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Lawsuit Resolved…City of Lamar and ARPA Reach Agreement

 

 

The City of Lamar and Arkansas River Power Authority have been attempting to reach a settlement regarding the Lamar Repowering Project for several years and the Lamar City Council approved a resolution for the settlement agreement in principle with the power supplier. The city council brought a suit, Case 31, against ARPA in Prowers County District Court in 2014 for breach of contract in several areas when it was determined the coal fired power plant would not operate up to expectations.

One attempt at mediation fell short in the offer as other ARPA member communities had voted against the settlement. All ARPA member communities had to reach unanimous agreement otherwise the settlement would not be resolved and La Junta voted against the settlement this past spring.  That still left mediation on the table before another trial date would have been set between both parties, most likely, in the spring of 2018.  ARPA is comprised of Lamar, La Junta, Las Animas, Springfield, Holly and Trinidad.

This past February and again on August 15th and on August 20th, ARPA and the City of Lamar met in mediation.  On the 20th both parties reached an agreement in principle to resolve all disputes related to the Lamar Repowering Project including all claims that were asserted or could have been asserted in the litigation.

Mayor Roger Stagner, at the November 13th council meeting, outlined the general settlement stating that the City of Lamar would receive $1,500,000 up-front from ARPA and within 18 months from the first payment or the successful refinancing of the ARPA bonds, which ever came first, the city would receive $1,000,000 from ARPA.  Stagner said, “These payments will effectively take care of the litigation costs the city incurred in the lawsuits.”  He said the city will receive some properties at the Repowering Project site as well as ownership of the two coal domes.  “The city will have the ability to sell them if it can, or to have them repurposed,” he explained, adding that after five years the city has the authority to have ARPA tear down the domes and remove them at ARPA’s cost.  ARPA will also be required to restore the property to its condition as it existed at the commencement of the term of the Lease Agreement.

In addition to the two initial payments, the City of Lamar will also receive $350,000 per year for the next 26 years from ARPA for a total of $9,100,000. This is a financial improvement over the proposed first settlement of a single $1,000,000 payment from ARPA as well as $33,333,333 for the 26 year period as compensation for the loss of the Unit 6 turbine owned by the city.

Stagner reminded the council that Lamar was the one member of the ARPA municipal membership which refused to re-affirm the organic contract with ARPA for power supply. If it had, Lamar would have received a one-time payment of $600,000, but it would forfeit the right to bring any future lawsuit against ARPA regarding the Repowering Project.  “Our plan right now is to have the monthly payment of $29,166.66 go against the Charter Appropriation payment from the Light Plant to the City and that way it can go back to help with the bills,” he explained.  Stagner added, “It’s been long and it hasn’t been easy.  We went to a lot of hearings and left a lot of times with nobody being happy.  Our attorneys felt like this was a fair deal.  The last deal they turned down was less than this.”  He added that the city may look into some form of solar power in the future, but that’s down the line at this time.

Stagner said the existing contract for power supply from ARPA will remain in effect as part of the settlement agreement. “We’re still a member of ARPA.  That’s one of the things we looked long and hard at as far as the lawsuits and that was the one point that would be the hardest to win on, so that was the least possibility for us.  We tried to make the best of that situation.”

By Russ Baldwin

Filed Under: City of LamarConsumer IssuesEconomyFeaturedHot TopicsUtilities

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