It was reported that the "lawsuit" workshop did have many interesting facts presented.
Apparently the city is involved in four separate legal actions. The lawsuit with AET (Arkansas Emergency Transport) is being delayed because of criminal charges it will move forward once the criminal charges are dealt with. We presume that the criminal charges are related to the driver that showed up on a call in Sherwood under the influence of medication and lack of sleep.
The North Little Rock Electric ruling is a very double edged sword for the city. On the one hand Judge Fox ruled that we do have the autonomy to select our own utility provider but on the other hand we may be forced to pay out $2 million in "franchise fees" plus attorney fees. The attorney representing First Electric would like to appeal the case to the supreme court regarding the fees but no action has been taken yet by the council. Although having a different electric provider would provide for better rate regulation through the Public Service Commission, there is no real, considerable difference in the rates being offered by First Electric. The City of North Little Rock has placed a inflated price on their infrastructure but has made an offer to fore go collecting the fees and attorney fees if we'll stick it out with them. The real question is, once the hydro electric dam bonds are paid off, would the City of Sherwood get a lower electric rate for the 6000 customers that are served? It's not an easy decision and one that we hope that the council will really research before making a decision.
On to the North Hills Country Club property.... The federal case (for damages) has been issued a stay until Judge Fox (the same judge in the North Little Rock Electric case) hears and a jury decides the fate of the purchase price. Attorney's recommended that the City pony up at least $1 million to put down on a bond issue and that the public facilities board and council should move swiftly prior to trial (at the end of July) so that a funding mechanism is in place.
It's a dangerous thing in this economy to gamble with 50% of the city's reserves. But, there is another option: If the City went with private financing they may be able to secure an even better rate, but, there is a catch: it would require a vote of the public since the City would be the party encumbering debt. Several issues were brought up... If the jury comes in with a figure of six (6) million, the city won't be obligated to purchase, but, then it would give more ammunition to the property owners to sue for additional damages. The numbers between the City and the property owners are way off from one another and no one knows what a jury will think. They could come in line with the city at around $2.2 million or they could side with the property owners at over $5 million. These numbers are only for purchase and not improving the property or developing it into a water park or installing hiking trails or a public lake. The water park in Jacksonville had a price tag of $2.5 million. So, worse case scenario, the City pays $5 million to purchase, then adds an improvement rolled into a bond issue that could be upwards of $8 million. It will take decades to have receipts large enough to pay back this bond issue with a potential price tag that high.
These are some very difficult and complicated issues facing the city council. And, we all hope that they think through things very carefully, and make a decision based on sound business principles instead of personal agendas. Regardless of our individual personal beliefs about saving green space or preserving what many consider a landmark, we must be ruled by logic and what we can truly afford. These are difficult economic times, and we as a Nation, a State and a City, must be as frugile as we are able to prepare for an uncertain future and economic turnaround. We really need mindfull leadership by the council.
We wish the city luck in dealing with four separate lawsuits, and, we also wish that it didn't take lawsuits to get things settled between disputing parties in this town. The real loser in all of this, in our humble opinion, are the citizens of Sherwood who undoubtedly will be paying tens of thousands of dollars in legal fees if we simply didn't bully in our leadership on the council instead of sitting down and being civil and coming up with solutions instead of allowing our politics to spawn lawsuits.
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9 comments:
I'm afraid the economic concerns don't take into account the different micro-economic situation.
Best figures I can find indicate that the average Super Center generates between $75 million and $100 million in sales. With large presence on Wal-Mart in the area, Wal-Mart sales in Sherwood are more likely going to cannibalize sales at the North Little Rock and Jacksonville stores as well as the now closed Levy store and possibly the Target store on McCain that many use as an alternative since the McCain Wal-Mart shooting incident. Neighborhood Market may see some loss of sales.
So conservative estimate, we should see an extra $50 million to $75 million in sales at the new store that are new to the micro-economy of Sherwood or a net gain of $500,000 to $750,000 in sales tax revenue.
That replaces a lot of that reserve quickly.
I appreciate the figures that you are presenting on potential sales tax receipts Mark from WalMart.
