The Culture of Secrecy at Eastsound Water

Ever since a disorderly board meeting on December 5, the Eastsound Water Users Association Board of Directors appears to have gone into hiding. Chairing that meeting, Vice President Jim Nelson lost control of it, allowing repeated interjections from members present to disrupt the proceedings and delay much-needed business from getting done. In one sense, it’s no wonder the EWUA board has reacted this way. But this is not an effective way to run what should be a public, member-oriented — and board-responsive — organization.

Other than electing EWUA officers — including Jim, Teri Nigretto as President and Carol Ann Anderson as Secretary/Treasurer — the only significant business done in the open part of the meeting was to approve (until February 15) a non-disclosure agreement, drafted by General Manager Dan Burke and the EWUA attorney, which enjoined board members from revealing information shared with them without full board approval. The board then went into a closed executive session to deal with problems raised by the botched 2023 elections process, in which three open board seats should have been on the ballot and voted upon by EWUA members, but only two seats had been listed. The board voted to accept candidate Jim Cook, who had finished third in the vote tally, to fill the third open seat and announced this decision on December 15, as published in the Orcasonian.

Two more such closed “working sessions” occurred the following week, the first in mid-December — so that they could get more comfortable working together, according to one board member — and the other on January 9, 2024, a week before the next scheduled board meeting. But official EWUA actions were still taken, notably a decision that Cook could not assume his board seat until the regular January 16 meeting. That decision arbitrarily excluded him from the vote regarding whom to appoint to the open seventh seat, which had been vacated by the mid-November resignation of Joe Cohen. Leith Templin edged out Elisabeth Britt by a 3-to-2 margin in the January 9 closed meeting. Even though EWUA members had effectively elected Cook to the board in November and he was present via Zoom, he was not allowed to vote. Had he been permitted to do so, or had the decision awaited the regular, open board meeting — after he was officially seated — the result could well have come out differently.

As should be obvious from the above instances, important decisions are being made by the new EWUA board out of sight of the membership, in secret meetings behind closed doors. The results are then just announced as a fait accompli — in member emails or the Orcasonian, or at a subsequent open board meeting. As far as I can determine, there was no organizational or legal justification to exclude Cook from the vote to fill the seventh seat or other decisions, as he had come in third in what should in fact have been a vote for three new board members. This was an arbitrary choice that helped manipulate the outcomes. What’s more, no minutes (or even videos) of any EWUA board meeting since late November, whether open or closed, have been published on the Association website as of mid-March, contributing to the mystery.

Meanwhile, the general manager and certain board members have neglected their fiduciary responsibility to keep the membership informed about the financial condition of the association. As specifically set forth in the current EWUA Bylaws (Article H, Section c), the duties of the Secretary/Treasurer shall include to “Keep an accurate accounting of the funds of the Association and make an annual financial report to the membership.” No such report was made at the November annual meeting, the obvious gathering in which to do so, nor was any report forthcoming in the regular December 2023 or the January and February 2024 board meetings. General Manager Burke has instead painted glowing portraits of EWUA water production and distribution, and of the employee certification process by the Washington health department, but little information was provided about its finances — not even revenues and expenses.

Important decisions are being made by the EWUA board in secret meetings behind closed doors.

When Paul Kamin was general manager, I attended half a dozen monthly board meetings in the cramped OPAL conference room, at which this kind of information was readily accessible in the board packets that interested members could access. Those of us able to read financial statements could grasp fairly well how EWUA was doing financially and understand decisions being made based on this information. By contrast, I find myself struggling to guess at the current financial condition of the Association.

Despite a few shortcomings, I believe, Paul was a good general manager — responsive to member concerns when they were reasonably voiced and backed by solid evidence. I observed these characteristics when I worked with him fairly closely as View Haven Estates Vice President on the construction of a new storage tank and piping here — a major project costing upwards of $200,000. He was exemplary in his openness and transparency, keeping members informed of important developments and often signing his emails, “In the spirit of service, Paul Kamin.”

But Paul never received total compensation of more than $100,000 until his final year as EWUA general manager, 2020, when he was awarded a $15,000 bonus for his many years of service. (I can recall one board meeting from which I had to excuse myself when they began discussing his salary without going into executive session. Talk about openness!) That contrasts markedly with the current general manager’s total compensation, which was given as $148,580 in 2022 on the EWUA’s IRS Form 990 and has recently soared to over $180,000 in 2024 according to two sources. As is typical of the shroud of secrecy now shrouding board proceedings, we do not accurately know information that should be available to EWUA members and must eventually be made public.

The veil had temporarily dropped in 2023 after then Secretary/Treasurer Tenar Hall — and, to a lesser extent, board member Steve Smith — began requesting deeper financial records to back up eleven questionable payments, including two checks Burke had issued himself in late 2022 for supposedly “unused” employee days off (EDO). Hall experienced extreme difficulty in obtaining these records after making repeated requests, citing Washington state law regarding member access to association financial data. Facing the threat of legal action from Burke and his attorney Beth van Moppes, however, she resigned from the board in mid-March 2023.

