Commissioner Virgil Fox stands outside the sewer pumping station for Water-Sewer District 5.
Water-Sewer District 5 commissioner Virgil Fox has sold off the debt the district owes him, an attempt at address ethical concerns that have put on hold the district’s sewer services agreement and led to a moratorium on building permits.
Last year, neighboring District 2 voided its agreement to provide sewage for tiny District 5, citing — among other things — Fox’s dual role as creditor and commissioner of the district. The district owed Fox close to $200,000 for water infrastructure he sold to the district in 2003. That sewage lapse led Lewis County to put a moratorium on building permits in District 5.
On March 12, according to documents obtained by The Chronicle, Fox sold the promissory note for the debt to SDHN, LLC. That company was created on March 5, with John Alexander and Larry and Rebecca McGee listed as its principals on records found on the website bizapedia.com. All are a members of Forward Fox Run, a group of developers that has backed Fox and pushed for the end of the moratorium.
Fox and Fox’s lawyer Scott Blinks did not respond to requests for comment.
“This should be an easy problem to resolve,” said J. Vander Stoep, a Chehalis lawyer representing Forward Fox Run. “Here's the main stated reason from District 2 why they put on the moratorium, and hopefully this can move them to action to what's in their district’s interest.”
District 2 doesn’t think it’s that simple. Commissioner Kevin Emerson said he hadn’t yet seen official documentation of the sale, which also includes the transfer of Fox-owned properties that had raised conflict concerns. It’s unclear if Fox’s share of the debt had been bought out with an up-front cash payment or a contract in which the company would collect the district’s payments and then deliver them to Fox as a third party — leaving Fox with an ongoing beneficial interest in the district.
“I can't speculate on the outcome of whatever has taken place concerning the debt without actually seeing the details of that,” Emerson said. “I just don't know how to make it any more clear that we're only following the guidelines that state law provides.”
Emerson also emphasized that the conflict-of-interest issue is not the only concern hindering a new interlocal agreement. District 2 has asked for detailed financial records to prove viability, showing that District 5 is charging sufficient rates to meet its obligations. Those documents have not yet been provided to meet District 2’s satisfaction, Emerson said.
Still, District 2 plans to look over the records outlining the sale of Fox’s debt, and is hopeful it can at least be a step forward.
“Of course, if there is something that has transpired that removes the conflict of interest ... then we will move more quickly,” he said. “As soon as we get some information, we definitely will be looking at that really quickly to determine if that will be sufficient to move forward.”
Vander Stoep maintains that District 2’s issues are overblown.
“My impression is there are always gonna be more concerns (from District 2),” he said. “Back in October, I was optimistic that this problem could be resolved promptly. … It's in the hands of people who I don't know and so far haven't shown a lot of interest in moving quickly to resolve the moratorium.”
Meanwhile, District 5 commissioner Deborah Hilliard — who has long feuded with Fox — said she had not yet seen the sale documents.
“That’s a little bit problematic,” she said. “In order to pay the bills, I need to know who to make them out to.”
Without seeing the paperwork, Hilliard said she couldn’t determine if the sale resolved conflict-of-interest issues, but said the involvement of Fox’s allies at Forward Fox Run complicated the matter.
“It seems like they’re buying and selling property between each other,” she said. “I think they want the moratorium lifted, however I think they want it lifted on their terms. It could have been lifted a long time ago if they were looking out for what was best for the district.”
The debt issue is just one of many facing District 5. Commissioner April Toups resigned abruptly earlier this year, several months after replacing a commissioner who also resigned abruptly. That leaves Fox and Hilliard, who have stalemated on most issues.
Though it’s technically up to the district to replace Toups, that role falls to the county if the pair can’t agree on a third commissioner within 90 days. Civil deputy prosecutor Eric Eisenberg recommended to county commissioners this week to begin recruiting for a replacement, given the small odds that Fox and Hilliard will agree on a candidate before the deadline in April.
Meanwhile, Hilliard is facing a recall challenge brought by Dennis Eros, whom she defeated in the last election on a coin flip after their race ended in an 11-11 tie. A court hearing Monday will determine whether the recall effort has enough merit to be put before voters on the ballot.
Lewis County is currently in the process of looking into the possibility of taking over the district, a move requested by Fox and Hilliard and one that many believe is the only way to resolve the tangle of fiscal issues and personal feuds that have plagued the district. It will be a complicated task to determine if that option is viable for the county.
“We’re working on what it would mean and how it would work for the county to take over the work practically,” Eisenberg said.
