KTVB

The City of McCall may have to file for a special municipal form of bankruptcy today.

McCALL - A long-running legal dispute has the city of McCall on the brink of bankruptcy – with a decision coming today.

McCall city leaders first started discussing that extreme measure about a year ago, but managed to avoid it.

But, at a town hall meeting Thursday night, the city told its residents it may not have a choice this time.

Bankruptcy would be a historic – and extreme – measure, but the city says the alternative is much worse.

In 1995, the Environmental Protection Agency ordered McCall to stop dumping treated wastewater into the Payette River.

The city hired a contractor to build storage ponds to remedy environmental concerns.

That ultimately lead to years of lawsuits -- with McCall claiming the work wasn't done properly and the contractor demanding payment.

The end result is that McCall owes $6.5 million.  Since May of last year, the city has paid back $1 million of that debt.

But those owed the money are asking a judge to force the city to pay it all back immediately. 

In fact, they want to prohibit McCall from making any payments to anyone until that judgment is satisfied.

"It would literally mean that all city operations would cease,” city manger Lindley Kirkpatrick said. “There would be no police protection, no street maintenance, no snow plowing, no water service, (and) no sewer service."

Kirkpatrick called the request “draconian” and said it isn’t acceptable to keep the city functioning.

"Chapter Nine Municipal Bankruptcy would stop enforcement actions and would stop any kind of contempt motions, any kind of orders like that,” he said.

Chapter Nine Bankruptcy is a specially designed for governments, but is rarely used - it's not a reorganization, nor a liquidation, but it buys time and allows the city to determine just how it will pay the millions it owes.

"There are no good options and I don't even know if there's a best option. None of the choices that we're facing are good ones,” Kirkpatrick said.

The city council will meet Monday evening to make a decision.