6.6. SR 04-28-1997ity of
E
iver
MEMORANDUM
Item # 6.6.
TO:
Mayor & City Council
FROM: Pat Klaers, City Administrator
DATE:
April 28, 1997
SUBJECT: City Attorney Fees
Last year the fee structure for the city attorney was changed by the City
Council. In March, 1997, this fee structure issue was reviewed and the topic
was continued to this meeting.
As previously discussed, any variation of the rate structure can work for the
city attorney. Peter's goal, which he is not achieving, is to reach 70 percent of
his normal hourly rate. The two extremes that have been used for city
attorney fees have been a city discounted rate of $110 per hour and a
developer rate of $180 per hour versus a $135 per hour rate across the board.
It is recommended that the city find a compromise and be charged $120 per
hour and have the developers charged at a $150 per hour rate. In this
manner the city receives a preferred client discount of 25 percent. Based on
1996 actual hours, the city would save about $4,200 if charged at a $120 per
hour rate versus the $135 per hour rate. On the other hand, the developers
would have paid about $3,200 more if charged at a $150 per hour rate versus
a $135 per hour rate.
It should be noted that the rate of $110, $120 or $135 affects only a few
attorneys at Doherty Rumble & Butler and that a good deal of the legal
services that we receive are from other attorneys under the supervision of
Dean Bussey, Peter Beck, and Dave Sellergren. These other attorneys have
rates between $85 and $110 per hour. Additionally, when we consider the
retainer arrangement of $2,500 per month versus the actual hours Peter puts
into this retainer arrangement and the rate that he typically receives, it
turns out that we receive services from Peter at a rate of much less than $75
per hour. When this retainer rate and hours worked is factored into the total
fees that the city pays for all legal services based on hours spent, it means
that the city pays less than $100 per hour for all legal services even when
using the higher $135 rate. Finally, it should be noted that in response to
past comments and concerns, the city and the city attorney have taken steps
to reduce the legal time that is spent on "standard" development projects. We
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
will continue to try to reduce legal time spent on all projects. As stated
before, we continue to believe the city is getting excellent quality services for
the fees that we are paying to Doherty Rumble & Butler.
Attached is a list of individuals and firms that were billed for legal services
through the city for 1996 and 1997. Also attached is the memo from Peter
Beck on this issue dated 2/20/96. The points in this memo are still valid
today.
It is recommended that the city attorney fee structure change to a maximum
of $120 per hour for city services and $150 per hour for other services. This is
a 25 percent preferred client discount for the city and is a mid point between
the two extremes noted above. If this compromise is not acceptable to the
City Council, we are comfortable with the $135 per hour rate across the
board. Even though this costs the city slightly more, the quality of service
that we receive is worth the slightly higher cost.
Legal Fees Billed
1996 and 1997
Development Related
K_ingman Builders
Associated Developers
Country Ridge Partners
Roger Derrick
Gordon Moldenhauer - Mississippi Oaks 2nd
Paul LeFebvre Co.
Riverside Developers
John Weicht
Pheasant Run
Cross Enterprises
Windsor Developers
Dan Boman - Ridgewood Hills
Rick Lurid- Nordic Woods
Phoenix Enterprises
Riverwoods Development
Elk River Developers, Inc.
LHI Homes
Other
NSP/RDG - Enforce license and address issues at RDF Plant
AmPortable Telecom - issues relating to tower
4/18/97
Finance Department
"'ity of
iver
FROM:
DATE:
MEMORANDUM
Mayor & City Council
Peter K. Beck, City Attorney
February 20, 1996
SUBJECT: Attorney Fees
Several Councilmembers have asked that I propose an alternative fee
arrangement for Council consideration. The current fee arrangement is as
follows:
$1,650.00 per month retainer. The retainer pays for all legal
services for which a separate file has not been opened, including
most City Council and staff meetings.
Reduced hourly rates up to a maximum of $110.00 per hour on
files which will be paid from city funds.
Normal hourly rates, up to a maximum of $180.00 per hour, on
files for which a third party is reimbursing the city for fees.
This structure and these amounts have been in place since, I think, sometime
in the 1980's. I believe it was set up during Bob Middaugh's tenure with the
city.
