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Clark-Edgar Rural Water District sets stage to steal deposits, connection fees –

October 26, 2015   ·   5 Comments

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Clark-Edgar Rural Water District (ECWd) –

I received a copy of the most recent audit and management letter from the Clark-Edgar Rural Water District (“CERWD”) this past week and came across a disturbing “Note” in the audit.

This “Note” basically stated that the district was under no obligation to connect water to people that have paid their deposits, and the district was under no obligation to refund the deposits paid even if they decide not to connect their water.

In other words, CERWD can use a connection fee collected from “Bob” to help finance connecting “Jim’s” house with water, and then turn around and tell “Bob” he is not getting water, and he is not getting his connection fee back.

To fully understand how wrong this statement is, and how the auditor, James D. Motley of Paris, Illinois, should be fired for providing false opinions, we must start at the beginning of this so-call “tap on fee”, “deposit fee”, “connection fee”, or whatever other name(s) they choose to place on it.

To expand water service into areas not currently served by a water district, the district employs strong-arm tactics to “convince” the residents it is in their best interest. They begin by holding a couple public meetings where very little truth is stated, and convince a township to authorize public opinion surveys, well water testings, signature collection, and “promise to connect” statements and fees from residents of the townships.

It is the last item where most of the problems arise. It has been reported to us that when a representative of the district, sometimes thru contractors, approaches a land owner about easements to run water mains, they are basically strong-armed into signing the agreement with the threat of “either pay the small connection fee now and allow the easement, or you will have to pay upwards of $2500 to $5000 to connect at a later date if we even decide to allow the connection” –

OK, so the last time we checked, there were at least 397 land owners within the CERWD that had paid a “deposit” or “tap-on fee” who have never been connected. Some of these were paid more than 20 years ago, with the “fee” being passed on from generation to generation – kind of a like a legacy of everything wrong with this water district.

Finally, once a grant is obtained, and the grant money runs out, there is no plan to connect those who were not connected. They simply get another grant to expand into another township, and repeat the process.

Can the CERWD collect tap-on fees?

“No.” However, to answer this question properly, we must look at the Public Water District Act and see if a water district is given the authority to collect connection fees.

There are two distinctly different districts mentioned in the PWDA, they are: “Combined Waterworks and Sewerage District“, and “Water District“. CERWD is a “Water District.”

Another useful definition used in the PWDA is “use and service” – the Legislature did not include “connections thereto” when defining “use and service” – this is evidenced by their separation of those items in Section 23 (f) of the Act.

In Section 23 (f) the Act specifically authorizes a Combination Waterworks and Sewerage District to “charge rates and charges for the use and service of the combined waterworks and sewerage system, and to defray the cost of connections thereto“,…

The board of trustees is authorized to charge rates and charges for the use and service of the combined waterworks and sewerage system, and to defray the costs of connections thereto,

That specific language is absent in paragraphs talking about Water Districts – – which means the legislature did not intend for a water district to charge fees for “connections thereto” like they authorized a combination district to charge. Sections 12, 22, and 23 discuss Water Districts, and does not state charges can be made to defray the cost of connections for water districts.

Can the CERWD place a lien on real estate for delinquent payments?

“No.” However, we must again look to the statute for clarification.

The PWDA, in Section 23 (f), gives specific authorization for a Combined Waterworks and Sewerage District to place liens on real estate for delinquent payments. Not only does it authorize liens, it states that delinquencies are ipso facto (automatically) a lien on the real estate, however, in order to take precedence over other debtors of the real estate, the lien must be filed with the property record.

Such charges or rates, including any penalties for late payment, are liens upon the real estate upon or for which service is supplied or made available whenever the charges or rates become delinquent as provided by any ordinance of the district fixing a delinquency date. A lien is created under the preceding sentence only if..." (and it explains how a lien is created)

"Such liens shall arise ipso facto upon the delinquency of such charges or rates; however, the district has no preference over the rights of any purchaser, mortgagee, judgment creditor, or other lien holder arising prior to the filing of a notice of such a lien in the office of the recorder of the county in which such real estate is located, or in the office of the registrar of titles of such county if the property affected is registered under the Torrens system." It further explains how to properly file the lien. It also explains the combined district can foreclose on the lien in the same manner as if it were a delinquent mortgage.

This language is found nowhere else in the Act, which shows the legislative intent to withhold this authorization from a Water District. It is our understanding that the CERWD has in the past placed liens on real estate. We do not know if liens are still current CERWD policy.

The Audit – Note 9

On page 34 of the Audit dated October 14, 2015, the Auditor inserted a “Note 9 – Tap Fees Liability”.

This “Note 9” purports to absolve the district from any responsibility to the potential customer who paid these [unauthorized] fees. The Auditor opined that the district is under no obligation to continue to expand its distribution system, or to refund and monies paid by potential customers. The district could instead apply those tap on fees, or connection fees, to previous work done by the district.

CERWD-Tap-On-Fees

This action of utilizing the ill-gotten connection fees for other uses, if taken, is morally, ethically, and statutorily wrong. It equates to theft of funds, and in my opinion meets the definition of criminal deception and conversion of funds as defined in the Illinois Criminal Code.

Call to Action: 

  • If you are one of the almost 400 people who have paid a connection fee and never been connected to water, please contact us.
  • If you are a current or past CERWD customer and property owner, please contact us.
  • If you have had a lien placed on your property because a CERWD customer was delinquent in payments to the district, please contact us.
  • If you paid the inflated connection (tap-on) fees because wither you or the previous land owners refused to pay the fee at the time the water mains were placed, please contact us.

We intend to put a stop to this illegal activity by the Clark-Edgar Rural Water District.

We believe any user contracts signed with the “pertinent clause” in it was signed in violation of law.
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Readers Comments (5)

  1. What a plan says:

    The auditor is basing his opinion using general accounting principles whic require disclosure of potential liabilities and booking the liability. In other words the county has peoples money, the deposits, which technically are an asset. And to balance the books he has created a liability account reflecting that there is the potential that the money may need to be used for expense or future refunds. Don’t blame the auditor, he is doing his job.

    What you should be looking at are expenses paid from this account and whether these expense reflect any true costs for management of the account itself. The auditor s opinion is basically a red flag for people like you to take notice and is not an opinion on future service water service decisions.made by the district.

     Reply
    • jmkraft says:

      In our experience, opinions from auditors are used by public bodies to justify doing something they would otherwise not do (see Edgar Co. Audit and Note 12). They same way they use attorneys to justify breaking the law – they will always claim innocence because they were acting on the advice of the attorney or auditor.

       Reply
      • What a plan says:

        It’s not unheard of that items have to be restated. Auditors do it all the time and it is based on the best information given at the time. If the board or people giving information to thw auditor clearly don’t give the auditor the best information at the time the auditor performed the service, making corrections are not uncomon.

        My only suggestion to be made is look at the asset and liability account in the balance shhet carefully. If the district is not properly segregating the assets like the deposits for future services from other sources of income, ie its all rolled into one general account, that’s a problem. If the liability account includes organizational and other miscellaneous expenses dig out what those expenes are. For an account like that it shouldn’t be more than bank fees. But if they are loading expenses on this deposit account that are extra ordinary, that’s a problem. Because in reality if the projct is never completed people should get most of their money back with interest. And this account should be drawing some interest all on its own.

         Reply
  2. Jim says:

    guess i was smart by not getting on when it went close to my place, Ill just keep my good ole well water don’t need all those toxin’s in my water, and the great thing about it they can’t shut my water off

     Reply
  3. Todd says:

    I think this may be occurring in Coles county also.

     Reply




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