State audit turns up insurance lapse at Water District 3

McALLEN — State auditors have determined Hidalgo County Water Improvement District 3’s board hasn’t been properly insured for about five years.

Board President Othal E. Brand Jr. told other elected officials about the problem Wednesday and they filled out applications for $10,000 public official bonds to correct the problem. The insurance protects board members from being sued as individuals for decisions they make as elected officials, though they’re generally immune from such claims except in cases of deliberate wrongdoing.

State auditors, at the direction of Gov. Rick Perry, have been poring over District 3’s books for several months. They’ve interviewed employees, scanned documents and recently visited the offices of Ferris and Flinn, a Harlingen-based engineering firm. Frank Ferris, who serves as District 3’s engineer, said his firm provided the auditors with about 800 megabytes of contracts and other documents.

An audit team headed by Nicole Guerrero planned to finish field work in January and release a report in April, according to a Nov. 21 letter to Brand from State Auditor John Keel.

Already, District 3 has made some changes to maintenance records and corrected the insurance problem after questions from the auditors. District 3 canceled the insurance by mistake in 2007, apparently after a miscommunication between Brand and district employees over increasing the coverage, Brand said.

At Wednesday’s meeting, several board members questioned — some tongue-in-cheek — whether they needed more than just $10,000 in insurance.

“As long as you’re acting in a legislative capacity here, you’re immune from liability,” said board member and former Mayor Leo Montalvo.

“I’d like to be immune with $1 million,” said W.D. Moschel, the board’s vice president.

The board voted to obtain a $10,000 public official bond for each member and investigate how much it would cost for higher amounts.

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Dave Hendricks covers McAllen and general assignments for The Monitor. He can be reached at dhendricks@themonitor.com and (956) 683-4452.

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