Thursday, May 26, 2022

Leland’s legal budget just more than doubled, expense account grows by $300,000

In fiscal years 2016-2017 and 2017-2018, Leland submitted a legal expense budget of $15,000. In fiscal year 2016-2017, it underspent that. But last fiscal year, it spent at least 14 times its budget on legal fees. Now the town has more than doubled that budget. What's going on?

As the town grows, so has its legal budget. Leland Town Council approved nearly tripling its legal expense account Thursday, transferring $300,000 out of its general reserve fund to cover the difference. (Port City Daily photo/Johanna Ferebee)
As the town grows, so has its legal budget. Leland Town Council approved more than doubles its legal expense account Thursday, transferring $300,000 out of its general reserve fund to cover the difference. (Port City Daily photo/Johanna Ferebee)

LELAND — Leland Town Council approved a budget amendment last week that more than doubles its legal expense budget. The move gives the town more room to pay its growing legal bills.

At its regular meeting Thursday, Council approved transferring $300,000 out of the town’s general reserve fund into its legal expense account.

Related: Update: Belville considering appealing after H2GO transfer ruled as unlawful

Before Council approved the budget amendment, the town’s legal budget for fiscal year 2018-2019 was $215,000. Now, it’s $515,000.

Reason for the change

The item was first introduced at Leland’s agenda review meeting on Monday, April 19. The increase was necessary since in June 2018 the town projected legal fees would exceed its submitted $215,000 budget by $35,000.

Carly Hagg, the town’s finance director, brought up the basics of the item to Council Monday, but no discussion ensued. It was later approved on Council’s consent agenda Thursday.

No specific purpose is listed on the budget amendment request. Hilary Snow, Leland’s spokesperson, said a majority of the financial strain is tied to the town’s lawsuit with Brunswick Regional Water and Sewer H2GO against Belville.

(On Monday, Judge Charles Henry ruled in favor of Leland in the case. Shortly after the ruling was released, Belville announced it is considering an appeal. Leland’s budget amendment decision came before Judge Henry’s decision.)

“It has been a lengthy, expensive process. So the town is anticipating there would be continued legal proceedings relating to H2GO case,” Snow said. Citing the potential for Belville to appeal the recent ruling, Snow said the amendment was to prevent going over the town’s original budget. “It’s budgeting for that unknown potential legal cost,” she said. “They’re still getting invoices in.”

Higher than recent years

According to Snow, Leland has spent $742,375.22 in legal fees related to the suit to date since it first began in November 2017. By the end of 2018, Leland spent an estimated $347,000 on the case. This means legal costs for the suit in the first four months of 2019 alone have at least doubled the town’s prior expenses on the case.

Leland's recently-inflated legal expense budget is 34 times its budgeted fiscal year 2017-2018 amount of $15,000. (Port City Daily photo/Courtesy Town of Leland)
Leland’s recently-inflated legal expense budget is 34 times its budgeted fiscal year 2017-2018 amount of $15,000. (Port City Daily photo/Courtesy Town of Leland)

Leland’s legal spending has picked up drastically in recent fiscal years.

Last fiscal year, the town outspent its budgeted $15,000 in legal expenses by at least 1,348% (the town’s audit last year does not itemize “governing body” expenses in which legal fees are included. The audit did, however, note that the town’s total governing body expenses went $263,994 over budget. Overall, the town said it was given a “clean” and “strong” financial bill of health.)

In fiscal year 2016-2017, the town budgeted $15,000 in legal expenses but came in $1,803 under budget.

Belville, a defendant in Leland’s lawsuit, spent an estimated $253,500 on the case between November 2017 and the end of 2018. H2GO, Leland’s co-plaintiff, H2GO, spent an estimated $165,80 over the same time period.

Port City Daily has requested updated legal fee estimates that include 2019 spending from H2GO and Belville.

Other legal matters

Snow confirmed Monday the H2GO case is the town’s costliest legal expense.

Besides that case, the town is currently being sued by Plantation Building Corp. for allegedly charging illegal impact fees for years — a claim the town denies. Plantation Building Corp. filed the suit in September 2018.

Other potential litigation also looms over the town; in August 2018, Leland entered into a tolling agreement with Bill Clark Homes Wilmington in which the builder alleged the town charged illegal impact fees for years. The agreement prevents Leland from arguing a statute of limitations has passed. It also does not bar the builder from bringing forth its claims in a future suit.


Send tips and comments to Johanna Ferebee at johanna@localvoicemedia.com

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