Council Watch

As the Lawsuit Looms...

With four days left before the city defends the federal lawsuit brought by Freeport-McMoRan, the air around City Hall these days is becoming increasingly steeped in suspicion. Two weeks ago, Councilmember Brigid Shea's office requested a chronology of the negotiations that resulted in Freeport's latest proposed settlement, the one rejected by the council on Feb. 23.

Assistant City Manager Jim Smith presented the chronology to Shea early last week. Missing from the list, however, was an alleged Sept. 16 meeting, which occurred only one week before the multinational corporation's federal lawsuit was filed, and one month before staff had been authorized to initiate five months of settlement negotiations with Freeport.

According to Tom Selby, Shea's executive aide, Shea had prior knowledge of the meeting through an unnamed source and confronted Smith about the missing detail. After recalling the meeting, Smith said that it occurred at the mayor's accounting office some time in September and that it involved himself, Mayor Bruce Todd, and Freeport's lawyer Roy Minton. He could not recall if others were present.

Speculation around City Hall last week was that the mayor and Minton had concocted the lawsuit as a threat to force some councilmembers to acquiesce to a settlement with Freeport. The suspicion is further aggravated by Todd's campaign contributions from Freeport-related interests (over $10,000 in the last three years, according to the consumer rights group, Public Citizen). Also adding to the intrigue is city staff's consistent and infamous complicity with Freeport in working to get the measure approved by the council.

Moreover, Jim Smith gave a curious speech before the environmental board March 22. "...in conversations with the attorneys early on, I don't think it was Freeport's intention to ever try this lawsuit. They filed the lawsuit to create the opportunity to settle this again once and for all, and now what everybody is doing is just playing it out."

And to many, that seems to be exactly what happened. Last Thursday, the company filed a pleading to reduce its lawsuit to include only the 25-acre Falls, and not its entire 4,000-acre Public Utility District (PUD).

When this reporter questioned Smith Thursday evening, he said he didn't know about the September meeting, and maintained that city staff frequently meet with opposing lawyers without council consent. But when asked whether it was against city policy for the mayor to meet with lawyers of the opposing sides, Smith replied, "You have your facts wrong. There was no opposing side when the mayor met with Roy Minton." Asked once again whether he knew about the meeting in question, Smith replied, "Maybe."

Later, Smith finally stated that Freeport representatives indicated at the meeting in question that it would file a lawsuit.

Todd denied repeated requests for an interview, but his executive aide, Trey Salinas, said Monday, "If someone's planning on filing a lawsuit against the city, it's customary for you to ask them not to sue you. And that's what the mayor was doing. Obviously, he wasn't persuasive enough."

Minton acknowledges that he called the meeting to announce the potential for a lawsuit. "It was a very amicable meeting, there wasn't any fussiness going on on either side. I just simply said we're at the point where I can see that we're going to have to have litigation, Bruce, if we can't [settle Freeport's and the City's differences]. And he was very gracious about it himself. And some time shortly after that we did bring the litigation. Of course, as you know, we've never had any problem in working out something with city staff. Our people have always gotten along with them." He would not comment further on the meeting.

It's exactly that friendliness that has Shea worried. "I think it certainly looks weird that they meet in the mayor's private office before the lawsuit's been filed to talk about it. And then we have such clear indications that the lawsuit's been cooked up to try and force us to give them, through a settlement, what they could not otherwise get from the city, which is sewer service."

In a related matter, the offices of Councilmembers Jackie Goodman and Gus Garcia have both indicated that their proposed agreement for the Freeport PUD is not up for consideration this week, meaning the council will not attempt to negotiate a settlement with Free-port based on such an agreement. The trial begins May 8.


The city's five-month budget process opened April 26 with a clear message from the city's budget officers that the council should put the brakes on its recent spending spree. (On March 30, the council, with Brigid Shea absent, unanimously approved issuance of $12 million in bonds to pay for the new baseball stadium and a water-quality pond.) Assistant City Manager Betty Dunkerly advised that the city set up a savings fund for capital projects to help the city "stay focused on the concept of affordability." Staff also presented a proposal that calls for no new spending initiatives until at least six months after the budget is passed in September.

Also, City Manager Jesus Garza noted that the city could maintain its effective property tax rate
(56 cents per every $100 of appraised value) if it issues only $7 million in bonds this fall, a suggestion that will require extra soul searching by the council members. They have authorized issuance of $28.31 million in bonds this fall, but could still revoke their plans. If the full amount is issued, the city will have to find $2 million to service the debt. In addition, city staff is looking to save $11 million by trimming 6% from the budgets of 23 city departments, except for the Fire Department and EMS. The proposals will likely return for council consideration by the end of June.


As of last Thursday, the dispute between the city and its legislative delegation regarding a legislative bill that would ensure funding for future indigent care at Brackenridge at the 1994 levels has been settled, much to the credit of city staff, according to Hugh Strange, Representative Glen Maxey's press aide. Maxey, not privy to the curtained negotiations between city staff and Seton Medical Center, feared that indigent care would falter after the Seton/Brack merger. But city staff, after spending weeks turning and twisting to avoid any state mandate regarding indigent care at Brack, "pretty much agreed to the draft we presented to them," says Strange. "So they have apparently dropped their objections. We're quite pleased with the cooperation shown by the city of Austin in resolving this matter."


This week in council: There will be a 4:30pm public hearing and vote on the recommendations of the Balcones Canyonlands Conservation Plan working group, and a 5pm public hearing and vote on the location of the new city hall.


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