Lead Hill is obligated by a valid contract to make monthly payments to Ozark Mountain Public Regional Water Authority, a circuit judge has decided.
Judge Shawn Womack issued the ruling Thursday.
The water authority sued Lead Hill in October after the town quit making monthly payments and notified the authority that it would disconnect from the water authority's new system.
Lead Hill signed a contract April 27, 2009, to purchase wholesale water from the Boone County-based water authority and agreed to a minimum monthly charge of about $5,200. Under the contract, the town agreed to pay at least the minimum monthly bill regardless of whether Lead Hill took water from the water authority.
The water authority began supplying the town in November 2012 after the completion of a $72 million project to build a new water-treatment facility and to distribute water from Bull Shoals Lake to Lead Hill and 17 other members via 120 miles of pipeline. But Lead Hill disconnected from the pipeline in October and resumed using the town's well system.
Lead Hill Mayor Jimmie Lou Nuessner said Tuesday that she felt "numb" after the judge announced his decision. She anticipates organizing a special meeting of aldermen to discuss the ruling.
"I was in shock," Nuessner said. "They didn't see our way on anything."
Ozark Mountain has billed Lead Hill for $54,395.75 since the town stopped making payments in August, said Andy Anderson, chairman of the water authority board. Lead Hill is one of two entities the water authority sued for not making payments promised by contracts to purchase wholesale water. The other entity is Marshall in Searcy County.
Lead Hill responded to the lawsuit by asking the judge to terminate the contract.
Attorney Sam Pasthing said Lead Hill officials must decide whether to appeal the judge's decision and how to meet obligations of the contract.
"It's going to be tough," Pasthing said.
Pasthing argued in court that the board was not formed properly under state law, and that under federal law, the water authority should not have solicited Lead Hill away from its old system, he said.
But the judge ruled against the town, Pasthing said. "We respect his ruling," he said.
The contracts signed by members of the water authority served as collateral for acquiring loans and grants from federal and state agencies for the project to build the water system and pipeline, Anderson said.
The minimum monthly payments were established based on water usage the entities reported in 2008, Anderson said. The contracts were signed in spring 2009.
"It was an 'all for one and one for all' deal," Anderson said. "We could not allow somebody to bail, which would take part of our collateral away. That changes the terms for all the other entities."
The water authority has enough money to continue operations as they are through December, Anderson said.
Womack instructed Chris Lawson, an attorney for the water authority, to draft the judge's order, Lawson said. Lawson is circulating a proposed order to the legal counsel for Lead Hill and will present the order for the judge's consideration this week.
"There was no defense that they raised that would invalidate the contract," Lawson said.
NW News on 06/01/2014