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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: JAMES F. PENMAN
City Attorney
Subject: Transfer and appropriation of funds relating to
the budget of the City Attorney's Office.
Dept: CITY ATTORNEY
Date: February 13,2003
Synopsis of Previous Council Actiou:
June 25, 2002: 2002-2003 City Budget Adoption (Reso. No. 2002-175)
Recommended motion:
Motion #1:
That the Economic Development Agency is directed to reimburse the City General Fund in the amount of
$137,000 from the low/moderate income housing funds received from the Inland Valley Development
Agency; said reimbursement is for $137,000 spent from the City's General Fund this fiscal year for defense
of the Alvarez v. City of San Bernardino case. In addition, $90,000 will be transferred from the City's
undesignatedlunreserved General Fund balance or from the City's General Fund reserve. $10,000 will be
transferred from salary savings in the City Attorney's budget to Account No. 001-051-5123 (library books).
Tlie Director of Finance is directed to amend the Fiscal Year 2002-2003 City Attorney's budget to credit
Account No. 001-051-5177 (Litigation Expenses) $25,400 and to credit Account No. 001-051-5503
(Litigation-Outside Attorneys) $111,600 and to add the sum of $90,000 to Account No. 001-051-5503
(Litigation-Outside Attorneys) and to credit the sum of $10,000 from salary savings in the City Attorney's
budget to Account No. 001-051-5123 (library books).
OR
Motion #2:
That the Director of Finance is directed to amend the Fiscal Year 2002-2003 City Attorney's budget and
increase Account No. 001-051-5123 (library books) by $10,000, which is transferred from salary savings
in the City Attorney's budget, and increase Account No. 001-051-5503 (Litigation-Outside Attorneys) by
$201,600 and Account No. 001-051-5177 (Litigation Expenses) by $25,400; $185,000 will come from the
City's undesignatedlunreserved General Fund balance or the City's General Fund reserve; the remaining
$42,000 will be appropriated from the City's General Fund reserve.
~1/~
c9'ature
Contact person: James F. Penman
Supporting data attached: Staff Report
Phone:
Ward:
5255
All
FUNDING REQUIREMENTS: Amount: $237,000
Source:
Motion #1 or Motion #2
Finance:
Council Notes:
Agenda Item No. 26
STAFF REPORT
Council Meeting Date: February 18,2003
TO:
FROM:
DATE:
AGENDA:
Mayor and Common Council
City Attorney's Offiee
February 13,2003
Item #26 (Transfer and appropriation of funds relating to the
budget of the City Attorney's Office).
The City has been named as a defendant in several lawsuits which have had a high level of
activity since July 1,2002 as a result of intense discovery (depositions, requests for admissions,
interrogatories, etc.) undertaken by the plaintiff in furtherance of his/her lawsuit or by the City in
strong defense of its position. Additionally, as a ease gets closer to triaL and is in fact tried, there
are further costs associated with trial preparation and the actual trying of the ease. The eases of
Smith v. Citv of San Bernardino and Gonzales v. Citv of San Bernardino represent two eases which
went to trial wherein the City was completely successful and the plaintiffs were awarded no
damages. However, the litigation expenses and outside attorneys' fees paid by the City since July
1,2002 in successfully defending its position in court forthesc two cases slightly exceeded $44,000.
To further illustrate the "cost component" of cven successful litigation for thc City, the Smith case,
which the City won in Federal District Court, has been appealed by the plaintiff to the Ninth Circuit
Court of Appeals. Additional costs will be incurred in once again aggressively defending the City
at this next judiciallcvel.
Timc is of the esscnce in dealing with this agenda item because the jury trial in the case of
Manta Management v. Citv of San Bernardino is scheduled to start April 7. There will be signilieant
fecs incurred over the next two months as the attorneys prepare this case for trial. plus the fees for
the trial itself.
Since July 1,2002, the City has paid litigation expenses and outside attorneys' fees in
defending its position in the case of Alvarez v. Citv of San Bernardino in the amount ret1ceted in
Motion #1: $137,000. Given the gravamen ofMr. Alvarez' causes of actions and the underlying
events which triggered his lawsuit, Motion #1 ret1cets the Economic Development Agency
reimbursing the City the $137,000 paid this fiscal year. Such reimbursement will be used to cover
some of the costs associated with the vigorous defense of the City in other lawsuits soon scheduled
for intense discovery or trial. The remainder of the money for thc defense of the City in its current
cases would come Irom the City's undesignated/unreserved General Fund balance or li'om the
General Fund reserve. $10,000 in salary savings would be transferred to library books to maintain
current resources in assisting such defenses and in researching legal issues.
Since the mid-year budget revIsion process is still ongoing, thc City's
undesignated/unreserved General Fund balance has not been revised, and remains at $185,200.
Motion #2 ret1ects the needed funds coming solely from the City, with no rcimbursement from the
Economic Dcvelopment Agency.