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Victorville debt to drop by $54M
City Council approves terms of Foxborough power plant settlement
VICTORVILLE • In roughly two months, Victorville's debt will drop by $54 million.
The City Council on Tuesday night approved terms of a settlement agreement with Carter & Burgess, designer of the failed Foxborough power plant.
Per the agreement, Jacobs Engineering, which bought Carter & Burgess in 2007, agreed to file a request to dismiss its appeal of Victorville’s jury-awarded settlement for the botched project. The company also agreed to wire the $54 million to a trust account within 60 days from the time the final agreement is executed, which City Manager Doug Robertson said should happen very soon.
The funds have already been pledged to cover past debts, with the first $30 million pegged to pay down an $83 million bond debt issued for the plant’s construction.
The next $22.5 million will be used to pay back loans — with interest — between the city’s Victorville Municipal Utility Services fund and the Victorville Water District. The city used $20 million in water district reserves in 2009 to keep the utility fund afloat, in a move flagged as potentially improper in the San Bernardino County Grand Jury’s June 29 report.
The remaining $1.5 million will be used for current year operations or to help replenish the city’s dwindling general fund reserves, according to Robertson.
“There may be some flexibility there, depending on our reserve amounts once the annual audit is complete,” Robertson said, with that report due by Jan. 1.
Victorville sued Carter & Burgess in 2009, six years after hiring the firm to oversee construction of the Foxborough cogenerational power plant.
The project was touted as a $22 million investment to help lure businesses to Victorville by offering electricity at a discounted rate. Instead, the city’s costs ballooned to an estimated $120 million, with Victorville forced to scrap the equipment and walk away before the plant ever generated 1 megawatt of power.
A jury unanimously awarded the city $52.1 million in damages in December 2010, upholding claims that Carter & Burgess had committed fraud and negligence in advising Victorville on the plant. The judge later tacked on another $1.8 million in attorney’s fees and costs, bringing the total settlement to nearly $54 million.
Carter & Burgess appealed the award and has been trying to fight it ever since, while also making repeated settlement offers to the city. The City Council accepted an offer from the firm during a closed session meeting Nov. 9.
Norah Lally, spokeswoman for Jacobs Engineering, said Tuesday the company had no comment on the settlement.
Brooke Edwards Staggs may be reached at (760) 955-5358 or at BEdwards@VVDailyPress.com.
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