SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY

Transcription

1 SACRAMENTO HOUSING AND REDEVELOPMENT AGENCY tpproved L SEP 2 4 SACiefinEMUCRIOTWO 'AaNCY CITY OF SACRAMENTO Sacramento, California Honorable Members in Session: APPROVED StP 2 4 WI 0 HOUSING AU/HUN/1Y WY OF SACRAMENTO SUBJECT: Comprehensive Policy Regarding Legal Services and Staffing LOCATION AND COUNCIL DISTRICT City SUMMARY We have never had a comprehensive policy for the hiring and oversight of outside attorneys. Currently, some legal services contracts are awarded after issuance of a request for qualifications and some are entered directly as "sole source" contracts. Some legal services contracts are not supervised through the legal department while others are. Financial staff has identified areas where reduced reliance on outside counsel and increased reliance on staff counsel will result in savings to the Agency. This staff report recommends approval of a policy calling for (a) regular issuance of requests for qualifications (RFQ) for certain outside legal services, (b) consolidation of legal services contracts in the legal department, (c) special treatment of attorney services contracts, (d) procedures for contacting attorneys, (e) restoration of a staff position to reduce the reliance on outside legal services and (f) the amendment of the budget as needed to reflect such actions. MAILING ADDRESS: P.O. Box 1834, Sacramento. CA OFFICE LOCATION: 6301 Street, Sacramento, CA (916)

2 Page 2 COMMISSION ACTION At its meeting of, the Sacramento Housing and Redevelopment Commission recommended approval of the above action. The votes were as follows: AYES: NOES: ABSENT: Amundson, Cespeaes, Diepenbrock, Moose, Pernell, Simpson, Strong, Wooley, N210/ None imori; Williams STAFF RECOMMENDATION It is recommended that a policy Calling for (a) regular issuance of requests for qualifications for certain outside legal services, (b) consolidation of legal services contracts in the legal department, (c) special treatment of attorney services contracts, (d) procedures for contacting attorneys, (e) restoration of a staff position to reduce the reliance on outside legal services, and (f) the amendment of the budget as Vneeded to reflect such actions. The recommended policy is attached as Exhibit I. TABLE OF CONTENTS Page No. Background V V 2 Financial Consideration 6 Environmental Review. 6 V. Policy Implications 6 MBEIWBE 7 Redevelopment Agency Resolution V 8 Housing Authority Resolution 9 Exhibit 10 BACKGROUND The Agency has ongoing contracts for legal services with various firms, as shown in Table 1. In most instances, the Agency selected the firms after issuance of an RFC). The contracts are generally one year contracts. The contracts with Bleier and Smith may be extended annually at established rates through (2)

3 Page 3 FIRM SERVICES HOURLY RATES CONTRACT MAXIMUM BRENTON A BLEIER Litigation & General $105-$115 $585,000 EDWARD A. SMITH Eviction Fixed Fee to $350 for Trial $75,000 DWIGHT L. MOORE Redevelopment $100 $75,000 ERNESTO PEREZ Housing Hearing Officer $300 per Hearing HEWITT, KALDOR & PROUT Insurance Defense (Paid by Self-Insurance Fund) $10,000 $100 Est. $25000 for 1991 Table 1 Ongoing Legal Services The Agency issued an RFQ for bond counsel services and established a list of qualified bond counsel for multi-family and single family bond issues. The bond counsel list is shown in Table 2. Counsel for tax allocation bonds were selected in 1989 after issuance of a request for qualifications. Bond counsel services are awarded in rotation by the staff of the housing bond program. Bond counsel for special bond issues are selected after "sole-source" negotiation with the Finance Department. The Agency also has contracts for special legal problems or for legal opinions. In some cases, attorneys have been treated as consultants and their contracts characterized as consultant contracts. For example, the firm of Shute, Mihaly and Weinberger is one of the specialist firms. It represents the Agency in the Housing Trust Fund litigation and advises the Agency in the planning and environmental process for Richards Boulevard. The rates charged by Shute, Mihaly and Wienberger are from $115 to $185 per hour. The limits of its two contracts are $170,000 and $100,000, respectively. Goldfarb and Lipman has provided special services related to tax credits and syndication of (3)

4 Page 4 Goldfarb and Lipman has provided special services related to tax credits and syndication of Riverview Plaza. It will probably provide similar services for the upcoming Shasta Rehabilitation Project and the Norwood Family Demonstration Project. FIRM SERVICES ORRICK, HERRINGTON & SUTCLIFFE JONES, HALL, HILL & WHITE Single & Single & The Agency also maintains an open account with McDonough, Holland and Allen for special legal opinions on unusual or controversial redevelopment matters. STRADLING, YOCCA, CARLSON & RAUTH ARNELLE & HASTIE BROWN & WOOD Single & Single & Sometimes, the current practices lead to duplication of work, in that legal Table 2 Bond Counsel List services are not coordinated centrally from the Legal Department. In some instances, untrained individuals are attempting to review attorney billings and make decisions regarding legal specialties. Several policies should be adopted to avoid these problems. First, use of the RFQ process for attorney selection should be expanded. As a general rule, at least every three years, RFQs should be issued as needed for bond counsel services, eviction services, redevelopment services, hearing officer services and insurance defense services. The RFQ process gives more attorneys opportunity to work with the Agency, and it gives the Agency access to a larger pool of available attorneys. The RFQ process makes it easier to review and compare the qualifications of attorneys. Even though the RFQ process does not require the Agency to select the lowest bidder, the Agency benefits from lower hourly rates because the attorneys are aware that they are in competition for fees as well as qualifications. The hourly rates charged by attorneys under contract with the Agency, which are shown in Table 1, are substantially less than rates charged to the general public. As a result of the RFQ process, the Agency usually gets better service for the money spent. We are recommending that all ongoing contracts except litigation be terminated in three years and RFQs be issued. Litigation services present a more difficult challenge. Some of the Agency's court cases extend over many years, and it is generally not a good idea to switch attorneys during a (4)

