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CONFLICT-OF-INTEREST CLAIMS TARGET LOVE CANAL AGENCY FEES PAID TO PANEL CHIEF'S LAW FIRM

The Love Canal Revitalization Agency has paid more than $300,000 in legal fees to the law firm of the agency's executive director and now is poised to pay the firm more than $100,000 in additional fees.

William Broderick is the agency's executive director and is also a partner in Rice, Reid, Broderick & Wattengel, which has earned about $300,000 since the agency was created in 1980. Broderick earns $30,000 a year as the agency's part-time executive director.

The law firm's contracts -- renewed four times since 1980 -- were signed before Broderick became an employee of the agency in 1988.

But now two state agencies question whether the law firm, which was the only one to collect legal fees when the government purchased Love Canal homes, should collect even higher fees when the homes are resold.

The sale of those homes may be delayed because of questions raised in an audit by State Comptroller Edward V. Regan.

Regan and the state Division of Housing and Community Renewal say the fees that the Revitalization Agency paid to the law firm may pose a conflict of interest for Broderick.

The law firm could collect another $100,000 or more as the Revitalization Agency sells 200 or more homes in the area once used as a dump for toxic wastes.

State auditors found that the agency did not follow the law by seeking the state's permission to spend money for Broderick's salary and other expenses.

The agency, instead, should have started repaying the federal government, which has loaned it $7.5 million, the auditors said.

As a result of the audit, the state Disaster Preparedness Commission said it will withhold $82,000 in state funds. Without those funds, the Revitalization Agency cannot obtain additional federal funds to repair houses for sale.

But Niagara Falls Mayor Michael O'Laughlin said local officials had assumed the federal loan would not have to be repaid. The agency, he noted, cannot repay the federal government and complete its mission without any money.

O'Laughlin, chairman of the agency's board, also defended Broderick.

The law firm's contracts -- renewed four times since 1980 -- were signed before Broderick became an employee of the agency in 1988, O'Laughlin said.

Broderick conceded, however, that he has profited from that contract, before and since his employment by the agency. Before the fall of 1988, the law firm provided management services as part of its annual $30,000 retainer. That retainer was cut in half when Broderick was appointed executive director.

"We're going to try to have a personnel committee meeting within the next week or so to talk about some different ways I could readjust my relationship with the firm or whatever to avoid this conflict of interest," Broderick said. "It's not really a conflict of interest."

"The main thing we're looking at is that I don't have an interest in that retainer agreement either by removing myself as an employee or as a person who has an interest in the (law firm's) contract," Broderick said.

With the firm's contract set to expire in November, state officials and the agency's board are asking Broderick to make a new arrangement.

Broderick said Wednesday he has several options, including resigning from the law firm or his part-time position with the agency.

But Broderick did not suggest that another law firm could handle the agency's legal work and house closings. He also ruled out the need to seek competitive bids for this work.

Since these are professional services, the agency is not required to seek bids.

The agency's board discussed the issue during its last meeting and is expecting suggestions from Broderick at its meeting next month.

Several attorneys in Niagara Falls said they would welcome the legal fees from the sale of Love Canal houses. Broderick said the fees would be the standard rate in Niagara County -- 1 percent of the sale price with a minimum fee of $350.

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