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HomeMy Public PortalAboutFFCL and JudgmentARCHIF N. BAN[3URY, CLEW BY DEPUTY I1.11_ 5 2011 Case No lost No Piled IN THE DISTRICT COURT OF THE FOURTH JUDICIAL DISTRICT OF THE STATE OF IDAHO, IN AND FOR THE COUNTY OF VALLEY IN THE MATTER OF. CITY OF McCALL, an Idaho municipal corporation, and PAYETTE LAKES RECREATIONAL WATER & SEWER DISTRICT, an Idaho political subdivision, JOINT PETITIONERS Case No. CV 2011-173C FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT The Joint Petitioners, City of McCall (the "City"), by and through its counsel TROUT e JONES ♦ GLEDIIILL ♦ FUHRMAN ♦ GOURLEY, P.A., and Payette Lakes Recreational Water & Sewer District (the "District"), by and through its counsel Holland & Hart, LLP (collectively, the "Petitioners"), hereby jointly submit the following proposed Findings of Fact and Conclusions of Law FINDINGS OF FACT 1. On May 3, 2011, Petitioners filed a Joint Petition for Judicial Confirmation (the "Joint Petition") pursuant to Idaho Code § 7-1301 et seq., seeking judicial examination and determination that: (1) the duties and obligations contained 'in the Settlement Agreement dated October 20, 2010, entered into between the Petitioners (the "Agreement"), are ordinary and necessary liabilities of the Petitioners; (2) by incurring those liabilities the Petitioners are protecting the health, safety and welfare of their respective constituents; and (3) those liabilities are within the "ordinary and necessary expense" exception to the voter approval and sinking fund requirements of FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - l Article VIII, Section 3 of the Idaho Constitution. The Agreement involved the resolution of Valley County Case No. CV-2005-352-C (the "Lawsuit"). 2. The Lawsuit involved a dispute between the City and the District regarding their conflicting interpretations of the Cooperative Agreement between the Petitioners dated December 15, 1977, and its seven amendments (collectively, the "Cooperative Agreement"). 3 The Cooperative Agreement established the Petitioners' rights and responsibilities in relation to the facility which receives, treats, stores and disposes of the City's and the District's wastewater (the "Facility"). 4 The District deemed the City's prayer for relief in the Lawsuit to be an effort to materially and adversely alter the District's rights in and to the Facility. 5. The City deemed the District's prayer for relief in the Lawsuit to be an effort to materially and adversely alter the City's rights in and to the Facility 6. The outcome of the Lawsuit was uncertain. In the event the City prevailed, the District may have lost the right to have its wastewater accepted, treated and disposed in the Facility In the event the District prevailed, the City may have lost its ability to unilaterally expand and/or improve the Facility to meet the needs of the City's users. 7 In addition to the above -described risks to the Petitioners, both Petitioners were also seeking monetary damages from each other. 8. On the eve of the trial set for the Lawsuit, October 20, 2010, and after several days of mediation, the Petitioners agreed to the general teuus for a settlement of the Lawsuit. FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 2 9. The Agreement was subsequently entered into with an effective date of October 20, 2010. 10, The Judicial Confirmation sought by the Joint Petition is the remaining element of the settlement between the Petitioners. I1. The Petitioners are subject to the debt limitations contained in Article VIII, § 3 of the Idaho Constitution. 12. Article VIII, § 3 of the Idaho Constitution provides that no county, city, or other political subdivision shall incur any indebtedness or liability, in any manner or for any purpose, exceeding in that year the income and revenue provided to it for such year without the assent of two-thirds (or, in the case of certain revenue bonds, the assent of the majority) of the qualified electors thereof voting at an election held for that purpose, but contains the following exception: "provided, that this section shall not be construed to apply to the ordinary and necessary expenses authorized by the general laws of the state...." 13, The obligations contained in the Agreement are ordinary and necessary for both Petitioners because they: (i) provide a detailed, long-term procedure for the use, maintenance and improvement of the Facility by both the City and the District, which in turn will promote the vital health, welfare and safety of the constituents of both the City and the District by resolving the key environmental issue of the treatment, storage and disposal of wastewater; (ii) avoid the continuance of costly litigation, and (iii) avoid the uncertainty of the outcome of the Lawsuit, which would have materially and adversely impacted the constituents of either the City or the District, or both, FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 3 14. The obligations contained in the Agreement are long-term obligations that exceed one year. The obligations are contingent, and in some years may exceed the budgets for either the District or the City, or