Fayette County

Lexington paid horse farm’s $21,380 legal bill. Some council members want to know why.

The house at Cobra Farm, 3030 Newtown Pike in Lexington, Ky., Wednesday, July 19 2017.
The house at Cobra Farm, 3030 Newtown Pike in Lexington, Ky., Wednesday, July 19 2017. cbertram@herald-leader.com

The city of Lexington spent more than $21,000 to pay the legal bills of a horse farm owner, raising questions from some Lexington council members and the chairman of the board that oversees Fayette County’s farmland preservation program.

The city paid $21,380 to the law firm Stoll Kennon Ogden and Gary Biszantz, owner of Cobra Farm, on May 16 — nine months after the Rural Land Management Board rescinded its order to stop extensive renovations on a historic farmhouse. At issue was whether Biszantz had received or needed permission to renovate the house on Newtown Pike, which is supposed to be preserved under Biszantz’s conservation easement with the city.

Stoll Kennon Ogden represented Biszantz.

Greg Bibb, chairman of the Rural Land Management Board, said he is concerned the payment sets a bad precedent for the county’s Purchase of Development Rights program and undermines the board’s authority. Bibb said the board did not vote to pay the legal fees and that he was not notified until after the payment was made.

“I am not aware of any reason why the city would or should have made this payment,” Bibb said. “I believe the PDR staff and the Rural Land Management Board acted appropriately given the circumstances and did so with the advice of the city’s counsel. I am concerned that such an action undermines the future ability of the PDR staff and RLMB to fulfill its monitoring and enforcement obligation under the ordinance and the terms of the deeds of easement.”

Since its creation in 2000, the PDR program has allocated $77 million — $37 million in local money, $24 million in federal money and $16 million in state money — to place conservation easements that prohibit future development on more than 28,000 acres of Fayette County farmland. The Rural Land Management Board enforces the terms of the easements, which are deed restrictions that landowners voluntarily place on their property.

Biszantz contends the PDR program made a mistake when it issued a notice of violation in July 2016 that halted renovations to the historic house.

“They cost me hundreds of thousands of dollars in delays … and legal fees,” Biszantz said.

Susan Straub, a spokeswoman for the city, said the decision to pay the fees was made by Sally Hamilton, the city’s chief administration officer, and Jamie Emmons, Mayor Jim Gray’s chief of staff. Gray was consulted before the payment was made to Biszantz, Straub said.

“While city staff members had good intentions and felt like they were doing the right thing to protect the historic property, we had real concerns about the process that resulted in unnecessary delays, tens of thousands of dollars in legal fees, and serious frustrations for everyone involved,” Straub said. “ And ultimately, the board agreed the property owner was in compliance and voted to rescind the violation.”

When asked if the city had the authority to pay the fees without the board’s vote or consent, Straub cited a city ordinance that says “the mayor, or his designee, is authorized to adjust, settle or compromise any action, causes of action, accounts, debts, claims, demands, disputes and matters against the urban county government…”

That includes legal settlements, Straub said.

Bad precedent?

Some on the Lexington-Fayette Urban County Council said they are concerned the payment to Biszantz could set a precedent that would leave the city on the hook for legal fees anytime the action of a city board is challenged in court.

Councilwoman Jennifer Scutchfield, who chairs a committee that is scheduled to review the PDR program at its Aug. 29 meeting, said the payment deserves further scrutiny.

“The council was not aware that the city had made this payment,” Scutchfield said. “I want to know if the city is in the habit of paying these legal fees without council approval.”

There are many city boards that have authority to make enforcement decisions, Scutchfield said.

“There are a lot of questions that need to be answered,” she said.

At-Large Councilman Kevin Stinnett, who chairs the council’s budget committee, said he’s concerned the Rural Land Management Board didn’t have an opportunity to weigh in before the payment was made.

“I believe it undermines the authority of the board,” Stinnett said. “Worse, I’m worried this could set a precedent that could trickle down to our other boards. I’m not aware of the city paying legal fees, although it may have occurred without the council’s knowledge, for other board actions.”

