Loading...
Cmd120622 spec mtg Edmonds City Council Approved Minutes December 6, 2022 Page 1 EDMONDS CITY COUNCIL SPECIAL MEETING MINUTES APPROVED MINUTES December 6, 2022 ELECTED OFFICIALS PRESENT Mike Nelson, Mayor Vivian Olson, Council President Will Chen, Councilmember Neil Tibbott, Councilmember Diane Buckshnis, Councilmember Susan Paine, Councilmember Dave Teitzel, Councilmember Jenna Nand, Councilmember (joined at 7:05 p.m.) STAFF PRESENT Jeff Taraday, City Attorney Scott Passey, City Clerk Jerrie Bevington, Camera Operator 1. CALL TO ORDER The special Edmonds City Council meeting was called to order at 6:00 p.m. by Mayor Nelson in the Council Chambers, 250 5th Avenue North, Edmonds, and virtually. 2. ROLL CALL City Clerk Scott Passey called the roll. All elected officials were present with the exception of Councilmember Nand. (Councilmember Nand joined the meeting at 7:05 p.m.). 3. APPROVAL OF AGENDA COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCILMEMBER TEITZEL, TO APPROVE THE AGENDA IN CONTENT AND ORDER. MOTION CARRIED UNANIMOUSLY. (Councilmember Nand was not present for the vote.) 4. AUDIENCE COMMENTS Mayor Nelson described procedures for audience comments. There were no audience comments. 5. COUNCIL BUSINESS 1. CITY ATTORNEY CONTRACT EXTENSION Councilmember Teitzel thanked Councilmembers Paine and Chen for their diligent work in helping to gather information the council needs to consider the 2023 contract for Lighthouse. The work group has been working diligently to bring facts and data together and to develop options for council to consider. He Edmonds City Council Approved Minutes December 6, 2022 Page 2 will provide a brief overview, Councilmember Paine will present the terms of the proposed final draft and Councilmember Chen will provide a brief summary reminder of the expense impacts of the contract as proposed, followed by Q&A, motions and hopefully a vote on the final version of the contract. Councilmember Teitzel said a couple of comments have been received from citizens regarding the process, challenging whether the council’s own rules and the City’s code is being followed. He asked the city attorney to comment on that issue, specifically the concern the City is not issuing an RFP before entertaining a contact for attorney services for 2023. City Attorney Jeff Taraday prefaced his response by saying if there is any hesitation about taking his word for this information, given that it is his contract the council is considering, the council has the ability to contact Ann Marie Soto of Madrona Law Group to confirm she agrees with his comments. As Ms. Soto is not here tonight, in the interest of time, he reminded the council and the public that on November 1, 2022, the council amended ECC. 2.05.010 (ordinance took effect December 1, 2022) and the end of the paragraph now reads, “The city council may from time to time with or without cause on such basis as a majority of the Edmonds City Council shall determine to undertake a request for proposal services for city attorney and/or city prosecutor services provided that nothing in this code or other city policy shall be construed as requiring the city council to undertake a request for proposal process prior to renewing or approving a contract for legal services.” Councilmember Teitzel explained on November 22, 2022, the work group discussed two options with council, a flat rate for 2023 services and a monthly retainer hourly model. At that meeting, council requested the work group refine the flat rate option and bring it back to council for discussion and vote. In addition, council authorized an expenditure of up to $2500 for external legal review of the contract by the Madrona Law Group. On November 29, 2022, Madrona provided the results of their review and advised with the changes they suggested, they were comfortable the terms of the proposed contract complied with the rules of professional conduct. The packet contains two versions of the draft contract, a redline/blueline format, and a clean format for ease of reading. The changes made by Lighthouse are shown in blue and the changes in red were made by Madrona. Madrona has looked at the entire contract, and if there were no redlines, it was acceptable to them. Madrona reviewed the contract it its entirety with the changes they suggested as well as the changes proposed by Lighthouse. With regard to next steps, Councilmember Teitzel explained once an agreement is reached on the contract for 2023, the work group will develop an action plan and key milestones for council to consider in January 2023 and will work diligently to bring facts and data to the council. The work group plans to look at options to support three decision points, 1) retain Lighthouse for city attorney services, 2) contract with another attorney to provide city attorney services, and 3) hire an inhouse attorney. The work group plans to conduct various activities to provide data to council including an internal client satisfaction survey such was done in 2019 directed to directors, mayor, councilmembers, city clerk, etc. to determine how they view the quality of Lighthouse’ services. They will also