By RICK KRON
Leader staff writer
North Little Rock will continue to provide electricity for most of Sherwood for the next seven years according to an agreement being hammered out by both cities and end a lawsuit that has been five years in the making.
Monday night, the Sherwood City Council told City Attorney Stephen Cobb to continue working on the agreement with North Little Rock’s attorney.
If a settlement is reached, which seems likely, then Sherwood won’t appeal a recent circuit court decision that said that Sherwood can get its electricity from any provider it wishes, but if the city chooses someone other than North Little Rock, then Sherwood would owe North Little Rock $2 million in franchise fees, plus lose the $600,000 in fees that city is holding. The foundation of the lawsuit started in 2003, when Sherwood allowed First Electric, instead of North Little Rock, to provide electricity to the Millers Crossing subdivision. North Little Rock had been the provider of electricity to most of the city and felt Sherwood broke a contract with North Little Rock when it went with another service provider.
Sherwood felt there was no contract and as a city it could pick providers of its choice. Circuit Judge Tim Fox heard the case earlier this year, and in his order stated that Sherwood did break a contract with North Little and even though the city could pick another electric provider, but if it did, then Sherwood would have to refund about $2 million in franchise fees. The judge also stated that if Sherwood went with another provider, then that provider would either have to buy North Little Rock’s electric infrastructure within the Sherwood city limits or remove the infrastructure. Cobb said that problem with the infrastructure was that North Little Rock had use the Sherwood infrastructure as security on bond issues which won’t be paid off until 2015.
Alderman Butch Davis said Monday that he clearly felt First Electric was the better utility, “but $2 million is $2 million.”
Alderman Charlie Harmon’s fear was that if the city appealed the circuit court order, it may lose what it did win at the circuit court level—permission to choose its own electric provider. “We won that part that we really wanted to win, and it’s my fear that we could lose that ability on appeal. Let’s take the agreement for seven years and then pick who we want.”
The proposed deal has Sher-wood staying with North Little Rock until 2015, and then at that time Sherwood could vote to stay with North Little Rock or go with another provider. Cobb explained that the agreement keeps the status quo in that North Little Rock will continue to provide service to the Sherwood homes it already takes care of, First Electric will maintain their customers within the city and those Sherwood homes serviced by Entergy will stay with Entergy.
Cobb said the agreement would set aside Judge Fox’s order, meaning Sherwood would not owe North Little Rock $2 million in collected franchise fees, and North Little Rock would release $600,000 in fees it has been holding immediately after the agreement is signed.
Cobb also said that Sherwood rates would be the same as North Little Rock’s in-town rates.
“They’ll have a hard time raising rates and getting re-elected,” Alderman Becki Vassar commented about the North Little Rock council, which sets rates. “They won’t be able to raise our rates, without raising their own.”
It was promised that the agreement would also contain wording that makes emergency-repair service more equitable.
Aldermen Vassar and Sheila Sulcer were pleased about that.
“I felt we were a stepchild in the last ice storm,” Vassar said.
Alderman Steve Fender, whose chiropractic office is right across from city hall, said his power was out for two weeks and he couldn’t get hold of anyone in the North Little Rock department. Cobb should bring a completed agreement to the council’s next meeting for the aldermen to approve.
In other council business:
The aldermen approved an ordinance approving the public- facilities board’s action to obtain up to $6.1 million in short-term financing to purchase the 106-acre defunct North Hills Country Club for the city. Sherwood would make the monthly payments out of utility franchise fees it collects. Even though the exact amount that the public-facilities board will actually ask for wasn’t decided, it is estimated that monthly payments on the loan will run around $40,000 a month.
The issue of whether to buy the golf course or not was not in question as the council approved the purchase at a specially called meeting July 21.