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PUBLIC WORKS AND PROPERTY VACATION SEPTEMBER 8.2008
<br />AND UTILITIES
<br />Public Works and Property Vacation Committee Members Present: Chairperson David Varner,
<br />Derek D. Dieter, Tom LaFountain, Henry Davis, Jr.
<br />Utilities Committee Members Present: Chairperson, Oliver J. Davis, Ann Puzzella, Tom
<br />LaFountain, Tim Hudak, Citizen Members
<br />Councilmember's Present: Timothy A. Rouse, Karen White
<br />Others Present: Rita Kopala, Jamie Loo, Gary Gilot, Mayor Stephen Luecke, Catherine Fanello,
<br />Derek Spier, Jennifer Laurent, Marty Wolfson, Marco Mariani, Jeff Gibney, Jim Bognar, Catherine
<br />Andres, John Leszczynski, Bob Mathia, Jitin Kain, Paul Meyer, John Tarwacki, Greg Conrad,
<br />Linda LaMont, Tom Price, Mark Smith
<br />Chairperson, David Varner, Chairperson, Public Works and Property Vacation Committee and
<br />Chairperson, Oliver J. Davis, Utilities Committee, called the joint meeting to order at 3:30 p.m.
<br />BILL N0.54-08 -APPROPRIATE -PUBLIC WORKS SEWER GENERAL OPERATING FUND
<br />N0.641 TO PAY COMPROMISE JUDGMENT
<br />Aladean DeRose, Chief Assistance City Attorney, City of South Bend Legal Department, 14tH
<br />Floor County-City Building, 227 W. Jefferson Blvd., South Bend, Indiana, made the presentation
<br />for this bill.
<br />Ms. DeRose advised that on February 14, 2008, the St. Joseph Superior Court entered a
<br />judgment against the City of South Bend in the sum of $614,725.64 The Court found that the City
<br />had improperly charged its non-resident Clay Utilities customers for debt service after the City's
<br />debt to acquire Clay Utilities had been paid and retired. Both the City and the rate payers asked
<br />the Court to reconsider its decision. The City claimed that the Court exceeded its power by
<br />altering and existing utility rate schedule; the class members claimed the City owed prejudgment
<br />interest of $304,229.85. The Court denied both requests and affirmed the priorjudgment of
<br />$614,725.64 on May 12, 2008. She noted that presently, this case is in the process of appeal to
<br />the Indiana Court of Appeals. If the City were to prevail on appeal, the result would be a $0
<br />judgment. If Clay customers prevail, the judgment would be in excess of One Million Dollars
<br />($1,064,953.49 to be precise) plus post judgment statutory interest at 8% from February 14,
<br />2008. As of August 14, 2008 post judgment interest alone is about $24,600. Ms. DeRose stated
<br />that considering the financial risks of an adverse judgment notwithstanding. The City's firm belief
<br />in the merits of its legal position, it is wise and prudent to resolve this dispute. The City's Legal
<br />Department and attorneys for Clay Utilities have agreed to settle this claim in full for the sum of
<br />$710,000 subject to Court approval. Hearing on the Court's approval is set for September 8,
<br />2008. This ordinance will authorize the appropriation of funds necessary to pay the agreed
<br />settlement promptly on Court approval. The Sewer Works General Operating Fund No. 641 has
<br />sufficient funds to pay this sum.
<br />Gary Gilot, Director, Public Works, 13'n Floor County-City Building, 227 W. Jefferson Blvd., stated
<br />that he recommends favorably that the compromise judgment is a fair compromise to resolving
<br />this dispute.
<br />There being no one else present wishing to speak in favor or opposed to this bill. Councilmember
<br />Dieter made a motion to recommend this bill favorably to full Council. Councilmember Oliver
<br />Davis seconded the motion which carried.
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