Outside city legal help being cut from the inside

Jan. 24--Since the start of 2016, the city of Lockport's budget line for outside legal counsel fees has been reduced drastically. Originally, $150,000 was budgeted for those costs but now that's down to just $28,871, according to Director of Finance Scott Schrader.

Money has been pulled out of the budgeted counsel line over the last three weeks by the Common Council to fund a full-time assessor position, a job that comes with a salary of $68,000 plus benefits. A second action was taken to fund a clerk's position in the treasurer's office. Council members made it known that if one of three previously laid-off clerks took the post, they wanted that person to have a higher salary. One of the three is interested, meaning her salary will be on the higher end, likely $32,140.

What impact could these recent decisions have on the city's financial picture in 2016? A lot, according to City Attorney John Ottaviano.

"I've always said, you get what you pay for," Ottaviano said. "There are areas of expertise in law just like there are areas of expertise in medicine. Corporation counsels brings in experts, both in the private sector and the public sector, when their clients are faced with a unique issue or specialized areas of law."

To do this, he said, a city's general counsel has to admit that they don't have the expertise to handle a specific case.

"It doesn't enhance me in anyway. I'm actually telling the council this is in your best interest to do this," Ottaviano said. "It's beyond my expertise. I know general municipal law, finance law better than anyone else. I've been doing it for 30 years. But not these areas of labor law."

That was the case last year when the city hired Bryan J. Goldberger to help with two legal matters. Goldberger was paid $157,000 by Lockport, but Ottaviano said "I can tell you that he paid for himself 13 times over." In fact, the city was able to save millions.

The first case had to do with police and fire retiree health care changes. Mayor Anne McCaffrey said the original cost to the city, had the matter not been negotiated, would have been $358,000. Through the agreement negotiated by Goldberger, the city paid $170,000, a $188,000 savings.

"That exceeds the $157,000 we paid him," Ottaviano said.

Ottaviano said the city, during its financial crisis, reduced the amount of money in municipal employees Health Reimbursement Account from $3,251 to $795, a $2,456 difference.

It was determined the city violated the collective bargaining agreement by changing the HRA administrator from P&A Administrative Services to ProFlex Administrator LLC. Then Lockport violated the agreement by enacting a change to the health insurance coverage in the retiree 799 plan and the prescription drug coverage in the POS 201 plan. But the city did not violate the agreement by failing to provide members HRA values for 2014.

As a remedy for these violations, the city was directed to "refrain from making any future changes to its health insurance plans, carriers or administrators without negotiating such changes with the union."

Ottaviano said it was also determined that the unions were not entitled to any damages.

Had the city lost the decision, it would have cost millions. With 217 employees, the lower amount is providing a saving of $532,952 a year. The case, if lost, would have required the city to pay that amount to cover 2015 and three years prior, 2012 to 2014, for a $2,131,808 total.

Ottaviano said the city would have also had to pay that additional $532,952 every year going forward.

The second matter was an arbitration by the New York State Public Employment Relations Board between the city and the Lockport Professional Firefighters Association Local 963. Ottaviano said Goldberger "worked very hard and did an excellent job."

Other costs

Each year money is also budgeted in the outside legal counsel line to cover a number of expenses that may occur, not just for hiring outside attorneys. Ottaviano said every year there are many cases brought to challenge property assessments. When a commercial assessment is challenged, he said the court will often direct both sides to obtain an independent appraisal that costs several thousands of dollars. If that case then proceeds to trial, the appraisal has to be certified for trial and, Ottaviano said, you have to pay the appraiser to testify.

Another fee out of that budget line is for arbitration. Ottaviano said each year there are between three to eight, sometimes even 10, bills received for arbitrators. Arbitrators costs $1,000 a day and each bill ranges from $4,000 to $5,000.

"That adds up quickly," he said.

Looking ahead

In 2016, there are a number of costs that need to need to be covered by money from that line. There are currently 10 pending commercial assessment challenges and 12 residential ones. There is an issue with the fire department that will need arbitration in 2016.

Also coming up this year is the Lafarge pipe line deal. Ottaviano has been working with Redland Quarry, which is owned by Lafarge, as the city investigates if its 100-year-old water line can handled the vibrations from the quarry blasting, if the quarry is allowed to expand south, past Hinman Road in the Town of Lockport. As part of this matter, outside experts will need to be retained by the city to consult with them on the matter, such as engineers.

Being just the first month of the year, there is a lot of concern from city officials when it comes to how much has been removed from the outside legal counsel budget line. McCaffrey said she is concerned because the budget is not balanced. The city does have $200,000 in a contingency line that could be accessed in the future, but would be very concerned with using funds from that so early in the year.

In her statement to the public on Thursday announcing her veto of the Common Council's decision to hire an outside assessor and to rescind their deal with Niagara Falls, she said, "the action to reduce the legal consultant line by more than half shows the Common Council's intent that they do not want provide the essential resources and expertise to represent the city. The New York State Comptroller's Office approved the city's 2016 budget after a careful review to ensure that each line was properly funded. By drastically reducing the legal budget line, this action has in effect created an unbalanced budget and may cause the comptroller's office to be concerned. In addition, Standard and Poor's recently improved our bond rating to 'stable' and indicated that this rating could be impacted by the new Common Council's actions. The ramifications could be far-reaching."

Ottaviano said since the new council has taken over, only one person -- 1st Ward Alderman Joe Oates -- has asked him what the money in this line is used for and how it is spent.

He said Lockport's budget for outside legal counsel "is one of the lowest, if not the lowest" in the area.

For the city of Niagara Falls, in 2016, $200,000 has been budgeted for this purpose. Falls City Attorney Craig Johnson echoed Ottaviano's emphasis on the importance of hiring outside attorneys for their expertise in various matters. He said there are three major areas where money will be used from the line, including having an outside attorney "vastly experienced in that area" handle a multi-million dollar piece of litigation against a contractor and bond agency. They also use outside counsel for complex matters in federal court, primarily civil rights claims against the city and plan to seek outside help with handling residual claims filed over "injuries from alleged exposure in the Love Canal footprint."

For Niagara County, County Attorney Claude Joerg said he has two lines in the 2016 budget that he uses for outside counsel in labor, pension and environmental matters. Both lines are more than $200,000 each.

Contact reporter Rikki Cason at 439-9222, ext. 6252.

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