Village's Legal Fees Spike With New Development on the Horizon

If you ever want a rough picture of how much new development is on the way in a community, just take a look at its legal fees.

In Menomonee Falls, those fees totaled roughly $1.2 million since 2010.

On a regular basis, the village contracts out the specialized tasks of drafting development agreements, development plans, real estate transactions, deed preparation, and title commitments to outside law firms. In a period of time when Falls development is spiking, so do its legal fees.

Between 2009 and 2010, the total amount of legal fees jumped from $277,000 to $530,000. The bulk of those 2010 costs were associated with work completed by Von Briesen & Roper, which is a Milwaukee-based law firm. Village Manager Mark Fitzgerald said the village has partnered with the law firm for decades because of the firm’s expertise in negotiations and contract drafting.

In 2011, the village once again exceeded the $500,000 mark, and totaled $532,000 in legal fees. As of July 2012, the village’s legal fees have totaled $207,000. Since 2007, 15 different law firms have been contracted by the village to complete work.

“The bulk of the fees are really all oriented toward some of the major economic projects we were working on. In that timeframe (2010 to 2011) we were working on Kohl’s, Eaton, the (Radisson) hotel, and TID #8,” Fitzgerald said. “The implementation of the Kohl’s development process will require us to complete more real estate closings and transactions moving forward.”

Fitzgerald said the village paid itself $130,000 upfront for attorney fees associated with the Radisson Hotel when it approved the bond issue for the project. The fees were paid as part of the financing, and will be paid back in part from the regular operations of the hotel.

The taxing district, or TID #8, includes land just off of Highway 41/45 and Pilgrim Road. The village as an area of improvement, and will invest roughly $30 million in infrastructure on the site to clear the way for new development.

In July, the village . The corporation plans to expand its headquarters campus in Menomonee Falls. Fitzgerald said attorneys spent some 5,000 hours total preparing the multi-faceted Kohl’s deal.

“As we’ve completed planning for a couple of those major projects, we should be lower on attorney’s fees,” Fitzgerald said. “We still have some transaction and implementation work to do. But much of the work is in fact behind us.”

Fitzgerald said legal fees associated with new development do not come out of the general property tax levy. Rather, the fees are folded into the overall financing costs for taxing district projects. Each taxing district includes its own budget, and costs fronted by the village are expected to be paid back in time with the incremental tax value generated from new development.

The village does employ its own attorney, Michael Morse, but Morse is in charge of day-to-day legal issues at the village. For example, Morse researched and crafted a new ordinance .

“The village attorney is more of a day-to-day specialist for legal issues,” Fitzgerald said. “These large development projects consume a lot of time and we don’t really take those on in house.”

Fitzgerald said in the long run, contracting services is cost effective since fees are paid on a project-by-project basis rather than paying for additional permanent, full-time village employees.

The second largest attorney expense is for village prosecution in municipal court. Since 2007, the law firm Arenz, Molter, Macy, Riffle & Larson have received roughly $100,000 from the village each year. Those costs are budgeted capital expenditures.

However, the Fitzgerald said they have lowered those prosecution costs by utilizing interns more often from the law firm rather than employing fully licensed attorneys.

“Much of municipal court prosecution is a standard process, and we are using interns to do more of that standard work,” Fitzgerald said. “Fully licensed attorneys are utilized to do the more difficult or unusual court cases.”