Falls councilman questions legal bills

Apr. 5—So just how much taxpayer money has been spent by the City of Niagara Falls to engage in legal battles with a Buffalo Avenue-based bitcoin miner and the owners of land where Mayor Robert Restaino's administration wants to be build a $150 million "events campus" known as Centennial Park?

Councilman Donta Myles said he has yet to receive a full accounting, despite weeks of asking the city controller's office to provide him with an update on the total of the city's legal bills for both items.

Myles, who has raised the issue on several occasions during recent council meetings, said he intends to raise it again during tonight's council meeting.

"That's something that I've been asking and that's something I'm going to have to address," Myles said.

The councilman's inquiries relate to two main legal costs: Those involving the city's dispute with the owners of the cryptocurrency mining operation known as U.S. Bitcoin, and those tied to the ongoing process of acquiring, through the city's legal power of eminent domain, 10 acres of property owned by Niagara Falls Redevelopment for the purposes of building Centennial Park.

A proposed settlement with U.S. Bitcoin, scheduled to be considered on tonight's council agenda, would require the facility operator to reimburse the city $180,000 for legal fees and costs.

Myles said it's unclear to him whether that amount — $180,000 — represents, in total, what the city has spent on its so-called "enforcement action" involving U.S. Bitcoin, which, he said, has been handled primarily by two outside attorneys from the law firms Hodgson Russ and Magavern, Magavern and Grimm.

Myles said he emailed City Controller Dan Morello in recent weeks in an attempt to obtain the full amount billed to the city by both law firms.

He said Morello confirmed, in an emailed response, that Edward Perlman, an attorney with Magavern, Magavern and Grimm, has been paid $35,335 for his work on the U.S. Bitcoin enforcement action.

As for Hodgson Russ, Myles said the controller told him the precise amount paid to that firm for U.S. Bitcoin work is complicated by the volume of invoices submitted by the law firm for work that is not related to the enforcement action. Hodgson Russ has performed legal work in several areas for the city dating back to former Mayor Paul Dyster's administration.

Perlman said the $180,000 reimbursement would cover roughly 90% of the city's legal costs for the enforcement action. He noted that the settlement also requires the company to pay additional fees, including a $50,000 upfront application fee and a $100,000 "compliance fee," which will result in the city recovering its costs and then some.

The settlement is not yet in place and is subject to council approval.

"At the end of the day, the city gave back nothing, except cutting back some fines," Perlman said.

Myles said he also wants more details from Restaino's administration about the amount that is currently owed to Hodgson Russ for work related to the ongoing eminent domain proceedings involving 10 acres of NFR land that the administration wants to acquire for the proposed Centennial Park project.

In December, the Niagara Gazette reported that, through Sept. 30, 2022, the city was billed $44,274 by Hodgson Russ for legal serves related to the eminent domain process. The newspaper reported the number after receiving copies of invoices from Hodgson Russ to the city through a formal Freedom of Information Law request.

Myles said he has been told, due to the other activities the law firm has included on its bills, it will take additional time to figure out just how much the city has been billed by Hodgson Russ for eminent domain work alone.

"It's sad that I, as a representative of the city, have to go through the red tape and the hoops (for information) that should be readily available," Myles said.

He described the situation as unacceptable, given the amount of taxpayer money involved.

"How long can this eminent domain process go on?," Myles said. "This is money that we are paying out. It's important because the community voted us in to do a job. When we are making decisions that come out of their tax dollars, I think that should be very attainable and reachable information. The information should be open and there should be transparency from our local government."