Lawyers will cost city $550K
by Nick Rappley | Patterson Irrigator
May 16, 2013 | 1837 views | 0 0 comments | 12 12 recommendations | email to a friend | print
The city added $460,000 to its mid-year budget earlier this month to fight off litigation and to seek to recoup money it is owed.

City Manager Rod Butler said the money being spent on legal expenses by the city is not for routine legal duties.

“These aren’t bread and butter expenses; this is litigation,” he said.

With 10 houses being targeted for code enforcement violations and other ongoing lawsuits with the Keystone Corporation, Patterson Hotel Associates, and Westside Property Management, the bills will be significant but can be recouped in later years when the suits are settled.

The expenses can be recouped if the city wins the lawsuits, Deputy City Attorney Doug White said. The next two years will be an unusual time for Patterson, as it contends with more than a dozen suits.

“With the exception of Turlock, this is the only place significant growth is taking place,” he said. “This is not a normal amount of litigation.”

White’s firm charges $150 an hour for most services to the city.

City Finance Director Minnie Moreno said Patterson is targeting the owners of 10 properties — mostly banks — for fines of $1,000 per day for code violations. The city is still developing its case against the property owners, and amounts and fines for the violations have yet to be finalized, Moreno said.

The city has been wrangling with the Keystone Corporation, which withheld a promised $175,000 payment to the city to help pay for the city’s general plan update in 2010, but the two sides are close to reaching an agreement, White said.

Officials for Keystone have said that the city owes them money for developer fees when the Keystone Pacific Business Park in west Patterson land was developed. The only reason the lawsuit was filed was to ensure the statute of limitations of three years didn’t run out, White said.

Keystone’s lawyer George Petrulakis said in July that the issue came down to “simple math” and that it could be resolved.

The city also is seeking to recoup money from Patterson Hotel Associates, the company that owns the Best Western Plus Villa Del Lago hotel in west Patterson. The city filed suit to recoup back taxes of $173,000 from the hotel owner in October 2011. Hotel developer Dominic Speno in turn sued the city for $2.5 million, claiming he was owed the money due to a developer agreement that required storm drain and flood-control improvements he made in the late 1990s. Speno forged the agreement with Stanislaus County before the city of Patterson annexed land in 2004 containing his project off of Rogers Road.

Meanwhile, Westside Property Management is disputing whether the city could charge $1.4 million in developer fees to the former owners of the land where Amazon.com is building its fulfillment center. Fritz and Donna Schali and brothers Kenny and Larry Buehner filed a suit related to a clause in a developer agreement implemented in 2009. Larry Buehner, who sits on the Patterson City Council, has repeatedly recused himself from city deliberations related to the matter. The Buehners, who co-own Westside Property Management, and the Schalis paid the fees as part of a developer agreement for infrastructure improvements. Those include new sewer systems, gutters and roads on about 60 acres near Park Center Drive and Sperry Avenue.

The former landowners’ attorney, Kathleen Hollowell, wrote in a September letter to the city that a clause requiring the fees was included in the developer agreement after it received council approval in September 2008 but before the land was entitled in January 2009.

The city has claimed it has contract law on its side, however, after city officials found a letter that indicated the plaintiffs agreed to the development. The letter was sent to the city before the agreement was executed, according to city officials.

Contact Nick Rappley at 892-6187, ext. 31 or nick@pattersonirrigator.com.

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