look at external cities and develop comparators regarding how other cities obtain services and their price points as well as ask for input from judges Lighthouse has appeared before to get their input about the quality of Lighthouse’s work, and prepare a pro/con analysis of in-house versus contracting models for city attorney services. He plans to work on that later this month and present it to council in January. Councilmember Paine thanked Councilmembers Teitzel and Councilmember Chen for their work, approximately 10+ hours/week for the last several weeks. She reviewed changes to the contract: • Page 1: No substantial changes • Page 2: Section 2 contains language the council approved at the last meeting authorizing lawyers at Lighthouse to provide information to members of the public and/or local media to facilitate a more informed public discourse related to the role of the city attorney, the operation of the city, and/or issues facing the city, particularly where the legality of city actions has been called into question. Edmonds City Council Approved Minutes December 6, 2022 Page 3 Councilmember Teitzel commented Madrona Law Group looked at this clause and determined it does not explicitly violate the rules of professional conduct but creates some risk. Madrona recommended striking this clause and if there are concerns around legalities or criticism of the work being done that involve the city attorney, the issue can be raised in a public forum and Mr. Taraday asked to respond. Councilmember Buckshnis pointed out the public can say whatever they want, there have been many questionable comments made during the 12 years she has been on council. She believes this clause takes away from Mr. Taraday’s and Lighthouse’s authority to do their job with the City by engaging in the media fray by making comments to citizens or correcting the record; basically the council has to trust the attorney’s advice. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCIL PRESIDENT OLSON, TO REMOVE ITEM 2. Councilmember Paine said this section would be useful at times when the council does not speak up when concerns are raised about the city attorney’s work. It offers an opportunity for a fairly neutral forum and it is in Lighthouse’s interest to allow for a moderate response about the actual facts. She did not support the motion. Council President Olson said she supported including this when the council voted previously, but the conversation has been very helpful and the council should on more regular basis to ask the city attorney to weigh in on things that are controversial or need to be clarified. That can be done by going through the council president or a councilmember so this language can be removed from the contract. She will vote contrary to her previous vote and support removing this language. Councilmember Chen said he previously voted against including this clause in the contract because it is too risky and has the potential for a back and forth between the city attorney and the public. The best approach is to do what was done earlier where Councilmember Teitzel asked the city attorney a question in public and Mr. Taraday responded. He will support the motion to remove this clause. UPON ROLL CALL, MOTION CARRIED (6-1), COUNCILMEMBERS TEITZEL, CHEN, TIBBOTT, BUCKSHNIS, NAND AND COUNCIL PRESIDENT OLSON VOTING YES; COUNCILMEMBER PAINE VOTING NO. • Page 2: revise 4.a to read, “Except as provided in Section 4.b, below, during the year 2023, the City will pay LIGHTHOUSE for the services specified in Section 1 the sum of Fifty-eight Thousand Dollars ($58,000.00) a month (the flat fee). Upon LIGHTHOUSE’s receipt of all or any portion of the flat fee, the funds are the property of LIGHTHOUSE and will not be placed in a trust account. This fee arrangement does not alter the City’s right to terminate the client-lawyer relationship.” Councilmember Paine explained this was brought up and addressed at the November 22, 2022 meeting, that billing occurs after the fact. This was acknowledged by both Lighthouse and Madrona. Councilmember Teitzel explained the way this billing process works is the City pays Lighthouse after the termination of a particular month and never pays them before the month is completed. It would be a very rare instance over the next 12 months where they would bill before the month was over so the risk of having to ask for refund is essentially nil. He was satisfied with removing the language as shown. COUNCIL PRESIDENT OLSON MOVED, SECONDED BY COUNCILMEMBER PAINE, TO REMOVE THE TEXT IN RED IN PARAGRAPH 4.A. MOTION CARRIED UNANIMOUSLY. Edmonds City Council Approved Minutes December 6, 2022 Page 4 • Page 2-3: Revise 4b to read, “LIGHTHOUSE shall have the ability to exercise this option, if triggered, at any time after the Option Triggering Event occurs by sending written notice to the City of its decision to exercise the option. If the option is exercised, LIGHTHOUSE shall send the City invoices that reflect the additional hourly charges owing after crediting the flat fee payments previously made by the City. Payments of the additional hourly charges shall be made by the City within 30 days of