Lead Hill officials will ask voters in November to establish a 1 percent sales tax to generate more revenue in light of a court order for the town to make monthly payments to the Ozark Mountain Regional Public Water Authority.
"Lead Hill just doesn't have any money," said Gary Van Meter, a town councilman who will become mayor in January. "We're giving all of our money to the water authority. We need a sales tax to help pay the bills for what we owe the water authority."
Lead Hill does not currently levy a sales tax. If the sales tax were approved, some of the sales tax revenue would come from tourists and people passing through the town, said Mayor Jimmie Lou Nuessner, whose term ends Dec. 31.
Lead Hill is under court order to comply with a wholesale water-purchase contract with the water authority, though officials are appealing a circuit judge's ruling in the case.
"We just feel we have a right to a court date," Van Meter said. "That's what we want in Lead Hill."
Little Rock attorney Andy Taylor said he is working to file the first set of documents to begin the appeal process.
The water authority began providing water to Lead Hill in November 2012 after the completion of a $72 million project to build a new water system to supply Lead Hill and 17 other members with water from Bull Shoals Lake.
Water customers of Lead Hill in October 2013 objected to higher water rates the town charged to pay the monthly bill to the water authority. The Town Council voted that month to disconnect from the Ozark Mountain system, to reconnect to the city's old well system and to stop making payments to the water authority. The council reinstated the former water rates.
Without a sales tax, town officials likely would have to raise water rates again, Nuessner said.
Under the contract signed in 2009, which helped to secure federal loans, the town agreed to pay a minimum monthly charge regardless of whether Lead Hill took water from the water authority.
The water authority sued the town in October 2013.
In May, a circuit judge ruled in favor of the water authority and instructed Lead Hill to abide by the contract. But the water authority received no payment from the town, and the parties returned to court for a contempt of court hearing on Aug. 5. Lead Hill did send $1,000 to the water authority the week preceding the hearing.
Judge Shawn Womack found town officials in contempt of court. Womack instructed them to stay current on future payments, warning them they would be sent to jail if any more monthly payments to the water system were more than five days late. The town also must make arrangements to pay on overdue charges.
The town reconnected to the Ozark Mountain system on Aug. 7, said Andy Anderson, board chairman of the water authority. The water authority on Tuesday received the first court-ordered payment of $5,199.26 from Lead Hill, Anderson said.
The town also has three years to pay on the overdue charges that currently amount to $64,939.62, plus 2.75 percent interest, Anderson said. Anderson estimated that the total with interest would be close to $68,000.
The water authority has lumped the back payments into what it is considering a loan to the town, Anderson said. Monthly payments on the loan aren't due until January. Anderson estimates that the monthly loan payment would amount to about $1,900, which would be paid in addition to the monthly payments for current water service, Anderson said.
"It gave them enough time to get a sales tax enacted to pay off that amount in back bills," Anderson said.
Metro on 09/18/2014