Counsel Probes Water District

Vineyard Haven Town Attorney Finds Independent Practices of Tisbury Water Company Are Outside the Law


The Tisbury water department, which historically has functioned as an independent entity with separate bank accounts and its own treasurer, has no legal authority to conduct many of these independent practices, a town attorney has found.

"In my opinion, the historical autonomy practiced by the board of water commissioners is not grounded in the language of Chapter 394 [the 1905 enabling legislation for the water company] or state law," wrote Michele Randazzo, an attorney at Kopelman and Paige in Boston, in an opinion this week.

The eight-page opinion was received by Tisbury town administrator John Bugbee on Tuesday. The opinion is critical of many water department practices - several of which the town attorney calls unlawful. Among other things, she finds that the water company has been improperly:

* Administering its own payroll system.

* Maintaining separate bank accounts.

* Hiring its own legal counsel and financial auditor.

* Retaining profits and surpluses monies.

* Investing funds in interest bearing accounts.

* Negotiating contracts and electing its own treasurer.

The opinion comes three months after the Tisbury selectmen expressed outrage over the salaries and benefits package commissioners awarded to water department superintendent Deacon Perrotta and administrator Lois Norton. Mr. Perrotta and Ms. Norton, who oversee both the Vineyard Haven and Oak Bluffs water systems, make over $100,000 - $50,000 from each town - under five-year contracts. Their salaries make them among the highest paid public employees on the Vineyard.

Selectmen said the length of the contracts and the benefits packages for Mr. Perrotta and Ms. Norton are out of line with other Tisbury employees. At the annual town meeting in April, selectmen tried unsuccessfully to reduce the salaries by amending the water department budget on town meeting floor.

Selectmen decided to take a closer look at the practices of the water department, which has historically functioned with a good deal of autonomy. In May, the board issued a public records request for all water department meeting minutes involving Mr. Perrotta and Ms. Norton's contract negotiations, as well as the financial audits from the last six years. All the information was passed along to Ms. Randazzo for a legal opinion.

As of yesterday, neither the selectmen nor the water commissioners had met to discuss the opinion, and several selectmen and commissioners had not yet seen the document. Mr. Bugbee said his board hoped to meet with the water commission sometime next week.

Selectman Tristan Israel said yesterday that he had not read the decision yet, and that he was sorry to see a newspaper story come out before his board and the water company had had the time to read and digest the opinion from counsel.

"I am disappointed that this has come out before the selectmen have had a chance to talk about it, but what we will do is take this information and discuss it and meet with the town water department - and take it from there," Mr. Israel said.

Water commission chairman David Schwab said yesterday that he, too, had not read or even received the opinion.

"All I can say is that we haven't done anything differently in the last five years from what we have done in the last 50," Mr. Schwab said. "Maybe somebody made a mistake back in 1952, but I don't know. I am not a lawyer."

The Tisbury water department has traditionally operated independently even though it is a town department. Water commissioners manage department finances with very little oversight from town hall, and the water department budget has frequently been exempted from review by the finance and advisory committee. Selectmen and water commissioners seldom meet.

Issues over control of the water department date back almost two decades. In the late 1980s, selectmen and water commissioners squared off in court over who had exclusive authority concerning wages, hours and other terms of employment for water department employees. A superior court judge declared that the selectmen - not the water commission - hold that authority.

Ms. Randazzo's opinion hinges on her belief that Chapter 394, the enabling legislation that created the department in 1905, does not create the water supply system as a separate legal entity autonomous from the town.

"As such, there appear to be a number of practices of the water commissioners that are not in accordance with state law," she wrote.

An audit for the water department from last year showed that the department had $1.57 million in surplus cash. State law requires all surplus over $1,000 to be either returned to the town treasurer or used to reduce the water rate.

"It is my opinion that all water department funds are to be maintained in accounts administered by the town treasurer, in the same manner as any department revenues for which separate enterprise or revolving funds have not been established," Ms. Randazzo wrote. "Surplus amounts . . . . should be returned to the town's general fund, or the water rates should be reduced accordingly. At the very least, it would be reasonable to expect that the town be repaid the monies it pays for water department salaries and wages, and employee benefits."

Ms. Randazzo found that the water department has not been irresponsible, only lacking in accountability.

"While it has not been suggested to me that the water department is operating inefficiently or that the water commissioners have been less than responsible in the discharge of their duties, there appears to be a complete lack of accountability to the town of Tisbury, particularly with respect to financial matters," she wrote.

The attorney suggested that the selectmen may want to contact the Massachusetts Department of Revenue for assistance in rectifying the situation, or they may want to convene a town meeting to amend the legislation that created the water company. Legal action may also be required, she said.

Mr. Bugbee said the board has made no decision about the next step, focusing only on a meeting with the water commissioners.