LORAIN — City Council’s rejection earlier this week of an agreement between Mayor Tony Krasienko and county Auditor Mark Stewart over the city’s Community Reinvestment Areas may lead to another $1 million in legal fees in 2010, a letter from Law Director Pat Riley to City Council indicates.

In hopes of curbing that bill, he proposed spending $200,000 to hire two additional attorneys in the Law Department to work exclusively on the CRA case — thereby reducing the work by Columbus law firm of Vorys, Sater, Seymour and Pease and that estimated $1 million bill.

“The city of Lorain cannot sustain the cost of its outside counsel for the CRA case,” Riley wrote. “It is imperative that an alternative representation at an effective yet reduced cost be found.”

For the past two years, the firm has represented the city in its fight with Stewart about the legality of making 15-year, 100-percent tax abatements in CRAs throughout the city retroactive to 2000. Also disputed was the $4,000 application fee for CRA households, among other things.

A letter from Vorys dated Nov. 9 to Krasienko and Riley indicates the firm “cannot continue to provide legal services to the city until we have a clear understanding of the terms under which we will receive payment for both unpaid legal bills and for legal services to be rendered in the future.”

Vorys contends Lorain owes them $465,053.41 for legal services through Sept. 30, 2009 — $357,726.46 of which is tied to the CRA fight.

Vorys is asking the city to pay $35,000 a month throughout 2010 and, in exchange, Vorys will forgive more than $45,000 that would still be owed. The firm also is willing to delay payment of additional legal bills accrued between the beginning of October and the end of the year until the first quarter of 2010.

“In that first quarter of 2010, however, the city will pay the full amount for legal services rendered after September 2009, and pay all future invoices on a current basis,” the letter reads.

Vorys estimates the bill for October 2009 will be approximately $27,000.

Councilman Mitch Fallis, D-at large, said he thinks Riley’s suggestion is wise.

“I would support that suggestions provided we could find an attorney with the proper qualifications and background experience in CRA matters,” he said. “I believe in his philosophy to engage someone in-house to minimize legal fees. I think it’s a wise strategy on his part.”

Fallis, chairman of the Finance Committee, said the city will have to work it into its budget somehow.

“It’s a very difficult time for the city of Lorain, financially,” he said. “Vorys is aware of our financial situation and has been very gracious to offer us that payment plan so that will help a little bit.”

The CRA case, which now moves to the discovery phase following the rejection of the settlement, could take an additional two years to resolve with estimated monthly legal bills in the five digits, Riley wrote.

The city is facing an estimated $2.6 million deficit by the end of the year, and it recently laid of 23 employees and faces the possibility of more layoffs. The city also is proposing borrowing more than $1 million from the Utilities Department to cover payroll expenses through the end of the year and into January 2010.

Riley and Krasienko did not return phone calls Friday  seeking comment.

Contact Alicia Castelli at 329-7144 or acastelli@chroniclet.com.

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