In less than two years, Wapato has spent more than $280,000 on attorney’s fees, with at least $211,000 of that going directly to cover costs from multiple lawsuits filed against the city and its former city administrator, Juan Orozco.

The city also has paid out more than $279,000 to five Wapato residents: $130,000 to settle three lawsuits alleging violations of the state’s open public records act, and more than $149,300 in severance to three employees terminated early.

Between those settlements and attorney’s fees specifically related to lawsuits filed in response to city actions under the Juan Orozco administration, the city faces at least $490,552 in expenses since January 2018.

When Mayor Dora Alvarez-Roa was asked where that money came from — considering Wapato doesn’t appear to have a general fund reserve, used by many cities for litigation or emergencies — her response was, “No comment.”

Orozco became mayor in January 2018. He resigned in September 2018 and was immediately appointed city administrator by Alvarez-Roa, his successor.

The Washington State Auditor’s Office reported eight egregious findings of unlawful activity and misappropriation of government resources during Orozco’s administration. He and other city staff and elected officials are the subjects of a criminal investigation by the Yakima County Prosecutor’s Office and the Yakima County Sheriff’s Office.

Orozco and the city have been the subject of eight lawsuits and nine civil tort claims, with allegations ranging from nepotism, ethics, and Open Public Meetings Act violations to wrongful termination and intimidation. The lawsuits include one filed by the state attorney general, alleging that Orozco used his position to unlawfully enrich himself by creating and accepting a city administrator position that carried a $95,000 salary.

Orozco resigned July 19 as part of a settlement agreement with Washington Attorney General Bob Ferguson. The resignation doesn’t prevent Orozco from facing consequences for criminal acts he may have committed while in office, nor does it stop the four lawsuits or nine tort claims.

Attorneys and lawsuits

The city of Wapato is facing four ongoing lawsuits:

  • A lawsuit filed on behalf of eight Wapato residents alleging violations of the Washington Open Public Meetings Act, filed in late 2018.
  • A lawsuit filed by open government activist Arthur West, alleging violations of the open meetings act, filed in May.
  • A lawsuit by the state attorney general, alleging violations of the open public meetings act and accusing Orozco of using his position to unlawfully enrich himself, filed in June.

A lawsuit by two former city staff alleging wrongful termination and ongoing harassment, filed in July.

The city has settled an additional four: a lawsuit filed by the Teamsters police union and three lawsuits by Wapato residents alleging violations of the state’s public records act.

The Yakima Herald-Republic obtained 247 pages of invoices and the city’s vendor detail report in response to a public records request asking for the city’s attorney fees from September 2018 to the present. Those documents show the city’s attorney fees have added up to at least $283,556 billed by at least eight firms.

That total includes the cost of legal services that every city has to have an attorney cover: drafting ordinances and resolutions, reviewing city contracts, answering legal questions brought up by the City Council or city employees.

Four main firms earmarked expenses specific to consulting with the city or otherwise handling the city’s lawsuits. Those expenses came to $211,243, or approximately 74 percent of the city’s total legal expenses.

It isn’t immediately clear how much of this total the city has paid to date, since many of the invoices included past balances that hadn’t been paid. The Herald-Republic used the total billed by each firm for each work period to make sure fees weren’t duplicated in calculations.

The first of the lawsuits against Orozco in his official capacity as mayor-turned-administrator was filed in September 2018, when Robert Noe was the acting city attorney. Noe, who resigned in October 2018, said his involvement with the city’s litigation was minimal, with just $1,845 of his total fees specific to work on lawsuits, namely the OPMA and Teamsters lawsuits.

The Issaquah-based firm Kenyon Disend then picked up counsel for the city from October 2018 through April 2019, when they withdrew from representing the city, saying they could not continue to do so in good faith. The firm’s costs for that period totaled $143,897, of which $133,671 was spent specifically on the four lawsuits related to the open public meetings act and public records act.

During that time, the Yakima-based firm Menke Jackson Beyer stepped in to help with the Teamsters lawsuit and to represent individual city officials mentioned in the open public meetings lawsuit. According to invoices in the public records request, from January 2019 through the end of April, the firm billed Wapato $69,777, tied entirely to the city’s lawsuits.

The fourth main firm, the Seattle-based Ogden Murphy Wallace, started as Wapato’s official city attorney April 1, when Kenyon-Disend was in the process of withdrawing. A sole invoice for the firm, as provided through the public records request, totaled $9,353, of which $5,950 was specific to the open public meetings lawsuit and the lawsuit filed by the two former city employees alleging wrongful termination and intimidation.

Settlements

The city has also spent at least $279,309 on severance for terminated employees and other settlements since March 2018.

That month, former police chief Dave Simmons — terminated in February — received $56,809 in severance pay. Then, in May, former city clerk-treasurer Sue Pearson received $45,000 and former fire chief Santos Valdez received $47,500 after their dismissals.

