeds to buy the 39.45-acre Everett property, which had an assessed value at the time of less than $2 million.
The special district was created well outside the boundaries of the Holmes Harbor Sewer District, a move that runs counter to state law. The sewer district serves roughly 500 customers in a golf course community near Freeland.
Besides blasting commissioners for allowing public money to be used to finance a private deal, state auditors also criticized Charles Tull, the district’s attorney, for making $100,000 from the bond sale. According to auditor records, Tull became the district’s attorney one week before the bond sale.
Tull was not in his Bellingham office Friday and was unavailable for comment.
Relations between Tull and the commissioners have been strained since at least mid-July. Without the consent of the board of commissioners, Tull asked the state auditor for an extension of the deadline for the district’s response to the draft audit report. He also asked that the report downplay its description of the violations of state law, and suggested that they be referred to as "possible violations." Tull also questioned the mention in the report that the case would be referred to the U.S. Securities and Exchange Commission and the Island County Prosecutor’s Office.
Before Zoll’s resignation, the commissioners compiled a list of six law firms they reportedly were going to contact in an attempt to find legal counsel that could investigate the bond sale.
The list has grown since, and with the resignation of another board member who had approved the bond sale, the basic need for an attorney has changed.
A decision on a new attorney is not expected at Tuesday’s meeting. Even so, a large crowd is expected.
"Hopefully, we’re going to borrow some chairs from the golf course," said district clerk Ken Ecklebarger. "If worse comes to worse, it should be nice weather and we can go out into the parking lot."
You can call Herald Writer Brian Kelly at 425-339-3422 or send e-mail to kelly@heraldnet.com.
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