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Greene BOS files second lawsuit against RSA

Greene BOS files second lawsuit against RSA

RSA treatment plant-Greene

The Rapidan Service Authority water treatment plant along U.S. Route 29 south in Greene County.

The Greene County Board of Supervisors on Sept. 28 filed its second lawsuit in two weeks against Rapidan Service Authority (RSA) and the RSA Board of Members, this time requesting the dissolution of the utility. The second lawsuit comes after the two Greene County representatives were prohibited at the RSA board’s Sept. 17 meeting from speaking at all during the meeting and going forward. The supervisors filed the first lawsuit on Sept. 14; both were filed in Greene County Circuit Court.

RSA was created as a regional water and wastewater authority on June 17, 1969, by the counties of Greene, Orange and Madison.

In the most recent lawsuit, the county alleged the “board members from Madison and Orange counties have worked in concert to undermine the purpose of RSA with respect to Greene County and have conspired to harm Greene County’s water and wastewater programs.”

After the first lawsuit was filed for alleged contract breaches, alleged violations of fiduciary duty and alleged non-compliance with its duties to Greene County, the RSA Board of Members voted Sept. 17, to prohibit the two Greene County RSA board members—Stanardsville Supervisor Bill Martin and Planning Commissioner Ron Williams—from speaking, voting or participating in the remainder of that meeting or future RSA meetings, including closed sessions.

“In essence, the members from Orange and Madison ‘kicked’ the Greene County members off the RSA board and unilaterally rewrote Virginia Code 15.2-5113 which requires at least five members on the RSA board,” the lawsuit states. “The reconstituted RSA board made decisions concerning the Greene County water supply even though Greene County had been eliminated from RSA.”

The Sept. 28 lawsuit also noted that RSA Board Chairman Steve Hoffman, of Madison, “falsely asserted that he had contacted the attorney general of Virginia and received an opinion from the attorney general concerning the instant circumstances authorizing the action the Orange and Madison members of the board would subsequently take at said meeting.”

Hoffman told the board at the Sept. 17 meeting, “I had thought about the Greene County members’ participation after we were once served, and I asked for and received a reply from the attorney general.”

The letter, obtained by the Greene County Record through an open records request, is dated June 15, 2018, and pertains to a case where a member of a board of supervisors was hired to be executive director of a public service authority and what conflict could arise if he remained a supervisor for the said locality. It is not a current opinion.

Hoffman went on to read several sentences from the letter into the record.

“Because an individual in the position you describe would have a personal interest in both governmental agencies—the Greene County Board of Supervisors and Rapidan Service Authority—he would have to remain alert at all times of which might require formal disclosure qualification or other action under (Virginia Code) 2.2-3.112,” Hoffman read. “For example, conflicts or this sort could arise from decision by the Board of Supervisors pertaining to or having a financial effect on the authority, which is us, or from transactions that are pertaining to the effect of the county. That’s the part I wanted to read into the minutes.”

The county is asking the judge to dissolve Greene’s membership in RSA, requiring the county to form a new authority and for RSA to transfer all assets located in Greene County to the new authority and requiring the new authority to assume the appropriate debt applicable to Greene County.

It also asks for a custodian to govern RSA as “the remaining RSA board has shown it will not behave in a legal manner or in the best interests of all three member counties.”

Finally, the latest lawsuit requests a writ of mandamus to invalidate the Sept. 17 vote to exclude the Greene County representatives from participating in the meetings.

The Sept. 28 lawsuit notes Hoffman’s assertion in the Sept. 17 meeting that RSA has “cut ties with Greene County.”

Greene County Administrator Mark Taylor replied, “Oh, no, sir. We asked you to cut ties with us, we asked you let us out and you wouldn’t. So, you either will or you won’t.”

On Tuesday, July 28, the Greene County Board of Supervisors unanimously approved a resolution requesting Madison and Orange boards of supervisors release Greene County from RSA. Both boards said no to the request.

The Sept. 14 lawsuit requested more than $33 million, including $24 million in debt the county acquired in preparation for the Greene County Supply and Treatment Project that it said the RSA board quashed when it voted July 16 to restructure the facility fee billing, which was a major chunk in the county’s financing for the project.

RSA attorney Terry Lynn said after the Sept. 17 board of members meeting that nobody would comment on the lawsuit.

“It’s in the court; that’s where we’ll try it,” Lynn said.

There are six counts in that lawsuit. The first is alleged breach of contract that stems from the RSA board’s July 16 meeting vote to stop billing for and collecting of the facility fees which were an integral part of the county’s plan to fund the water project and continue to pay the debt on the sewer project.

The second count is alleged breach of fiduciary duty. The county alleged in the lawsuit that Greene paid for a $19,180 billing system to allow the facility fees to be added to the billing, as well as the fact that RSA kept 10% of facility fees collected monthly as part of the original agreement with the county. The county is asking for both the cost of the billing system, as well as the amounts collected from facility fees monthly by RSA and for RSA to produce the customer list to the county.

Count three is for alleged breach of contract causing the “unjust enrichment” of RSA because the county assumed the debt in the 2005 agreement.

“RSA has been unjustly enriched by Greene County’s payment of $7,537,524.22 over 15 years,” the lawsuit stated. The county still owes $1,313,732.17 for future bond payments, according to the lawsuit. The county is asking for all that money back.

The fourth count alleged breach of contract due to RSA’s alleged failure to maintain the system.

“RSA has not had a capital improvement project in 20 years,” the lawsuit stated. “Items are fixed on an ad hoc basis, but there has been no capital improvement plan to upgrade the water or sewer system or infrastructure.”

The county requested a writ of mandamus that would require RSA to turn over the operations of the water and sewer systems to Greene.

The fifth count alleged breach of articles of incorporation as it relates to the infrastructure in Greene County.

The final count in the civil lawsuit alleged breach of contract for water hookup fees due to the fact that the July 16 board of members’ vote “unilaterally determined that all water (hookup fees) would be paid directly to RSA. There was no consultation with the Greene Board of Supervisors about this change prior to the breach,” the lawsuit stated.

At press time no hearing date had been scheduled for either lawsuit and no responses filed by RSA. 

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Editor, Greene County Record

Terry Beigie is the Editor of the Greene County Record in Stanardsville. She can be reached at tbeigie@greene-news.com or (434) 985-2315.

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