A sewer-fees lawsuit thought to be on the verge of settlement is now back to square one, as the city council in  Marathon, Fla., on Feb. 23 rejected revisions made by Key RV Park attorney David Paul Horan to its latest offer, according to the Florida Keys KeyNoter.

The mobile-home park’s homeowners association sued the city in October 2008. It alleges discrimination in assessing the park residents more than $1 million combined to connect to the system, which is still under construction.

The lawsuit essentially boils down to whether it’s legal to charge Key RV’s individual owners the same sewer fees as other equivalent dwelling units in the city based on the form of ownership. The mobile-home park switched to a condominium form of ownership in 2004.

Single-family homeowners in Marathon pay $5,700 per EDU, which is what Key RV residents were slated to pay.

Horan said two Keynoter articles were partly responsible for the city’s decision. That includes a story detailing Key RV/Mobile Home Condo Association board member Greg Coldiron’s outline of a proposed settlement.

The Keynoter obtained an audio recording of a board meeting in which Coldiron said the city would foot a roughly $1 million bill to install new pipes and be responsible for maintaining them. He also said residents would get a break on monthly sewer charges totaling $34,000 per year.

The city’s adopted methodology for assessing sewer fees says it will not install sewer infrastructure in condominium properties.

“What it did was portray the Key RV as getting a sweetheart deal. We definitely were not getting a sweetheart deal. We were paying the full boat on everything and that didn’t come through in the article. It wasn’t the intent of the article, but it didn’t come through,” he said.

The other article pertains to a complaint Knights Key Inn owner Lance Kyle filed with the state Commission on Ethics against city Finance Director Peter Rosasco.

Kyle claims, among other things, that “Mr. Rosasco (during his time as interim city manager) secured a ‘sweetheart’ sewage infrastructure deal for his CPA client, Greg Coldiron, at Key RV Park.” Rosasco said at Tuesday’s City Council meeting he’s never represented Coldiron.

“Both of those are disturbing to the elected legislators of the city,” Horan said.

Councilman Dick Ramsay said despite Coldiron’s claims, he still hopes for a settlement.

“If we make a settlement that exposed the city to others coming forward, then what we do is potentially create an ongoing situation that we can’t allow to happen,” he said, referring to possible additional lawsuits from condo associations. “Any settlement has to be fair for everyone in the city, and that is the real hang-up.”

“The council looked at it and we need to look at all the ramifications of going through with the deal that we had,” Councilman Pete Worthington said.

Horan said a “basic premise” for a settlement remains in place and he’s hopeful it will happen in lieu of a trial.

“I don’t think it’s to either of our best interests to litigate it. The way we’re trying to get this thing done doesn’t give us any kind of ‘sweetheart’ deal, and people don’t understand that,” he said.

Acting Circuit Court Judge Ruth Becker on Jan. 18 denied cross motions by both parties to dismiss the case and said the issue warrants a full-blown trial. Her office told the Keynoter Friday no hearing date has been announced.