By Mark Bertone
February 21, 2012

I am very concerned about the financial health of our City. The State of California has robbed our City of our RDA funds. These funds were set aside to fund infrastructure improvements, fund City staff, fund the expansion of much needed Senior housing and to provide programs in the community. We have lost hundreds of thousands of dollars investing in one local business downtown, Christophe’s. We are facing labor contract renewals in the coming future. We have pension obligations that are most likely underfunded. I enjoy the fact that my City has it’s own police and fire departments. I enjoy the fact that our City provides an extensive choice of recreational and senior programs for those who live in Upland. Friends, the choices our leaders have made in the past and the current spending trends frighten me. I’m afraid that these things I enjoy about Upland will soon be gone without immediate change.

As a resident or business owner in Upland, are you aware that the City has spent $7.8 million dollars in fees over the last three years to Richards Watson & Gershon (RWG), the firm providing legal counsel to the City? In the calendar year 2011 alone, the City spent $2 million on legal fees to RWG.

Let me put $2 million dollars in perspective for you.

• $2 million is more than 25% of the City’s General Fund Reserves.
• $2 milion could fully improve up to 3 1/2 miles of City streets.
• $2 million dollars could fund up to 35 – 40 regular full time employees, annually.
• $2 million dollars could fund up to 20 full time public safety employees (fire and police), annually.

In the best of times there were $20 million in the General Fund Reserves. $8 million was used to construct the new fire station and animal shelter. As of 3Q of 2010 there were $12 million in the General Fund Reserves. Today there is somewhere between $6M and $8M in the General Fund Reserves and at the current spending rate of $2M per year on legal fees the General Fund Reserves will be depleted in 2 – 3 years. That’s right, the rainy day fund will be broke and Upland will not be able to sustain itself through another economic downturn.

We have all read about the layoffs to staff at City Hall. In recent years there was concern about having to cut the library hours to the public, but at the last minute a community partner stepped up and funded money to keep the library open. Staffing is so low at City Hall that we hear of long waits for permits which delay businesses from opening. I recently read in the paper that City Manager Stephen Dunn was seeking a County takeover of our Library. There has also been recent discussions of regionalization of the Public Safety departments in Upland – police and fire.

Following are some examples of how your City funds are being spent on RWG legal fees:

• In the last three years, the City has spent $4.8 million dollars in legal fees to RWG to defend itself in the County / Flood Control lawsuit. The County had originally sought $2 million from the City. In 2006 the City was approached by the Colonies partners and the partners offered to the City to pay $1 million of the $2 million figure. The City turned them down and decided to fight the County. Imagine how $3.8 million, the difference from legal fees incurred over the last three years and the $1 million settlement payment, could have been spent in the City towards roadway improvements, downtown revitalization, employing staff, senior housing and community programs. If we currently had that $3.8 million in our General Fund Reserves the sting of the State robbing our RDA money would not feel so bad. I would appreciate an explanation from members of this City Council who have allowed RWG to continue to burn through millions of dollars when we could have gotten out of this mess for $1M?

• In the fall of 2010, then City Manager Robb Quincey was concerned about a $178,000 bill for the month of September by the City Attorney ($105,000 for County Flood Control lawsuit and $73,000 for the G3 Holistics lawsuit). Robb Quincey and then Finance Director Stephen Dunn authorized NovaPro, a third party consultant to the City, to review RWG September 2010 billings. Highlights of the NovaPro review were:

o 7 RWG employees billing between $124 and $348 per hour over a total of 367 hours on the County Flood Control lawsuit.

o 9 RWG employees billing between $124 and $348 per hour over a total of 269 hours on the G3 Holistics lawsuit.

o NovaPro maintained that the maximum billable hourly rate should have been $250 per hour.

o There were 22.5 hours totaling $6,079, charged by 6 RWG employees for discussing the County Flood Control case between themselves.

o There were 20 hours totaling $5,954, charged by 7 RWG employees for discussing the G3 case between themselves.

o If the hourly rate was capped at $250 per hour and the City wasn’t charged for time for internal discussions, the City would have saved $42,428 for the month of September 2010.

