City is spending millions on litigation it can’t win
(LAKEWOOD, CO) – Citizens for Sound Government today called on the municipality of Lamar, Colorado to drop its lawsuit against the Arkansas River Power Authority (ARPA) over the Lamar Repowering Project (LRP). Lamar’s frivolous litigation has already cost the small town’s taxpayers millions of dollars in an effort the city is unlikely to win. The city’s leaders should acknowledge their role in the failure of the LRP, cut their losses and attempt to settle the lawsuit immediately.
In 2004, ARPA’s six member cities decided to convert a gas-fired power plant located in Lamar to coal power, a process that required the towns to borrow a total of $155 million. Each member city approved ARPA’s bond issuances and agreed to repay them over time. The repowering project was ultimately unsuccessful, but the debt remains.
Despite its role as overseer of the LRP, Lamar remains locked in litigation with ARPA in an attempt to disown its portion of the debt. The other five ARPA members have already settled their lawsuits in exchange for six-figure payouts.
“Lamar is budgeting $1,000,000 in legal fees for an ARPA suit it is unlikely to win,” said Alan Philp, president of Citizens for Sound Government. “The other members of ARPA saw the writing on the wall and accepted settlements that helped stabilize energy rates and took taxpayers off the hook for unwarranted litigation. Lamar, on the other hand, is spending one of every eight taxpayer dollars in the city budget on the ARPA lawsuit.”
Lamar’s 2017 general fund budget is $8.4 million, with $1 million earmarked for ARPA litigation. In 2016, the city budgeted $1,000,000 on legal fees and spent $1,600,000.
Citizens for Sound Government argues that the city’s case is particularly weak, as not only did it join its fellow ARPA members in approving debt financing of the LRP, but Lamar actually served as Operating Agent on the bonds, with oversight of the day-to-day management of the project. It’s difficult to see how the city can claim it was taken advantage of when it played such a prominent oversight role.
“Lamar had the opportunity to settle its suit early, and receive a settlement similar to the $600,000 its peers received from ARPA to stabilize electricity rates,” Philp continued. “Instead, the stubbornness of city leaders is likely to cost millions while foregoing much-needed settlement funds. Government spending in Lamar has grown over 23 percent since 2014, largely to fund litigation the city is unlikely to win. The city should cut its losses now, rather than continuing to sock its citizens with spiraling legal fees.”