receipt of the invoice., except for those specific items on an invoice that are contested or questioned and are returned by the City with a written explanation of the question or contest, within 30 days of receipt of the invoice. LIGHTHOUSE shall respond to such questions or contests within 15 days of receipt of the City’s written explanation. Councilmember Paine explained the language that was struck from 4b has been moved to section 7 of the contract under terms of billing. Councilmember Teitzel explained Madrona Law Group reviewed this language and found it reasonable. This benefits both parties because if there is a billing dispute about the number of hours reported, it behooves both parties to promptly resolve it. Up until now, it has not really mattered to the City because payment is on a flat rate, the same amount every month regardless of the number of hours incurred. Going forward if a lookback penalty is incurred, it will be calculated based on the hourly rate and will have a meaningful impact to the City so it behooves both parties to resolve disputes in that month or shortly after if a dispute incurs. This language accomplishes that. • Page 2: Revise Section 4c to read, “Any of the following shall constitute Option Triggering Events for the purposes of triggering the option in Section 4.b, above: i. The City terminates or provides notice of an intent to terminate the Agreement with LIGHTHOUSE; ii. The City Council authorizes a contract with selects a firm other than LIGHTHOUSE to serve as City Attorney; or iii. The City approves hires an in-house City Attorney position. iii.iv. The City rejects LIGHTHOUSE’S response to an invoice contest as described in Section 7. Termination of the Agreement by LIGHTHOUSE shall not constitute an Option Triggering Event. Councilmember Paine explained Section 4c describes the triggering events for the purposes of triggering option 4b, the lookback section. Councilmember Tibbott said he has done a lot of contract work in the past; for clients he has had a long relationship with, he considered it a courtesy to provide notice if the relationship would be changed in a substantial way or the relationship ends. In this case the City has had a long relationship with Lighthouse and his preference in any event would be for option i to be exercised first, partly out of courtesy and in respect for the relationship. He felt sections ii and iii were unnecessary and he would happy to only utilize sections i and iv. COUNCILMEMBER TIBBOTT MOVED, SECONDED BY COUNCILMEMBER PAINE, TO STRIKE SECTIONS II AND III. Councilmember Buckshnis agreed with Councilmember Tibbott. Things may not happen overnight and with the molasses-ness of how things work, it will probably take an entire year to get reach any of these points. Since the City has had a 10+ year relationship with Lighthouse, she did not see the need for sections ii and iii. She would like to hear what Madrona said about including that language. Councilmember Teitzel answered Madrona’s suggested language are reflected in the changes shown in Edmonds City Council Approved Minutes December 6, 2022 Page 5 the draft. He did not anticipate they would have a concern with striking them. The concern would be if only section i was retained and sections ii and iii were retained, the City could potentially let the contract lapse at the end of 2023 without providing notice to Lighthouse. He believed Lighthouse would like to be protected from that eventuality so additional language would need to be added to item i to avoid that. He asked Mr. Taraday to comment. Mr. Taraday said from Lighthouse’s perspective, this is the most material provision in the contract. If there is one paragraph in the contract that is a true deal breaker, it is this paragraph. He recalculated their effective rate through November 2022; it is $178/hour, well below any recent RFP in terms of hourly rates even for the most junior attorney. The reason that is important is because Lighthouse offers the flat fee only to Edmonds and the only reason they offer it is frankly to avoid having to go through an RFP process. It is intended as a loyalty incentive. Obviously that will not work this year as the City has decided to do an RFP. Lighthouse is still willing to do a flat fee, but it has to be a flat fee with strings attached because essentially Lighthouse loses money on the flat fee. When Lighthouse attorneys are worth more than $178/hour on the market and are doing that work for the City, they are losing money, but do it as a loyalty incentive. Mr. Taraday continued, with regard to the contract language in subsection c, what he wanted to make crystal clear to the council was it is Lighthouse’s intention that they only provide the flat fee for 2023 with the expectation they will be retained for 2024 and beyond. If that that ends up not happening, because the City decides to go inhouse or another firm is selected as a result of an RFP process, then it is Lighthouse’s intention to be compensated for 2023 on the hourly rates set forth in the agreement which are market rates. How the parties get to that understanding with regard to the exact minutia of the language, he