• On December 2, 2010, then Finance Director Stephen Dunn authored a memorandum to City Manager Robb Quincey regarding RWG. Here are some interesting highlights from that memo:

o Current RWG contract with City is dated January 28, 2008

o Prior to 2008 contract, all “basic legal services” (attendance at City Council and Planning Commission meetings, occasional meetings at City Hall, advisement on all legal matters pertaining to City matters, preparation, review and approval as to form, contracts, agreements, resolutions, ordinances and all other standard City documents, preparation of written and oral legal opinions and the performance of other routine legal services as required by the Mayor and/or City Manager) was covered under a $6,000 per month retainer. (Dunn estimated that 2/3rds of the time spent for “basic legal services” was for the attendance of the City Attorney at meetings and conversations between City Attorney and City staff).

o After the 2008 contract the City paid $9,000 for 60 hours of “basic legal services”. This eliminated all “basic legal services” being covered under one amount.

o The 2008 contract also increased the fees charged by RWG.

o The 2008 contract also took away the requirement that the City Attorney needed the approval of the City Manager before proceeding with litigation services, taking the approval authority for litigation services away from the City Manager and eliminating any oversight or control of costs by the City. In a memorandum to City Manager Robb Quincey from City Attorney William Curley that became an attachment to the City Council action approving the 2008 contract, there was no disclosure made to the change that removed the City Manager’s approval authority for litigation services. The RWG contracts say that litigation will be charged at a discount rate of 20% from Attorney’s then current posted hourly rates. The “current posted hourly rates” are nowhere to be found.

o RWG Statistics as of Dec. 2, 2010:

• RWG high monthly billing: $245,136 in September of 2010

• RWG low monthly billing: $16,083 in January of 2005

• Average monthly billing: $78,336 as of October 2010

• Average monthly billing for the last 24 months: $151,790

• Average monthly billing since January 2009: $158,338

• Average monthly billing since the last contract Jan 2008: $127,937

• First time a monthly billing exceeded $100,000: January 2009

• First time a monthly billing exceeded $200,000: May 2009

o Finance Director Dunn had prior experience with RWG as they were the legal counsel for the City of Buena Park where Dunn had worked prior to his service with Upland. The City of Buena Park also had issues with what appeared to be EXCESSIVE AND FRIVOLOUS billings for services provided by RWG.

o Finance Director Dunn found no evidence the City Attorney has ever provided City staff, the City Manager or the City Council with a written estimate, or budget, on how much the City could expect to spend in pursuing a case.

o Numerous times the City was billed for excessive and frivolous items. As an example, the City paid RWG almost $6,400 for what was listed as “shared costs”. These “shared costs” were for work on various issues that may have affected municipal governments. The City never agreed to share the costs for this type of work and found, many times, the work being conducted was not relevant to the City or the same information was available from other sources at no cost.

o During the first quarter of 2007, Finance Director Dunn sent an email inquiry to his peers within California Society of Municipal Finance Directors asking if any agencies still pay for all “basic legal services” for a flat retainer amount. Upon finding out about the inquiry through other sources, City Attorney Curley called the Finance Director indicating he was upset that such an inquiry was made.

o Finance Director Dunn concluded that RWG is the largest contractor employed by Upland. There are no controls on how their work is assigned or performed. RWG assigns staff as they see fit to work on cases without regard to the financial impact to the City of Upland. RWG does not provide estimates and/or budgets for the cases they work on thus denying the City Council, the City Manager and other City staff the ability to evaluate the cost versus the benefits related to any particular case / legal issue.

To the reader of this letter, please focus on the last 4 bullets listed above that were included in Finance Director Dunn’s memo to City Manager Robb Quincey. In November of 2010 it is clear that RWG billing practices had caught the eye of both the City Manager and the City Finance Director.

Further, the RWG billing practices had caught the eye of the City Council as well. A series of emails related to two separate settlements with the Upland Police Officers Association conclude on November 5, 2010 when in response to an email to the City Council from the City Attorney, Councilman Willis writes in an email:

“Jim:
While I normally would like to say thank you when someone sends me information, I’m not so sure in this case. You are dealing with matters which quite frankly, I believed were put to bed some time ago. If there is anything that would warrant a return to those issues or items, then that should be brought to the Council for consideration during executive session. As it stands right now, I do not believe that your law firm has authorization to be “investigating” these issues for the Council. This should be brought to us during executive session when we can collectively review and question any recommendation.

As it stands now, Jim, you should not plan on billing the City of Upland for time spent pursuing something that I believe we understand to be resolved. Our billings are very high and the Council is concerned.

I am going to recommend to my colleagues that we form a Council committee to review legal matters to include all billings, and report back to the main body. I think Mr. Brandt and Mr. Musser would do a good job of reviewing future billings. So, let me be clear, the tax payers here in Upland expect the Council to watch over expenditures and these legal fees have become extremely expensive. It is time to carefully review all expenditures. There is going to have to be a more thoughtful process to the billing issue. At least your activity has brought the issue to a “head”, so to speak, for those of us on the Council. So, I guess in a way I should say “thank you.” End of email.

(For the record, the identity of Jim in Mr. Willis’ email is James Markman of RWG who was filing in for William Curley while out of town on a family matter).

