In a phone call with one of the County Commissioners it was discovered that an email was floating around saying something to the effect of the Hospital District was asking for $315,000 from Somervell County. The email, which was obtained through an open records request under the Public Information Act, is dated 1/29/2016 9:14am from Brian Watts, Somervell County Auditor, to Ray Reynolds and Michael Honea, the CEO and COO respectively of the Somervell County Hospital District. On the carbon copy line was the County Attorney, the County Judge, and all four County Commissioners. It says:
Per our meeting yesterday I discussed your proposal with our commissioners. The consensus among the majority of the court members is a loan in the amount of $315,000 is the maximum the County would be willing to advance. This amount represents the principal portion of the payment due on February 15th. Please have your board meet to discuss this offer and make a formal request to ourCommissioners Court per the requirements of Government Code Chapter 791, Section 791.027.
Our Court will be meeting on February 8th and I will add your request to our agenda as well as an agenda item to approve the interlocal agreement at that time. Upon approval, I will have the County Treasurer wire our funds directly to the bond trustee on Friday, February 1ih and you will be responsible for wiring the remaining $314,931.26 at that t ime.
Please let me know if you have any questions.
Brian Watts, CPA
Somcrvell County Auditor
There has been no County Commissioners meeting since early January so in my opinion the only way Mr. Watts would have been able to say "The consensus among the majority of the court members" is if he had a private meeting with them or polled them individually to avoid the quorum. How was the amount determined and agreed upon in the email and why is Mr. Watts allegedly speaking for a quorum of the board when they haven't even legally met for a Commisioners Court meeting? Upon receipt of this email I immediately went down the County Attorney Andrew Lucas office and handed him the email. According to Texas Government Code, it is a misdemeanor to attempt to violate the act by meeting in smaller numbers in an attempt to circumvent the Open Meetings Act:
Sec. 551.143. CONSPIRACY TO CIRCUMVENT CHAPTER; OFFENSE; PENALTY. (a) A member or group of members of a governmental body commits an offense if the member or group of members knowingly conspires to circumvent this chapter by meeting in numbers less than a quorum for the purpose of secret deliberations in violation of this chapter.
(b) An offense under Subsection (a) is a misdemeanor punishable by:
(1) a fine of not less than $100 or more than $500;
(2) confinement in the county jail for not less than one month or more than six months; or
(3) both the fine and confinement.
Added by Acts 1993, 73rd Leg., ch. 268, Sec. 1, eff. Sept. 1, 1993.
I asked Mr. Lucas if he needed me to fill out a written complaint and he said no, he would follow up with the County Auditor upon his return and find out what is going on, in fact he handed me back the email beause he said he had a copy. Since Mr. Lucas had already seen the email, was on the cc line, and not acted on his own to remedy the issue I decided to follow up with a fax to the County Attorney Andrew Lucas and to include the District Attorney Dale Hanna:
County Attorney Andrew Lucas
This is a follow up to my verbal comlaint about a walking quorum of the Somervell County Commissioners Court that I expressed to you today. Included in this fax is the email sent by County Auditor stating "The consensus among the majority of the court members" indicates a walking quorum of the Commissioners Court.
You did tell me that you would follow up upon the return of County Auditor but I wanted to ensure that the District Attorney saw a copy of this complaint since the County Attorney himself is included in the email thread.
Thank you both for your time and consideration.
It appears to me that Mr. Watts wanted to inject himself into the financial situation of the Somervell County Hospital District using Somervell County funds. I find this odd since last July he sent an email, in response to my request for an office of attorney general (OAG) opinion on the legality of the hospital district operating outside its boundaries at Pecan Plantation in Hood County, stating he didn't want to inject himself into the District's financial responsibilites.. The County Auditor is one of three local entities (County Attorney, County Auditor, District Attorney) that can officially request an opinion from the OAG which is why I requested it from him. His response to that request states the opposite of what he attempted to do in the email above in my opinion:
From: Brian Watts
Sent: 7/22/2015 6:35 PM
To: Paul Harper
Subject: Attorney General Opinion
Good Evening Paul,
I have reached out to some fellow County Auditors whom I consider trusted colleagues and to some other learned legal counsel for guidance. The consensus of their advice is that the ability of a County Auditor to seek an Attorney General’s opinion is to provide guidance to the County Auditor regarding the legality of certain financial transactions occurring or being contemplated by the Commissioners’ Court of the county to which they have been appointed.
As I have no legal or financial authority in connection with the Somervell County Hospital District, it would be inappropriate for me to request an opinion on a matter that is outside of my scope and authority. My position as County Auditor is to serve Somervell County and the financial matters of this governmental agency. I should not, nor do I have any authority, to inject myself into the internal financial matters of the hospital district.
Accordingly, I must respectfully decline your request to seek an official opinion from the Texas Attorney General on your behalf at this time.
Brian Watts , CPA
Somervell County Auditor
So if Mr. Watts didn't want to get involved with the Somervell County Hospital District affairs in July of last year why did he choose to get involved now?
