$28,817 must be paid to Iowa State Bank and $105,000 is owed to residents Dan and Linda Johnson.
The City Development Board ruled Wednesday in Des Moines on how the former city of Mount Union must settle its outstanding debts.
When Mount Union was dissolved in March 2017 it owed about $300,000 in court-ordered judgments and legal fees to Regional Utility Service Systems. At the time of the state agency's meeting Wednesday, two claims against the city remained: $28,817 owed to Iowa State Bank and $105,000 to Mount Union residents Dan and Linda Johnson.
Iowa State Bank was the lending agency Mount Union had a contract with to purchase its Community Building. Along with all other city assets, money owed on the Community Building mortgage had to be paid in full upon Mount Union's dissolution.
B.J. Jahn, a Burlington attorney representing Iowa State Bank, told the board Mount Union owed about $21,000 to the bank. Jahn also requested about $7,000 in interest, principle and attorney's fees, which the board unanimously approved.
About $42,000 in former Mount Union funds remain with the City Development Board, which it will use in part to pay the bank.
The more contentious debate surrounded the $105,000 in damages awarded to the Johnsons in their defamation suit against the city of Mount Union.
On Dec. 8, 2017, District Judge Mark Kruse awarded $70,000 to Dan Johnson, a former city mayor, and $35,000 to Linda Johnson, his sister and a former city clerk, who were in attendance at the Wednesday meeting.
Steve Ort, Mount Union's former city attorney, participated in the meeting via conference call, in which he argued against the judge's decision.
"I have made it clear I believe it is a worthless claim and should be denied," Ort said.
No one, including Ort, came to Henry County District Court in December to testify before Kruse on behalf of the former city.
Ort said that because Mount Union was no longer a city when damages were decided by Kruse, no one could attend the hearing on behalf of the town.
"If there is no city of Mount Union, there can be no one there to represent the city of Mount Union," he said.
The board rejected Ort's argument and said it would not re-litigate the judge's ruling.
"I really don't take this lightly," said board vice chairman Jim Halverson. "I realize that there is a substantial impact to the property owners. Believe it or not, I'm very sympathetic to that. But based on the testimony provided as well as advice from council and what I've also learned today, I just don't know that we have any other choice in this particular circumstance. A district court judge made a decision and we're in the precarious situation of having to implement that."
After more than two hours of discussion, the board unanimously decided the $105,000 claim must be paid and proceeds from the sale of the Community Building should be used by the Henry County Board of Supervisors to go toward paying down the debt.
How and when the remaining debt is settled will be left to the Henry County auditor and board of supervisors to decide as they work on the 2019 budget over the next several weeks.