And finally, I end my review of City communications from 2010 with excerpts of an email from then City Manager Robb Quincey to the Mayor and City Council dated December 2, 2010. In the email Mr. Quincey recapped the growing concern of staff regarding the City’s legal services provided by the City Attorney and little control of the issue. Mr. Quincey expresses his concern over the nasty and ‘twist” that is occurring with respect to Mr. Curley’s personal attacks on him and are considered to be direct, retributive, intimidating and in retaliation for having the responsibility to highlight the billing crisis. (I personally note a similar pattern and reaction back in 2007 when Mr. Dunn at that time sought feedback from his peers on “basic legal services” billing arrangements.) Mr. Quincey continues that Mr. Dunn has long been concerned about the legal bills and has expressed concern about the “tactics” that Mr. Curley is taking towards Mr. Quincey, and that Mr. Dunn and/or members of his staff may be the next target of Mr. Curley / his firm. Mr. Quincey states that the issues are a serious matter and requires the undivided attention of the Council immediately. Mr. Quincey concludes that a copy of Mr. Dunn’s memo dated December 2, 2010 would be made available to the Council on that date.

I have so many questions. Since December of 2010, at least $2 million dollars have been spent on legal bills from RWG. How did this series of communications and opinions from NovaPro, the City Manager and the City Finance Director conclude? Did the City Council act? Where has the guardian of our City treasure gone? When I read Mr. Willis’ email to the City Attorney I am convinced that he was conducting himself exactly as I would want my elected official to act. I would like to know if this Council committee was formed and what conclusions were made by Mr. Brandt and Mr. Musser.

Since January of 2009 the City of Upland has paid $418,542 to RWG on marijuana dispensary related cases. To date the most publicized case is G3 Holistics. I am beyond angry to the point that I find humor in the fact that this strip mall marijuana dealer has out flanked RWG repeatedly and remains open to this date. Mr. Sandusky has and will continue to spend equal or more in legal fees to keep G3 Holistics open. At some point you have to decide that this fight is bigger than the City can take on and preserve the City treasure for other services. One would think that $400,000 in legal fees would have resulted in some form of victory for the City, yet these businesses still remain open. But then again, as then Finance Director Dunn points out in his December 2, 2010 memorandum to then City Manager Robb Quincey, he found no evidence that the City Attorney has ever provided City staff, the City Manager or the City Council with a written estimate, or budget, on how much the City could expect to spend in pursuing a case. Mr. Willis has taken the marijuana dispensary issue head on and is acting out against this business as a personal fight, yet with City dollars. I sincerely hope Mr. Willis will once again become the public steward and fiscal guardian of our treasure. I have great respect for Mr. Willis and I believe his feelings towards these types of businesses in Upland are honorable and in our best interest. I’ve been told that Mr. Willis is not going to seek re-election in November. Until his term expires I wish Mr. Willis would live within the spirit of his November 5, 2010 email and be very concerned about the cost for justice.

On February 19, 2012, I heard some very disturbing information regarding the City lawsuit with the County. From a very reliable source I was told that there has been meetings between City legal counsel (RWG) and the County counsel. There have been settlement proposals given to the City Attorney that have not been passed along to the City Council. I am not surprised. Again, RWG and the City Attorney successfully negotiated a contract renewal in 2008 which per the Dunn memo failed to disclose the details to the City Manager and City Council which took away the approval authority for litigation services from the City Manager and eliminated any oversight or control of costs by the City.

I have spoken about this crisis with leaders of other surrounding cities. All have a watchful eye on what is going on in Upland. I have queried some elected officials from other cities and they felt in an average year their cities would spend approximately $400,000 – $500,000 on legal fees. These individuals I have spoken with are from much larger cities than Upland.

What Upland needs is a community awakening – we should seek and expect fiscal prudence from our elected leaders. I would like answers from our elected officials on how they can defend spending at least 25% of our General Fund Reserves annually on legal fees. Clearly we have gotten ourselves into a legal pickle and legal counsel is needed. If our City continues its course on these legal cases, the costs will be hundreds of thousands of dollars, if not millions of dollars more. One cannot deny the right to sound legal counsel, but it is not unrealistic to expect the ability to manage the fees paid for these services and to establish performance expectations in return for these fees. It is my opinion that the City attorney has underperformed and it is time for a change. And when that change occurs the new City Attorney must have a contract that gives the City back the right of oversight and control.

If we continue along this spending trajectory Upland will be on a non-stop course to irrelevancy. How gracious will our City be when we have spent away our treasure that funds our community programs, when we can no longer afford our police and fire department, and our downtown and Foothill Boulevard are neighborhoods of years gone by? Now is the time for Upland citizens and business owners to make your voice heard.

There is less than one week before the next City Council meeting. I am hopeful that our elected officials can understand our concerns and provide a plan for the future. I would like to see a strategy in place that removes us from these legal matters as quickly as possible and with the least amount of expense to the City. I would like to see our City Council once again focus on the growth of our City, leading us in a positive direction in the 21st century.

Thank you for taking the time to read my concerns.