Archive for Thursday, March 20, 2008

One count dismissed in RWD No. 4 case

March 20, 2008

The city of Eudora won a small victory against Douglas County Rural Water District No. 4 last Thursday when a federal court granted a motion to dismiss the first count of the water district's lawsuit.

The decision, handed down by U.S. District Judge Julie A. Robinson, means Eudora will not have to pay RWD No. 4's court cost.

At dispute in the lawsuit is water service to areas south of Kansas Highway 10 along Douglas County Road 1061, which Eudora recently annexed into the city. RWD No. 4 filed a lawsuit against Eudora in September 2007 in U.S. District Court of Kansas City, Kan. The water district claimed because it received a U.S. government loan to enhance its system, its service to the area was protected from the encroachment of a city or private entity by a federal law - 7 U.S.C. section 1926(b).

The loan the district received, according to a memo written to RWD No.4 board members, was a calculated business move that would stop anyone from annexing its territory.

Eudora City Administrator Cheryl Beatty said the memo was an indication of the district's intent to create a monopoly because it was a loan it did not need.

RWD No. 4 Administrator Scott Schultz admitted it was a sound business decision, but that if the district didn't need the loan, it would not have been approved.

The two sides first met on Oct. 24, 2007, but failed to come to an agreement. Eudora city officials offered $235,000 to pay off the water district's federal loan to settle the suit. RWD No. 4 found this offer to be too low, saying the district would make upwards of $6 million by serving present and future customers in the 153 acres in the Fairfield district over a 40-year period.

The federal court's decision stated RWD No. 4 had to show there was "curtailment or limitation of service" on the part of Eudora preventing RWD No. 4 from its right to sell water.

The city claimed although they have "sought to compel" RWD No. 4 to sell its property and allow the city to serve residents in the 153-acre territory, there has been no "curtailment or limitation."

RWD No. 4 countered the threat of curtailment or limitation was enough to bring a claim.

The court disagreed with the district's claim, but more importantly, the court essentially stated the district made allegations in response to the dismissal that should have been included in their lawsuit and "because the Court is not obligated to look elsewhere to find a valid claim, it does not do so in this case, and the motion to dismiss is granted."

Schultz said the water district would refile the complaint.

"Eudora has encroached on our territory, and we intend to serve our territory," Schultz said. "That's also triggered a claim for damages, which essentially are our court costs."

Eudora will enter into mediation April 3 with RWD No. 4 in an effort to settle the lawsuit before it goes to trial, which is set for Nov. 18.

The city has rejected three other offers from the district that Beatty deemed "unfair." They were:

¢ The city would allow the district to serve the territory south of K-10.

¢ The city would install and maintain water lines in the affected area but buy water from the district.

¢ The city would pay the district $20,000 for each meter in annexed territory.

Although the city wants no part of the offers, Schultz said the district would make similar offers as negotiations proceed.

"Once they reject an offer that kills the offer, but it doesn't mean the concepts are off the table," he said. "I think the biggest things is that we value them as neighbors of the same community, and the best thing for neighbors in a dispute to do is work things out amicably."

Beatty said the city would consider purchasing water from the district in the future if the price and length of time specified is reasonable.

"I would hope that RWD 4 would understand that the city is willing to put aside differences to come out with reasonable solutions," Beatty said. "If they continue with their attitude now, I don't see that happening. I'm not trying to back them into a corner or make them mad, we just need them to step aside rather than hard lining us."

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