Winds of change buffet water board

The fractious fraternity that makes up the seven-member board of Holley Navarre Water System is becoming more strident with almost every monthly meeting and the delicate balance of voting power may be in for a shake-up.

That’s partly because the utility’s board elections scheduled for January could bring the return of Daryl Lynchard, the board president who resigned in frustration over panel politics at the end of 2016.

Board members acknowledge that Lynchard would likely transform the often prevailing 4-3 majority that now exists into a new alignment that favors dissidents who are seeking more transparency and challenging the authority of current President Bien May.

“Daryl and I didn’t agree on everything, but he is very intelligent and he listens,” said Gaius Bruce, a board member whose three-year term is up in January. Bruce, who plans to run for re-election, usually votes in an informal block with May, Robert Coley and Troy Bossier.

Often on the other side of voting issues are board Vice President James Calkins, Ricki DeSantis and Brian Kelly.

Lynchard declined to confirm whether he will run again when interviewed outside the Holley Navarre Water offices during a break in last week’s meeting, at which he sat in the public section. He told a reporter: “Some people want me to (run).”

May, responded to a reporter: “I have heard of several HNWS members interested in running for the HNWS board of directors. In my opinion it is inspiring to have members of HNWS and our community interested in contributing their expertise and experience to HNWS. We welcome all that are eligible and interested to put their names in the hat and have the members choose.”


Management targeted

What’s more, Kelly and the rest of the current board minority are calling for the resignation or replacement of General Manager Paul Gardner. They have criticized Gardner’s handling of the proposed debt restructuring of Fairpoint Regional Utility System, the co-op of which HNWS is a member and the source of water it purchases.

Kelly charged in a recent letter to Gardner that the 30-year Holley Navarre Water employee is “bum rushing” the proposed refinancing—which would add $4 million to Fairpoint Regional’s debt load. Kelly, a principal in Pensacola-based Hallmark Capital Partners, a financial consulting firm, accused Gardner of “exhibiting malfeasance and incompetence” in pressing for a vote on the debt issue by HNWS’s board without providing adequate time to consider the issue or documentation explaining it.

But May said in an email to this newspaper: “As to the assertion that Mr. Gardner has mishandled the Fairpoint Refinancing request, I find this absurd. Mr. Gardner was requested to bring this issue to the HNWS board of directors by the Fairpoint board of directors…which he did.  He was also requested by me… to put the refinancing request by Fairpoint on the agenda for the special held Oct. 6, which he did.”

Fairpoint Regional is required to have the support of Holley Navarre Water’s board and the directors of its two other co-op members—Midway Water and South Santa Rosa Utility System—to approve the debt restructuring.

Last week the HNWS board, after considerable debate, decided to table its vote on the refinancing until directors are satisfied they have adequately studied the proposal.

Calkins told a reporter that the vote should be delayed until after the January board election: “Let’s make sure the people who are voting on this are going to be in office and accountable for a while.”

There’s a dotted line connecting the fiscal futures of Holley Navarre Water and the Fairpoint Regional group and its member utilities that makes the collective’s debt load a concern for all of them

Lowering debt payments though a restructured Fairpoint bank loan could free up cash flow for sudden infrastructure repair needs such as in 2015 when the collective’s water line under East Bay broke, requiring $685,000 in repairs. Although Fairpoint records the cost of such work on its books and thus off the balance sheets of its member utilities, the three companies nevertheless end up footing the bill through water purchase and are subject to price increases.

The East Bay line break contributed to a 25 percent increase in Fairpoint’s water price in 2016.

Bruce said he’s torn about the debt issue: “Personally I like to pay off debt. But I would also like to see us have more cash in reserve.”


Millions more for spraying

Meanwhile, Holley Navarre Water’s volunteer directors have tabled consideration of a separate proposed deal in which that company would pay about $8 million—nearly the equivalent all the financial assets now listed on its balance sheet—for the right to spread treated wastewater on rural land owned by fellow Fairpoint member South Santa Rosa Utility System.

The 20-year SSRU contract is being drafted by the City of Gulf Breeze, which owns that utility. The pact has been in the works for more than a year while Holley Navarre explored other options to meet guidelines set by the Florida Department of Environmental Protection to raise its effluent disposal capacity.

In an earlier interview, Gardner told this newspaper that the cost of the proposed effluent disposal deal with Gulf Breeze is actually lower than the long-discussed alternative — reaching an accord with Eglin Air Force Base to spray effluent on a remote area there. Holley Navarre has already planned to spend $11 million on that Eglin eventuality, which would include building a pipeline from its water treatment plant. Gardner added that the building expenses expected in either plan can be paid for without another water rate increase in addition to last year’s 17 percent hike.

But Calkins pointed out that the HNWS rate increase was in part to pay for a 25 percent rise in the price of water purchased from Fairpoint. He added, “I’d rather see Fairpoint Regional pay off its debt, get free and clear and maybe then reduce rates  instead of raise them again.”

Read the full article in the Oct. 26 issue of Navarre Press. Subscribe online at for as little as $38 per year.

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