both. 15. The Petitioners do not intend to hold an election because key decisions about the future of the Facility need to be made by the Petitioners in the next four months, and the process to reach those key decisions (set forth in the Agreement) needs to be implemented immediately. More specifically, treated effluent from the Facility is currently mixed with irrigation water and applied to agricultural lands lying south of the City. The land upon which the effluent is applied is not owned by either the City or the District; it is owned by others who have agreed in writing to permit the use of the effluent enhanced irrigation water. These agreements expire in 2016 and some of the land owners have already informed the City that they do not intend to renew the agreements and that their land will not be available for disposal of the treated effluent. The lead time that is necessary to determine the future of the Facility, and the method of disposal of treated effluent, is such that decisions must be made before November in order for the City to be able to lawfully dispose of the treated effluent after the current agreements expire. Design of any new or modified facilities takes many months, and securing grants and other financing for such improvements can take more than one year. Further, state and federal regulations related to the federal Clean Water Act mandate involvement of other agencies in these decisions, all of which require time. Although the current agreements do not expire for a few years, the realities of wastewater facility planning, design, financing, and construction make the current situation very urgent which demands certainty now. Accordingly, the City and the District have commenced the FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 4 implementation of the decision -making procedures for the future of the Facility pursuant to the guidelines set forth in the Agreement. 16. If the Petition is denied, all decisions and obligations made by the Petitioners pursuant to the Agreement may be deemed unconstitutional and void because they violate Article VIII, § 3 of the Idaho Constitution by creating long-term obligations without a vote or judicial confirmation. Accordingly, if the Petition is denied, Petitioners will not be able to make the key decisions regarding the Facility and future of the Facility may be jeopardized. 17. The Agreement does not contain a non -appropriation clause. 18. The Petitioners set a hearing for April 5, 2011 for the purpose of considering whether to adopt a joint resolution authorizing the filing of the Petition, Notice of the hearing was published in the Star -News on March 17, 2011. The hearing was held, and nobody appeared to object to the filing of the Petition. 19. On April 19, 2011, the City duly adopted Resolution No. 11-05, authorizing the filing of the Joint Petition. 20. On April 19, 2011, the District duly adopted a resolution authorizing the filing of the Joint Petition. 21. On May 6, 2011, the clerk of the court issued its Amended Notice of Filing Petition (the "Notice") in this matter indicating that a petition had been filed for judicial confirmation, and notifying all interested parties to inquire further and/or appear. 22. For a period of more than thirty (30) days, commencing on May 20, 2011, the Notice was posted on the front doors of the respective primary place of business for the City and the District. A conformed copy of said Notice was delivered by the City FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 5 Clerk to the Star -News for publication, which was published with three consecutive weekly insertions on each of June 2, 2011, June 9, 2011 and on June 16, 2011. Such public posting and publication of said Notice was conducted in compliance with Idaho Code § 7-1306, 23. No papers or pleadings were filed in the action by anyone other than the Petitioners. 24. On June 23, 2011, the Court held a hearing for the purpose of identifying any interested parties who desired to appear in support of, or opposition to, the Joint Petition. Ben Slaughter, of the firm Trout Jones Gledhill Fuhrman Gourley, P.A., appeared on behalf of the City. John Hucks appeared on behalf of the District. No other appearances were made, 25. At the hearing, the Petitioners requested that the Court takejudicial notice of all pleadings, orders and judgments in the Lawsuit. CONCLUSIONS OF LAW 1 This Court has subject matter jurisdiction of this matter, and has jurisdiction to adjudicate this matter and validate the proceedings taken by the Petitioners pursuant to Idaho Code § 7-1301 et. seq. 2. In examining the constitutionality of any statute, the Legislature is presumed to have acted within its constitutional power. Evans v. Andrus, 124 Idaho 6, 855 P.2d 467 (1993); Worthen v. State, 96 Idaho 175, 525 P.2d 957 (1974); Western Beverage Inc. v. State, 96 Idaho 588, 532 P.2d 930 (1974). Every reasonable presumption must be indulged in favor of the constitutionality of a statute. Olsen v J.A. FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 6 Freeman Co , 117 Idaho 706, 791 P.2d 1285 (1990); State v, Pontier, 95 Idaho 707, 518 P.2d 969 (1974); Caesar v. Williams, 84 Idaho 254, 371 P.2d 241 (1962). 