Tuesday, November 14, 2000 8:43 AM
Sioux Center pays rural water system
Judi HazlettBy Judi Hazlett, Journal staff writer | E-mail
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A rural Iowa water system has collected an award from the city of Sioux Center following a decision by the United States Supreme Court in October.

Rural Water System 1 of Hospers, Iowa, was involved in litigation with Sioux Center over disputed territorial boundaries and the right to serve customers. One of the city's issues was an Iowa statute that gave it the right to serve customers within two miles of its annexed area.

The rural system was concerned the city's annexation of land in July 1992 had taken several customers away and could potentially take enough to hurt the rural water system base permanently, and they filed suit.

The U.S. District Court in Sioux City decided the case in the water district's favor and awarded it approximately $212,000 in attorney fees and costs.

Sioux Center appealed the case to the U.S. Court of Appeals, 8th Circuit, in St. Louis, but that court also ruled in favor of the water district.

The U.S. Supreme Court was Sioux Center's last resort, but that court denied the request Oct. 2.

Hospers Rural Water filed a suit in November 1995 against Sioux Center. In May 1997 U.S. District Judge Mark W. Bennett ruled in a summary judgment that the July 1, 1992, boundaries set by the city were good, but the issue of whether Sioux Center could serve customers beyond those boundaries was a trial issue.

The decision was not in Sioux Center's favor, however, and the city appealed to the U.S. Court of Appeals. After that court failed to grant an appeal, the city went to the Supreme Court.

"Sioux Center is a growing community," Harold Schiebout, city/utilities manager, said. "As we have grown in the past and as we expect to continue to grow in the future, the City Council has been concerned about being able to provide our future citizens service not only water, but fire protection. That is why once this lawsuit was filed by rural water the council always felt strongly about pursuing whatever remedy we could to overcome those concerns. We went through the judicial process and that's over, and so we go on from here."

Schiebout said fire protection is still an issue

Jean Still, manager of Rural Water System 1, said the five-year ordeal had been stressful.

"We are elated that this case is finally over," Still said. "It's a shame that this case wasn't settled years ago at a lot less expense to both parties. We had asked to settle for pretty much what the courts ruled."

On Oct. 24 the city paid $230,165.34 as payment on the award of attorney fees and interest pending the appeal requests.

Schiebout said the city and the rural water system "interconnect," so the city has "made every effort to accept this as a business deal between two businesses."

Still said the rural water company has a 40-year loan with the FmHA, and as long as it receives federal funding and is classified as a 504 utility, the 2-mile annexation statue will not apply.