Dont be fooled by Forest Groves shell game
If the verdict is upheld, the city would be on the hook for another $1.5 million.
'Don't worry, Aldie, if we have to pay, the money will not come out of the general fund.'
That was the comment Forest Grove Mayor Peter Truax made to me at last month's Annual Town Meeting.
He was referring to paying the $6.5 million dollar verdict against the city for abuse of power handed down by a federal District Court.
'We will pay $3 million out of our Capital Projects Fund and the $5 million from our insurance policy,' he continued. The total then would be $6.5 million plus $1.5 million for attorney fees.
When Mayor Truax suggests that I not worry, guess what? The inference is that no 'taxpayer money' will be used to settle the suit, but he is misleading us.
The money referred to in the Capital Projects Fund came from the sale of the Forest Grove Waste-water Treatment facility to Clean Water Services (CWS).
I am not sure of the date of this transaction but originally the waste-treatment facility was built using a municipal bond of some sort. That bonded indebtedness was paid off using taxpayer's money either through the rates charged for sewer or as a monthly assessment.
As the cities and the county grew, the waste-treatment capability was overwhelmed, which culminated in a ban on all development in Washington County for a period of approximately three years starting in 1969. The United Sewerage Agency was then formed to treat all waste-water from all of the cities in the county.
In the process, our facility was incorporated into the larger agency and we were paid $3 million dollars for it. (USA later changed its name to Clean Water Services.)
Note that the taxpayers paid off the initial, construction bond. Therefore the taxpayer's money is now the Capital Improvements Project fund.
Mayor Truax and the council are almost correct: the money to pay off the verdict will not come out of the general fund but from a fund created with taxpayer's money from the sale of our property. How clever is that?
My concern is that once the city depletes the Capital Improvements Projects fund, there is no immediate way to earn money for parks, new buildings, streets.
The public loses two things: the money and future improvements.
Now consider the $5 million dollar insurance policy the city has with WSC Insurance. The policy is a co-operative venture entered into by several cities in the area as sort of self-insured company.
The member cities participate and as such all will share in the cost of a sizable payout if in fact the city is forced to pay what the jury awarded the plaintiff, plus attorney fees.
Mayor Truax has stated that the insurance will pay off the full amount, but is that correct? I doubt it. Insurance companies are loath to pay anything and in this case a large payout will effect all of the members of this co-operative and all of the premiums would most assuredly increase.
Mayor Truax also suggested that if the present appeal is rebuffed at the district court level, the verdict will then be appealed to the 9th Circuit Court. That verdict might take two years to be handed down. Remember that the chance of the verdict being overturned by the higher court is only 15 percent which means 85 percent are upheld.
He also noted that interest on the award does not amount to much, but he failed to note that attorney fees would increase dramatically.
If the verdict is upheld, the city would be on the hook for that increase which could amount to another $1.5 million dollars. I have said this before and I'll say it again, now is the time to negotiate a settlement.
It is obvious that the mayor, the city council and the city staff would like to see this matter disappear.
This same old rhetoric -a conspiracy among the jury members, an unjust verdict and we bend over backwards to help the developer - was again the theme of Mayor Truax's remarks.
The only new wrinkle was that the pea had been moved under another shell.
Aldie Howard lives in Forest Grove.