3. The proceeding under the Judicial Confirmation statutes, Idaho Code § 7- 1301 et. seq., is a proceeding in rem and jurisdiction of the subject matter and of all interested parties has been obtained through publication and posting as outlined herein. Publication and posting as authorized by the Judicial Confirmation statutes is a valid method of vesting jurisdiction in this Court over the parties and the subject matter. Smith v. Progressive Irrigation Dist., 28 Idaho 812, 156 P 1133 (1916); Knowles v. New Sweden Irrigation Dist., 16 Idaho 235, 101 P. 87 (1908). The Joint Petition is taken as confessed by all persons who received actual or constructive notice thereof and who failed to appear in objection thereto The Court is authorized to render the judgment and decree as set forth herein. 4. As a matter of law, Petitioners complied with all procedural requirements, which are conditions precedent to and necessary to authorize Petitioners to perform the obligations set forth in the Agreement. 5. This court has made an examination of the statutes authorizing Petitioners to take the action which is the subject matter of the Joint Petition, and the allegations of the Joint Petition identifying potential constitutional issues raised by the action taken and proposed to be taken by Petitioners. There being no opposition to the factual allegations of the Joint Petition, the allegations are taken as true, and therefore the court concludes that the statutes at issue were duly and regularly enacted by the Idaho State Legislature, that the Petitioners properly acted in pursuance of their duly authorized power with regard to the Agreement and have the power and authority to perform the obligations set FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 7 forth in the Agreement. There being no challenge to those statutes, or to the proposed actions of the Petitioners to perform the obligations set forth in the Agreement, and since there exists no facial constitutional infirmity which the Court is required to recognize, sua sponte, the statutes and proposed actions of the Petitioners with regard to the Agreement are deemed constitutional. 6. Petitioners are not required by the Constitution of the State of Idaho to submit the obligations created by the Agreement to a vote of the electorate. The Court concludes that: (l) the duties and obligations contained in the Agreement are ordinary and necessary liabilities of the Petitioners; (2) by incurring those liabilities the Petitioners are protecting the health, safety and welfare of their respective constituents; and (3) those liabilities are within the "ordinary and necessary expense" exception to the voter approval and sinking fund requirements of Article VIII, Section 3 of the Idaho Constitution. Hickey v. City of Nampa, 22 Idaho 41, 124 P. 280 (1912); Asson v City of Burley, 105 Idaho 432, 670 P.2d 839 (1983); City of Pocatello v. Peterson, 33 Idaho 774, 473 P.2d 644 (1970); Lloyd v Bannock County, 53 Idaho 478, 25 P.2d 217 (1933); Butler v. City of Lewiston, 11 Idaho 393, 83 P. 234 (1905); City of Boise v Frazier, 143 Idaho 1, 137 P.3d 388 (2006). 7. The Court hereby takes judicial notice of all of the pleadings, orders and judgments in the Lawsuit. 8. The findings and conclusions made herein are intended to be and are legally binding upon all persons interested in the outcome of this proceeding including but not limited to all persons or entities who received actual or constructive notice of the filing of the Joint Petition. FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 8 JUDGMENT This matter having come regularly before this Court for hearing, and counsel for Petitioners having submitted briefing, affidavits and exhibits; and it appearing that proper notice and filing of Joint Petition for judicial confirmation has been given as provided for in Idaho Code § 7-1301 et. seq., and the court having examined the allegations of the Joint Petition and all other submissions of the Petitioners, and arguments for and against the Joint Petition, and good cause appearing therefore, the court does ORDER, ADJUDGE AND DECREE as follows. The relief prayed for in the Joint Petition is granted and Petitioners are fully and lawfully authorized to undertake all rights, duties, obligations and actions set forth in the Agreement as ordinary and necessary to the Petitioners' respective duties. Dated this i) day otr , 2011. MlCF1PF.i, Fl. lirlcl. l\0.-,1-tUN HONORABLE MICHAEI MCLAUGHLIN District Court Judge FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 9 CLERK'S CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this ';') day of .iit a - , 2011 a true and correct copy of the foregoing document was mailed, postage ()repaid t?t Kim J. Trout Hand Delivery Trout Jones Gledhill Fuhrman, P.A. U.S. Mail PO Box 1097 Facsimile Boise, ID 83701 Overnight Mail Fax: 331-1529 Scott Hess Holland & Hart LLP I -land Delivery PO Box 2527 U.S. Mail Boise, ID 83701-2527 Facsimile Fax: 343-8869 Overnight Mail John C. Hucks Hanel Delivery PO Box 737 U.S. Mail New Meadows, ID 83654 Facsimile Fax: (208) 347-4128 Overnight Mail E FINDINGS OF FACT, CONCLUSIONS OF LAW, AND JUDGMENT - 10