was open to rephrasing the language as long as it does not create loopholes where the City can essentially terminate the agreement and not pay hourly. Lighthouse is only willing to do the flat fee if the agreement includes that language should the exit clause be triggered. He wanted that to be very clear because for Lighthouse, that was the crux of the entire contract and without that, there is no basis for offering a flat fee. With regard to how that is phrased, he was open to working with the council on the details. In the interest of complete transparency, he wanted to ensure that was clear. Councilmember Teitzel said item i says the trigger event is the City terminates or provides notice of an intent to terminate the agreement with Lighthouse at some point during 2023. He asked if that language could be enhanced in a way that was satisfactory to Lighthouse to address what Mr. Taraday just said. Mr. Taraday said without making additional amendments, his concern with 4.c.i was technically this is a one year contract and the City could just let it expire at the end of 2023 and take the position that Lighthouse was not entitled to hourly rates because the City never provided a notice of termination because a contract that is expiring does not have to be terminated. Additional language needs to be added to require some kind of notice be provided. He was satisfied with the original language prior to the Madrona edits, but the Madrona edits to c.ii and iii create loopholes that are dealbreakers for Lighthouse. Councilmember Teitzel said the intent was in all instances the City would notify Lighthouse of their intent not to renew in 2024. He asked if adding that language to the agreement would obviate the need for ii and iii. Mr. Taraday answered it probably could, depending on the exact phrasing of the language that had not yet been added. Councilmember Teitzel was not sure that language could be drafted without Mr. Taraday thinking about it and finding it acceptable. Mr. Taraday answered agreed and suggest the council would also want Madrona to consider any new language. If the language was modified, there likely would be time at a future council meeting to schedule the agreement on the consent agenda. Councilmember Teitzel asked Councilmember Paine her preference. Councilmember Paine responded there is a motion and second on the floor. She preferred to vote on the motion and then consider what Mr. Taraday said. Edmonds City Council Approved Minutes December 6, 2022 Page 6 Councilmember Buckshnis raised a point of order, stating there is a motion on the floor, but the council has not had an active discussion on it. She has many questions based on Mr. Taraday comments. She requested a discussion before taking a vote on the motion. Mayor Nelson advised this is the discussion period. Councilmember Nand said part of the hesitation with the surcharge in the event i, ii, or iii in section c are triggered is the administrative burden and uncertainty of calculating a higher rate for hours that were already used. She understood Lighthouse was trying to hedge its risks if this long term relationship fizzles and from the City’s perspective, the council and staff have gotten very used to a rich, unlimited usage of Lighthouse’s time. Instead of this very complicated scheme of retroactively surcharging, she suggested in the event Lighthouse’s contract was terminated, the City be charged a finite sum such as $100,000. That would put the amount the City paid into a range where Lighthouse would feel protected in the event the relationship ended and the City would not be hit with an unforeseeable bill that could lead to additional litigation if timesheets are contested. She asked if Lighthouse would consider reducing the surcharge to a finite amount based on how much the City would be charged based on the flat fee versus how much they could get at market rate for the City’s typical usage. Mr. Taraday said he bristled at the characterization of this as a surcharge. The rates that would be utilized in the event of the option triggering event are market rates, rates that other cities just like Edmonds are paying their city attorneys every month. Lighthouse does not see it as a surcharge but as a return to market. Edmonds is getting a deep discount and in their opinion, going from a deep discount to market should not be characterized as surcharge. The problem with the concept Councilmember Nand proposes is the extent of the discount Edmonds is getting is very deep and if it is stated upfront in the contract, it becomes divorced from the actual work that is done. Whereas, they like to remind the council and public that Lighthouse keeps track of their time and detail what they do on behalf of the City. Lighthouse provides monthly statements with how much time they work and the amount of time per task. The concept Councilmember Nand is proposing is essentially a form of liquidated damages. Liquidated damages are appropriate where it is not possible to calculate with ease the amount of a firm’s damages in the event of a contract dispute. In this case it is very easy; Lighthouse provides monthly billing statements, detailed