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No windfall for us, ELO says of BWD settlement

January 31, 2013
By JO ANN BOBBY-GILBERT - Staff Writer (jgilbert@mojonews.com) , Morning Journal News

EAST LIVERPOOL - What may seem to be a hefty windfall for the city with the recent finalization of a lawsuit against Buckeye Water District really isn't, according to city officials.

After nearly eight years of court battles and appeals, the city was recently awarded $6.2 million from BWD, which was sued for breach of contract after its board decided to stop purchasing water from the city as it had agreed to do.

Although the city is the actual recipient of the total award, what that money can be used for is severely limited, according to Auditor Kim Woomer.

Because the contract breached was for the sale of water, all of the court award must go into the water department fund, not the city's general fund, Woomer said.

"The city could take the interest, but it won't, since the water department gave us $1 million," Woomer said, adding that the interest paid in the court case amounts to between $300,000 and $400,000.

The $1 million to which Woomer referred is the amount the city is owed by the water department for a water line project completed in 2005-2006 for which the city obtained a loan, instead of using water department funds.

Of that amount, $550,000 will, in turn, be repaid to the Community Improvement Corporation (CIC) and 1st National Community Bank for money loaned to the city to finalize the purchase of the former Riverview Florist property.

The CIC loaned the city $95,000 from its mineral lease funds and also secured a $455,000 short-term loan from the bank which was then loaned to the city, with the expectation of repayment once the water department repaid the $1 million to the city.

So, essentially, the city's general fund will see none of the $6.2 million until the water department repays the $1 million owed.

The $450,000 remaining from the $1 million once the CIC is repaid could be used in a number of ways, according to City Council's finance Chairman Sherrie Curtis, who said several specific uses have been discussed, with none yet decided upon.

Thus far, none of that money has been appropriated because it has yet to be received, Curtis emphasized.

The water department will be able to use the rest of the money for a variety of projects, Woomer said.

"It's a big windfall for them," she noted.

The water department will have to use some of the $6.2 million to pay $383,884 in legal fees related to the court battle with BWD, which includes the cost of attorneys and witness statements, Woomer said.

In addition to the money paid to the city for the court case, the BWD is also paying out of its coffers the cost of its legal fees, according to district fiscal officer Tony D'Angelo.

He estimated $129,049 has been paid to the district's attorney Fred Emmerling for the case, while another $440,886 has been paid to the law firm of Stumphauzer & Toole.

 
 

 

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