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Budget shift reveals city's legal bills

- $360,000 in one year to fight Flanders suit


Published: October 23, 2009

A BIT of budgetary balancing raised eyebrows at the Carmel City Council meeting Oct. 6, when resident Carolyn Hardy asked about an after-the-fact transfer of funds to cover $324,000 in unbudgeted legal costs. During the year, the city racked up more than a half-million dollars in legal bills, mostly for fighting a lawsuit filed over the proposed sale of Flanders Mansion.

To balance the books, administrative services director Joyce Giuffre recommended a transfer of $342,242 to cover unanticipated bills the city received during the 2008/2009 fiscal year. The transfers, which were proposed in a report slated for approval without discussion, would be made from the budgets of departments that had not spent all the dollars earmarked for them.

To cover the costs, Giuffre recommended transferring $133,750 budgeted for positions in administrative services, the police department, public works and community services that went unfilled last year, along with $62,287 that was not spent on police overtime. Unused funds allocated for professional and contractual services provided most of the remainder, as well as $27,960 from the stormwater runoff program and $12,865 from the workers compensation fund.

With the exception of the transfer from the workers compensation reserve fund, these transfers do not increase the total general fund expenditures budget, she said in her report. Rather, they shift monies from one line item to another. The council agreed with Giuffres recommendations and voted to approve the transfers.

After the meeting, in response to a request from Hardy, Giuffre said the city had originally budgeted $60,000 for legal professional services in 2008/2009. At midyear, the council increased the amount to $185,000, but actual expenditures by the end of the year topped out at $507,898.

Giuffre reported litigation over the Flanders property accounted for the largest amount $360,359 with John Mandurragos unsuccessful lawsuit over the citys failure to approve his downtown Plaza Del Mar project totaling $66,200. General matters and employment law issues, including costs related to the citys defense against a sexual-harassment lawsuit filed by human resources manager Jane Miller, totaled $81,339.