Loans totaling $17,310 will not be repaid if the Shady Cove Water District's dissolution plan is given the OK by county commissioners.

Loans totaling $17,310 will not be repaid if the Shady Cove Water District's dissolution plan is given the OK by county commissioners.

The plan, approved unanimously by the newly elected Shady Cove Water District board, concludes that the personal loans were not legally collected under Oregon law.

Six people, five of whom are former water district commissioners, used the loans for legal fees necessary to successfully overturn a 2005 election that had approved dissolution of the district.

The plan was reviewed by the district's attorney, Michael Franell.

"When the district was created it did not set a tax rate limit," board president Phillip Keith explained, "nor did it go to the residents of the district and ask them for approval of a tax rate."

The five new board members ran on a platform to dissolve the district in the May election after the district had failed to provide water for residents after several years. The candidates were elected by an average of 87 percent of the vote.

Citing Oregon statutes, Keith said because the district could not legally tax and had no source of income to repay loans, the loans were invalid and should never have been collected.

The largest loan, $16,700, was claimed by Jim Collier, former president and general manager of the water district. He said the water district's decision did not surprise him.

"I expected them to take that route," Collier said. "We haven't made any plans yet. We were waiting to see what they would do."

— Bill Miller, for the Mail Tribune