In January 2019, the city also paid out a collective $130,000 to settle three lawsuits brought by Simmons and Wapato residents Trent Wilkinson and Luz Aguirre that alleged the city violated the state’s public records act. They received settlements of $80,000, $30,000, and $20,000, respectively.

A city’s insurance carrier sometimes picks up costs for lawsuits. Wapato’s insurance is with the Association of Washington Cities. It’s not clear what legal expenses the agency has covered for the city; AWC did not comment for this article.

The figures cited in this story were pulled from individual invoices from the law firms, billed specifically to the city, and a 119-page vendor detail sheet provided in response to a public records request that listed totals paid to the identified firms.

Source of the money

At the end of 2016, the city had close to $2 million in ending cash and investments. By February 2019, that amount had dropped to a negative balance of $41,516, according to the state Auditor’s Office.

Wapato’s budget is not online nor filed with the Association of Washington Cities.

A one-page 2019 budget summary provided to the Yakima Herald-Republic by Wapato City Councilman Keith Workman shows a blank line for the general fund reserve.

That budget, which Workman said he does not consider accurate, indicates total revenue of about $7.4 million for the city, a number that includes funds for streets, capital projects and necessities such as water, sewer, and garbage services. The same budget allowed for about $7.1 million in expenses, leaving a remainder of about $243,000.

Alvarez-Roa and Kimberly Grimm, the city’s clerk-treasurer, would not say where the city got the money to cover the costs of the settlements, severance payments and lawsuits.

But the state auditor report, published in May, noted that at least $117,111 of it came from the city’s sewer fund, which is a restricted use fund — meaning that money from the fund should only be used for sewer-related services, since city residents pay for the services that create the fund.

Workman said Wapato leadership ultimately authorized $400,000 from the city’s “long-goal investment plan” to cover the legal expenses at its February meeting.

The fund is not listed on the copy of the budget that council members received. The agenda for the February meeting notes an ordinance involving a transfer of that amount from the “investment account” (also not listed on the budget) to the general fund.

Workman added that the meeting became controversial when the council learned that Orozco would become the sole individual able to release the funds, and that he would be able to do so without council approval. Workman said that he and council members Brinda Quintanilla-Bautista and Chuck Stephens left the meeting, which Workman said then continued without them, including a vote on the transfer of the funds.

Minutes from the meeting note that Councilwoman Irasema Cantu was absent, which would leave three of the seven council members present at for the vote. Minutes from the meeting note that Workman, Quintanilla-Bautista and Stephens did not vote, which were counted as nays. Council members Barbie Perez, Joel Torres and Ralph Sanchez voted in favor. The minutes note that Alvarez-Roa then “broke the tie” and the motion carried, despite law for second-class cities that requires at least four council members to vote in favor of an ordinance for its approval, as noted in a memo from the city’s former attorneys at Kenyon Disend.

Rebuilding

Workman said he worries about whether the city’s ongoing litigation will end up bankrupting the city.

“I don’t know what we’re working with at this point because they keep us in the dark,” he said. “But if we don’t get in there and settle some of these lawsuits, that’s a very real concern.”

Workman became the subject of controversy in May when Wapato’s new attorneys learned he was sharing information with Richard Gilliland, the attorney representing eight Wapato residents in the Open Public Meetings Act lawsuit. Workman said in a May 30 declaration that he did not trust city officials or attorneys to refrain from illegal activity and that he was doing what he felt was right for Wapato.

The city’s attorneys said that Workman should not have been contacting opposing counsel and asked for sanctions against Gilliland and a halt to the case until they could discover the extent of the information sharing.

Wapato’s insurance with its current carrier ends Jan. 1, 2020. The Association of Washington Cities announced a decision to terminate the city’s membership from its risk-sharing pool in June.

AWC would not comment for this story. But Mike Bailey, a consultant for the nonprofit Municipal Research and Services Center, who was contracted to work with the city of Wapato to improve its financial situation, offered the following comments on what it would take for the city to rebuild:

“We have developed several resources that might assist Wapato in their efforts,” he said. “For example, our advice on financial policies recommends a fund balance or reserve to provide for unforeseen issues or circumstances.”

In May, Bailey said he had met with city leadership and Grimm, the city’s clerk-treasurer, as part of the MRSC contract. Grimm took several steps to strengthen the city’s controls over its financial resources at that point, including training, Bailey said.

Alvarez-Roa, the mayor, said Wapato already has started taking action to improve safeguarding government resources and taxpayer dollars.

“These include retaining an experienced clerk, contracting with MRSC consultants, implementing new accounting software and other protocols to prevent theft of funds, retaining qualified municipal attorneys, working closely with insurance and attorneys related to personnel matters and attempting to resolve claims in the early stages,” she said.

Alvarez-Roa said the steps started before the May audit findings.

“We will start another audit cycle in just a few months to assess whether these controls are starting to make a difference,” she said.

Reach Lex Talamo at ltalamo@yakimaherald.com or on Twitter: @LexTalamo.