Lake Osborne Waterworks - $1,000,000.00

One way to get rid of a lawsuit--just buy the plaintiff's assets in the area of dispute. And ever since the bond was voted in by the residents of Lake Worth and the penny sales tax was approved by the voters, the city government is having a field day. But as our city attorney has said, lawsuits are always 50/50. So, if that is the case, why aren't they settled sooner?

A little over two years ago, the City Manager entered into an agreement not to exceed $25,000 with Manson Bolves Donaldson PA (“Firm”) to defend the City against a lawsuit filed by Lake Osborne Waterworks, Inc. (“Plaintiff”). The claim relates to the City’s provision of potable water to Plaintiff (formerly known as Lake Osborne Utilities Company and once known as Aqua Utilities), a regulated utility company under Florida law. Legal fees must be escalating now by all the lawyers involved, thus this proposal that is on the consent Agenda.

Lake Osborne Waterworks, a company that buys water from Lake Worth and distributes it through their pipes, sells it to Lake Osborne Estates.  The single family residences in Lake Osborne Estates are charged as if they are multi-users and the rates they pay are astronomical. The company reached a settlement with Lake Worth on June 1, 2017 and the city is just now telling us about it with NO discussion.

TITLE: Resolution 42-2017 extending the City’s water utility system and providing the proposed service area to be included in anticipation of the purchase of the Lake Osborne Waterworks.

The City's SUMMARY:

The Resolution will extend the City’s water utility system and provide for the purchase of this utility as part of a litigation settlement at a later date.

BACKGROUND AND JUSTIFICATION: In 2014, Lake Osborne Waterworks, Inc., a private utility provider serving 466 homes in unincorporated Palm Beach County, initiated litigation against the City of Lake Worth contesting the rate that the City charged Lake Osborne Waterworks for water service. After attending several mediation sessions, the parties have conditionally agreed to terms for the purchase of the utility by the City, subject to Commission approval. The parties have prepared and seek approval to enter into purchase and sale agreement between Lake Osborne Waterworks, Inc. and the City of Lake Worth for the purchase of the utility.

This transaction has been negotiated and reviewed by the City’s water utility department including Director Brian Shields and former director Larry Johnson, as well as outside counsel, Brian Bolves, outside consultant Andrew Burnham and City Attorneys Glen J. Torcivia and Carolyn Ansay. The agreement provides that the City will pay one million dollars and acquire the water system owned and operated by Lake Osborne Waterworks, Inc. on or about October 1, 2017. It is anticipated that the Purchase and Sale Agreement will be set for a public hearing on the Commission’s September 19, 2017 agenda.

Procedurally, prior to considering the Purchase and Sale Agreement, the City must comply with the statutory process to extend the City’s water utility system and service area. The attached Resolution sets forth the proposed service area and provides the public with an opportunity to file written objections prior to the Commission’s August 15, 2017 meeting and provides for a public hearing on that date if any objections