Second opinion: Van Buren does not have to pay 2009 ‘true up’

A second legal opinion on a 2009 water payment dispute between Fort Smith and Van Buren concurred with the opinion given by Fort Smith attorney Jerry Canfield: Fort Smith does not have the legal power to force Van Buren to pay a 2009 “true up” of $253,000.

True-ups are geared to cover changes in operating costs that may increase or decrease the cost of water. Van Buren Municipal Utilities Commission Chairman C.E. Dougan has said Fort Smith officials missed an August 2010 deadline to provide the Van Buren commission details on the 2009 true up.

Van Buren officials have agreed to pay Fort Smith for $581,000 in true-ups for 2006-2008, but does not believe it owes a $253,000 true-up for 2009. Fort Smith City Administrator Ray Gosack met Dec. 14 with Dougan and Gary Smith, manager of Van Buren Utilities to ask if they would pay the 2009 true and to set terms and payment amounts for the money Van Buren has agreed to pay. Gosack said Dougan and Smith were not willing to budge on the 2009 payments.

Canfield, the attorney for Fort Smith, told the Fort Smith Board of Directors that the city indeed missed the deadline and would likely not succeed in a legal challenge to force Van Buren to pay a 2009 true up. However, several Fort Smith city directors have said Van Buren should pay the 2009 adjustment, and requested a second legal opinion.

On Friday (Dec. 30), Fort Smith attorney Mark Moll said Fort Smith failed to provide Van Buren officials with data in 2010 to support the 2009 true up adjustment, and said “a court would conclude that Fort Smith did not substantially comply” with the contract provisions.

“My opinion is the same whether Fort Smith intentionally or negligently failed to send CAFR Comparisons and timely send the true-up amount. Under either scenario, Van Buren has no contractual obligation to pay an adjusted amount for water consumed in 2009,” Moll noted in his Friday letter to Gosack.

Moll also wrote: “The wording of the contract that is central to this dispute reflects an intention of the parties to make Van Buren’s obligation to pay additional charges for water consumed in a prior year conditional on Fort Smith timely providing CAFR Comparisons and a true-up invoice for the additional charge. Therefore, noncompliance by Fort Smith results in forfeiture of Fort Smith’s right to make an adjustment in the amount that Van Buren owes for water consumed during the prior year.”

Moll also advised that Fort Smith would not legally jeopardize the 2006-2008 true ups if it pursues legal action to collect the 2009 true up.