Utility board settlement blocked by legal action
by Daniel Gaddy
Jun 10, 2012 | 1657 views | 0 0 comments | 6 6 recommendations | email to a friend | print
CARBON HILL — The mayor and city council members recently voiced their disappointment with a legal challenge to a $41,980 settlement between the city and the Carbon Hill Utilities Board.

"We came to a very fair agreement with the decision yesterday," said council member Chris Pschirer during Thursday’s city council meeting. "It's just a sad day in Carbon Hill when we cannot have grown men and women sit down and make a decision to move this city forward."

City officials hammered out the $41,980 compromise during a joint work session Wednesday. It was designed to satisfy debts the utilities board owed the city for unpaid health insurance premiums and a disputed franchise fee for the city’s water system.

During the council meeting, however, Hart announced that city leaders received an injunction seeking to stop the council’s approval of the settlement. The legal block was from an attorney representing three former members of the utilities board: Jerry Nelson, Milton Jackson and Joe Killingsworth.

The three men, as well as board member Pete Bray, were removed from the five-member board during a single council meeting in January. At the meeting, Hart read a prepared statement charging the four board members with refusing to provide public information and refusing to pay the franchise fee.

The former board members denied the charges and filed suit against the city, saying they were improperly removed from their posts. However, Bray has stopped pursuing the matter in court since he was reinstated to the utilities board.

During Thursday’s meeting, Hart said the city’s attorneys advised him not to approve the settlement in light of the injunction.

Hart also criticized the former board members’ attorney, Russ Robertson, saying the Jasper lawyer is behind half of the lawsuits filed against the city in the last three years.

"All he is doing to the City of Carbon Hill is robbing the citizens blind with frivolous lawsuits … He's hurting our city, and he's stopping progress from taking place in our city," Hart said.

Robertson said he has filed three different legal actions representing five different parties who have had their rights violated by the City of Carbon Hill. He said two of those actions have been settled and one is still pending.

In regard to the injunction, he said that he and his clients feel the settlement should be decided by either a “court of competent jurisdiction” or the rightful utility board members.

"All they want is their proper position on the board,” he said. “They're not seeking to affect the operations of the city in any way, and I'm certainly not interested in doing that."

Robertson said the suit is far from frivolous and raises legitimate questions about the validity of the franchise fee. He said city leaders have had four months to show where the franchise tax originated, and they have not yet done so.


During Wednesday’s joint work session, city officials struck a deal that was to have the utilities board paying $41,980 to the City of Carbon Hill.

Attending the meeting were Hart, council members Jacques Allred and James Johnson as well as utilities board members Ronnie O’Rear and Pete Bray. Pschirer, a member of both the council and the utility board, was also present.

Each of the officials expressed their hopes that a compromise could be reached, saving the City of Carbon Hill in legal fees associated with resolving the matter in court.

“And, if we drag this out, we are going to have to go up on (water) rates,” O’Rear added.

In January, the council was notified that the City of Carbon Hill owed nearly $100,000 in unpaid health insurance premiums for municipal workers.

Pschirer said city leaders were able to reduce the bill. However, the utilities board still owes the city $17,890 for unpaid health benefits for two employees who started work sometime before 2006.

“It’s like the city said, ‘Here’s a bill. Sorry we dropped the ball,’” Pschirer said during the negotiations.

The rest of the settlement concerned tax revenue the utilities board had collected more than a decade. Though it charged residents for the franchise tax in their water bills, the board did not turn the funds over to the City of Carbon Hill.

Auditors discovered the discrepancy in August of 2011, and the utilities board began paying the city the fee.

According to Alabama law, the City of Carbon Hill can only reach back five years in demanding back payment for the franchise fee.

During the meeting Wednesday, Pschirer brought spreadsheets detailing the amount collected in the last five years for the franchise tax. That figure was $56,743.

While some initially felt the board should pay the full 5-year amount, others believed the board fulfilled its duties by starting to pay the fees once auditors discovered the mistake. On Wednesday, however, the officials at the meeting settled on $24,000 as a compromise, bringing the total settlement amount to $41,980.

At the end of Thursday’s meeting, Pschirer said he and the council regret that a final agreement could not be reached.

"I just want to apologize to the City of Carbon Hill that we can't seem to move forward for having to go through decisions that have been made six months ago," he said.