TREASURE ISLAND — The city of Treasure Island is proposing an out-of-court settlement in a long-term dispute with St. Petersburg over sewage treatment fees.
The St. Petersburg City Council is expected to meet July 25 to consider a settlement offer by Treasure Island to drop pending litigation if St. Petersburg will refund $180,721 in interest paid to the city on $1.3 million held in escrow for a sewage treatment surcharge that began in 2008.
Although St. Petersburg city attorney John Wolfe won't say what his recommendation will be to the City Council, he did reference a January 2012 circuit court decision that ruled that St. Petersburg acted properly in levying the surcharge.
"We won the case; we are entitled to the interest," Wolfe said. "It is up to the City Council to either reject, accept or make a counteroffer."
Treasure Island city attorney Maura Kiefer, after a vote by the city commission, had offered in June to drop two pending suits against St. Petersburg if Treasure Island could keep the interest paid on the escrowed 25 percent surcharge. As part of the agreement, each city would pay for its own legal fees.
Kiefer did not respond to repeated requests for comment.
In a letter from St. Petersburg, the city said it would be willing to settle the standoff but said Circuit Judge Amy Williams' ruling in 2012 and a subsequent District Court of Appeal ruling in February 2012 determined St. Petersburg should received the $1.3 million and the interest.
The origin of the dispute goes back decades when a regional treatment plant was built in St. Petersburg to handle wastewater from Treasure Island and other beach communities.
Treasure Island's contract for service expired in 2008 and city officials could not reach a new agreement with St. Petersburg, which then increased the sewage treatment fees by 25 percent. Treasure Island disputed the legality of the surcharge and refused to pay. The issue ended up in court, which ruled in St. Petersburg's favor.
"Treasure Island is trying to get something (interest) they aren't entitled to," Wolfe said.
Treasure Island Mayor Bob Minning said the city is willing to drop its two suits involving payment in lieu of franchise fees and payment in lieu of property taxes if St. Petersburg will return the interest on the surcharge fee.
"It is a tit for tat, if we drop the suits, what can we get back?" Minning said.
Treasure Island has argued that it wants a flat rate with no out-of-city surcharges.