The Lake Today

Miller County Circuit Court Judge Stan Moore overruled a motion to dismiss a lawsuit against the City of Eldon by 15 Eldon property owners over alleged discriminatory water and sewer rates during a hearing Thursday morning at the Miller County Courthouse.

At the hearing, Judge Moore reviewed an amended petition filed in court Dec. 12, 2011 and after overruling the defendant’s motion to dismiss gave the City of Eldon 30 days to file their answer and any additional information to their case at the Miller County circuit court.

As previously stated, Mayor John Holland said at this time he and city representatives cannot comment on the case until it is resolved.

The amended petition came after Miller County Circuit Court Judge Kenneth Hayden sustained a petition to dismiss all eight counts of a lawsuit filed against the City of Eldon over water and sewer charges during a hearing held Nov. 10 in Miller County Circuit Court. Hayden had given the 17 original plaintiffs 30 days to file an amended petition. Since Jan. 3, two plaintiffs – Dennis Bond and George Hardcastle – have been voluntarily dismissed from the lawsuit.

“It is just unreasonable what the city has done,” Plaintiff Attorney Audrey Ellen Smollen previously told The Lake Today. “They don’t realize or don’t care they are closing down businesses, ruining people’s retirement, causing people to move and have landowners losing tenants. But the most unreasonable thing is they are not even trying to understand and work with understanding of where these people are coming from.”

The lawsuit was originally filed on April 21, 2011, alleging the City’s newly designed water and sewer rate structure, which went into effect December 2010 last year. was in violation of the Hancock Amendment of the Missouri State Constitution, among seven other counts.

According to a definition of the Hancock Amendment by the University of Missouri, “property taxes and other local taxes and state taxation and spending may not be increased above the limitations specified herein without direct voter approval as provided by this constitution.”

However, according to the defendant’s brief in support of its motion to dismiss, in which Hayden sustained all counts, this claim, or Count 1, “should be dismissed as the ordinance complained of is not subject to a Hancock analysis … and even if it were, it would show the fees complained of to be a fee, not a tax. Additionally, plaintiffs’ lack standing to challenge the City’s rates as a tax as they did not follow the proper procedure of Section 139.131 RSMo for disputing an alleged tax … any increases in such a fee are not considered an increase for the purposes of the Hancock Amendment.”

According to the amended petition, the plaintiffs ask the Miller County Circuit Court to enter and order the following:

• declaring the ordinances void as a special tax prohibited by Mo. Const. article III (40);

• declaring the plaintiffs are not required to pay the amounts demanded by the City for water and sewer service in excess of lawful costs of such service;

• declaring that plaintiffs are not required ot pay the excessive water and sewer charges based on meters that are disconnected or otherwise not in use;

• declaring that plaintiffs are not required to pay excessive water and sewer charges based on the number of units serviced by a single meter rather than on the meters that actually exist;

• directing the City to recalculate its past, present and future water and sewer works service rates and fees based on the City’s actual costs to provide waterworks and related services;

• directing the City to refund the overpayments it has received by virtue of the Vacant Meter Ordinance and Virtual Meter Ordinance that are in excess of its actual costs;

• awarding plaintiffs costs and expenses, including reasonable attorney fees; and

• granting such other and further relief as this Court deems just and proper in the premises.

Because of an aging system and needed improvements to meet Department of Natural Resources (DNR) regulations the city worked out a 10-year plan to improve its sewer and water systems. A part of those improvements included a reworking of the user rate structure.

Among the improvements to the water system required by the DNR were enhanced flow for fire suppression and to domestic dwellings, replacment of problematic water mains, tower and well improvements and a plan for handling emergency repairs.

Sewer improvements, also scheduled under the DNR’s direction, were the collection system rehabilitation, extending the sewer to unserved areas, reducing the amount rainwater that gets into the system and a plan for handling emergency repairs.

The city has been running the utility system at a deficit for several years. For instance, in 2009 the city ran the water system at a $60,000 deficit, but this past year that deficit jumped to $194,160.

To handle these shortfalls and meet the DNR’s deadline, city officials determined that a rate increase was necessary.

Mayor John Holland told The Lake Today, in February 2011, the city held a work session, public hearing and the Board of Aldermen purposely waited to do a final reading of the rate increase ordinance to give the public time to ask questions and state their opinion. Holland said at that time although “quite a few” people attended the public hearing very few spoke in opposition to the increase.

City Administrator Frank Schoneboom previously told The Lake Today in a February 2011 article the city conducted a study to determine what it would require and how much it would cost to complete the 10-year improvement ordered by the DNR. The results of that study determined that the cost of the completely rehabbing the aging system to meet DNR standards was approximately $6 million.

The increased rates will allow the city to meet its water system needs during the 2011 fiscal year. Expenditures and income for 2011 is at the break even point when it reaches $640,000, however in order to meet DNR standards the city must also set aside a reserve fund of $100,000 for new construction.

In the study, Eldon’s new monthly water and sewer rates for residential, in-city users were comparable to Lake Ozark and Shawnee Bend and slightly higher than Osage Beach and Horseshoe Bend. Schoneboom also said at the time of the February article city officials spoke with a number of other cities of comparable size around the state before making a final determination on exactly how to structure the new rate system.

The plaintiffs who are currently listed on the amended petition are Delbert Hayes, Robert Dunstan, Kimberly Tompkins, Timothy P. King, Virgil Clark, Joan and Glen Jungmeyer, Doug and Debbie Parkhurst, Dennis and Linda Killday, Michael and Kim Knopf, and Bill and Jean Koebel.