Here are some weaknesses in your argument:
1. You haven't factored the additional costs of providing basic services to Gravel Ridge.
2. You haven't factored in the increasing additional budget costs associated with ever escalating gasoline and diesel fuel costs for our Police, Fireman, Public Works and other departments that have vehicles.
3. You also haven't factored in the slow down in franchise fees returned to the City by NLR (a loss of about $600k per year)because of the lawsuit.
4.We also can't really factor in what the costs will be when the 2000 acres behind LRAFB will be developed and how much running sewer and water lines several miles in order to place them into our city services system.
5. The price tag for purchase and improvement also does not cover items like maintenance, the cost of new equipment to maintain the premises, additional costs for liability insurance or the costs for employees and their benefits.
6. One huge factor that is looming financially for us is the immediate need to upgrade our sewer facilities. Although the City does have reserves for sewer improvements via the sales tax that was collected those fees will more than likely be eaten up by the state mandate to improve.
7. And, we also have to be realistic about the fact that new construction permits, another stream of income for the City are also way down.
8. Also, we don't know how many tens or hundreds of thousands of dollars that fighting four lawsuits will cost us all, the lawsuits are far from over.
Now, with all of those realities and concerns in mind, do you really think that WalMart is going to be our saving grace financially? And, do you really feel that since we'll have no net gain because of not being returned the NLR Electric franchise fees, that this is a viable economic decision? Would you personally spend 50% of your savings when you know that you might not be able to recoup or rebuild that savings? I think not.
What are we agruing about? I must have missed something because I am not following the conversation other than just a debatable issue.
Sometimes there is no avoiding lawsuits.
1. AET. They never should have been renewed and certainly needed canceling. City did the right thing terminating and the lawsuit is just AET wanting to get paid for not getting to continue their sub-par service.
2. NLR Electric. Status quo was fine when NLR had great rates. When the chance came to bring better rates to new parts of the city, NLR didn't like it and sued. That led to the current suit to get out from under NLR Electric and its short-sighted management that used its revenue to fund the city of NLR rather preparing for increased demand.
3. Golf course if you are going to buy it, you have to sue if the owner wants something other than the appraised value.
4. Their lawsuit against the city has no merit if the council takes action rather waffling around waiting for the post-Stedman mess to clear up.
Outta four, I've got no problem with three of them.
Hey, Dandydan welcome to the blog by the way..., which appraisal are you talking about? The one that the city paid for at $2.2 million or the owner's of the property at $5.0+?
I agree with you about the NLR electric suit, but, what about when that hydro electric dam bonds are paid for? Couldn't it be possible that their rates might actually become lower than Entergy or First Electric? Just wanting the council to really research their decision before the suit moves up to the Supreme Court.
I just think that sometimes lawsuits can be avoided, especially when actions create them instead of solutions and compromise being offered.
Yes it is possible once the hydro project is paid for that NLR electric will have lower rates. It is also possible that NLR could choose to leave the rates alone or barely reduce them to re-line city coffers as they used to do.
It is also possible that Sherwood having the ability to move to 1st Electric will prevent NLR from choosing to offer a non-competitive rate.
Here's the thing to me though.
With Entergy and 1st Electric the state Public Service Commission will provide consumer protection and audit the utility to make sure they aren't making an unfair profit. With NLR Electric our consumer protection is provided by the NLR City Council.
Based on what I am hearing and reading, it looks like the best thing to do with the Electric lawsuit is to settle with NLR Electric. Also, either get a long-term Franchise agreement in place or quit collecting the Franchise Tax on the Sherwood customers. It is an illegal exaction of taxation to be collecting a tax without a contract to authorize. It looks like Sherwood had better get this one settled quickly. Every month without the agreement is a substantial Franchise tax they are losing.
My franchise "fee" was $13 last month.
Forget settling and locking into 7 years of high priced mis-managed electric service.
Win the issue on appeal, the city gets the franchise fee. Lose the franchise fee on appeal and I get a refund of the franchise fee I've been paying. NLR will NOT be able to keep it.
Sounds like a win-win to me.
I agree the customer is going to end up with the Sherwood version of the government "stimulas" checks for the NLR Electeic customers.
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