Judge Gives Priority Status to Portion of CCFD Retirement Debt, Rejects Additional Tax Levy

Published at 3:23 p.m., Updated with court hearing information at 3:54 p.m.

Following a tense public information session Thursday evening, representatives from the Central Coventry Fire District once again appeared in front of Kent County Superior Court Judge Brian P. Stern Friday morning. 

Despite Thursday's unanimous votes by board members against ratifying a contract negotiation agreement with the firefighters' union, and in favor of recommending that Judge Stern authorize the district to liquidate, the motions heard on Friday were only related to claims from the Municipal Employees' Retirement System (MERS).

Judge Stern noted that the court will take up any additional CCFD items, including the board's recommendation regarding liquidation and closure of the district, after the annual public budget meeting and vote takes place on Monday evening.

On behalf of the MERS Retirement Board, counsel Michael Robinson submitted to the court earlier this month, motions requesting that MERS claims be given priority status in terms of debt repayment and requesting the court approve an additional tax levy to CCFD taxpayers  to cover the nearly $629,000 claim. This figure reflects retirement contributions that should have been paid into the retirement system prior to it entering into a Special Mastership.

The first claim asks the court to apply federal bankruptcy code to the CCFD MERS plan in order to give employee benefits priority in the receivership proceedings. Judge Stern ultimately approved an alternative MERS suggestion, requesting that the portion of the claim withheld directly from employee paychecks be given equitable priority status. 

MERS also requested a priority claim on any statutory settle amount that may be withheld by the General Treasurer, however Stern stated it was not necessary to address this particular contention as no funds have been withheld from the district by the General Treasurer.

Lastly, Judge Stern addressed the MERS motion petitioning the court to issue a Writ of Mandamus which would authorize the issuance of an additional tax levy to residents to pay back the debt owed to the employees' retirement plans. Despite finding that the Central Coventry Fire District falls within the statutory definition of a municipality in regards to MERS, he decided to reserve his ruling on the matter for the time being.

"It would be inappropriate and inefficient during the present posture of this case to consider whether a separate tax levy should be made to satisfy a single claim," he said. 

Another point made during his decision was that if the fire district is liquidated, the retirement system's claim may increase to an amount in excess of $6 million due to further legal and financial obligations that may be triggered if the district shuts down.

"The fate of this district is unknown. There's uncertainty as to whether the district will continue to run or cease to operate and be forced to liquidate," Judge Stern continued. "Ultimately, the taxpayers will have liability if the district is unable to work out either a plan of repayment with the retirement system or its worked through the Special Mastership proceedings."

On Friday afternoon, the firefighters' union requested an emergency hearing to establish certain conduct guidelines for the Oct. 21 annual budget meeting. Specifically, union members are inquiring whether the court will permit amendments to the tax rate, levy and/or operations budget on Monday evening. The hearing has been scheduled for 11 a.m. Monday, Oct. 21 at Kent County Superior Court (222 Quaker Ln., Warwick).