11/02/10 — Alley battle settled for $500 after $200,000 bill

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Alley battle settled for $500 after $200,000 bill

By Catharin Shepard
Published in News on November 2, 2010 1:46 PM

MOUNT OLIVE -- A long-running legal battle involving the town of Mount Olive that cost the town $200,000 in legal fees has been settled for $500.

For more than five years, the town has been wrangling with former Mount Olive businessman Rick Kraft about an alley that runs alongside a building he owns on West James Street.

The town condemned the alley, but Kraft contended in a lawsuit that a strip of the alley about one-and-a-half feet wide was unencumbered.

After years of legal fees, the town has agreed to pay for the land and erect four protective poles on the Kraft property to make sure no vehicle hits the building.

Town Attorney Carroll Turner announced the settlement at the monthly town board meeting Monday night.

In other business, Sharon Edmundson of the Local Government Commission addressed the town board of commissioners in regards to how the town's general fund balance slipped to its $142,000 low mark in 2009, and what town officials must do to shore up that reserve.

According to audits, the town has struggled financially since about 2003 or 2004, she said. Looking at the fund balance over a period of about seven years, things "went downhill" beginning in 2005, when the town used about half its savings at one time, Ms. Edmundson said.

Brown later said that amount was money the town temporarily fronted to pay for an infrastructure improvement project, but was actually covered by grant funding.

Nearly every year, the audits noted over-expenditures in the town budget, Ms. Edmundson reported, and now the town has "almost nothing left in fund balance at this point," she said.

Mount Olive Mayor Ray McDonald said that part of the issue is due to the need to occasionally front the money for ongoing utilities projects which are later paid for by grant money. For example, the town is currently waiting to receive a grant to replace money the town spent on its sewer improvement project.

Ms. Edmundson strongly encouraged the board members to consider using the encumbrance system to set aside money when it is obligated at the start of the budget year.

Although she said she hated to be so "gloom and doom," her suggestions were meant to help the board members take control of the situation, Ms. Edmundson said.

To make sure the town gets back on the right track in the future, "We kind of need to back up to the beginning of the spending cycle," when the board chooses to allocate money to particular items during budget talks, she said.

There could be easier days ahead for the town in the near future, Ms. Edmundson said. November tends to be a "fairly high revenue month for the town," and the town may expect to receive about $341,000 this month.

The town will not have enough money in its fund balance at the end of this financial year to use any of it to balance the next year's budget, Ms. Edmundson said.

The town's options to adjust the revenue stream include raising taxes, increasing fees or cutting services, she said.

The board has attempted to keep a low tax rate out of concern for residents, especially those who live on fixed incomes and would struggle with additional bills, McDonald said.

The mayor asked whether it is likely the state will choose to withhold any additional parts of the town's money this year.

"I don't know that there's a whole lot left they can take," Ms. Edmundson said.

The audits revealed that the state began keeping amounts of money from the town on several occasions over the past decade, she said.

The town board also voted unanimously to allow the Bizzell Construction Co. to withdraw its low bid on the wastewater collection system improvements project, but the company may have to pay a penalty fee to do so.

The company reportedly made a clerical error in calculating its bid for the project, and could only complete the project at an additional $20,000 cost, Turner reported.

At the recommendation of the town's engineer, the board voted to allow the company to withdraw the bid. However, the company could have to pay the town up to about $85,000 to withdraw the bid -- a cost that could affect the company's future ability to bid on projects, Turner said.

The clerical error could cost the town about $190,000 if the town board accepts the second-lowest bid on the project in order to get the work done. The second-lowest bid, $1,810,543 proposed by Step Construction Inc. of LaGrange, was about $190,000 more than the Bizzell company's bid, Turner said.