Crestwood aldermen to place AT&T settlement in reserves

Put settlement cash toward debt service, Duchild urges

By EVAN YOUNG

A telephone company’s legal troubles could help Crestwood pay down its debt or buy a new fire truck, but for now the Board of Aldermen will stow a forthcoming settlement check in the city’s reserves.

The board recently voted 6-0 to deposit roughly $223,000 into general fund cash reserves when the money arrives in December as part of a multimillion-dollar lawsuit settlement from AT&T.

Ward 2 Alderman Chris Pickel abstained from voting on the issue; he is a director of external affairs for AT&T. Ward 4 Alderman John Foote was absent from the Oct. 27 regular meeting.

In June, a St. Louis circuit judge tentatively approved settling a suit that hundreds of cities and St. Louis County filed against the phone company in 2004 regarding unpaid telephone gross receipt taxes.

By excluding certain items, AT&T underpaid municipalities and the county on that tax, the suit alleged.

St. Louis County, the only county in Missouri to levy a telephone gross receipt tax, reached a separate, $4.6 million settlement with the phone company.

But the 300-plus plaintiff cities are expected to receive part of $65 million in additional settlement funds.

Crestwood’s share is $226,052.95.

Aldermen voted in August to allocate $3,000 — roughly 1 percent — of it to the St. Louis County Municipal League, which asked county cities to appropriate up to 5 percent of their settlements to the organization for its legal efforts during the dispute.

That leaves some $223,000 coming into the city next month — a sizable chunk of cash that could be spent on a number of things, aldermen said Oct. 27.

Ward 3 Alderman Paul Duchild proposed using the funds for debt service.

The city could make early payments on the roughly $8.5 million in certificates of participation issued in 2001 to construct its aquatic center, or on the $2.87 million “annual appropriation note” the city obtained in 2006 from Royal Banks of Missouri, Duchild said.

Those debts will be retired in 2012 and next April, respectively, but making additional principal payments on either could lead to smaller interest payments down the road, he said.

City Administrator Jim Eckrich said the aquatic center COPs likely don’t allow prepayment.

He later said that the $223,000 was not included in either the 2009 or 2010 budgets.

The board also should consider putting some of the AT&T settlement toward the city’s planned purchase of a new fire truck in 2013, Ward 1 Alderman Darryl Wallach said.

Officials have proposed setting aside $80,000 annually from the capital improvement fund to buy the $260,000 vehicle, according to the city’s five-year plan.

“I would think this might be a good jump start for that process,” Wallach said of the settlement funds.

But both Ward 2 Alderman Jeff Schlink and Ward 1 Alderman Mimi Duncan suggested the $223,000 be left alone for the time being.

“I think the initial question was ‘Where are we going to deposit the money?’ But it seems like — while they’re very good ideas — we’re getting ready to spend it in the same breath as well,” Schlink said. “I like the idea of … depositing the money and deciding at a future date what, if anything, we’re going to do with that money.”

Duncan said, “As a former banker, I’d like to put it in cash reserves and let’s see where we stand and have a bit more of a cushion.

“I still think we’re in a little bit of uncertainty as to what sales tax revenue is going to be, so I would be more comfortable with (placing the money in reserves) and then let’s see where things play out a little bit before we spend it.”

Although the money would be tucked away in reserves, the board could use it “whenever they want,” Mayor Roy Robinson said later.

“It’s there, but it’s kept away from the normal spending and all that,” Robinson said. “It can’t be used without the board’s approval.”