Burke continued to threaten legal action, largely focused on Smith, in a March 16 letter from van Moppes to board president Clyde Duke objecting to what she called a “campaign to smear and discredit Mr. Burke” and attempting to justify his EDO self-payments, which totaled over $10,000. In subsequent communications, they insisted Smith be removed from the EWUA board, which occurred at a June board meeting. And a confidential settlement agreement was apparently reached between the board and Burke in August 2023, which included payment of Burke’s attorney’s fees by the Association. Members were not informed about this secretive agreement except indirectly, well after the fact. Few details have been revealed — including whether or not Burke agreed to reimburse the Association for his unwarranted EDO payouts. When I attempted to question these payments in a December 2023 report titled “General Manager Dan Burke’s Excess Payments,” the new board president Teri Nigretto (after conferring with EWUA attorney Rochelle Doyea and other board members) confirmed the existence of this agreement, stating in an undated letter, “These findings have been resolved by the 2023 Board and are covered in a Confidential Settlement Agreement with Mr. Burke and the subject is resolved.”

As usually happens when attorneys become involved in a dispute, things get hushed up and the truth suffers. Valid questions to which members — who in the EWUA case are also the owners — of an organization deserve answers are often ignored. For example:

  • What are the financial impacts of this confidential agreement on the Association?
  • Have any changes to the Association bylaws been demanded by Burke or agreed upon?
  • Are any EWUA members effectively excluded from board membership in the future?
  • Have any commitments been made to the general manager if he resigns or is terminated?

These are important matters that affect the well-being of the organization and should therefore be known to all members, not just the board, despite an employee’s desire for confidentiality. Suppressing them can only lead to a damaging climate of suspicion and mistrust.

This is the situation that the Eastsound Water Users Association now finds itself in as a result of the unfortunate actions and decisions of the past year. A culture of secrecy has grown up that will be difficult to dispel. The board has become increasingly unresponsive to member requests for financial and other information we have every right to know. Decisions are made by the general manager and board with little or no member/owner input. The wagons have circled.

A culture of secrecy has grown up at EWUA that will be difficult to dispel.

This cloud of suspicion thickened after board members (in at least one case, grudgingly) approved the non-disclosure agreement at the December board meeting. That decision set in motion a process whereby the board has met repeatedly in closed session to make important decisions in secret, with little or no member input on questions before the board. Even asking board members for information about these matters is met with partial, guarded replies — as if there might be something wrong in our doing so. It’s become more like the board of a for-profit corporation, which is answerable to shareholders only at the annual meeting. But Eastsound Water Users Association is a public, member-owned 501(c)12 cooperative that should be far more open in its proceedings than it has recently become.

“I have never attended a water association meeting like that one that I attended two days ago,” Elisabeth Britt (who is my domestic partner) told me after the December board meeting. “And I have attended hundreds of meetings over the last 30 years, with both Group A and Group B systems.” And that disruptive board meeting was an open meeting. That disruption may be part of the reason why the board has scheduled so many closed meetings out of sight of EWUA members since then — and perhaps why no minutes of these meetings have been released.

But another likely reason is the general manager’s undue insistence upon secrecy (which may be understandable given his total compensation). It already exceeds that of all but one chief executive of Orcas Island non-profit organizations — despite the fact that EWUA revenues are relatively modest, only about $2 million annually — and has been growing rapidly since he took over in 2021. According to IRS requirements, the general manager’s total compensation must eventually be reported in the annual Form 990, so this information should be available to EWUA members once the board has a reliable figure for it. Interested readers can view this information for the years 2017 to 2012 in the table below (prepared by Robert Austin), along with other key EWUA financial data.

Similar financial data have not yet been released for 2023, but preliminary indications indicate that the revenues will come in close to $2 million and that the general manager’s total compensation exceeded $150,000 — possibly by more than $5,000. The fact that accurate 2023 figures have been difficult to get is yet another example of the undue secrecy at EWUA.

Several of us had expected a financial report to be made at the November 2023 annual meeting, the natural gathering for this to occur, as it was attended or watched online by many members. But Secretary/Treasurer Cohen had just resigned, and Burke elected instead to make a presentation focused largely on the production and distribution of water, with few financial details. Members with sharp eyes could however discern from one graph he briefly showed that 2023 revenues were expected to come in at about $2.1 million, but not much else.

If that were not sufficient, Burke requested another closed board meeting on February 4 in a clumsy attempt to engineer the ouster of Ron Claus from the board, purportedly because of staff displeasure with his performance. This was a classic case of the tail wagging the dog — or at least trying to. In a normal, healthy non-profit organization, employees report to the general manager or executive director, who answers to the board, which is ultimately responsible to the members who elected it. Fortunately, a sufficient fraction of the board rejected this attack and told Burke to resolve staff problems himself.

