#Léland Ong ou te. Noung our ect. 102 Town Hall Drive | Leland, North Carolina 28451 Phone (910) 371-0148 | Fax (910) 371-1073 By Email and First-Class Mail Mr. Ron Jenkins Chairman of the Board of Commissioners Brunswick Regional Water & Sewer H2GO Sanitary District 516 Village Rd Leland, NC 28451 rienkins 01 Dear Chairman Jenkins: Congratulations on your recent assumption of the Chairmanship of the Sanitary District Board and to the new members of that Board. We received your letters of danuary 24 and February 19, 2020 (your “Letters”) regarding possible settlement of the litigation between the Town of Leland, the Town of Belville, and the Sanitary District. ‘The Leland Town Council met in closed session on February 20, 2020 to carefully consider the Sanitary Distriet’s proposal and other matters related to the on-going litigation. The Council supports the immediate construction of the aquifer-based reverse osmosis plant based on subsequent approvals of the Town of Leland’s proposal presented to the Parties’ representatives in October 2019. ‘The Council determined that the Sanitary District's proposal raises several important questions that the parties need to address. As it has been from the outset of the litigation (and before), Leland remains open to a dialogue that addresses the resolution of the Parties’ disagreements. If your Letters are an invitation to continue such discussions, then Leland will gladly participate. If, on the other hand, your Letters intend to present a “take it or leave it” ultimatum, then we are unpersuaded that your proposal adequately addresses the needs of the Parties, our citizens, and the community, and we must politely decline ‘The ongoing lawsuit between Leland, Belville, and the Sanitary District is about much more than an aquifer-based reverse osmosis plant. It is about the Rule of Law and local governments acting lawfully and ethically. As the Court found, the case involved two local governments secretly and unlawfully conspiring and colluding to effectively dissolve one of the government entities by giving away everything it possessed (including nearly $50 million in physical assets and $16 million in cash assets), in an effort to avoid the results of the 2017 election. ‘The pro-Transfer contingency has manipulated and abused the court system to try to gain an advantage.#Léland 102 Town Hall Drive | Leland, Narth Carolina 28481 Phone (910) 371.048 | Fax (910) 371-1073 ‘The Town of Leland cannot take the risk of similar misconduct recurring, and feels obligated to protect itself, its citizens, and its future from that risk. ‘The Town of Leland seeks a regional compromise that: (1) assures the three local governments in the lawsuit, will not face these circumstances again and (2) allows the entities to grow together through partnership and cooperation. ‘To that end, please note that the settlement agreement that the Town of Leland proposed in 2019, and which initially received positive feedback from the Sanitary District and Belville remains open. Under that proposal: ‘+ The aquifer-based reverse osmosis plant would begin the process for completion and construction immediately. © The taxpaying citizens of Belville would be relieved of the statutory obligation to pay approximately $1 million for the Town of Leland’s attorney fees for fighting the illegal actions of Belville's officials. + The Towns and Sanitary District would create a partnership and establish guidelines for growth and cooperation for the betterment of the region. + Efficiencies in service would be increased and confusion of service would be eliminated. + The Sanitary District would be empowered to provide both water and sewer to the greater region, including areas the Town of Leland eur such as Brunswick Forest, Waterford, Magnolia Greens, areas along Village Road and Old Fayetteville Road, and others. + The Town of Leland would work with the Sanitary District to assure funding is available and approved for the construction of all needed facilities. tly serves, ‘The Town of Leland encourages the Sanitary District and Belville to approve the ‘Town of Leland’s settlement agreement proposed in 2019, or at a minimum engage in meaningful discussion regarding a compromised solution instead of issuing threatening ultimatums and demands that would effectively accomplish the same results that the Sanitary District and Belville Boards sought through the unlawful actions that began in late November 2017. ‘The important point is this: For those who want a reverse osmosis plant built immediately, the Sanitary District and Belville are the ones standing in its way.4#Léland ‘roving eure Nouig our et 102 Town Hall Drive | Leland, North Carolina 28451 Phone (910) 371-0148 | Fax (310) 371-1073 In the hope that your Letters are an invitation to continue discussions, we are providing you with several important questions we have. We hope that you will meaningfully consider them and then discuss with us. First, doesn’t the Sanitary District’s offer leave Leland’s citizens in a financially worse position than they are without it? The Letters propose a substantial reduction in the attorneys’ fees which Leland incurred in addressing the Sanitary Distriet-Belville illegal transfer. They also would deny Leland its attorneys’ fees for having to respond to an appeal that Leland did not initiate or desire. Leland won a strong summary judgment order in this case, and there are several applicable statutes, and at least one rule, which permit Leland to seek reimbursement for its attorneys’ fees from Belville and the Sanitary District. We think, given the Court’s ruling and the subsequent statements and conduct by some, the Court would make Leland whole at the end of this litigation. Quite differently, your Letters’ proposal would eveate a financial loss for Leland, and that proposal would exact significant concessions and impairments of Leland’s rights. It is unclear to us why you think Leland should agree to such a proposal. Second, why doesn’t the Sanitary District’s