Victorville Settles Lawsuit and Accepts $54 million

By Miguel Gonzalez

(Victorville)-— Victorville City officials announced today that a settlement has been reached with Carter & Burgess. The City Council accepted a $54 million offer from Carter & Burgess at the end of a Special Closed Session meeting today to discuss the offer.

Carter & Burgess originally brought suit against Victorville in 2008 for $107,000 in unpaid fees. The City of Victorville countersued for $52,116,367 on several causes of action. Following a seven week trial the jury awarded the city the entire amount requested and denied Carter & Burgess’ request for back fees. Subsequently, the judge awarded $1,775,539.50 in attorney’s fees and $107,778.51 in costs bringing the total award to $53,999,684.01.

Victorville Mayor Ryan McEachron said the award represents a very proud moment for the city. “This is a victory that will allow us to do many positive things in our city. That money will go o our general fund and allow us to increase services,” he said.

The mayor, who came into office a day before the award was originally awarded in 2010, said this was a great way to cap a year where Victorville has made fiscal progress. “For me personally, it represents a great way to cap off my mayorship in the city that I love.”

Council member Mike Rothschild said the vote today puts Victorville in an enviable position, considering how many other cities are struggling. “This settlement gets our city on a solid financial future. We got to a balanced budget and small reserve without this settlement. Our bond rating should improve as well, ” said Rothschild.

He added: “This injury to our city has been addressed and this will be a landmark decision for other cities to rely on. I am very happy to have this as my last vote on the Victorville city council. The new council will have a clean slate and solid future to look toward,” Rothschild, one of the longest serving council members in Victorville history said with pride.

Carter & Burgess appealed the decision but ultimately made several offers to settle the matter over the last several months. After careful consideration over a series of closed session meetings, the City Council ultimately voted to accept an offer that guaranteed the recovery of all costs awarded by the court.

The award had been earning interest that is forgiven under the settlement. The city could have held out for the additional interest, however, the risk of an adverse decision at the appellate court was too great to walk away from the full cost recovery offer.

The settlement will be used in large part to eliminated debt. The first $30 million will go to reduce the debt burden of bonds issued for the plant construction. The remaining $24 million will be used to repay approximately $22.5 million in interfund borrowing between the Victorville Municipal Utility Services (VMUS) fund and the Victorville Water District. The Victorville Water District will in turn repay approximately $20 million in additional internal borrowing.

The Victorville General Fund has a balanced budget with no use of reserves this fiscal year, for the first time in four years. This, combined with the settlement reached today and the ensuing elimination of the majority of the existing internal borrowing, will help solidify Victorville’s financial future. There is still work to be done but we are happy to have the majority of our financial difficulties behind us.

Note: This story was also constructed with information fromCity of Victorville.

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