Retainer. The $1,650.00 retainer amount was established at a time when
the city attorney's involvement in the day-to-day business of the city was
minimal. At that time, the city attorney rarely attended a Council meeting
or traveled to the city for staff meetings. As late as the early 90's, the
$1,650.00 retainer amount covered all of the time actually billed to the city
for general legal services.
In 1992, when the Council appointed me as city attorney, I made a
commitment to the Council to be more available to city staff and to regularly
attend Council meetings, including the Council's monthly planning and
zoning meeting. As a result of this increased level of service, the hourly
value of services rendered over the past 2 or 3 years (at $110.00 per hour) has
been between $5,000.00 and $6,000.00 per month.
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · (612) 441-7420 · Fax: (612) 441-7425
I consider the difference between an hourly value for the services I am
rendering and the retainer amount to be my investment in a client that I
enjoy working for very much. ! am not asking the Council to raise the
retainer amount to $5,000.00 or $6,000.00 per month. However, I would
appreciate the Council considering the change in the nature of the services
being provided since the $1,650.00 amount was established, and raising the
retainer amount closer to approximately one-half of the average hourly value
of services rendered over the past two years (somewhere in the $2,500.00 to
$3,000.00 per month range).
Hourly Rates. The city currently pays a reduced hourly rate, with a
$110.00 per hour maximum, for legal services rendered on separate files for
which payment will be made from city funds. Files for which the city will be
reimbursed by third parties are billed at normal hourly rates, with a $180.00
per hour maximum. Once again, I believe this structure was established by
Bob Middaugh. The theory behind the structure is that private parties
should pay at the same rates they would pay if the city attorney were
working directly for the third party.
From my perspective, my goal is to realize approximately seventy (70%)
percent of normal rates on the hourly work which I do for the city. The thirty
(30%) percent discount is, in my view, justified by the fact that the city is a
long time client which has a perfect payment record. By charging third
parties the rates they would pay if payment was not going through the city,
we have been able to keep the city's hourly rate even below the seventy (70%)
percent goal.
If the city were to go to a single hourly rate, in order to achieve my goal of
seventy (70%) percent of normal rates, the hourly rate would have to be an
across-the-board $135.00 per hour. This would be the hourly rate for all legal
services provided on all files. This rate is at the bottom of the hourly rates
charged by my present firm to other public sector clients.
There are, of course, any one of a number of options between the current
$110.00/$180.00 split rates and an across-the-board $135.00 rate. I would be
happy to come up with other split rates, or discuss with the Council other
alternatives. One idea I have heard suggested is that the city try the $135.00
across-the-board rate for a year to see what the impact is. I have no
preference between the existing split rates or a $135.00 rate, as long as I
have an opportunity to achieve somewhere close to seventy (70%) percent of
normal hourly rates.
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Memo
To: Mayor and City Council
Date: April 23, 1997
Re: Liquor Licenses
This memo is in reference to the recently approved liquor license for Time Out Restaurant
and Sports Bar. A question occurred regarding the request for this establishment to sell
liquor on Sunday between the hours of 10:00 a.m. and 12:00 noon. Liquor licenses are
renewed by the Council on a yearly basis which would allow the Council the opportunity to
assess the situation. All of the existing liquor establishments in the city sell liquor between
the hours of 10:00 a.m. and 12:00 noon on Sundays.
Number of Liquor Licenses
There are currently 7 on-sale liquor establishments in the City. Elk River is a City of the third
class which is determined by population. Third class cities have a population of 10,000 to
20,000 and are allowed to have 12 on-sale liquor licenses. Once a city's population exceeds
20,000, the city is then considered second class and the number of on-sale licenses
increases to 18 plus one for every 2,500 in population over 45,000.
The council may issue on-sale licenses in excess of the authorized number. To do this, the
council, by majority vote, may direct that either of the following questions go on the ballot at a
special election or at the general election. "Shall the city council be allowed to issue on sale
licenses for the sale of intoxicating liquor at retail in excess of the number now permitted by
law?" or, "Shall the city council be allowed to issue (number) on-sale licenses for the sale of
intoxicating liquor at retail in addition to the number now permitted by law?"
Feel free to call me with any questions you may have regarding liquor licenses.
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