District keeps legal defense secret

Their commissioners and attorneys decided how to defend against two legal actions directed at them, but Holmes Harbor Sewer District ratepayers won’t know much about the strategy until the trials start months from now.

During a lengthy secret session Oct. 18, the district’s five commissioners and two attorneys from Inslee Best Dozie and Ryder discussed a $20 million class-action lawsuit filed against the district last week by investors who say they have lost money on bonds sold by the district last October.

The state Auditor’s Office proclaimed the bond sale illegal in August after auditors found that public funds were being used to develop a privately owned office complex in Everett.

Also deliberated out of the public eye was a court motion by Jack Sikma to stop foreclosure proceedings against hundreds of acres of his property. Sikma is contending in Island County Superior Court that the sewer district incorrectly figured sewer standby charges for his property for the past several years.

In the public portion of the meeting prior to the executive session, district counsel Michael Ruark told about 50 ratepayers in attendance that he would not disclose his legal strategy for dealing with the bonds because it could jeopardize the district’s case in court. When asked whether he has determined the bonds to be legal or illegal, Ruark said he has an opinion that he will disclose only to the district’s commissioners.

“But I’m going to ask them to keep it quiet,” he said. “After all, I may have to go in and defend these bonds at some point.”

Ruark gave no opinion on Sikma’s motion against the property foreclosures, nor did Sikma, who was present at the meeting.

Also an item of contention at the meeting was the final tally for the district’s bills from the state audit. Total audit costs reached $62,109, of which $22,997 is still outstanding. Commissioner Don LaMontagne recommended the district delay paying the balance, saying state Rep. Kelly Barlean told him earlier in the week that he might be able to find some financial relief for the sewer district.

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