Council reacts to attack on city attorney

By RICHARD HANNERS / Whitefish Pilot

Jacobson calls Realtors' allegations "garbage"

Several Whitefish city councilors expressed anger and dismay Monday night at accusations by the Northwest Montana Association of Real-tors that the city's contract with city attorney John Phelps might be illegal or unethical.

In a Nov. 14 letter to the city, NMAR president John Osweiler suggested Phelps had a conflict of interest because his "six-year" contract paid him more than the Flathead County attorney and provided unusually good benefits. Osweiler said it was NMAR's opinion that state law limits such contracts to only two years.

Osweiler took NMAR's position further in a Nov. 25 letter suggesting Phelps violated the Montana Rule of Professional Conduct for attorneys when he negotiated his contract in November 2006.

When Phelps changed his two-year contract to a "six-year" contract and increased his pay by $10,000 a year, "he was entering a pecuniary transaction that was adverse to the city of Whitefish," Osweiler claimed.

The transaction and terms should be fair and reasonable and the "client" " in this case the city " should have been advised in writing of the desirability of seeking independent counsel on the transaction. Osweiler asked for documentation showing that Phelps complied with these ethical requirements.

Interim city manager Dennis Taylor responded to NMAR's first letter on Nov. 21 by pointing out that "Whitefish is a charter city with self-government powers."

"As a "home rule" city, the city is not bound by the state statute that limits city attorney contracts to a two-year term," Taylor said. The law cited by Osweiler in his first letter refers to cities with a ""strong mayor" form of government," Taylor said.

Whitefish's charter created the position of "Legal Officer," which is appointed by the council, not the mayor, Taylor said. In addition, the charter "contains no limit on the term of the Legal Officer," he said.

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

George Culpepper, NMAR's government affairs director, told the council on Monday that Realtors had a legitimate interest in the city attorney's contract because real estate sales were being lost in Whitefish and the legal budget was "bloated."

Culpepper also referred to the Wall Street meltdown and the recent bond elections for the high school and the city fire department. He did not explain what those things had to do with Phelps.

Four city councilors came to Phelps' defense, beginning with Shirley Jacobson, who noted that since this was her last council meeting, she could say what she wanted. Phelps is worth the salary he's drawing, she said, and if other city attorneys are not getting paid as much, maybe it's because they're not as good.

Jacobson also called NMAR's accusations "garbage" and said she felt sorry for Realtors who are members of the association.

Councilor Nick Palmer, who noted that Phelps' contract is for five years, not six as stated by Osweiler, pointed out that Realtors have made a lot of money in Whitefish, and the current economic downturn is not related to the city attorney.

Palmer also said he had done some independent research and figured that if the city had to contract out all its legal work rather than use an in-house attorney, it would cost the city $150,000 more.

Councilor John Muhlfeld said NMAR did not do its due diligence before attacking Phelps, and that was reflected in Osweiler's second letter, which brought up ethics charges rather than contract terms. Muhlfeld said this was the second time NMAR "inappropriately" questioned the ethics of a city staff person and "embarrassed" its own members.

Deputy mayor Nancy Woodruff noted that Culpepper expressed concern about the city's budget, but Phelps' salary package is a very small part of the overall budget. She also said she'd been told that NMAR had tried to persuade media to pursue Phelps' contract as a story of interest.

She said the city council will not take action on Osweiler's letters and noted that the city was still awaiting an apology for its claims against former city manager Gary Marks. She said she had full confidence in Phelps and pleaded for Culpepper to make more productive use of his time.