ST. ALBANS — On Tuesday morning, St. Albans Town presented its final witness in its lawsuit against St. Albans City. The suit stems from a 2009 agreement between the two communities for the provision of water and wastewater services.
St. Albans City presented the entire two-hour recording of a joint meeting between the city and town from Feb. 23, 2009 and put former city mayor Marty Manahan on the stand to identify who was speaking in the video as well as to testify about his understanding of the agreement.
The town claims a last minute change to the agreement entitles it to purchase the needed services on a piecemeal basis, while the city holds that the agreement always envisioned a large one-time purchase of water and wastewater capacity, known as allocations.
Town selectman Bill Nihan was on the committee that negotiated the agreement. As a member of the selectboard, he also voted for and signed the agreement.
Nihan said there were two issues of concern to the town: unequal rates for water and sewer services – town residents have pay a surcharge not charged to city residents; and “attempts historically by the city to control the town’s development and growth.” He added, “We wanted to have our independence.”
The city owns the municipal water and sewer plants. Many town residents and businesses purchase water and sewer services from the city. As talks failed to produce a settlement, the city in April 2011 placed a moratorium on new water and sewer hookups in the town. By that time the city and town had tried for years to reach an agreement.
When talks were underway most recently they began with a provision under which the town would have purchased daily access to 100,000 gallons of water and wastewater allocations at a cost of $1.1 million. The town would then have sold that capacity to developers within its own borders.
On the morning of Feb. 23, 2009, the day the agreement was signed, the description of the amount to be purchased was changed to “up to” 100,000 gallons per day.
Asked about the meaning of the change by the town’s attorney John Bergeron, Nihan answered, “It would mean the town could purchase any volume up to 100,000 gallons a day, between nil and 100,000 gallons.”
When asked if he believed the change in language would allow the town to make piecemeal purchases until they reached 100,000 gallons, he said “yes.”
According to the agreement, when 40,000 gallons per day remains, the town and city will enter into negotiations for another allocation. The city has maintained that the town’s interpretation of the agreement as allowing for piecemeal purchases instead of a single bulk purchase is inconsistent with this provision.
Nihan said the 40,000 gallons per day trigger originated with the negotiating committee. “As the town used the allocations… it would make sense at some point to talk about another allocation,” he testified. No one from the city had suggested that amount was a minimum purchase, according to Nihan.
“Did anyone from city say you have to make a sizeable allocation and purchase it up front?” Bergeron asked.
“Not at all,” Nihan replied.
However, he did acknowledge that until the addition of the words “up to” on the morning of Feb. 23, 2009 all of the conversation had been about a bulk purchase.
“It allowed us to buy as much as we want, when we wanted to until we hit the 100,000 allocation,” Nihan said of the altered language.
Town witnesses have referred to remarks made by former town attorney Dave Barra at the Feb. 23, 2009 meeting as indicative of the town’s position.
Nihan was asked by the city’s attorney Eileen Elliott to review a transcript of Barra’s remarks and whether Barra used the words “up to.” Nihan noted Barra said the city was binding itself to sell up to 100,000 gallons per day.
“Does he explain it? No he doesn’t. I would think it’s self explanatory,” Nihan testified.
Elliott also suggested a new interpretation of the words “up to.” Since the agreement reads that the city “hereby grants a wastewater allocation of up to 100,000 gallons per day and a water allocation of up to 100,000 gallons per day, she asked Nihan if that meant the city might grant just one equivalent unit (EU), enough water and wastewater for a single home, to the town.
“We can take it any way we want from zero to 100,000 gallons,” Nihan replied.
Bergeron, too, questioned Nihan about Barra’s remarks. “Isn’t his explanation a description of pay as you go?” Bergeron asked.
“It certainly seems it, yes,” Nihan said.
Barra himself had previously provided what appeared to be inconsistent testimony on the meaning of his remarks. In his deposition testimony, he said he had not considered a pay-as-you-go interpretation of the agreement. On Monday, he changed his statement to say he may have been considering such an interpretation.
Former city mayor Marty Manahan also signed the agreement, but despite the addition of the words “up to” Manahan said he believed the town would be purchasing a 100,000 gallons per day allocations for both water and wastewater.
A joint committee established to explore a joint water and wastewater district had recommended the town make a bulk purchase rather than form a joint district, Manahan said.
“The town purchases a bulk allocation from the city and the town could distribute that as they saw fit. When they needed more they could come back,” Manahan said.
“They thought and we thought a bulk allocation was the way to go. Their concern was how to pay for it,” he testified.
“My understanding was they were going to try to figure out a way to purchase 100,000 gallons,” he said. “Once their allocations got to 40,000 gallons, they would come back and negotiate another bulk allocation.”
Manahan also testified that no one from the town had ever told him a bulk purchase wasn’t impossible.
According to Manahan, there was no discussion of the meaning of the change in language.
He also testified he would not have voted for an agreement which required the city to set aside 100,000 gallons per day in allocations for the town, but allowed for the town to pay for that allocation piecemeal.
Asked if there was a benefit to the city in the pay-as-you go arrangement, Manahan replied, “Not that I could see.”
Manahan also was asked about an exchange he had with town selectman Ron Allard at the February 2009 joint meeting. Allard had suggested the 40,000-gallon trigger might need to be changed and Manahan had concurred.
Asked to explain his remarks, Manahan said that the town might need to adjust the trigger based upon how it resold the allocations within the town.
Manahan also stated that if the town bought it, the city would reserve it, but he then went on to describe a situation in which a developer had asked for allocations but hadn’t purchased them and ultimately ended up paying more as a result.
Manahan said he was discussing the town’s resale of the allocations to developers. “They (town officials) could turn around and sell it for more than they purchased it from us for. That was up to them,” he said.
The city does allow developers to request allocations but not pay for them until they are used. However, the allocations expire after three years and the developer must pay interest on them up until the time the final purchase is made, according to city manager Dominic Cloud.
During cross-examination Bergeron asked Manahan why he continued to believe the town would purchase 100,000 gallons of allocations after the addition of the words “up to.”
“The whole crux of the matter and the entire focus of the conversation we’d been having for the past year and year a half was about a bulk allocation of 100,000 gallons,” Manahan said.
Bergeron also asked whether Manahan had considered the 40,000-gallon trigger a minimum purchase.
“It never crossed my mind that they would purchase less than that,” Manahan replied.
Manahan was also asked to identify speakers when the city’s lawyer played a two-hour recording of the Feb. 23, 2009 joint meeting between the selectboard and the town for the court.
At that meeting, town resident Paul Larner raised several concerns about the agreement, including how the town would raise the money for a bulk allocation.
“Are we going to pay upfront or are we going to pay as we go?” Larner asks at one point, adding that pay as you go would be easier to sell to town residents.
Not one person answered Larner. No one from the town said the agreement was already pay as you go, or that it was a bulk purchase.
“Put in this agreement, it will be paid for as the applicant pays for it,” Larner said, meaning the town would pay for allocations when it had a buyer for them.
Selectboard chair Kathy Middlemiss said, “OK,” but nothing further.
In the recording, no one from the selectboard said in answer to the concerns of town residents that the town would not have to raise the funds to purchase a large allocation, only that there were many ways to do so. Barra said only that there were “myriad” ways for the town to raise the money.
Jack Brigham, who was one of the negotiators of the agreement, said, “If we don’t get financing, we don’t go ahead.”
Testimony continued in the Franklin County Court House and there was the possibility it would wrap up today.