Bond election discussed, mandate ordinance killed

Seeley Lake Sewer Board

SEELEY LAKE – The Seeley Lake Sewer District Board continued discussing holding a bond election and rejected an ordinance reinforcing a resolution mandating connections at its Sept. 17 meeting. The Board also received a proposal that would keep the District from having to pay $350,000 in legal bills to defend the District from Don Larson’s lawsuit.

In other business the Board approved paying its past due legal bills after negotiations, the Board gave a landowner a letter stating it wouldn’t initiate annexing their property and Director Pat Goodover was asked to resign.

Bond election

The Board continued discussion of holding a bond election that started several months ago as a compromise to gain support for the project from newly elected President Tom Morris and Director Jason Gilpin who campaigned on putting the project to a vote of the people.

The District’s Bond Council Dan Semmens presented the idea of having a bond election and changing how the proposed sewer is financed from Special Assessments to a General Obligation bond to address the new Directors’ wishes for an election. It would also help with the affordability for low-income residents.

Semmens has been trying to identify the taxable value of the District for calculating the impact on properties. He has also been working with the engineers and representatives from the funding agencies regarding the allocation of the costs between the sewer treatment plant and the Phase 1 of the collection system. The treatment plant portion of the funding will be spread across the entire District while the collection system portion will be only spread across Phase 1 landowners.

Under the current proposal for using Special Assessments to pay off the debt, every lot in the District would pay a maximum of $30.06 per month for the treatment plant.

If a bond election were to pass, the rates would be based on the taxable value of each property. Semmens estimates show that a house with a Department of Revenue market value of $100,000 would pay $10.69. A $200,000 market value house would pay $21.38 and a $500,000 home would pay $53.44 per month.

For the collection system, properties in Phase 1 would still pay an equal amount of approximately $25 per month. All properties connected to the system would also pay an operating and maintenance fee currently estimated at $70 per month after subsidies in Phase 1.

In order to proceed with the proposed election day of Feb. 23, 2021, the Board must sign a resolution calling for a bond election by the end of November.

The October Board meeting was bumped to the fourth Thursday in order to give Semmens more time to have a draft resolution to hold a bond election available for discussion.

Ordinance to mandate connections

The Board considered an ordinance written to give a resolution from last year mandating connection to the sewer system more teeth.

Goodover said the ordinance would help clear up one of the questions that some of the funding agencies have been hung up on, will people hook up to the system?

In the last Letter of Conditions the District received from the US Department of Agriculture Rural Development regarding the main slice of funding, the District was to collect approximately 150 user agreements. This was stated as having the purpose of showing support for the project and showing the system will be put to use. It is also key to getting the cost of operating and maintenance down.

An enforceable mandate to connect could help guarantee the system would be put to use and spread the cost across as many properties as possible.

Morris didn’t think the District should be coercing people into connecting and felt that it was violating their property rights.

Director Walt Hill moved to pass the ordinance and Goodover seconded it. The motion failed with Hill and Goodover voting in favor and Morris, Gilpin and Director Beth Hutchinson voting against it.

Lawsuit insurance coverage

The Board reviewed a proposal for an Assignment of Rights and Claims agreement from its former insurance company, Montana Association of Counties Property Casualty Trust (MACo), regarding their insurance coverage on the lawsuit filed by Larson in 2018.

The District was covered by insurance through MACo that expired on July 1, 2018 and then a policy from Cincinnati Insurance Company after that. An issue arose because Larson’s lawsuit was filed in June of 2018 but the District was not informed of the lawsuit until August of 2018. The District informed MACo after it learned of the suit.

The MACo policy states that its coverage is based on the date in which it was notified of the lawsuit. Since coverage had expired July 1 and MACo was not notified until August there was no coverage. Cincinnati subsequently refused to provide coverage because the District did not notify them when the lawsuit was filed.

Despite the lack of coverage, MACo paid the legal defense bills with the understanding that it could seek reimbursement for those costs from the District. The District received a letter from MACo dated July 28, 2020 after the suit was dismissed asking the District to reimburse approximately $350,000 that MACo paid to Beal Law Firm for defending the District.

In the proposed Assignment of Rights and Claims, MACo offers to go after Cincinnati for the legal bills and agrees to not seek reimbursement from the District. MACo argues that Cincinnati should pay the defense bills because their policy requires the District to “do an impossible thing” in reporting the claim when the lawsuit is filed. The proposal goes on to explain that in Montana a complaint may be filed with the court but not served to the defendant for up to three years.

District Manager Jean Curtiss recommended the Board have an attorney review the proposal before signing it and said that MACo was aware that the Board was still in the process of hiring one.

Other business

Curtiss was able to negotiate some on the District’s legal bill from Beal Law Firm for Board business. She said they would drop the final amount owed from approximately $21,000 to $20,000 and not charge interest. The District could also make three payments.

The Board voted unanimously to make the payments.

A landowner adjacent to the District contacted Curtiss with concerns that if they were annexed in the future they would be forced to abandon a new septic system they plan to construct.

The landowner plans to install a state approved Level 2 nitrogen-reducing SpeticNET system that meets the same nitrogen discharge levels as the Sewer District’s proposed treatment plant. The landowner is being required to install this system to meet restrictions imposed by the Missoula City-County Health Department due to being in the Seeley Lake Special Management Area.

The landowner did not want to invest in an expensive septic system if the District would then annex them.

Curtiss asked Health Department Sanitarian Jim Erven how long he expects the SepticNET system would last.

“I expect that system to last a really long time. I think the first thing that’s going to fail on that system is probably the drain field. But boy, I would expect that to last quite a long time especially with the soils [on the property],” said Erven.

The Board voted unanimously to send a letter stating that the District would not initiate annexation as long as the landowner’s system was properly functioning.

In public comment, District resident Troy Spence asked if Director Goodover would resign from the Board over actions Goodover took as President last spring. Spence said that the Board did not approve moving forward with a lawsuit against newly elected Directors Morris and Gilpin but Goodover proceeded anyway. That lawsuit was later withdrawn by the District but cost the taxpayers approximately $15,000.

“No, I’m not willing to resign over it. And [the lawsuit] was authorized in a special meeting of the Board, a closed meeting,” said Goodover.

The next regular meeting is scheduled for Oct. 22 at 6 p.m. Check the District’s website for information on how to participate.

 

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