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Water territory dispute legal fees total $75,000

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A seven-month dispute between the city of Jamestown and Stutsman Rural Water District generated about $75,000 in legal fees, according to information released by both parties.

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The disagreement centered on a territorial dispute regarding the Titan Machinery location near Jamestown Regional Medical Center. The resulting agreement defines the territorial boundaries for the two utilities for the entire Jamestown area

The city of Jamestown spent a total of $43,891 on the dispute. This included legal fees submitted by City Attorney Ken Dalstad and Vogel Law Firm and for a legislative consultant retained by the city. The fees were paid from the city’s general fund.

“The cost versus the possible future detriment to the city residents made it worth the cost,” said Ramone Gumke, city councilman.

Stutsman Rural Water District incurred legal fees of $28,456 that included the time spent by Scott Sandness, its local attorney, and Steve Harris of Doyle, Harris, Davis & Haughey of Tulsa, Okla. Rural Water also incurred costs of $2,828 in extra fees paid to board members for special meetings.

“We paid the legal costs from our legal expense line item,” said Geneva Kaiser, manager of Stutsman Rural Water. “We went over our budget of $4,000.”

The dispute started in October 2012, when the city advertised for bids to extend water service to Titan Machinery, which was under construction at the time west of Jamestown Regional Medical Center. Rural Water considered the Titan location part of its territory as did the city. Over the next seven months, attempts to negotiate between the two parties often ended in a stalemate. Both sides also testified before the North Dakota Legislature about the validity of their claims.

“We didn’t expect it to play out this way,” Gumke said. “About halfway through it, the Rural Water attorney started adding things like the sewer. It took longer than we thought.”

Mayor Katie Andersen said she never expected any sort of conflict.

“When we originally started discussions, we thought we had a document already,” she said. “We didn’t anticipate there would be any legal battle.”

The city and Rural Water had entered into water purchase agreements that required Rural Water to transfer territory to the city. The validity of those agreements was challenged because Rural Water was prohibited from transferring territory while it owed money on federal loans.

Joel Lees, Rural Water board member, said the conflict had been building for years and was inevitable.

“It had to be done,” he said. “The people on the board are just common people. We tried to communicate with the city for several years. After not hearing back, after losing territory at the hospital (Jamestown Regional Medical Center), after the Titan thing. We got to do what we got to do.”

A tentative agreement reached in April gave Rural Water the Titan Machinery territory in exchange for the city acquiring water service rights to an area south of the Jamestown Regional Airport. The agreement set the other boundaries around Jamestown at the city limits as it existed in 2010.

The agreement was signed in September after both sides reviewed the wording of the document.

Lees said the agreement is important to the viability of Rural Water.

“We had to secure our area,” he said. “Our more profitable areas are near Jamestown. The city didn’t want to serve them 15 years ago. Now they are an important part of our system.”

Representatives of the city expressed dissatisfaction with the agreement.

“The agreement is not as beneficial as we had hoped,” Gumke said. “We didn’t expect it to play out this way.”

Andersen expressed hope the parties can move on.

“I’m not satisfied with the ultimate results,” she said. “But the point of a settlement is you move forward and that’s what we’re doing.”

Lees also saw hope the two parties could cooperate in the future.

“There is no reason the city and Rural Water can’t work together,” he said. “We can do good things in the long run. We’re already working with the city providing water to Dakota Spirit AgEnergy.”

Sun reporter Keith Norman can be reached at 701-952-8452 or by email at knorman@jamestownsun.com

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