City awaits cell settlements

Tuesday, December 18, 2007 | 6:40 p.m. CST; updated 10:32 a.m. CDT, Sunday, July 20, 2008

COLUMBIA — Columbia could receive more than $2.5 million from the settlement of class-action lawsuits against three of the state’s largest wireless phone providers.

The first settlement, with U.S. Cellular, is expected to be presented to the City Council on Jan. 7. If approved, the city would receive more than $580,000 from the settlement.

Columbia is among the Missouri municipalities that were plaintiffs in a lawsuit filed in 2004 against wireless companies, including U.S. Cellular, AT&T and Sprint. The plaintiffs claimed the wireless companies owed back taxes on gross receipts from Sept. 1, 2005, to Aug. 31, 2007. The companies had argued they didn’t need to pay the taxes because they didn’t provide the same services as land-line phone companies.

The settlement with U.S. Cellular also requires that it pay all future taxes. The lawsuit against AT&T also has been settled, said Gary Markenson of the Missouri Municipal League, and the Sprint suit is expected to be settled by early January. The amount of those settlements will vary by company, depending on how many customers each company has, Markenson said.

According to John Mulligan, an attorney representing several municipalities in the suit, a preliminary approval agreement reached with AT&T would give Columbia a little more than $2 million from that company alone.

Mulligan does not represent Columbia in the lawsuit but is representing a slew of cities in the Kansas City and St. Louis areas.

The agreement is subject to a judge’s approval. He said Columbia would have until Feb. 25 to approve the settlement amount, and the final approval hearing would not begin until April.

City Manager Bill Watkins could not be reached for comment Tuesday, but in a Dec. 10 memo to the council, he estimated the combined settlements from AT&T and Sprint could amount to more than $2 million. While emphasizing that there are no guarantees, Watkins said that the city is “guardedly optimistic” about the settlements and that preliminary planning for what to do with the money has begun.

About $1.2 million of the collective settlement proceeds would go to the city’s reserve fund. Another $500,000 to $600,000 would be used to make up a projected shortfall in sales tax revenue for fiscal 2008. Slow sales tax growth has made it necessary for the city to put off purchasing some large equipment.

Watkins said city officials earlier this year listed a street sweeper, multiple dump trucks and fire and police support vehicles as items they would not be able to buy as soon as they wanted.

The council will be asked to set aside about 5 percent of the settlement amount, or about $29,000, as a donation to the Missouri Municipal League to compensate for its work on the lawsuits. City Attorney Fred Boeckmann said he expects council approval on an ordinance accepting the settlement terms.

“In this particular case, it’s hard to imagine that anyone would vote against it,” he said.

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