RCH Response to Concerning McLendon-Chisholm City Council Agenda Item

Dear Members,

It has come to our attention that the McLendon-Chisholm City Council has scheduled an item for discussion and action at their upcoming meeting on September 10, 2024, directly impacting RCH. The agenda item, proposed by Mayor Pro Tem Dan Tucker, seeks approval for the City Attorney to issue a letter to RCH WSC and its financial partners, including RCH’s banks, lenders, and creditors. The agenda item suggests the purpose is to "put them on notice" that water-related infrastructure within the Sonoma Verde development is solely owned by the City of McLendon-Chisholm and cannot be used by RCH as collateral or security for any financial purposes. This agenda item is highly unusual and concerning because the ownership of this infrastructure has never been in dispute.

The Board of Directors of RCH had hoped that our relationship with the City would remain on a positive path grounded in mutual cooperation, benefiting all parties involved. Unfortunately, this agenda item indicates that certain members of the City Council have chosen to remain on a less collaborative approach.

Our Position on the Agenda Item

This agenda item, as presented, serves no constructive purpose other than as a veiled attempt to interfere with RCH’s legitimate financial operations. The timing of this agenda item, following the RCH’s recent Board approval of a loan with CoBank, is unmistakable.  No one from the City of McLendon-Chisholm has reached out to RCH to clarify our position regarding the ownership of the infrastructure in Sonoma Verde. Common courtesy and professional conduct would suggest that such communication should be the first step, rather than resorting to a legal notice to RCH’s banks and lenders.

For the record, RCH has consistently recognized the existence of the Public Improvement District (PID) and its role in defining ownership of infrastructure within the development. Multiple public records reflect our clear understanding of this, and RCH acknowledges that the water-related infrastructure in Sonoma Verde is the property of the City. To further clarify, RCH cannot and has not encumbered these assets, nor would we attempt to do so.

Recent Developments and Clarifications

At RCH’s recent Board meeting on September 3, 2024, the Board approved a $20 million loan with CoBank. This loan is secured solely by RCH’s revenues, not by any physical infrastructure or assets within the Sonoma Verde development. Despite what is implied by the City’s agenda item, there has been full transparency in our dealings. The City Council’s agenda item misrepresents the facts and appears to stem from a misguided agenda to undermine the significant progress that RCH has made over the last year. We should not assume, however, that every member of the McClendon Chisolm City Council agrees with the agenda item.  We are hopeful that some reason will prevail and the item will be withdrawn as unnecessary or voted down.

Impact on Residents and Future Water Resources

It is regrettable that some members of the City Council appear to be working under the notion that what is detrimental to RCH must somehow benefit the City. This type of approach does not serve the best interests of the residents they are supposed to represent. Instead, it obstructs the much-needed progress RCH is making to secure additional water resources for the community.

We want to assure our members that RCH WSC will continue to operate with transparency and in the best interests of our members and stakeholders. We remain committed to working collaboratively with all parties involved, even in the face of actions that seem designed to delay progress.

Sincerely,

David Naylor

RCH Board President