5 Page 5 lawsuit. Although, we could begin to assign new cases to another firm, we believe that good working relationships and knowledge of the Agency's role, purpose and procedures are important in selecting litigators. Mr. Bleier's firm has been handling our litigation for many years with good success, and continuation of our relationship with his firm is beneficial to the Agency; subject, of course, to review of the firm's future performance and costs. For special legal services, the Legal Department should determinate, on a case by case basis, whether the RFQ process should be used. RFQ's should be used when time permits and there are several qualified firms which could provide the services. Finally, the Attorney I/II position, eliminated in 1990, should be restored. Experience since July 1, 1990, shows that the increase in outside legal fees has substantially exceeded the salary savings from the eliminated position. Staff from the finance department independently analyzed the cost and use of legal services during the period July 1, 1990 through June 30, 1991 and found that approximately 3000 hours of outside legal services could have been performed by staff attorneys if they had been available. They estimate that the Agency would have a net savings of $120,000 every year by adding one staff attorney working 1800 hours annually. Salary, benefits, office space, equipment, and other overhead results in a total cost of $55 per hour for the services of an Attorney II as compared with $100 to $185 per hour for outside legal services.. The additional staff attorney would also increase the Agency's ability to review billing reports and control costs of outside counsel. Contracts for outside legal services should be retained but reduced by the work done by a new staff attorney. Litigation should remain with outside attorneys because litigation is subject to peaks and valleys of work load. Outside litigators are more cost effective because they can allocate staff among several clients. Special counsel, too, should be retained when really needed for their special expertise. Examples are bond and tax attorneys. Financial entities, for example, may require review by independent counsel. Finally, outside counsel should be available during periods when staff is unable to handle an unpredictable workload. (The Agency occasionally becomes involved in several major projects at the same time. Recently, the Agency has been working concurrently on the Downtown Plaza Project, the Lot A Project, the Metro Place Project, the 8th and J Project, the 1111 G Street Project, the Booher-Giannini Project, the Habitat Project, the Oak Park New Construction Project, the Salvation Army Gymnasium Project, the Legal Services of Northern California Administration Building Project, the 5th and T Street Project and others. Outside counsel has helped break the logjam of work.) (5)

6 Page 6 FINANCIAL CONSIDERATIONS Administering contracts through the legal department should result in a reduction of outside legal costs. The restoration of the Attorney I/II position will be paid from savings realized by reduced reliance on outside legal services which should result in net reduction of the Agency legal budget by $120,000 annually. For the remainder of the current year, a total of $25,000 will be transferred from the legal services account to the appropriate employee services accounts. The 1992 proposed budget will reflect the projected cost savings if the new position is approved. ENVIRONMENTAL REVIEW Not applicable to administrative actions, per CEQA Guidelines Section 15378(b)(3) and 24 CFR Part 58.34(a)(3). POLICY CONSIDERATIONS No policy currently exists regarding the use of outside counsel. The policy recommended by staff is new. The Attorney I/II classification has previously been approved by the governing boards as part of the classification and salary plan. MBE/WBE Not Applicable - no contracting Currently involved. Respectfully submi ted by, Transmittal Approved By: N E. OLLOY ecutive Director WALTER J IPE City Manager Contact Person: Dana W. Phillips General Counsel (6)

7 RESOLUTION NO. 9i oerez ADOPTED BY THE REDEVELOPMENT AGENCY OF THE CITY OF SACRAMENTO ON DATE OF LEGAL SERVICES AND STAFFING POLICY APPROVED SEP sitcommil) REDEVELOPMENT CITY OF SACRAMENTO f BE IT RESOLVED BY THE REDEVELOPMENT AGENCY OF THE CITY OF SACRAMENTO: Section 1: Preparation and implementation of a policy, by the Executive Director, regarding hiring and use of outside attorneys is approved. Section 2: The 1991 budget is amended to add a new Attorney II position in accordance with the Agency's classification and pay schedule, to allocate funds for such position and to reflect payment for such position from savings realized by reduction of existing legal service contract allocations. AT1EST: CHAIR SECRETARY IF: \ DWP\TKASTAFRPT.LEG] FOR CITY CLERK USE ONLY RESOLUTION NO.: DATE ADOPTED: (.7 )

8 . RESOLUTION NO. ADOPTED BY THE HOUSING AUTHORITY OF THE CITY OF SACRAM ON DATE OF LEGAL SERVICES AND STAFFING POLICY I 2 4,t1 HoZ O n, 0 1id iiii F SACRAA 11'. -1ENTo BE IT RESOLVED BY THE HOUSING AUTHORITY OF THE CITY OF SACRAMENTO: Section 1: Preparation and implementation of a policy, by the Executive Director, regarding hiring and use. of outside attorneys is approved..1, lk Section 2: The 1991 budget is amended to add a new Attorney II position in accordance with the Agency's classification sand pay schedule, to allocate funds for such position and to reflect payment for such position from savings realized by reduction of existing legal service cdntract allocations. ATTEST: CHAIR SECRETARY, [FADWPVFX1ASTFRPTL.D RAJ FOR CITY CLERK USE ONLY RESOLUTION NO.: DATE ADOPTED: ( 8 )