The McCall City Council on Monday approved the final step to pay off the $6.5 million J-Ditch lawsuit.

The city was ordered to pay Employers Insurance of Wausau and St. Clair Contractors, Inc. of Boise $6.5 million by U.S. District Judge B. Lynn Winmill in April.

The city considered municipal bankruptcy as an option in May, but settled on a three pronged approach to pay the debt, while seeking to have Judge Winmill's ruling overturned by the Ninth Circuit Court of Appeals.

The city paid $300,000 in June from money found in the city budget that was deemed surplus funds by an annual audit in the spring.

Earlier this month, the city paid $666,000 to the prevailing parties in the lawsuit that found the city mismanaged the construction of the wastewater storage pond. The money was paid using a tax revenue anticipation note.

The borrowed funds will be paid back by the city by Sept. 30, 2008 using revenue received
from increased property taxes allowed under state law.

The final step in the plan to pay back the balance of the lawsuit award requires the city to ask a state judge to confirm that revenue bonds are "ordinary and necessary" for the city to payoff its debt.

The revenue bonds will increase the city's sewer customers monthly bills by $10-$11 per month for the next 20 years.

Monday's action did not include a court date for the judicial confirmation.

The city will seek a court date now that the council has approved the final part of the payment plan.