offer address the underlying regional disputes that caused the litigation and led to the Sanitary District- Belville transfer? As the parties’ representatives discussed at the productive regional compromise discussions last year, growth in our region presents significant opportunities if it is handled properly and significant challenges if it is not. For far too long, the local governments in the region have competed and fought with one another. At times, the Sanitary District competed with Leland for growth opportunities, and the Sanitary District's action (such as causing there to a be a sewer moratorium) negatively impacted Leland’s ability to provide a full range of necded municipal services to new developments. If these and other conflicts persist, an additional infrastructure project presents potential risk and problems. We were making progress towards resolving these issues, and we are uncertain why the Sanitary Distriet is proposing that we now abandon that progress. Third, how does the Sanitary District proposal protect against another local government crisis like the Sanitary District-Belville transfer? The litigation arises from a situation in which the Sanitary Distriet transferred itself essentially out of existence rather than have a Board that would be open to hearing Leland’s concern ‘There is substantial evidence, including media recordings, indicating that the purpose of the transfer was for Belville to hold the assets while that Board was in office and then give them back if that Board's composition changed. As Judge Henry recognized, this tactic was unlawful. The Sanitary District, having engaged in such conduct, now asks for a settlement that would give it more responsibility, with no institutional checks to prevent#Léland ‘Groming ou tare Nourishing ot et, 4102 Town Hall Drive | Leland, North Carolina 28451 Phone (810) 371-0148 | Fax (910) 371-1073 further unlawful transfers. Por the protection of the region and its citizens, including those in Leland, we need controls in place that will facilitate local government cooperation and will prevent future lawlessness arising from loyalty to factions. We also need a structure in place that will preserve the Sanitary District's neutrality and fairness. We were making progress towards implementing these controls, and we are concerned that yur proposal moves in the other divection. Fourth, why does your second letter indicate that the parties cannot have an interlocal agreement because “the parties’ interests on fundamental issues are irreconcilably and materially different”? As your Letters indicate, the parties spent significant time attempting to negotiate a regional solution last year. Your Letters avoid mentioning, however, that the parties came to a tentative resolution on an interlocal agreement last summer —one that you, Mr. Jenkins, were personally supportive of during the last regional compromise meeting. For reasons that are unclear, your position changed by November, after counsel drafted an agreement for consideration by the Parties’ governing bodies. We should build on the foundation of the progress we made. And if there are fundamental issues, we need to meet to work them out and learn to live as neighbors, not bury our heads in the sand. We do not understand why your Letters, propose leaving fundamental issues unresolved and claim that our problems ave too big for our leaders to solve. Fifth, can our citizens be confident that the Sanitary District can successfully construct and operate the RO Plant in the absence of full regional cooperation? Certain members of the Sanitary District Board and its staff take the answer to this question as a given, But this assumption generally lacks explanation, and Leland remains unsure. After all, one would not normally entrust those who recently gave away more than $60 million for nothing with a new approximately $40 million project. Further, it is our understanding from Sanitary District representatives that the construction will take much longer than we have heard mentioned in media reports. If the Sanitary District is not able to deliver the RO Plant on time and on budget, then the citizens of the region may be materially worse than if we cooperate with the County to obtain our water, especially considering that Brunswick County recently received their NPDES permit and will receive bids for their reverse osmosis plant in early March 2020. Though Leland remains open to the concept of an aquifer-based RO Plant if there is cooperation among the parties, Leland is hesitant to speculate that the Sanitary District will effectively do so in isolation and in the face of what you describe as “interests on fundamental issues are irreconcilably and materially different.” In any event, it is unclear#Léland ‘Growing aftr. Nourishing or ete, 102 Town Hall Drive | Leland, North Carolina 28451 Phone (910) 371-0148 | Fax (910) 371-1073 to us why the Sanitary District proposes to move away from a collaborative approach that gives us all our best chance of success with a project. ‘This list is not an exhaustive list of our questions, but we think it provides a good starting point. We welcome the opportunity to have our representatives meet with yours and Belville’s to discuss how the parties can make progress. We are willing to host any meetings if it would be helpful. We continue to believe that this community's leaders should work together to find comprehensive solutions to the community's challenges. We want to work with you to find the best compromise possible, given the circumstances and the relative interests of the Parties in the litigation. We are not presently convineed that your cuzrent proposal accomplishes that. If we work together, the plant can be built quickly. ‘Thank you for your attention to these issues. We look forward to hearing from you. Sincerely, fo Brenda Bozeman, Mayor, Town of Leland Copy: Mike Allen, Mayor, Town of Belville (Wallen49@bellsouth.net) Bob Walker, Executive Director H2GO (bwalker@h2goonline.com)