Delaware State News

CHESWOLD — Cheswold residents will vote June 3 on whether the town can take out a commercial loan for $250,000 to pay a legal settlement with the former town manager.

In March the town settled with Edward J. Ryan after the state Supreme Court ruled there was a breach of contract between the two parties.

During a public hearing Tuesday, town council provided the crowd of about 40 residents with information on the loan that has to be voted on in June, according to the town’s charter's "long term borrowing" section.

"If the town is allowed to borrow the money, then it can pay the full settlement without any interest," town attorney Ron Poliquin said. "If it’s paid up front, then it eliminates a large sum of money."

According to the court’s ruling the town must pay the entire settlement by June 27 or pay three installment by Jan. 2, 2009, with a 17-percent interest rate added.

"They’re going to get it out of our hide one way or another," Cheswold Mayor Donald Tinari said.

The town is considering a 10-year loan with a fixed 6.5-percent interest rate for the first five years, he said, which would work out to a $36,000 payment each year for the town.

However, the town is currently not taking in enough money to pay the additional expense, with $542,000 in income and an expected $586,000 per year in operating expenses with the addition of the loan payment.

Mayor Tinari proposed a solution.

"Raising taxes $30 a year, then drop it back off in two years when the houses start selling again," Mayor Tinari said. "It would work out to 60 cents a week to keep the town on track."

Some residents were skeptical of relying on the housing market, but the mayor asserted his confidence in the economy.

"As managers we have to forecast and know that this country always bounces back," he said.

If town residents decide to vote against borrowing the money, then the town will have to figure out another way to pay off the settlement.

"Believe me, no one wanted to give (Mr. Ryan) money," Councilwoman Jamie Basler said. "It was agonizing for everyone involved.

"No matter what is decided it will come out of the taxes."

Mr. Ryan served on council before signing a five-year contract to work as the town’s manager full-time, but sued the town when he was fired by a majority vote of council.

Council contended that his contract was illegal, since a charter change to eliminate a one-year waiting period for a council member to assume a paid position had not been signed by Gov. Ruth Ann Minner before he took the job, although it had already passed the General Assembly.

"The basic premise the judge took was that our action was what we were going to do in the first place," said Councilman Robert Sine, the only council member still in office from when Mr. Ryan was manager.

He also was the only council member to vote against Mr. Ryan’s termination in the 3-1 vote, with one member abstaining.

"This town and this community inherited these problems," Mr. Poliquin said. "Now we’re just trying to address these problems. We want to give the town of Cheswold a clear slate to go forward with, but we have to deal with the consequences of the past."

Cheswold’s ex-manager claimed breach of contract

Delaware State News

CHESWOLD — Cheswold recently settled a two-year-old lawsuit with former Town Manager Edward J. Ryan for a six-figure sum after the Delaware Supreme Court ruled there were grounds for a civil trial.

The lawsuit was settled out of court a couple of weeks ago, Mr. Ryan’s attorney, Thomas S. Neuberger of Wilmington, said Monday, with the town agreeing to pay $300,000.

"The case was settled to the mutual satisfaction of all parties," Mr. Neuberger said.

Another of Mr. Ryan’s attorneys, John LaRosa, said town officials admitted no wrongdoing and settled the claim to avoid further expense and cost.

He said Mr. Ryan looks forward to continuing his career in public service in Milton, N.H.

Mr. Ryan, who had served as a councilman before signing a five-year contract to work as the town’s manager, sued the town and three council members who voted to fire him.

The General Assembly approved a town charter change on Jan. 27, 2005, eliminating a one-year waiting period before a resigning Cheswold council member could be hired as town manager.

But council contended Mr. Ryan had assumed the job 13 days before Gov. Ruth Ann Minner signed the bill into law on Feb. 9, making it an illegal contract.

Mr. Ryan filed a suit in May 2006 that he later dropped, only to refile seven months later

The Delaware Supreme Court ruled in February that the case could go to trial, allowing both Mr. Ryan’s breach-of-contract and his retaliation claims to be presented to a jury. That trial that was scheduled for March 24.

But the case was settled before the set date.

Once all the paperwork is signed by both parties, Mr. Neuberger said, the town will have 10 business days to make a down payment of $50,000 to Mr. Ryan.

After that, the remainder of the balance must be paid by June 27 without added interest, Mr. Neuberger said, or three payments on June 27, Oct. 3 and Jan. 2, 2008, must be made with quarterly 7-percent interest added.

"I don’t know what it’s going to happen with the town," Cheswold Mayor Donald Tinari said. "The town will be under the burden to take care of it."

Council wants to schedule a public hearing to discuss the settlement with residents and possible methods to come up with the funds.

After the hearing, a special election will be held to vote on what solution will work best for the town, he said.