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City plans $1M litigation fund
By ALEXANDER J. GRANADOS
agranados@manassasjm.com
Thursday, November 30, 2006

With possible litigation looming, Manassas is preparing for the battle by increasing its litigation fund.

The city has planned on holding $1 million for fiscal 2007 in case of legal action stemming from the investigation into city actions by the U.S. Department of Housing and Urban Development.

The investigation was recently turned over to the U.S. Department of Justice. Since then, no further action has been taken against the city.

"We all hope and feel that we will not have to utilize it," said Manassas City Council member J. Steven Randolph. "But I think it's prudent and appropriate that we have that reserve money set aside."

Since January, HUD has been investigating allegations that the city's housing overcrowding program discriminates against Hispanics.

HUD, civil rights groups and Manassas residents who complain they have been discriminated against have all filed complaints against the city.

HUD sent the investigation to the DOJ after HUD officials said negotiations failed.

The investigation went to DOJ because it has the authority to decide what other action might need to be taken.

The litigation fund that could be used to fight DOJ legal action is a combination of money budgeted for the end of fiscal 2006 and for fiscal 2007. Both years had $500,000 budgeted, but the money was rolled together into fiscal 2007, said city manager Lawrence D. Hughes.

"On an annual basis we have spent a maximum of $200,000 a year," Hughes said. "And we are budgeting $1 million this year. So that's big."

For now, Hughes said the budget is just a forecast. It is not clear whether the funds will need to be used.

"We are prepared to," he said. "But we don't know what to anticipate. It is just out there."

The city has retained outside legal counsel in the form of former Attorney General Bill Broaddus, now with McGuireWoods LLP, to deal with any HUD-related legal issues.

In fiscal 2006, the city spent a little more than $12,000 on outside legal counsel to deal with HUD, but that could change as the investigation goes on and possible litigation arises.

The city has faced its share of legal disputes, everything from land use issues to disputes with a local trash provider.

"Certainly there has been litigation in the past, but this seems to be of a greater magnitude," Randolph said.

And the city may not just have federal litigation to fear.

Howard Daniel, a gay Manassas resident who was recently denied a special-use permit for a home massage therapy business, could be taking action against the city.

The city had granted two similar special-use permits in the past, and some think that Daniel's permit was denied because of his sexual orientation.

Daniel retained counsel from the Washington, D.C.- based law firm WilmerHale to fight the city's decision.

One of Daniel's lawyers, David Olsky, said that if the dispute could be solved without legal action that would be preferable.

"But there is no proposal on the table and we are accordingly planning to pursue his rights in court," Olsky said.

Randolph, a 20-year veteran of the council, said that there seems to be an increase in litigation in recent city history.

"I think there are a number of really controversial issues the city is having to deal with pertaining to overcrowding and with the preservation of our neighborhoods," he said. "Trying to find a way to do that within the framework of the law is challenging for Manassas and other cities throughout America."