There is no easy way to determine how often the city has paid legal fees in dropped enforcement actions, Straub said, though city lawyers remember paying legal fees in 2007 in a building code enforcement case.

Biszantz has received $625,448 from the PDR program for conservation easements that protect three farms from commercial development. He was paid $242,896 for the easement on his 82-acre Cobra Farm.

All PDR easements include language that says “in a judicial enforcement action each party shall bear its own costs.”

Biszantz and the city contend that language doesn’t apply in this case because the board rescinded its order and the issue never made it to court.

Initially, the city rebuffed attempts by Biszantz’s lawyers to recover his legal fees, according to records obtained by the Herald-Leader through an Open Records Act request

In a Jan. 7 email to lawyers with Stoll Keenon Ogden, Hamilton said the city does not reimburse legal fees: “(The city) does not as standard practice reimburse attorney fees in these situations, and we feel it would not be prudent to do so in this case.”

Emails show Cobra officials continued to press the issue until the city reversed its stance and agreed to pay the fees.

“Because of the facts and the unique circumstances of this case, we felt the notice was indefensible,” Straub said.

Historic property

Cobra’s April 1, 2005, conservation easement lists several things that must be preserved, including a historic home called the Andrew Gorham House. Any renovations to the home must be approved by the Rural Land Management Board.

In 2013, PDR records show that permission was granted to tear down a non-historic addition in the back of the house. After receiving a complaint in June 2016, PDR officials visited the property and saw much more extensive renovations than what records indicated were approved in 2013. Complicating matters, PDR officials say plans for the 2013 renovation were not in their files.

A key point of contention is whether PDR officials gave Cobra sufficient notice about the questions surrounding the renovations before issuing the violation.

During an Aug. 29, 2016, Rural Land Management Board meeting, PDR program director Beth Overman said she called Mike Owens, the Cobra farm manager who is also a long-time member of the Urban County Planning Commission, to get more information. Owens told her to call the architect, she said in the meeting.

Owens, in an interview and in letters to the city after the August 2016 meeting, maintains Overman never called him. Owens said he saw Overman at a public meeting in March and that she asked questions about the farm at that time. Owens said he invited her to the farm to see the renovations but Overman never came.

“We were in complete shock when we received the notice of violation in late July because no one had attempted to contact Mr. Biszantz or myself,” Owens said.

Overman, though, provided cell phone records to the Herald-Leader that show an 11 minute phone call to Owens’ cell phone on June 2.

In an interview last month, Biszantz said city officials should have contacted him directly. Overman also did not contact the architect or the builders, who could have shown her the plans for the home, he said.

“I’m the landowner,” Biszantz said.

PDR records show Biszantz’s primary residence is in California. Correspondence from the PDR program has always been addressed to Owens or other Cobra employees.

Overman consulted with city lawyers and sent a notice of violation to Cobra on July 14, 2016, which stopped work on the home. The city’s lawyers made the recommendation to issue the notice prior to the board’s August meeting because the possible destruction of a historic home was imminent, she said.

In late July, officials with Cobra met with city officials and showed them plans for the house that included tearing down non-historic additions and adding two large additions on each side of the home. The original Andrew Gorham house was being preserved, they said. The city agreed to allow work to continue on the non-historic parts of the Gorham house after the late July meeting, according to records.

In 2015, the city’s building inspection department issued a permit for the renovations after it sought and received an approval letter from the PDR program. That letter, though, was mistakenly for a neighboring farm once owned by Biszantz, not Cobra Farm. Because the city messed up, Cobra’s architect and builder were not aware that a potential problem existed, farm officials said.

At the August 2016 board meeting, Paulsen said the city was satisfied the historic home was protected and that there was no violation of Cobra’s easement. He recommended the violation be rescinded. The board voted 5-4 to drop the enforcement action after a lengthy debate about whether the board should vote to rescind the notice of violation since it was not issued by the board.

The official notice rescinding the violation was not delivered until Sept. 17, which further delayed construction, Cobra’s lawyers argued.