Ratepayer alliance lawsuit drags on
December 21, 2009 · Updated 6:04 PM
Nearly eight months since the Bainbridge Ratepayer Alliance sued the city over improper use of utility fund money, the two sides remain apart on a settlement agreement.
The city last offered a settlement to the alliance on Oct. 27.
Through a public disclosure request, the Review obtained the settlement offer and a response from the alliance.
The city’s offer addressed many of the demands made by the alliance. But the alliance did not accept the offer, and the lawsuit remains ongoing.
The settlement had a deadline of Oct. 30. The alliance response is dated Nov. 2. Sally Adams, secretary for the alliance, said no further talks or settlement offers have materialized since that time.
City Attorney Paul McMurray said future discussions have been referred back to the attorneys representing the city and the alliance. McMurray said lawyers representing the city contacted attorneys for the ratepayers group expressing a willingness to re-engage in talks.
“So far, I think they’re still thinking it over,” McMurray said. “We haven’t received a ‘no’ to continue talks.”
McMurray declined to comment on how close the two parties are to a settlement.
The settlement proposal has been at the center of Ethics Board disputes between Councilor Hilary Franz and Adams over the past month. Adams filed a request for advisory opinion from the board when she alleged that Franz leaked confidential information regarding the settlement offer.
The board ruled Monday that if the information was confidential and Franz did release it, a violation would have occurred. In response, Franz filed a request for the advisory opinion with the board. Her primary argument was that the documents were available to the public on a disclosure request, therefore they could not be confidential.
The board did not rule on Franz’s request at its meeting Monday.
The city presented six concessions in its settlement that included releasing the source and application of funding for the Waste Water Treatment Plant upgrades, with monthly updates to the alliance promised.
The city agreed to return $1.5 million from a bond into the sewer utility to “restore adequate working capital and operation reserve levels,” according to the offer.
The city also agreed to open up the books and provide the alliance with updates on the financial position of three utilities for the earlier of five years, or until the alliance dissolves.
Adams said the group doesn’t want that. It wants a transparent utility, visible to all citizens who want to know where their money is going.
“The city needs to set up a system where missteps in the future just can’t happen again,” Adams said.
The city also agreed to pay up to $25,000 worth of legal fees. Adams said the city should not only pay the legal fees, it should reimburse the sewer fund for any legal fees paid from the utility.
McMurray confirmed that the city has spent at least $100,000 in legal fees on this case.
Adams cited several issues within the settlement with which the alliance disagreed. Chief among those include the time the city will take to pay $1.25 million from the general fund to the water and sewer utilities; the payment amount for legal fees; and the inclusion of the Winslow Way reconstruction project in the settlement at all.
“The Winslow Way project has never been part of this litigation,” the alliance response said.
Adams said the city mentioned the Winslow Way reconstruction project in the settlement offer so that once a settlement is reached, the alliance will be unable to pursue legal action, if it chooses to, in regards to the Winslow Way project.
“We want it stated that Winslow Way is not a part of this,” Adams said. “It could be maneuvered to keep us out of court based on that release.”
A portion of section 3.1 of the city’s offer states: “Approval of this settlement agreement shall constitute and effect a mutual release by BRA (Bainbridge Ratepayers Alliance) of all claims and assertions of any kind against the city, including its elected officials, officers, agents and employees, past and present, arising out of or relating to the complaint, including either or both of the bond validity claim and the other claims raised in the lawsuit and settlement discussions.”
As a result of the lawsuit remaining unsettled, the city has been forced to postpone reconstruction of utilities on Winslow Way for at least a year, and institute a temporary sewer surcharge to finish the upgrades or until another solution can be found.
McMurray said the city is still attempting to obtain a $1.5 million bond anticipation note from Cashmere Valley Bank to fund the treatment plant upgrades. McMurray said the bank would provide the funding if the alliance agreed not to sue. This would allow the City Council to repeal the 111 percent sewer surcharge imposed last week.