Bulk of Aspen housing authority’s legal fees over past 5 years go toward two eviction cases

Almost half of the $430,000 in legal expenses incurred by the Aspen-Pitkin County Housing Authority in the past five years are a result of two high-profile eviction cases.

Lee Mulcahy, who’s been in litigation with APCHA since 2015 when he was found out of compliance for not proving that he works in Pitkin County the required 1,500 hours a year, has generated roughly $145,000 in legal bills for the agency from 2015 to ’19, according to invoices from the agency’s contract lawyer, Tom Smith.

Smith said this week that he estimates about $75,000 in attorney fees are reimbursable; the rest of the work was ancillary to the court cases involving Mulcahy and unrecoverable.

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APCHA prevailed in Mulcahy’s enforcement case in Pitkin County District Court, the Colorado Court of Appeals, the Colorado Supreme Court and the U.S. Supreme Court.

Liens have been placed on Mulcahy’s Burlingame Ranch home so when he is forced to sell the property in the coming months attorney fees can be collected, according to Smith.

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Mulcahy declined to reveal how much he has spent on legal fees fighting APCHA.

What’s likely not recouped is the nearly $41,000 incurred in the multi-year legal case against Amanda Tucker, who was evicted from her apartment at Aspen Country Inn last October.

It started as a compliance case when APCHA learned that Tucker didn’t include her Social Security income on her qualification form, which if she had she would have been ineligible to live in the low-income rental.

Smith said it is difficult to collect attorney fees in rental compliance cases because often the individuals have minimal assets, and liens can’t be recorded because they do not own property.

“There’s no way to collect them,” he said.

The estimated $75,000 in reimbursable attorney fees includes other lawsuits levied by Mulcahy against APCHA, Smith added.

A civil rights lawsuit that Mulcahy filed in federal court was dismissed, according to Smith.

It was based on the alleged denial of due process by the Pitkin County District Court and APCHA. Mulcahy appealed it, and it is now in front of the 10th Circuit Court of Appeals.

APCHA has incurred attorney fees of about $13,000 in that case. However, the ability to recover the money is legally a gray area, Smith said.

“We are arguing that we are entitled to the $13,000,” he said.

Mulcahy filed another case in Pitkin County District Court alleging that APCHA’s “rules of decorum” violated his First Amendment right of free speech.

The court held that the rules are constitutional, but that on a couple of occasions APCHA violated Mulcahy’s free speech rights at board meetings.

“It was a draw,” Smith noted of the court’s ruling for both sides.

The legal fees billed to APCHA in that case are about $20,000.

Combined, Smith has billed roughly $186,000 for work on the Mulcahy and Tucker cases.

That is 43.2% of the $430,225 Smith has billed for all legal services from 2015 to 2019.

“It is true that (in) either litigation or ancillary matters, I have spent an extraordinary amount of time with Lee,” Smith said. “I’m in response mode.”

At $250 an hour, Smith’s rate is far lower than market rate and costs incurred to the local government could be much higher. Most local attorneys charge over $400 an hour, according to other Aspen lawyers.

Smith, who has represented APCHA since 1983 when the program was in its infancy, said he bills under market because it’s a public service, and it’s steady work. He doesn’t charge for his overhead costs or travel time, either.

City Attorney Jim True said the city hasn’t gotten too involved in APCHA’s legal cases, and there has been minimal staff time used in that regard.

However, the city did spend close to $10,000 in 2017 when it hired a special prosecutor Angela Roff, with the Law Office of Angela Roff, PC., in a municipal court case against Mulcahy for littering of public/private property.

Roff was brought in because True stated he had a conflict of interest and Assistant City Attorney Andrea Bryan was on maternity leave and unavailable.

Mulcahy was found guilty by a jury and paid $185 in fines. Attorney fees were not recoverable in that case.

Litigation of a different kind

Other litigation outside of Tucker and Mulcahy over the past five years amounts to roughly $65,500.

Some of those are enforcement cases in which the resident disputes the notice of violation and either sues APCHA, or the agency sues them for non-compliance and forces an eviction or the sale of the property.

Others are long-disputed cases like the Centennial Owners Association, which claims APCHA, Pitkin County and the city of Aspen are liable for poor living conditions and shoddy construction in the 92 deed-restricted units at the seven-building complex.

Most of the legal costs incurred by general litigation fees are not recoverable for various reasons, including that between a third and half of the units in the inventory have old deed restrictions that don’t have provisions for APCHA to collect attorney fees.

“Where deed restrictions provide for the award of fees to the prevailing party, APCHA uses its best efforts to collect when it wins,” Smith said. “This requires recording liens and collecting at the closing of the required sale.”

Other times it’s a judgment call for APCHA.

“Sometimes when we get voluntary compliance we will forgo attorney fees in order to settle the case and get the property in the hands of a qualified employee quickly,” Smith said.

Bethany Spitz, compliance manager for APCHA, said about 1 in 5 enforcement cases makes it into the legal arena.

She acknowledged that those who decide to challenge APCHA in court either do it because they think their arguments have legitimacy while others use it as delay tactic to stay in their homes.

The costs of ramped-up enforcement

Legal costs associated with enforcement have grown significantly in the past year and a half, when APCHA stepped up its compliance efforts and hired Spitz 18 months ago.

Over the past five years, APCHA has spent roughly $54,500 in enforcement and compliance cases.

About $37,000 was incurred just in 2018 and 2019. Between 2015 and 2017, enforcement and compliance legal fees amounted to $17,425.

“In a general sense, compliance right now takes up most of my time,” Smith said, noting that in 2018 alone he handled 36 cases. “These cases take a lot of time.”

Smith gets involved at the front end when APCHA has investigated a matter and asks an individual to prove they are in compliance.

Smith will review the notice of investigation letter and supporting documents.

If a person ignores a notice of violation or appeals it, Smith gets more involved, particularly if the compliance case turns into a lawsuit.

APCHA Executive Director Mike Kosdrosky said the agency’s budget, which is funded by the county and city, is nimble enough to handle the ebb and flow of legal fees.

Elected officials have approved a supplement budget request for $60,000 for 2020, Kosdrosky noted.

He said he anticipated costs going up after APCHA officials made compliance and enforcement a priority.

“The last thing we want to do is get into litigation but I’m not afraid to, either,” Kosdrosky said. “We are willing to fight when we have a legitimate case.”

Smith said he does not recall ever losing a compliance or enforcement case.

“I can’t think of one,” he said.

Kosdrosky said in the long run he hopes enforcement costs go down as people stay in compliance or otherwise pay hefty fines for violating the rules.

Spitz said she has about 10 open cases that she’s investigating.

The estimated $124,350 remaining of the total amount billed by Smith to APCHA since 2015 is general legal representation.

That cost includes reviewing APCHA’s housing guideline changes, interpreting deed restrictions on units, real estate contracts and attending board meetings.

Last week, Smith was asked to review APCHA’s pet policies across its inventory.

“With 3,000 units,” he said, “stuff just keeps coming up all the time.”

csackariason@aspentimes.com