Hoboken taxpayers could foot the bill for almost $2 million in legal costs for 2011, an increase from approximately $570,000 in 2009 and $640,000 in 2008. But Mayor Dawn Zimmer, who took office late in 2009, defended the costs last week, and said that the cost of litigation in the last two years has been money well spent for the city of Hoboken.
“Overall, the costs have gone up because we’re dealing with major issues and we need to make sure that we have good legal counsel protecting the city’s interests,” Zimmer said in an exclusive interview with the Reporter.
Resident David Liebler, who has worked for an anti-Zimmer candidate in the past, filed an Open Public Records (OPRA) request recently asking for all of the legal expenses for the city of Hoboken since 2008.
“All I heard was legal, legal, legal at every council meeting,” Liebler said last week. He said it took him a month to review the thousands of documents that he received.
Scarinci and Hollenbeck received approximately $1 million in contracts since 2008.
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“What I found was astonishing,” he said. “The spending is out of control.”
The mayor said major issues that have cost the city in litigation fees include the complex sale of Hoboken University Medical Center, litigation surrounding recently implemented rent control changes, and development costs.
However, attempted rent control changes and development issues have been around for some time.
“There has been a lot of money spent on making sure we have the professionals to protect the city and bring balanced development to the city of Hoboken,” Zimmer said.
The city is currently at a standstill with NJ Transit over development of the downtown transit terminal area. Originally, NJ Transit proposed high-rise towers, including one that would be 70 stories high.
“They understand that under my administration, they are never going to get something like that,” Zimmer said of the original proposal. The proposals have since been modified, “And that’s because I’ve hired the right lawyers and am being strong, and saying that I am going to work as hard as I can to make sure to bring balanced development,” she said.
Zimmer said the developers are hiring “the big guns,” so she feels the city needs to do the same.
According to the spreadsheet provided by Liebler, the city spent approximately $1.17 million in legal fees in 2010. These fees are only for law firms, not for expert testimony or settlements.
The firm of Kates, Nussman, Rapone, Ellis received $147,000 that year, but the big winner was the politically connected Scarinci and Hollenbeck of Lyndhurst, which pulled in close to $400,000 in contracts last year.
However, the city recently cut ties with the firm after attorney Donald Scarinci accused the Hoboken Municipal Hospital Authority of fraud in court papers.
But the firm received another approximately $172,000 in fees for 2011 before the city cut ties. Scarinci and Hollenbeck have received approximately $1 million in contracts since 2008 from the city of Hoboken.
Over the past two years, the firm of Weiner Lesniak, also well connected to Democratic politics, received approximately $450,000 in contracts. The city’s corporation counsel, Mark Tabakin, is from Weiner Lesniak.
As of October, the city had spent approximately $1.2 million on legal costs in 2011 – but more bills were expected from the hospital sale and other litigation.
The city’s most recent adopted budget was for $100 million for 2011.
So, are court judgments down?
Recent annual budgets, which are listed on the city website, list how much the city paid out in judgments per year, and how much the city is appropriating for the upcoming year.
In 2008, the city did not list any judgments, but in a line item identified as “settlement of claims against the city,” $65,500 was spent.
Settlement numbers are not specified in the next two years of budgets, but the budgets list non-settled judgments against the city. In 2009, the city paid $20,850 in judgments, even though officials appropriated, or expected to pay, $115,000 that year. In 2010, the budget shows only $2,500 in judgments.
The 2011 budget shows that the city has appropriated $400,000 for potential judgments, but final numbers are not in yet.
Employee litigation
In 2010, the mayor implemented a layoff plan that cut 18 workers from City Hall. She said the city is still facing litigation from employees who were laid off from their jobs.
“It’s extremely time consuming [to fight the suits] and therefore costly,” Zimmer said. The employees fighting for their jobs are a part of the state civil service program, which provides protections for employees, and can sometimes make it difficult for terminations to occur.
Zimmer took part in a discussion with Gov. Christopher Christie on Tuesday in West New York.
“One question the governor asked was if I could wave the magic wand and get legislation passed what would it be, and I said, ‘To opt out of civil service,’” Zimmer said.
Civil service is a state program to set rules for government hirings and firings.
For example, two former public information officers who worked for the mayor’s office are currently suing the city, alleging they were fired and replaced for political reasons.
Zimmer said the city is also dealing with “legacy litigation,” or legal problems created before her time. For example, the city previously offered an early retirement plan which was later rescinded when the city was under state fiscal monitoring and the program was judged to be against state regulations. Some employees had entered the program before it was rescinded. The city is facing 11 lawsuits from the withdrawal of that program alone, Zimmer said.
The city also recently negotiated two union public safety contracts.
“We’re getting things done that haven’t been done in a long time,” Zimmer said. “I think it may be the first time in Hoboken’s history that police and fire both have employee contracts going into the future.”
But at what cost?
Zimmer’s council foes have become increasingly vocal on the increase in spending costs.
In a meeting on Wednesday night, Councilwoman Theresa Castellano, discussing line item transfers, said that recently in the city, “The only true winners are the law firms and the losers are the taxpayers.”
Councilman Michael Russo has, for some time, been questioning the city attorney as to why other attorneys were told to continue to do work without the council’s authorization, after exceeding the contracted spending cap. But Tabakin said that attorneys have a fiduciary duty to protect the city’s interests once they are awarded a contract.
“[You want me] to tell them to cease doing work?” Tabakin asked Russo. “That is the most irresponsible thing that can happen.”
Councilwoman Beth Mason blames the rising cost of legal fees on “mismanagement.”
She also said the use of politically connected firms is an issue.
But Council President Ravinder Bhalla, a Zimmer ally and attorney, said rising legal costs “is not a shock” to him.
“I don’t think [council members] are in a position to armchair quarterback on these legal issues,” Bhalla said. “The facts speak for themselves; we came into office with a lot of legacy litigation.”
Zimmer credits the attorney who handled the city’s hospital fees, Paul Hollander, with helping protect the city from $98 million in potential legal exposure. She also said it has been “worth the investment” for the city in the NJ Transit litigation.
Bhalla also spoke of the job that Hollander did during the hospital negotiations. Hollander billed the city at $540 per hour.
“Although his legal fees are high, they are less than a drop in the bucket compared to what we would have been faced with had we not have his services,” Bhalla said. “Let’s not be pennywise and pound foolish when we think about these issues. You get what you pay for.”
Ray Smith may be reached at RSmith@hudsonreporter.com