Whitesburg KY

City, Veolia may agree on new plan to settle old debt

State to give amnesty on road funds if proper documents are filed soon

Attorneys for the City of Whitesburg and Veolia Water North America-South are negotiating to ease collection efforts Veolia began in August after the city fell behind in making monthly payments on a $1.05 million debt owed the company after it stopped managing the city’s water and sewer departments in 2011.

As part of an August 2012 settlement of a federal lawsuit Veolia filed against the city a year earlier, the city had agreed to pay $29,917 a month until the debt was paid. The city was able to reduce the debt to $823,722, but stopped making the monthly payments this past May. Ninety days later Veolia reopened its lawsuit in U.S. District Court in Pikeville and garnished $70,131 from the city’s bank accounts and $3,500 in monthly rent payments it received from Pine Mountain Lumber Co. and the Whitesburg campus of Southeast Kentucky Community and Technical College.

After a status hearing held by telephone Oct. 28 with U.S. Magistrate Judge Edward B. Atkins, Pikeville attorney David Stratton, who represents Veolia, and Whitesburg City Attorney James D. Asher have been negotiating terms for a new payment agreement between the city and the company.

“We are negotiating a settlement to catch up with the payments,” Asher said. “As is every other city right now, we are asset-rich but cash-poor.”

Veolia filed the “writ of garnishment” actions against the city on August 16, more than a month before the Whitesburg City Council voted 4-1 to approve a 1.5 percent payroll tax on people working within the city’s limits. Proceeds from the new tax are expected to help pay the debt owed to Veolia. The Indianapolis-based company was charging the city a fee of $967,144 per year to operate the water and sewer departments.

Meanwhile, the city learned that it will receive four years’ of Rural and Municipal Road Aid money after it submits four documents known as “Uniform Financial Information Reports” to the Kentucky Department for Local Government.

The Kentucky Transportation Cabinets has been withholding the funds, which usually run between $25,000 and $35,000 a year, because the city had not furnished the reports as required by state law.

City officials say the reports, which state law says can be prepared by a designated elected or non-elected official, were not submitted because of a clerical mistake.

The documents must be submitted by the end of November.

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