down to the tenth of an hour, and it is easy to calculate the market value of those services. For those reasons it did not seem like developing an arbitrary lump sum at this stage would be an appropriate thing to do. Councilmember Buckshnis agreed with Councilmember Nand, pointing out Attachment F contains a lump sum of $139,441, for going from the flat fee option to a retainer option. Her opinion is the council has gotten lazy with the abundant amount of work they give the city attorney. For example, she has always been against Ebb Tide because she is an environmentalist, but had Lighthouse been charging the City hourly for the Ebb Tide litigation, she anticipated certain councilmembers would have stopped it. One year Lighthouse spent more hours on Ebb Tide than any other issue. She agreed Lighthouse has given the City a wealth of time, and they have been able to run free and take all the council and staff’s phone calls, attend committee meetings, etc. due to the flat fee. Councilmember Paine raised a point of order, advising the comments are not germane to the motion on the floor. Mayor Nelson said he will allow Councilmember Buckshnis to continue but suggested she be cognizant of the time. Councilmember Buckshnis relayed her understanding of Mr. Taraday’s explanation that not including section ii and iii is a dealbreaker for Lighthouse. The council’s intent is to test the market, which does not mean anything will happen. She asked if the council does not hire Lighthouse next year, then does the City have to retroactively pay for 2023 at market rate. Mr. Taraday responded that is the expectation. Edmonds City Council Approved Minutes December 6, 2022 Page 7 Lighthouse was happy with the versions of c.ii and iii that were in the previous packet. The most recent edits by Madrona to c.ii and iii essentially create a loophole where the City could terminate the contract without paying hourly. Lighthouse is not interested in loopholes and wanted to be on the same page with regard to how they are being compensated this year. Councilmember Buckshnis said she would have changed her decision had this discussion come up previously. She was under the impression if the contract is extended into 2023 and the City decides to go with another firm, that’s the way the cards fell. She didn’t realize the City would just be buying time to renegotiate another flat rate contract with Lighthouse whereas there may have been issues last year that the council wanted to look at. Mr. Taraday said Lighthouse is still open to an hourly arrangement for 2023, but not willing to do a flat fee in what could be the final year of their arrangement with the City because it does not make financial sense to do that. Councilmember Nand asked for the motion to be repeated as she joined the meeting late due to an emergency. Councilmember Tibbott restated the motion: REMOVE ITEMS C II AND III FROM THE CONTRACT. Councilmember Tibbott said if the motion is approved, it would be necessary to amend c.i Council President Olson recalled reading somewhere that the council needs to review monthly statement immediately after receipt so there won’t be a dispute over the amount of hours spent at the end of the contract. She agree with Mr. Taraday that it is simply a calculation to determine the difference between the flat fee and the amount using the rates in contract. If the motion passes, she recommended working on the language in section c.i. Councilmember Chen referred to the concept proposed by Councilmember Nand. Councilmember Paine raised a point of order, saying Councilmember Chen’s comments are not germane to the motion. Mayor Nelson said he would allow Councilmember Chen to continue. Councilmember Chen said the concept proposed by Councilmember Nand was suggested by him during the work group’s discussions and proposed to Mr. Taraday and rejected. A more fair calculation in case the contract is terminated would be to take a midpoint; the contract has an 8-month maximum lookback. A midpoint lookback would be $112,671. Councilmember Paine raised a point of order. Mayor Nelson ruled point not taken. Councilmember Chen said he was proposing a midpoint lookback amount that was fair to Lighthouse and the City. COUNCILMEMBER PAINE MOVED, SECONDED BY COUNCIL PRESIDENT OLSON, TO AMEND TO THE LANGUAGE IN THE NOVEMBER 22, 2022 PROPOSAL. Councilmember Paine read the language in the November 22, 2022 proposal: iii. The City selects a firm other than Lighthouse to serve as city attorney; or iv. The City approves an inhouse City Attorney position. Councilmember Paine said that language represented the language Mr. Taraday had agreed to and was in the council’s November 22, 2022 packet. Mr. Taraday relayed his understanding of Councilmember Paine’s motion was to return to version of c.ii and iii that was in the council packet the last time this was Edmonds City Council Approved Minutes December 6, 2022 Page 8 before the council. Councilmember Paine answered yes, in Attachment A of that packet. Mr. Taraday confirmed that is the language in the November 22, 2022 council packet and is the same language that is in Lighthouse’s current