In a lengthy statement of claim filed in Yukon Supreme Court last week, the 76 residents, representing scores of duplex properties, say the city messed up horrifically when it permitted the federal government to sell the subdivision to a local business in 1998 for $2.2 million.

The city broke with standard procedure when it let the local company avoid entering into a development agreement, and instead register an easement agreement relieving the city of responsibility for an aging and decrepit water and sewer system, the claim states.

Water and sewer infrastructure in Takhini North fell well short of city standards at the time of the sale, and continues to today.

Water and sewer services for each of the duplexes, for instance, are tied to each other in series, so that freezing problems at one end of the row could affect services at the other end, rather than having individual services for each home.

Furthermore, the suit contends, the city failed to ensure the potential buyers were made aware of the faulty water and sewer system, despite advice from the federal government to seek an independent legal opinion regarding the sale to the private developer.

The suit says the easement agreement was unclear, and did not spell out the future liability buyers would face when it came to making upgrades to the subdivision built by the Canadian military back in the 1940s.

Takhini North residents are seeking a court order to directing the city to pay for the repairs, and an injunction preventing the city from pursuing costs from the residents.

Residents have also suffered a reduced value of their properties because of the city's negligence, and are seeking compensation for special and general damages, the suit says.

Representatives of the local residents' association have met with city officials to try to iron out a mutually acceptable approach to the matter.

An April 7, 2007 letter to residents from the city indicated each homeowner would have to pay $24,350 as their share of the cost of upgrading the water and sewer services during reconstruction of the neighbourhood, the suit points out.

A subsequent letter to residents indicates a new estimate of $10,000, which would cover the regular surface improvements - pavement and sidewalks - and the cost of bringing the water line from the road to the house.

Homeowners would also be responsible for the cost of doing what was required inside the basement to switch from the old to the new service, in addition to the $10,000 estimate.

Reconstruction of the neighbourhood is scheduled for next year, in conjunction with phase one of the new Takhini North development to provide new residential lots for sale.

The suit points out that when the city permitted the federal government in the early 1990s to sell off Valleyview, Takhini East and Takhini West, it did require a development agreement calling for new water and sewer infrastructure.

The same requirement was not made of either Ottawa or the developer in the sale of Takhini North, says the statement of claim.

Mayor Bev Buckway declined comment this morning.

She said the city had not yet received notice of the lawsuit, and that she would not be commenting now in any case because the matter is before the court.