Updated Nov. 8, 2006
City Attorney Sarah O'Reilly-Evans could collect up to $650,000 on the $65 million convention Center bond proposal, according to a clause in her city contract, first revealed publicly on Nov. 1 on jacksonfreepress.com. O'Reilly-Evans, who heads the city's legal department, makes $113,000 a year in annual salary—almost $25,000 more than the last city attorney, Terry Wallace—but a clause in her contract allows her to take home extra pay from every city bond proposal she helps devise.
Clause B of O'Reilly-Evans' employment contract states: "The issuing and refunding of bonds and the drafting and presenting of all orders and resolutions in connection therewith, shall be provided by the City Attorney, and this shall be as an additional service to the city of Jackson. … The city attorney shall be compensated a reasonable compensation as authorized for any co-counsel not to exceed the amount authorized by (state) law."
State law allows the city to pay the attorney a "reasonable compensation" not to exceed 1 percent of the bonds issued. In the case of the $65 million bond for the Capital City Convention Center, even just 1 percent is $650,000. However, state law mandates that O'Reilly-Evans can't be paid any more than co-counsel, who will get $70,000.
Still, Ward 2 Councilman Leslie McLemore said he questions why composing bond proposals does not count among her designated services and duties when the city is already footing her considerable salary.
"I think we're paying her $113,000, and that's more than we paid any other city attorney. It seems to me that she's being paid well enough without that clause, and it should be excluded," McLemore said.
In response to public-records requests by the JFP, Rick Hill, deputy director of the Department of Administration, wrote on Oct. 30 that O'Reilly-Evans received no additional compensation for a recent general obligation fund (worth almost $300 million) and a $27 million water/sewer refunding bond.
Hill refused to disclose whether O'Reilly-Evans received extra compensation for her work on the Capital City Convention Center bond issuance or TIF for a new Lowe's in south Jackson. (A TIF or "tax increment fund" is a bond designed to pay for public projects that will encourage private development; the bond is secured against anticipated future property tax revenues.) Hill wrote that those deals had not yet closed and legal fees had not yet been distributed.
After the JFP broke this story last week, O'Reilly-Evans admitted to The Clarion-Ledger that she's taking home an extra $45,000 for her services. Ward 7 Councilwoman Margaret Barrett-Simon said O'Reilly-Evans said last week that she had reduced her fee from the $70,000 co-counsel will receive to $45,000.
Mississippi Ethics Commission Executive Director Tom Hood said the state law was designed for smaller municipalities employing underpaid part-time city attorneys. However, O'Reilly-Evans' contract appears to break no law, he said. "As far as the law is concerned, the ethics law does not prohibit variable compensation as long as all the terms are contained in one contract," Hood said.
Ward 6 Councilman Marshand Crisler was outraged at the possibility that O'Reilly-Evans might collect any extra from the city's strained coffers.
"It would be different if we didn't already have a full-time attorney," Crisler said. "I understand why outside counsel would get one-half of 1 percent (sic) but why on God's earth would you pay this ungodly salary, plus her fees on bond counsel, especially taking into consideration the financial strife that the city is in already? To me, that's part of her job. We'd be paying her twice."
Ward 4 Councilman Frank Bluntson said he was fine with O'Reilly-Evans taking home $158,000 this year with the bond fee inserted in her salary. "As long as it's legal, and the state says it's OK, I'm OK with it," Bluntson said.
The city is already paying law firm Baker, Donelson, Bearman & Caldwell, as well as Phelps Dunbar LLP and other attorneys for their assistance in writing the bond. Neither firm returned calls to the JFP for comment.
McLemore, Crisler and Barrett-Simon say they don't recall seeing Clause B in O'Reilly-Evans' contract prior to the council's confirmation of her last year. "I can't be 100 percent sure that that clause was in her contract when we had her confirmation hearing," McLemore said.
"We may have seen (Clause B)," Council President Ben Allen told the JFP, "but we were all so euphoric at having a change in the legal department that we may not have noticed it."
Barrett-Simon said O'Reilly-Evans should have made a point to discuss the clause prior to her confirmation. "This clause is something of such significance that we're having a hard time believing that (this agreement) is exactly what we did approve," Barrett-Simon said. "I just can't believe we missed it. This kind of thing just jumps out at you. Why would (O'Reilly-Evans) not have said as an attorney representing us, too, that 'I will be getting a percentage of the bond proceeds?'"
No council member has produced a copy of the employee agreement from that date. Via public records request, the JFP obtained a copy of O'Reilly-Evans' contract, stamped July 6, 2005, which includes Clause B.
O'Reilly-Evans told the JFP that her contract, including all provisions, was before the eyes of council members prior to her confirmation and that they approved its terms. "They most certainly saw it," O'Reilly-Evans said, adding that she intends to keep her fee.
Nevertheless, Crisler brought the issue up at this week's Tuesday council meeting, asking whether the $45,000 fee would be inserted in this week's payroll. When O'Reilly-Evans' fee comes up for collection, Crisler wants to know about it, he said. Allen, who is determined to keep debate regarding the issue behind closed doors, cut off Crisler.
"We'll have some more conversations about this whole issue, but not in this forum," Allen said. Allen later told the JFP: "It's far from over, but we're going to work it out in a dignified manner."
Crisler predicted that a majority of the council, including Allen, might eventually be pressured by tax-weary residents tired of useless expenditures and wasteful payouts into renegotiating the contract.
Former City Attorney Terry Wallace said he was surprised at how hastily the council had confirmed both O'Reilly-Evans and her considerable salary increase in the first place. At last year's July confirmation, no council member brought up Clause B. O'Reilly-Evans, who has worked with former mayor Dale Danks, retired from city service during the last administration. During Melton's 2005 campaign, she helped Melton argue his way out of lying to the Jackson Municipal Democratic Executive Committee, when he told them that he had filed for homestead exemption in Jackson but had not.
At least three council members believe that the legislative branch needs its own legal counsel to inspect and advise on certain documents submitted by the mayor's office, claiming that the council, without its own attorney, is at the mercy of the executive.
"The difficulty has been that the city's legal persons represent the executive branch and not the legislative branch, and that's a fatal flaw in the legislation when this form of government was approved and passed by the state Legislature. They really forgot legal representation for the City Council," McLemore said.
Former Mayor Harvey Johnson Jr. said he had resisted the idea of the council having its own legal representation during his administration. "If you start hearing legal opinions within the city between the branches of government, you start pulling against each other," Johnson said. He added that he wasn't sure how easily the council could pull out of O'Reilly's agreement, saying, "it's obvious that a lawyer drafted it."
"It could be grounds for a lawsuit, although it would be weird for the city's own attorney to sue the city," Johnson said.
Mississippi College School of Law professor Greg Kettles said he didn't see an obvious way out of the agreement short of something drastic.
"Whether she's not done a good job as a city attorney could be terms for terminating the employment agreement," Kettles said. "Her agreement implies that she's expected to do a competent job, and if they wanted out of it they might have to go down that avenue."
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