If indeed Burke was granted a total compensation package exceeding $180,000 for 2024, that would be nearly double what Paul Kamin earned until his final year, 2020. Such an amount would represent at least a 91 percent increase in five years, or almost 14 percent per year, far greater than the rate of inflation — and for a general manager with essentially no experience in water-system or non-profit management. Experienced, long-standing directors or managers of comparable Orcas Island non-profits — for example, OPAL Land Trust, Orcas Island Community Foundation, and Orcas Recycling Services — earn less, in some cases far less, according to their 2022 Form 990s.

How can such largesse be justified? It’s indeed true that Burke has recently taken on additional management responsibility for EWUA to provide maintenance services for the Doe Bay, Olga and Rosario water systems. But that doesn’t require a near doubling of its workload, which is still hopefully focused on the 1300 or so connections in its core service area. So why, then, has the EWUA board acquiesced to Burke’s demands for such a large compensation package?

We do not know. But EWUA members deserve to have answers to important questions like this, since salaries and benefits ultimately have the greatest impact on water rates, as the above table indicates. And a good part of the rationale for taking on maintenance aspects of other water associations is presumably to spread the costs of EWUA system maintenance over a broader base, thus lowering member costs. But if the management expenses of doing that grow disproportionately, such cost savings will probably not be realized. Therefore the justification for such an increase in general manager compensation should be based primarily on whether costs are in fact being kept under control, which would hopefully result in reduced EWUA water rates.

To a casual observer with limited access to the financial data, this does not appear to be happening. If EWUA were achieving economies of scale by taking on maintenance of the other water systems, then salaries and benefits would become a smaller percentage of revenues or expenses rather than the larger percentages that seem to have occurred in 2021–2022. A more definitive answer could be determined by including 2023 financial data in the comparisons, but these data have been difficult to obtain, largely due to the veil of secrecy at Eastsound Water.

At its December 2022 meeting, the EWUA board voted to increase water rates by two cents per 1000 gallons, or roughly 10 percent for typical members, based on a two-year 2023–2024 budget (which former Treasurer Hall recently characterized as “a hot mess”). We are now at a point where the board should be able to evaluate whether things are indeed working out as hoped — or if mid-course corrections are needed. But even knowledgeable members remain in the dark due to the lack of sufficient financial information. The EWUA board should open up, throw some light on the matter, and let members know: Are further rate increases going to be required?

As Elisabeth Britt has often stressed to me — based on her experience as the general manager of a Group A water system in Whatcom County, and as a founding board member of a multi-county satellite management agency — making more information publicly available will help rebuild trust between EWUA members and the board. When public water associations are transparent, levels of trust increase; when that level is high, members begin to participate more.

The members of EWUA are its owners, she observes. With EWUA assets valued at well over $7 million, that means that each member owns at least a $5,000 share in the water system. As owners, we want and need access to financial data to understand how our property is being managed. By sharing details about EWUA growth and change, the board can provide a sense of what it has done and what still needs to be done. Sharing financial and statistical analyses of the association’s income and functions is crucial to demonstrating how the board is working for us. And as an IRS 501(c)12 cooperative, EWUA is in fact required to provide water to its member-owners at the least possible cost, and it must return any excess profits to them unless needed for system improvements. Those objectives cannot be achieved under a cloud of secrecy.

Consequently, four of us — Britt, Robert Austin, Fred Klein and I — recently submitted a proposed bylaw amendment on open meetings to the board for consideration and inclusion in the series of such amendments currently being contemplated. It provides that all meetings of the board be open for observation by all EWUA members in good standing, and that minutes of all board meetings be published on the Association website soon after board approval. We hope that this amendment will be embraced by the board and membership.

A healthy dose of openness and transparency would do much to dispel the cloud of secrecy at EWUA.

Such a healthy dose of openness and transparency would do much to dispel the cloud now hovering over Eastsound Water Users Association. The EWUA board can begin lifting the veil by adopting our open meetings amendment. It can also reveal the general manager’s current compensation package, along with the justification for granting it. And it should soon release the 2023 financial statement so we can understand what has been happening to what is our property during the previous year.

This culture of secrecy at Eastsound Water runs contrary to the wonderful community spirit I have experienced since moving to Orcas Island in 2010. 180 degrees. Newcomers like Anderson can be excused for this lapse, as they moved here in recent years when this spirit was in decline during the pandemic. But certain old-timers on the board should know better.

Figure caption: The Eastsound Water Users Association’s core service area.

Author Profile
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Orcas Island physicist and writer Michael Riordan is author of the award-winning 1987 book The Hunting of the Quark and coauthor of The Solar Home Book (1977), The Shadows of Creation (1991), Crystal Fire (1997) and Tunnel Visions (2015). His articles and essays have appeared in the New York Times, Seattle Times, Scientific American, and many other major publications. He serves as Editor of Orcas Currents.

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