Setting the Record Straight – RCH’s Response to False Claims from McLendon-Chisholm Council Members

Dear RCH Members,

I am reaching out to address the recent statements made by McLendon-Chisholm City Council members Day and Tucker during the November 12, 2024, council meeting. Both councilmen claimed that RCH was unwilling to work with the City and that we have been uncooperative. This is categorically false, and I believe it is important for you, our members, to have a clear picture of the extensive steps RCH has taken to engage and collaborate with the City, only to be met with resistance, non-responsiveness, and ultimately, a legally dubious termination of our License Agreement to serve Sonoma Verde customers.

RCH has always been open to productive discussions with McLendon-Chisholm and was hopeful, especially after the recent election, that the new council would work collaboratively to address the community’s water needs. In fact, RCH Board Member Chris George and I met with Council members Tucker and Easter,  as well as the Mayor, on May 19 and again on July 2, in good faith, to foster a constructive relationship and explore solutions together. However, the City Council’s actions tell a different story—one of repeated interference, a singular focus on acquisition and control, and a disregard for due process that has left RCH with no choice but to defend its rights and the interests of its members through legal action. Unfortunately, the City’s actions have prevented any further productive meetings from taking place.

Timeline of Events Illustrating RCH’s Efforts to Work with the City and the City’s Escalating Hostility

Below is a detailed timeline that demonstrates the record of RCH’s willingness to engage and the City’s continuous steps to undermine RCH and disrupt its operations:

March 4, 2024 – RCH Issues a Cease and Desist Letter

RCH sent a Cease and Desist letter to the City, Blackland, and the Developer due to clear violations of Public Utility Commission (PUC) rules and our License Agreement. This letter outlined our concerns about the City and Blackland’s agreements to provide water services to the Sonoma Verde development phases, which were rightfully under RCH’s contractual service area. RCH demanded that the City, Blackland, and the Developer:

• Cease activities violating our Water Service Agreement.
• Allow RCH to continue serving all phases of the Sonoma Verde development.
• Stop interfering with RCH’s contracts and services.

The Developer responded positively, acknowledging RCH’s rights under the Agreement. However, Blackland’s counsel stated they would continue their actions despite RCH’s valid contractual rights. The City, for its part, did not respond at all.

September 3, 2024 – City’s Concern Regarding RCH’s Loan

Following public notice of RCH’s loan with CoBank, Mayor Pro Tem Dan Tucker placed an item on the City Council’s agenda to “put RCH on notice” that the City claimed ownership of specific infrastructure. This was an apparent attempt to interfere with RCH’s financing arrangement; as RCH stated at the prior board meeting, it never intended to use any City-owned property as collateral.

September 6, 2024 – RCH Clarifies Its Loan Agreement with the City

In response, RCH promptly sent a letter to the City, clarifying that none of the City’s infrastructure would be used as collateral for the loan. We expressed disappointment that the City would attempt to interfere with RCH’s financial arrangements without reaching out to discuss any concerns. We clarified that RCH was fully aware of ownership distinctions and did not intend to encumber City assets.

The City did not respond to this clarification.

September 17, 2024 – City Votes to Terminate License Agreement

The City Council, in a special meeting, escalated its interference by voting to:

1. Send a letter “warning” RCH not to encumber City property (a concern we had already addressed).
2. Terminate the License Agreement with RCH within 60 days without cause.
3. Authorize its attorney to file a lawsuit if RCH includes any city property in its loan.

At the meeting, a council member explicitly stated that the City would use the threat of termination as a “hammer” to force RCH into renegotiating a valid contract. This statement shows the City’s intent to use heavy-handed tactics rather than engage in honest negotiations.

September 18, 2024 – RCH Requests Mediation as Required by the License Agreement

In response to the City’s improper termination of the License Agreement posing risks to water service in Sonoma Verde, RCH formally requested mediation, as required by the contract, to address this dispute before proceeding with litigation.

September 23, 2024 – RCH Proposes Mediators

RCH sent the City a list of three qualified mediators in Dallas to facilitate the mediation process by the October 3, 2024, deadline specified in the License Agreement.

September 27, 2024 – City Issues Formal Termination Notice

The City formally notified RCH of its decision to terminate the License Agreement, effective November 16, 2024. Notably, the City used this notice to try to pressure RCH into negotiating a new wholesale water agreement, revealing that the termination was a tactic to force RCH into concessions.

September 30, 2024 – RCH Rejects City’s Termination of the License Agreement

In its response, RCH rejected the City’s unilateral attempt to terminate the License Agreement improperly. RCH also informed the City that a lawsuit would be filed if the City failed to timely provide an appropriate response to RCH’s demand for mediation. 

With the November 16 date set by the City looming, RCH had no choice but to seek court action to avoid the residents of Sonoma Verde not having water. Based on the City’s actions, RCH was faced with the impossible choice of ceasing deliveries of water to the citizens of Sonoma Verde or continuing deliveries of water in the face of the City’s likely claims of theft of services or other criminal or civil transgression. 

That was a critical situation. The City wanted maximum pressure to help their “negotiation,” but it just put Sonoma Verde at risk. 

October 4, 2024 – RCH Files Suit to Compel Mediation and Halt the Termination

RCH had no choice but to file a lawsuit to compel mediation and prevent the termination of service to Sonoma Verde residents. The City’s actions created a dire situation, leaving RCH at risk of either water service interruption or continued service under the threat of being accused of criminal trespassing or theft of services.

November 14, 2024 – Rule 11 Agreement Reached to Maintain Status Quo

On the eve of a court hearing to seek a judge’s order to prevent a November 16 termination, the City agreed that it would not prevent RCH’s continued water service under the terms of the License Agreement while litigation is ongoing. This agreement ensures uninterrupted water service to Sonoma Verde residents as the legal process continues.

The Truth Behind Our Actions

Contrary to Council members Day and Tucker’s baseless claims, RCH has consistently taken every possible step to work with the City and protect our members’ interests. At every turn, the City has chosen to ignore our attempts at collaboration, violate agreements, and pursue legal threats and interference aimed solely at pressuring RCH. We have only resorted to legal action to safeguard our rights, our members, and the community’s water supply. There is a genuine difference between a desire for cooperation and a desire for complete control. 

It’s important for you to know that the legal costs and administrative burdens that RCH faces are a direct result of the City Council’s refusal to follow established agreements and procedures. Our only goal has been to protect the interests of RCH and ensure a stable water supply for our members despite the City’s continual efforts to interfere.

We will continue to stand firm against these tactics, and we appreciate your continued support and involvement. As always, we remain committed to serving our members and will keep you updated as this situation develops.

Thank you for standing with us.

Sincerely,

David Naylor

RCH Board President