There is an inter-local agreement that was put into place when the Somervell County Hospital District was created to transfer the assetts from Somervell County to the Hospital District, that is available here. This gives all hospital resources and funds that have been collected for hospital purposes to the Hospital District, it also takes away Somervell County responsibility for the Hospital District, including the bonds that had been previously approved but they remained in the county name. This is required by Chapter 286.073 of the Texas Health and Safety Code.
Sec. 286.073. DISTRICT RESPONSIBILITIES. (a) On creation of a district, the district:
(1) assumes full responsibility for operating hospital facilities and for furnishing medical and hospital care for the district's needy inhabitants;
(2) assumes any outstanding indebtedness incurred by a county, municipality, or other governmental entity in which all or part of the district is located in providing hospital care for residents of the territory of the district before the district's creation; and
(3) may operate or provide for the operation of a mobile emergency medical service.
(b) If part of a county, municipality, or other governmental entity is included in a district and part is not included in the district, the amount of indebtedness the district assumes under Subsection (a)(2) is that portion of the total outstanding indebtedness of the county, municipality, or other entity for hospital care for all residents of the county, municipality, or other entity that the value of taxable property in the district bears to the total value of taxable property in the county, municipality, or other entity according to the last preceding approved assessment rolls of the county, municipality, or other entity before the district is confirmed.
Added by Acts 1991, 72nd Leg., ch. 14, Sec. 121, eff. Sept. 1, 1991.
Under this Chapter a notice was actually filed, according to another email thread from Mr. Watts from 2013, stating that the County is no longer responsible for the bonds:
The County filed a “Material Event” notice with the SEC in accordance with SEC Rule 15c-2-12 informing the bond holders that the hospital district “assumes any outstanding indebtedness incurred by a county, municipality, or other governmental entity in which all or part of the district is located in providing hospital care for residents of the territory of the district before the district’s creation” which is allowed under Section 286.073(a) of the Texas Health and Safety Code. That notice was filed with the SEC on 6/14/2013.
If that wasn't enough there was an attorney opinion was provided at that time to the County Judge and County Commissioners stating that fact and coming to the conlusion that if Somervell County Hospital District did not pay the bonds that are still in Somervell County's name, they could get a writ of mandamus to force them to pay their obligations. So for some reason in my opinion it appears Mr. Watts wanted to inject himself into the District responsibilities when it is clear all the responsibility is on the District itself and if all of that wasn't enough there is another section of Chapter 286 of the Texas Health and Safety Code which explicitly tells the County to stay out of the District business.
Sec. 286.072. LIMITATION ON GOVERNMENTAL ENTITY. On or after creation of the district, a county, municipality, or other governmental entity in which the district is located may not levy taxes or issue bonds or other obligations for hospital purposes or for providing medical care for the residents of the district.
Added by Acts 1991, 72nd Leg., ch. 14, Sec. 121, eff. Sept. 1, 1991.
So why is Mr. Watts as the County Auditor now in my opinion attempting to inject himself into something the County has no business doing?
The emails between Mr. Watts and the CEO/COO of the District were not shared nor discussed with the elected Hospital District Board of Directors. The only way I understood what was going on was because notice of a Special Hospital District meeting was called by the President, here's a copy of the notice. It was called on 1/29/2016, a day after the regular meeting which happened on 1/28/2016, and at the time I wrote about it here and the strangely worded very vague notice stated the following:
1. Call to Order
2. Record of Attendance
3. Discuss and if necesssary take action on the request by Somervell County Hospital District to Somervell County to provide assistance in the payments of bond principle to Regions Bank as provided for in Government Code Chapter 791, Section 791.027.
4. Discuss and if necessary take action on the authorization of Board President to sign an Interlocal Agreement between Somervell County Hospital District and Somervell County related to the assistance provided by Somervell County to Somervell County Hospital District for the payment of bond principle to Regions Bank as provided for in Government Code Chapter 791, Section 791.027.
5. Discuss and if necessary take action on the approval of paying the intereste and extending the due date by up to 150 days of two bank loans with Interbank.
The meeting that was called for 2/2/2016 was cancelled less than an hour before the meeting was to take place. Notice that 791.027 reference? That's the "EMERGENCY ASSISTANCE" section of Texas Government Code under Inter-local agreements. Look up and you will see Mr. Watts email tells the CEO/COO to put this in their public meeting notice, so now we know where that reference in the public meeting notice came from but the question remains why did Mr. Watts put this in his email? Where did he get that 791.027 reference from? Why did he not bring this to the commissioners court first? Why did he directly deal with the CEO/COO instead of going through the Hospital Board or a County Commissioners meeting or even a joint meeting to discuss? Let's not forget the Hospital District, on a vote of 5-1 with myself being the 1, approved spending $225,010 on Pecan Plantation in Hood County on 1/28/2016 so where is the EMERGENCY that Mr. Watts asked the CEO/COO of the District to request assistance under?
Many unanswered questions, hopefully Mr. Lucas or Mr. Hanna will get to the bottom of at least some of them.