The Rochester City Council is debating Mayor Malik Evans' request to raise the cost of legal fees to defend the city and its former finance director from a federal Securities and Exchange Commission charge.
The SEC charged the city nearly two years ago with floating a $119 million bond issue for the Rochester City School District in 2019...just before an audit showed the district had a $30 million deficit. That reduced the city's credit rating, and the SEC says it defrauded the people who bought the bonds. It wants compensation from the city and from Finance Director Rosalind Brooks-Harris, who could be on the hook for up to $25,000. That's what another person charged in the complaint ended up paying.
Mayor Evans says the city schools are financially independent from the city, and the city isn't responsible for what happened. Under New York State Law, the RCSD is financially independent of the city, although the city is required to turn over a percentage of its revenues to fund school operations. The mayor says the city didn't know the district had a problem until an independent audit revealed the problem.
That audit showing the school district's financial problems came out more than 40 days after the city handled the bonding, which it does for the district as a cost-saving measure. The city is arguing that the charges against it should be dismissed, and that it should at least be able to pay the fine for Brooks-Harris. Otherwise, he asks, why would anyone want to work for the city?
The city originally estimated and budgeted for legal fees of about $63,000 for a legal firm expert in such cases to handle the case. The legislation now being debated by City Council includes a request from the mayor to raise that estimate to more than $413,000. And the city's law office says it will go higher if the case can't be resolved by a judicial order before trial, as the city hopes. The mayor says that's a lot of money for a city with a $500 million annual operating budget.