A crowd of more than 200 people filled the banquet room at The Hunt Lodge to ask questions about how the city of McCall plans to extricate itself from a $6.5-million court judgment.
Members of the McCall City Council listened to the questions and city officials provided answers the best they could, but the evening ended without a plan to pay off the debt.
The town hall-style meeting was called to review the city's options to pay the judgment, which followed a 2004 trial over firing by the city of two contractors who were hired to build the giant J-Ditch sewage storage pond.
A jury said the city and its engineers mishandled the project and awarded the companies $5 million. Attorneys' fees and interest have ballooned the amount to $6.5 million, Mayor Bill Robertson announced to the crawl.
Last mouth, U.S. District Judge B. Lynn Winmill has ordered the city to pay the judgment "immediately," leading to urgent meetings by the council on how to proceed.
No testimony taken
City officials led off the meeting with a background presentation and then asked residents to fill out index cards with questions. No testimony was taken from the audience.
The cards were passed forward and reviewed by attorneys for the city, who then passed them off to Mayor Bill Robertson. The mayor then handed the cards to City Manager Lindley Kirkpatrick to read and answer.
About half the questions that were handed in received answers at the meeting. The city will answer every question on its Web site soon, Kirkpatrick said.
Many questions expressed ignorance to how the city got in the present situation in the first place. One question asked what the jury and judge saw that led to the judgment against the city.
"What the jury found was that the city was wrong in the way it handled the contract with St. Clair," Kirkpatrick said. "In a lot of ways exactly how we were wrong doesn't matter, we were wrong and we have this judgment in front of us and we need to solve it."
One resident asked how bankruptcy would affect the city's ability to sell bonds to build a planned wastewater treatment facility to meet McCall's future growth needs.
"It will have surprisingly little effect on our future ability to borrow money," Kirkpatrick said.
Another resident asked why the city was paying its attorneys millions of dollars when the outcome of the case was a complete failure for the city.
Kirkpatrick pointed out a graphic that showed the judgment against the city and the 3-percent cap allowed by state law on property tax increases.
"The difference is worth fighting for in my opinion," he said.
City can raise $600,000
The city can raise an additional $600,000 in property taxes under the 3-percent annual cap in state law, Kirkpatrick said.
The amount is less than one tenth the total of the judgment. Winmill's order says the city
should raise all the funds in one year.
"All the experts we've talked to with very few exceptions disagree with the judge's decision," Kirkpatrick said. "The federal judge has carved out an exemption in the state law that the legislative body of work doesn't support."
Affordable housing was raised in a question about what would happen to the city's rental market if taxes were raised.
"That is something of great concern to the council," Kirkpatrick said.
Many questions were fielded that asked where the original federal grant money went to pay for the construction of the J-Ditch pond.
Kirkpatrick said that all funds were used to pay for the construction. He said after the meeting that a full disclosure of what money was spent on the project would be the first question the city answers on its Web site.
Many citizens wanted to know how the city would protect McCall taxpayers.
"By ensuring that we are not forced to collect more property taxes than the state law allows us to collect," Kirkpatrick said.
Many questions suggested possible solutions. Some asked if the city could sell its nine affordable homes on McCall Avenue. Another question asked if the city had any capital improvement projects it could put off to another year and declare the funds as surplus to go towards paying the judgment.
Kirkpatrick said most of the city's capital improvement projects are tied to dedicated funding that could not be used to pay off the judgment, such as the city's nearly $5-million urban renewal project at Legacy Park.
One question asked if property around Payette Lake could be annexed to increase the tax base and lessen the tax burden on city residents.
Kirkpatrick said it was unlikely that such an annexation could be done in time to satisfy the judgment by getting on the tax rolls in time.
Another resident asked about a sales tax to spread the burden to visitors to the city.
Kirkpatrick said that the city's current Local Option Tax, which taxes hotel rooms and other short-term rentals at 3 percent, does not allow for the money to be spent on the judgment.
Another question asked if former council members and city staff could be held personally liable for the judgment.
"The answer is highly, highly unlikely," Kirkpatrick said. "There is only one very remote avenue that gets to that possibility." He did not specify further.
Another question wanted to pinpoint who was advising the city not to pay off the judgment through the years.
"The folks who made those decisions aren't the ones making decisions today," he said.
