Legal fees hit funds in reserve

Getting sued is getting expensive.

The Augusta Commission voted Tuesday to take $600,000 out of reserve and contingency funds so the Law Department can continue paying outside attorneys through the end of the year.

The department has already exhausted its legal fees budget, spending $450,000 so far this year. A request for supplemental funds attached to Tuesday's meeting agenda blamed "recent changes in federal law" and "a rise in countywide litigation."

Though City Attorney Chiquita Johnson signed off on the expenses, she didn't hire all the attorneys being paid. Fees paid to Burnside Wall LLP, the firm of former City Attorney Jim Wall, which the Richmond County Sheriff's Office uses for litigation, come out of her budget. The Wall firm is also involved in the continuing X-Mart case.

Finance Director Donna Williams said she couldn't determine on short notice which attorneys were hired by the city attorney and which by other departments. Ms. Johnson did not immediately return a phone message Tuesday.

Among those brought in by the Law Department have been Freeman, Mathis & Gary LLP, of Atlanta, for the Teresa Smith case, the Thompson Building Wrecking Co. case, airport matters and various tax appeals; and Mary Cooney, of Atlanta, for the McKnight Construction Co. case.

The commission voted 7-2 (Joe Bowles and Jerry Brigham opposed, Corey Johnson not present) to take $300,000 from contingency funds and to authorize as much as $300,000 from reserves. The Law Department must provide "comprehensive" monthly reports on legal expenses to the commission, and Law Department funds can't be transferred without Ms. Johnson's being informed.

Mr. Brigham said he feels hiring of outside attorneys ought to be approved by the commission, and he wasn't comfortable agreeing to $600,000 when the contingency fund has a balance of only $425,000.

"We should not spend more than what's in our contingency fund," he said.

Reach Johnny Edwards at (706) 823-3225 or johnny.edwards@augustachronicle.com.

In other business Tuesday

Pension plan

The Pension & Audit Committee learned that the city will have to come up with $1.3 million by the end of the year to cover shortages in the 1949 pension fund, which took a battering in last year's market with plummeting investment values. Otherwise, the city won't be in compliance with the state-required level of contributions.

That news came out of an actuarial valuation with data ending Jan. 1. A portfolio review of the 1945 and 1949 pension plans for the period ending July 31, presented by financial adviser Charles May of Morgan Stanley Smith Barney, offered better news. The market has rebounded in the past four months, Mr. May said.

The 1949 plan, which lost $20 million in 2008, has risen from $55.2 million to $55.9 million since January. The 1945 plan, which lost $2.4 million in 2008, has dropped from $6.9 million to $6.7 million this year.

Stimulus funds concerns

The commission sent the proposed ratification of a $50 million request for neighborhood stabilization stimulus funds back to the Administrative Services committee in hopes of having more questions answered.

The application has Commissioners Betty Beard and J.R. Hatney livid at City Administrator Fred Russell, Housing and Community Development Director Chester Wheeler and Mayor Deke Copenhaver, who sent the paperwork to Washington without com-mission OK and omitted the Laney-Walker and Bethlehem neighbor-hoods.

The mayor and Mr. Russell have said that if they'd waited for approval the city would have missed the application deadline and would have had no chance of getting funds. Neighborhoods had to be paired with developers who could line up written backing from lending institutions, and that didn't work for Laney-Walker or Bethlehem, Mr. Russell said.

The application includes $21 million for the Goshen golf course community, and members of the Goshen Resi-dents Homeowners Association on Tuesday wanted to know if stimulus funds would lead to low-income housing.

Mr. Russell said no, that the money would be used to revive a stalled project by Gould & Associates to build homes and townhomes.