The president of the Lakes Region Sanitary District Board of Trustees has stepped down, lamenting in a resignation letter Tuesday that he “cannot ethically participate in a governmental system where tax- and fee-paying constituents have no representation.”
Kurt Stimpson complained in the letter that the district and its affiliates — which include the villages of Hainesville, Round Lake, Round Lake Beach, Round Lake Heights, Round Lake Park and Lake Villa — “have no voice in the manner in which” a sewage treatment plant managed by the village of Fox Lake “is operated or the fees they will be charged going forward.”
Stimpson wrote that he was resigning as a result of Lake County Circuit Judge Mitchell Hoffman’s decision on a lawsuit the district, Round Lake and Round Lake Heights brought against Fox Lake and Lake County alleging the misappropriation of $2.2 million in wastewater treatment funds. The lawsuit was dismissed, according to Barry Burton, the county’s top administrator.
“Unless somebody takes action to appeal that decision within the next couple weeks, then that’ll be history,” Burton said.
Fox Lake has an agreement with the county to treat sewage from communities in the county’s northwest area at its Northwest Regional Water Reclamation Facility. The village collects money out of a Northwest Regional Fund for managing the facility. Nine communities, including the northwestern Lake County residents comprising the Lakes Region Sanitary District, pay into the fund.
Lake County owns interceptor sewers used to transfer the sewage to the facility, and transfers from the regional fund to Fox Lake are administered by the county.
The county and Fox Lake reached their own settlement related to Fox Lake’s alleged misappropriation of money from the regional fund. The county questioned about $1.2 million that the village charged from the fund between 2011 and 2015, and the parties reached an $846,000 settlement earlier this year. Fox Lake will pay the money back over the next eight or nine years by collecting a lesser amount from the fund.
The parties arrived at the $846,000 figure because the county disputed $1.2 million, but the village could have charged about $400,000 for maintenance services over the same time period and never did so. The Lakes Region Sanitary District, which quested $2.2 million in misappropriation in the dismissed lawsuit, was never party to the settlement.
Lake County State’s Attorney Michael Nerheim said in a statement that “the judge agreed that the primary contract at issue (in the lawsuit) was between the County and Fox Lake, and that those two parties had resolved all of the issues now involved in this lawsuit.”
“The judge held that the plaintiffs were not legally entitled to re-open those settled issues and the case was dismissed with prejudice,” Nerheim added.
Burton said Fox Lake had been charging the regional fund for police and fire services that were not authorized under the operating contract. He said taxpayers are not “out any money” because Fox Lake will be paying most of the money back.
“Because they’re going to be paying it back, then in fact, it won’t impact taxpayers,” Burton said.
Stimpson said in a phone interview he wasn’t happy with the settlement the county reached with Fox Lake. He said “this whole situation began” when he approached the county and Fox Lake about consolidating sewer operations “because they were inefficient,” upon which the agencies “stumbled” upon the mismanagement of funds.
Stimpson said that based on the judge’s ruling, “if I see they’re doing something that’s not correct, or they’re gouging us or mismanaging money, as we showed them to be doing, we have no standing within the contracts to raise it as an issue. … We have no ability to effectuate any change.”
“All they did is settled on an amount to be paid back, which was not audited,” Stimpson said of the settlement between the county and Fox Lake. “They established a manner in which the village could pay the money back over roughly a decade with no interest.
“They established a new way of calculating the amount of administrative fees the village could transfer from the enterprise fund to the village general fund that’s far in excess of what we believe was allowable under the accounting standards,” he added. “And that in itself is probably going to result in the constituents in this area paying $3 to $5 million in additional fees to the village of Fox Lake over the next 10 years, and we raised that issue several times.”
Burton said Stimpson is “entitled to his opinion, but the contract was between Lake County and Fox Lake, and that’s the reason the settlement was between us.”
Lake County Board Member Judy Martini will choose Stimpson’s replacement on the three-member board, Stimpson said.
“If I had to do it all over again, I’d do the same thing,” Stimpson said. “The citizens of this area have been ill-served by the way in which the claims were dismissed, so I feel sorry of the employees of the district. I think this is not good governance.”
