Realtors question Whitefish attorney contract

By LYNNETTE HINTZE/Daily Inter Lake

After reviewing Whitefish city records, the Northwest Montana Association of Realtors said last week it believes the city attorney's six-year employment contract is a violation of state law.

Montana law limits a city attorney employment contract to a two-year term, association president John Osweiler said.

"There clearly is a discrepancy between the Whitefish contract and Montana law and raises an issue about whether a legally binding contract exists at all," Osweiler wrote in a letter to Whitefish city officials.

Whitefish City Attorney John Phelps' contract was amended in November 2006 to extend his contract through June 30, 2012. The amendment also gave Phelps a $10,000 raise each year along with an annual cost-of-living adjustment. Phelps currently earns an annual salary of $99,256 plus health insurance and retirement benefits.

Whitefish Interim City Manager Dennis Taylor responded to the Realtor association's request, saying the city of Whitefish is a "home rule" charter city with self-government powers and therefore is not bound by the state law the association cited.

Charter cities may supersede state law on a broad range of issues, including the employment of a city attorney, he said.

PHELPS INITIALLY had a two-year contract with the city, but when he asked for a raise two years ago, the council said it would grant the raise, provided he sign a contract that extended to 2012.

"If I had two-year contracts I wouldn't care. It wasn't that I wanted greater security," Phelps said, noting that it was the council that asked for the multi-year contract.

Phelps has asked the state Office of Disciplinary Counsel to investigate the matter and issue a report of its findings.

"It comes down to whether the council is satisfied with my work," Phelps said. "I'm very comfortable relying on the City Council and management to evaluate the quantity and quality of work I do and I'll live with their judgment."

City Council member Nick Palmer said he's the one who suggested extending the contract to 2012 because it made good business sense.

"If we had to farm out attorney services it would cost us at least $300,000," Palmer said. "John Phelps is first-class talent. He's never lost a land-use case. He has an outstanding record."

THE association's allegation surfaced at Monday's Whitefish City Council meeting when George Culpepper, government-affairs director for the association, and Kalispell attorney Duncan Scott explained the association's concerns.

Scott said his interpretation of state law is that the state prohibits a local government with self-government powers from exercising any power inconsistent with state law, especially if it establishes standards or requirements that are lower or less stringent than those imposed by state law.

"While I have not researched the issue exhaustively, I don't think the issue is as clear-cut as Mr. Taylor suggests," Scott said.

Whitefish Deputy Mayor Nancy Woodruff said that given Taylor's explanation of Whitefish's charter city status, she sees no reason to take the matter any further.

"My feedback is that John Phelps is one of the best city attorneys in the state," Woodruff said. "I have full confidence in him. I don't have any issues with his employment.

"If they [Realtors] have issues with the budget, that's fine. But to target an individual employee is not constructive or appropriate public engagement," Woodruff said.

Several council members voiced their support of Phelps at the end of Monday's meeting. Woodruff said the council will not take action as requested by the association.

The Realtors association said it delved into the Whitefish city attorney contract after requesting similar information from the city of Polson. Association members had questions about the city-attorney contracts in both cities, Culpepper said.

The association also plans to review attorney contracts in Kalispell and Columbia Falls.

In addition to questions about the city-attorney salaries in Polson and Whitefish, the association asked for documentation in both cities about how much has been spent on litigation within the past five years.

In Whitefish, outside litigation expenses from 2003 to 2008 have been $119,101, Taylor said. About 88 percent of that amount was spent on the Best Bet Casino lawsuit filed in 1999 to recover additional compensation from the city of Whitefish for land acquired by the city.

In Polson, roughly $38,276 was spent on litigation over the past five years.

BEYOND THE legal contract is the question of fiscal restraint and good stewardship of taxpayer dollars, the association maintained.

"With a contract this large, shouldn't they be financially prudent and review" it and other city contracts? Culpepper asked.

Kalispell attorney Tammi Fisher, one of six lawyers asked by the association to review the Whitefish city-attorney contract, said that by extending the contract far beyond what state law allows, it ties the hands of future councils from making changes, especially when a council may need to tighten the city's belt for financial reasons.

"Why or how they got the addendum [the 2006 amendment to extend the contract to 2012] is concerning maybe more from a financial than a legal aspect," Fisher said.

While the Montana Constitution acknowledges self-governing powers of cities, "it's not unfettered power," she said. "Generally, municipalities can be more strict, but not more lax than state statutes."

Fisher said transparency in government is crucial, and that Phelps' contract should be looked at if there are questions.

If the city of Whitefish has to lay off employees next year as has been rumored, it behooves the city to be able to review Phelps' contract, Culpepper said.

Woodruff said the council has not yet considered any staff reductions but may have to address staffing levels during next year's budgeting.

"They can be assured that if and when we have to consider cutbacks, we will take a comprehensive look at the budget," Woodruff said.

Phelps is one of the highest-paid city attorneys in the state. Polson pays its attorney $43,200, and in Livingston, a city comparable in size to Whitefish, the city attorney earns $74,986 annually. Billings, the largest city in the state, pays its city attorney $130,000 annually. The state attorney general's salary is set by state law at $89,600 annually.

Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com