Sewer rates in McCall would increase by about $11 per month over the next 20 years in order to pay the balance of the J-Ditch lawsuit judgment, McCall City Manager Lindley Kirkpatrick said.
Kirkpatrick did not have an exact number, but said the rates would increase $10 or $11 per month on McCall sewer customers if a judge approves the city's request to issue revenue bonds to pay the balance of the J-Ditch lawsuit.
McCall's 2,523 sewer customers currently pay $34.50 per month for sewer service.
U.S. District Judge B. Lynn Winmill ordered the city to pay $6.5 million last April to Employers Insurance of Wausau and St. Clair Contractors forthe city's mismanagement of the construction of the wastewater storage pond on West Deinhard Lane in McCall.
The city lost the lawsuit in 2004, when a jury ordered the city to pay the two parties just under
$5 million. Interest and attorneys' fees accrued as the city pursued an appeal of the judgment to total $6.5 million.
Interest on the judgment is about $280 per day, Kirkpatrick said. Interest on the judgment is about $102,000 per year.
The McCall City Council will hold a public hearing at its Nov. 8 meeting to seek comment on its intention to ask a judge for approval to issue bonds to pay off the judgment. The meeting will begin at 6 p.m. Nov. 8 in the lower level of McCall City Hall.
The council will then hold a special council meeting Nov. 26 to adopt a resolution authorizing the petition, Kirkpatrick said. The earliest a court hearing could be held is Jan. 2.
A ruling on the petition is likely not to come any sooner than March 4, he said. That date assumes that no one will challenge the city's request.
If the judge rules in favor of the city by March 4, then the city can make its final payment to the two parties on May 1.
The revenue bond amount is not to exceed $6.5 million, Kirkpatrick said. The city will only bond for the amount needed to pay off the balance of the judgment, he said.
Customers of the Payette Lakes Recreational Water and Sewer District would not be affected by any rate increase.
The city of McCall plans to make its next payment to Wausau and St. Clair Contractors by Nov. 12, Kirkpatrick said.
Toward that end, the city council will be asked to authorize a tax anticipation note for $696,000.
Issuance costs for the note will drop the total amount paid to the two parties to an amount between $651,000 and $661,000, Kirkpatrick said.
The city paid $300,000 in property taxes this summer toward the judgment when it found a surplus in its budget during a normal spring audit.
The $661,000 payment will be the second payment made to the prevailing parties in the lawsuit. It will also be made up of property taxes that the city otherwise could have collected under state law for city operations.
Meanwhile, the city's lead attorney on the appeals of the J-Ditch lawsuit, Kim Trout of Boise, has filed an appeal with the Ninth Circuit Court of Appeals that challenges Judge Winmill's April ruling that the city pay the entire judgment immediately.
No hearing date has been set on the appeal, Kirkpatrick said.
