Hiring another full-time staff member doesn’t always sound like
the best way to save money, but that was the city of Morgan Hill’s
strategy this year to cut down on costs for legal expenses. And so
far it has worked, according to city staff.
Hiring another full-time staff member doesn’t always sound like the best way to save money, but that was the city of Morgan Hill’s strategy this year to cut down on costs for legal expenses. And so far it has worked, according to city staff.
Since hiring assistant city attorney Jefferson Billingsley last summer, the city has seen a total savings of about $145,000 on attorneys’ costs out of its general fund, according to City Attorney Danny Wan. That reduction came mostly from a sharp decline in budgeted costs for contracts with outside lawyers, who the city hires for specialized services and to supplement the previously overburdened one-person city attorney’s office.
“We took in a lot of work (this year) that used to be done by outside counsels, which charge by the hour,” Wan said. “The cost of expertise in-house is cheaper than paying by the area.”
Areas that formerly required outside expertise, but are now largely taken care of by Wan and Billingsley, whose background is in municipal law, include elections, code enforcement, police complaints and court appearances, Wan said.
Specifically, the 2008 Measure H initiative to exempt up to 500 future downtown housing units from the city’s growth control policy cost the city about $90,000 in outside counsel fees, Wan said. The cost was related to the study and preparation of the initiative that appeared on the ballot. One year later, after the city hired Billingsley, a similar initiative – Measure A – was drafted in-house and the cost was absorbed in personnel costs.
Furthermore, the processing and defense of police records requests and police complaints used to be handled by an outside counselor at a cost of about $200 per hour, Wan said. Now, those issues are handled by Billingsley.
In fiscal year 2007-08, the general fund spent a total of about $295,000 for outside special counsel services. This year, only about $49,000 will be spent on outside attorneys, Wan said. With the addition of Billingsley’s full-time position, which cost about $90,000 in salary and benefits, and including the costs for outside attorneys’ costs, the office budgeted about $516,000 this year. Wan’s contracted salary is about $175,000.
The office total is significantly down from two years ago, when the city spent about $640,000 on the city attorney’s office.
Most of the costs for general fund outside counsel this year have been for issues related to labor negotiations with the city’s three unions, Wan said. The city hires Public Law LLC to help in those areas.
The city’s redevelopment agency generally faces different varieties of legal issues, which are still often handled by outside counsel. Those costs are not part of the general fund, but the expense for such contracts has dropped in recent years as well.
Still, Councilwoman Marby Lee voted against two contracts for RDA legal services, at a total cost of not more than $55,500. In council discussion of the two contracts April 28, Lee pointed out that the purpose of hiring an assistant city attorney last year was to cut down on such contracts.
One of those contracts, with the Strombotne Law Firm, was to help the city deal with defaults and foreclosures of below-market-rate homes for which the RDA provided loans, and to protect the city’s interests in those loans. The defaults often require negotiations with banks and lenders, an area in which neither Wan nor Billingsley are experienced. The city has already used the firm for previous BMR foreclosures, and the council extended the contract at the April 28 meeting on a 4-1 vote, with Lee the only dissenter.
The other contract extended at that meeting was for real estate services related to downtown properties owned by the RDA. The contract with Nossaman, Guthner, Knox & Elliott pays for services such as property management, tenants’ relocation allowances, leases, and preparation of recent settlement agreements for tenants in RDA-owned properties. Those properties include the parcel that contains the Downtown Mall and Granada Theater, as well as one that contains Royal Clothiers.
Both contracts include attorneys’ fees of $175 to $300 per hour. City staff said the costs are within the RDA’s budget.
“My concern is that one of the reasons we brought on an assistant city attorney was to help with items like this,” said Lee, who also voted against the Nossaman contract. “These items seem pretty straightforward, and I don’t know why we need to go to outside counsel.”
While city attorneys on staff have the expertise to handle such real estate concerns, they don’t always have time to do so, Wan explained.
“We could do it in-house, but something else has to give,” he said after the April 28 council meeting.
The city attorney’s office is able to handle about 60 percent of the RDA’s legal needs in-house, Wan added.
The budgeted amount of spending for RDA outside counsel has fluctuated significantly over the last six years. The actual costs have been less than what was budgeted. Since fiscal year 2004-2005, the agency has spent an average of about $102,000 per year on outside legal contracts similar to those approved April 28.
The projected need for outside counsel, in both the general fund and the RDA, is based on an “analysis of the expected workload,” City Manager Ed Tewes said. City staff anticipate a heightened need for more outside legal counsel services next year, as the RDA prepares to enter into negotiations and development agreements with Barry Swenson Builder, a developer who the council chose last month to partner with to improve two properties downtown.
By the numbers
City Attorney’s office budget
$516,171: Fiscal Year 2009-2010
$538,354: FY 08-09
$640,192: FY 07-08
