Cape May Manager Explains Legal Expenses

CAPE MAY – At the Aug. 4 work session of Cape May City Council, City Manager Bruce MacLeod reported on the city’s legal expenses from Jan. 1, 2014 to July 31, 2015. MacLeod was responding to inquiries from the public at earlier meetings when residents raised concern over the many legal cases before the city. 
MacLeod noted that the expenses summarized were gathered on a cash basis, meaning they represented actual payments made for legal service during the period. Those payments may have been for services provided at various points in time including 2013. 
With the exception of the city’s ongoing suit regarding Convention Hall, the expense figures also did not include any encumbrances for expected costs for issues that remain open.
MacLeod presented the figures in terms of billings from separate firms and entities that provide legal services including city solicitor, city prosecutor, and individuals and firms involved in legal matters for municipal bonds, historic preservation, labor negotiations, the on-going convention hall suit, the school funding challenge regarding the Lower Cape May Regional School District, and the recent proceedings concerning the city’s suit against the County Prosecutor.
Absent from the list was the suit by former Police Chief Robert Sheehan concerning the rescinding of his appointment and his placement back in his previous rank of Captain. That suit is defended by the Joint Insurance Fund, the city’s liability insurance carrier.
According to MacLeod, the city has paid $500,000 in legal bills spread across the types of services listed during the stated period. Not all of those charges were against the city budget, the Current Fund, since a number of them, like bond issue business, were accounted for on other budgets including the utilities.
MacLeod reported that the city’s Current Fund budget for 2015 has a $575,000 appropriation for legal expenses and that as of the day of his report, $463,000 remained as a balance in that fund. He added that he expected that level of available funding would be sufficient to see the city through the remainder of the year without the need for any transfer of funds from other appropriations.
Of the funds expended during the period, MacLeod noted that just over $100,000 in 2014 and approximately $75,000 during the first seven months of 2015 were expenses paid to the firm of the City Solicitor Anthony Monzo. 
By far the highest expense is associated with the Convention Hall lawsuit. There MacLeod noted that another $260,000 has been encumbered for the potential on-going charges. The city hopes to recoup the charges if it is successful in the legal action.
What sparked the public request for an accounting was the highly-visible use by the city of legal services related to the controversy concerning the Sheehan action and the related suit against the county prosecutor.
At this point, MacLeod’s report did not show those expenses to be large enough to pose a problem for the Current Fund budget that was appropriated before the controversy began.
Under questioning from Jerry Gaffney during public comment, Monzo and MacLeod noted that there could be a self-insured deduction of anywhere from $30,000 to $50,000 that potentially would be a city responsibility if the city does not prevail in the lawsuit brought by Sheehan and defended by the JIF.
Councilman Jack Wichterman added that the 2015 budget contained $75,000 for legal expenses expected as the city pursued its case regarding the school funding formula. Given that that issue is, in Wichterman’s words, “in limbo” awaiting the results of similar lawsuits in the northern part of the state, he noted that the funds were not likely to be spent for that purpose this year.
Water Issues
Council approved a resolution concerning a state-mediated settlement of a dispute between Cape May City and West Cape May concerning water.
The Borough of West Cape May buys water from the city’s desalination plant. The borough complained that it had been billed $700,000 for water it never received. The dispute has been ongoing since 2009 and the settlement avoids potential litigation. 
Early in the process, the focus had been on alleged thieves who had diverted water and left the taxpayers of West Cape May with the bill.
Exhausting that avenue of explanation, attention turned to faulty infrastructure including leaky pipes and malfunctioning meters. 
Studies by both municipalities ensued. The period for which the discrepancy between water received and paid for was greatest was from 2003 to 2009.  Replacement of meters by Cape May City resulted, in the view of borough officials, in the annual losses being corrected, but the city never acknowledged those repairs as fixing a preexisting problem with its infrastructure.
Settlement proposals from each side did not resolve the problem and the state’s Office of Disputed Services got involved.
Under the terms of the agreement approved at the council meeting, one half of the disputed amount, $350,000, will be received by West Cape May as a credit against water bills from the city over the next 10 years. The city also agreed to regular inspection and calibration of meters.
Cape May provides water to Cape May Point, the Coast Guard Training Center, and portions of Lower Township as well as West Cape May.
Other Business
Wichterman urged members of the public to consider running for the council seat open this November.
Wichterman was appointed following the resignation of newly-elected council member Jerry Inderwies, Jr. He can only service until the November general election. At that point, the public has the opportunity to elect someone to the seat to serve out the remainder of Inderwies’ term. 
As of the time of Wichterman’s remarks, no one had yet picked up the required paperwork at the Clerk’s Office to register to run in the election.
When asked about the scheduling of the public disciplinary hearing for Lt. Chuck Lear, the police officer whose alleged abuse of compensatory time ignited the controversy that included the rescinding of Sheehan’s appointment as chief, Monzo replied that discovery was complete and the only matter remaining was scheduling the hearing. 
Monzo said he expected it to be scheduled for this week or next at the latest. 
To contact Vince Conti, email vconti@cmcherald.com.