contract. Councilmember Teitzel pointed out Madrona advised the council to move away from that langue and insert the language they recommended. It is not a legality issue, it is a protecting Edmonds issue. The example Madrona provided was a city has approved an inhouse attorney, but never ultimately hired that person and the contract with the contracted attorney continued and nothing changed. He provided another example related to the city prosecutor; the mayor recommended hiring an inhouse city prosecutor and included it in the 2023 budget, but that decision package was later pulled. If that had been the city attorney, it would have triggered a lookback payment. Madrona’s recommended language is to avoid a situation where the City ends up paying a large lookback adjustment and still continues with Lighthouse, the worst of both worlds. He acknowledged the odds of that happening were probably small, but that was what the external attorney advised. Council President Olson relayed her understanding that this language was the result of the city attorney ensuring there were no loopholes that the City could exploit. She asked if Mr. Taraday had a remedy to the concern brought up by Madrona to prevent the loophole for the City. That was her only reservation regarding returning to the original langue. Mr. Taraday said he was hearing that for the first time right now so he did not have an opportunity to craft a solution to that language. It is a valid point and he can understand why Madrona raised that concern and was certain there was a way to draft language to close that loophole so the City was not charged twice. From a practical standpoint, it seems highly unlikely that Lighthouse would both get new contract with the City and be able to take advantage of that. He was confident there was a solution that would say something like provided if Lighthouse later enters into a new agreement with the City, the City would be refunded the additional hourly billing. He was sure that could be worked out between now and putting the contract on the consent agenda. Council President Olson suggest voting yes on the amendment if councilmembers were generally in favor of returning to the language in the November 22, 2022 with that tweak. Councilmember Nand said the council has not voted on Councilmember Paine’s amendment to Councilmember Tibbott amendment, and she also wanted to propose an amendment to Councilmember Tibbott’s amendment. She offered to propose her question to the city attorney to determine if this would be acceptable from his firm’s position. Mayor Nelson agreed. Councilmember Nand said part of the hesitation and why Councilmember Tibbott is seeking to remove ii and iii from section c is that this will no longer be a simple flat fee contract but a hybrid contract. Instead of Lighthouse assuming the risk that they sell their services too cheaply, the City is assuming part of the risk that they will be over-consuming Lighthouse’s services and will be over budget for city attorney services for 2023. As a private sector attorney herself, it is quite common to have a hybrid arrangement where a client asks her to draft a contract for a project and not spend more than 20 hours, but if she needs to spend more hours on it, ask for authorization to go over that cap. She wondered whether Lighthouse would consider, instead of passively providing a monthly invoice identifying the number of hours the City consumed, providing the City notice when it reached a certain hourly limit such as 300 or 400 hours. That would provide the City notice to begin making strategic decisions about how to utilize Lighthouse’s time. She asked if Lighthouse would consider that to allow the City to be more thoughtful and mindful in how it is consuming city attorney services in 2023. Mr. Taraday said they are happy to provide as much information as would be useful in terms of allowing the City to monitor the progress of Lighthouse’s work. If the City wanted them to send an email when they hit a certain hours threshold each month, that could be set up. Candidly, he thought that would end Edmonds City Council Approved Minutes December 6, 2022 Page 9 up being informational only and doubted it would change behavior because Lighthouse is always responding to the needs of the City and those needs will not go away just because some arbitrary hours threshold is met. He concluded it may be useful to know and they would be happy to do it, but he did not think it would change behavior. At 6:59 p.m., Mayor Nelson asked whether the council wanted to extend the special meeting, pointing out a regular meeting was scheduled to begin at 7 p.m. Councilmember Paine suggested a separate meeting, preferably within the next seven days, was needed to finish this discussion. COUNCILMEMBER BUCKSHNIS MOVED, SECONDED BY COUNCILMEMBER NAND TO TABLE THIS UNTIL A DATE CERTAIN. Mr. Taraday advised the item did not need to be tabled as the meeting was ending at 7 p.m. The council president could determine a date to bring it back. 2. RESOLUTION OF RETAINING RIGHTS OF SELF-DETERMINATION OF LAND USE 6. ADJOURN With no further business, the Council meeting was adjourned at 7:00 p.m.