Minutes

             
12 Consideration and Approval of Contract:  Contract with Ballard Spahr, LLP for legal services; authorize the CIty Attorney and any retained legal counsel to file an action to clarify the legal effects of Proposition 126 on the City of Flagstaff and other cities; and direct the City Attorney to prepare a contract for joint representation and cost sharing agreement with other cities.
        
 
  Senior Assistant City Attorney Anja Wendel provided a PowerPoint presentation that covered the following:
 
PROPOSITION 126
WHAT IS PROP 126?
HOW DOES IT AFFECT THE CITY?
COUNCIL OPTIONS
 
  Moved by Councilmember Scott Overton, seconded by Councilmember Jim McCarthy to approve the contract with Ballard Spahr, LLP for legal services, authorize the City Attorney and any retained legal counsel to file an action to clarify the legal effects of Proposition 126 on the City of Flagstaff and other cities, and direct the City Attorney to prepare a contract for joint representation and cost sharing agreement with other cities.

Vice Mayor Whelan asked if entering into litigation would stop Proposition 126 or if it would still continue. Ms. Wendel stated that the law is in effect, the question is if the Arizona Department of Revenue (ADOR) would stop collecting the taxes. She believes that ADOR would collect the taxes and possibly escrow them and not distribute them pending the outcome of the litigation.
 
Councilmember Putzova asked what the anticipated cost of the entire for legal representation. Ms. Wendel stated that it is difficult to estimate those total costs; it can cost $25,000 to $30,000 to file the complaint and do the initial research. Another city has done some of this research already and if other cities participate those costs will be shared. Mr. Solomon added that when the time comes to join the other cities in litigation, a cost share agreement will be brought to the Council for consideration which would address the proportionality for each party.
 
Ms. Goodrich offered that there has been a lot of support to enter into this type of legal action. These issues were unanticipated consequences and the State is just as concerned as the cities are. The role that the League will play is unknown at this time and staff remains in close contact with its State Lobbyist Richard Travis on the matter. Unfortunately, no one has a clear path forward at this time.
 
Vice Mayor Whelan suggested holding off to see what other cities and the State will do and if the City needs to join in it does so at the appropriate time. Mayor Evans stated that the State may or may not weigh in and the timeline for that is unknown, it may come after Flagstaff’s taxes go into effect. The City is faced with a nearing deadline for its taxes to go into effect and it does not want to collect taxes that may have to be returned. It poses a big issue as preparation of the budget begins. The more cities that are moving forward together shows the legislature that this is a major issue for cities and towns.
  Moved by Vice Mayor Jamie Whelan, seconded by Mayor Coral J. Evans to amend the motion to include language in the contract that the fee would be pro-rated among the participating parties per a separately negotiated cost sharing agreement.
  Vote: 6 - 0 - Unanimously
  Councilmember McCarthy stated that he would like the City’s legal team be involved in the negotiations on what legal points should be brought forward in the litigation to ensure that strong arguments are developed.
 
Original Motion:
 
  Vote: 6 - 0 - Unanimously