Archive for Thursday, March 19, 2009

Rulings in water case shed light on central issue

March 19, 2009

Recent rulings in the city of Eudora’s lawsuit with Douglas County Rural Water District No. 4 denied several of the city’s motions. However, Curt Tideman, who is the city’s attorney, said the document illuminated what likely will be the central issue in the case: Was the federal loan RWD No. 4 acquired necessary?

“On balance, it’s very good news for the city,” Tideman said. “This is the first time that there was any in depth analysis of that issue.”

Eudora has annexed into the city in recent years property south of Kansas Highway 10 along Douglas County Road 1061.

Kansas State statute K.S.A. 12-257 states that when a city annexes territory served by a water district, the water district must negotiate a fair price for the city to acquire the territory and serve its residents.

However, RWD No. 4 filed a lawsuit against Eudora in September 2007 in U.S. District Court of Kansas City, Kan., under a federal law — 7 U.S.C. section 1926(b) — that states as a result of borrowing money from Farmer’s Home Administration, the district is protected from a municipality or private entity that would curtail or limit the district’s water territory or customers.

On March 9, United States District Judge Julie A. Robinson decision covering motions for summary judgment, which are motions from both sides that seek to prove there is no genuine issue and that the party making the motion is entitled to judgment as a matter of law.

The ruling noted that a Kansas rural water district can’t enter into an agreement with the federal government solely for section 1926(b) protection.

The city contends that RWD No. 4 secured a federal loan simply to protect the district from annexation, which RWD No. 4 Administrator Scott Schultz said was true. But he also said the loan would help the district maintain its facilities and water system.

As a result, Robinson said in the ruling that, “… there appears to be an issue of material fact as to whether the loan guaranty agreement was entered solely for 1926(b) monopoly protection.”

Robinson denied motions to exclude evidence of alleged deannexation threats made by Eudora City Administrator Cheryl Beatty to developer Doug Garber, and granted RWD No. 4’s motion to exclude evidence of the district’s obligation to provide fire protection.

However, Tideman noted that the jury’s verdict on the question of the loan is what will matter most.

“If that issue is decided in favor of the city then nothing else matters,” he said. “There are various issues that were decide d various ways, but that’s the most heartening part of the order.”

Though Tideman saw a ray of light shining through the clouds of previous rulings, Schultz said the ruling hadn’t changed anything in the context of how the water district’s attorneys would approach the case.

“If rural water districts couldn’t get loans to do business, they wouldn’t be in business because virtually every one of them was set up with a loan from the federal government when they started,” Schultz said. “I think that (the reason for getting the loan) will be kind of a non-issue.”

Possibly the biggest winner in the rulings was the First Southern Baptist Church of Eudora. The church became involved in the lawsuit when land where it planned to build its new facilities, located on 20th Street to the north of Eudora High School, was annexed into the city.

RWD No. 4 said the city’s annexation of the land prevented the district from serving the church. Though the land is outside the district’s boundaries, RWD No. 4 argued it could have plausibly served the church.

The ruling said the district could not prove it had a legal right to serve the property

“It’s been our position that our federal service territory extends beyond the boundaries of our district, and that continues to be our position even if the judge disagrees,” Schultz said.

Though the decision immediately benefited the church, which now can begin the process of preparing for construction, Tideman said it also benefited the city.

“The reason that was important to us was because that was an attempt for the water district to reach outside of its boundaries, and if they could prevail on that claim, then the city would have no idea what they could annex,” he said.

The trial date had been set for Tuesday, but a meeting to set a new trial date was postponed.


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