Nov 28
2023
Spending more on settlements than services
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The City of Buffalo will borrow $43 million to settle a lawsuit brought by a woman rendered a quadriplegic after a police officer hit her with his patrol car more than three years ago.
It is the largest payout for a personal injury lawsuit in the city’s history. The city’s top attorney called it “unprecedented.” A city lawmaker called it “catastrophic.”
With interest, the total cost of the settlement could approach $50 million, based on current lending rates for municipal bonds, adding nearly $10 million to the city’s annual debt service over each of the next five years.
That’s an increase of more than a third over the $27 million will pay in debt service this year, mostly to pay for repairs to streets, sidewalks and city-owned buildings.
It is more than twice the amount Mayor Byron Brown’s administration forecasts spending annually on the Department of Community Services and Recreational Programming in each of the next four years, according to the mayor’s most recent extended financial forecast.
It’s more than is allotted each year to the operations of the Common Council and the City Clerk combined.
It’s more money than the city forecasts spending on the Department of Permits and Inspection Services. It’s nearly twice what the mayor proposes to spend on the city’s law department.
It’s even more — just barely — than the mayor forecasts spending on his own executive department, which includes the Office of Strategic Planning as well as his own staff.
The woman, Chelsea Ellis, was struck while walking with a friend on Main Street by a police officer driving nearly 80 miles per hour to answer a report of a stabbing. The report turned out to be fake. Ellis was thrown nearly 70 feet by the impact, which severed her spinal cord. She was 28 at the time.
“This case is beyond heartbreaking, and it is universally understood that this significant claim will go directly to around-the-clock care for Ms. Ellis for the rest of her life,” Fillmore District Council Member Mitch Nowakowski told Investigative Post on Monday.
Nowakowski called it “one of the most catastrophic claims” he has seen, but it’s not the only one. The city has paid $13 million to settle personal injury and property damage lawsuits over the past three years alone, according to city financial records.
And there are other lawsuits against the city pending, some of which have the potential to end in significant damages.
Hard financial times ahead
The city comptroller submitted a request to the Common Council asking permission to sell the five-year bond on Friday. The Council is expected to recommend approval of the request at its Finance Committee meeting next week. Meanwhile, the Council’s Claims Committee will meet Thursday to recommend approval of the settlement.
The entire transaction should be settled before year’s end.
The resulting strain on the city treasury will manifest when the city begins hashing out its annual budget in the spring.
“This will pose a significant obligation to the taxpayers over the course of this bond,” Nowakowski said.
“This will also occur during a time when [the city’s federal pandemic relief] dollars will dry up, and the city will be in a fiscal shortfall.”
Donations up to $1,000 made by Dec. 31 will be matched
For the past three years, the city’s finances have been floating on a cushion of federal dollars intended to soften the impact of the Covid pandemic. That cushion has a shelf life. The city’s $331 million in American Rescue Plan Act funds must be obligated — that is, be under contract — by the end of 2024 and spent by the end of 2026.
The Brown administration has designated nearly half its ARPA money as “revenue replacement” funds. That has allowed the administration to use the money to balance budgets, rather than to fund programs to help those most affected by the pandemic and equip the city to endure future emergencies.
Because all ARPA money must be obligated by next December, the federal funds can be used to balance the budget only through the first half of next year’s city budget cycle, which begins July 1.
“The clock is ticking,” University Council Member Rasheed Wyatt, who chairs the Finance Committee, said at a meeting earlier this month.
In the decade before the pandemic, stagnant revenues and rising costs contributed to end-of-year deficits in eight of 11 budget cycles. The Brown administration frequently relied on the city’s reserve funds to address those deficits. The net cost of those deficits to the city’s reserves was $109 million, according to the city comptroller.
Post-Covid, the city has relied on federal pandemic relief instead.
The city used nearly $90 million in ARPA funds to balance the past two budget cycles. The city will use $30 million of ARPA money to balance the current budget. In all, the city has earmarked $150 million of its ARPA money — about 45 percent — for “revenue replacement.”
The question for city officials: What will replace the ARPA money when it’s gone?
“The challenge is the next years, the following years, when those funds are gone,” Gregg Syzmanski, investment and debt management officer for the city comptroller, told the Finance Committee earlier this month.
Syzmanski said the city’s share of the tax on legal cannabis sales might help, though he noted that no one could predict how much revenue those sales would generate. Casino revenue might also help, he said, but that’s a hard budget line to predict, too, because the compact between New York State and the Seneca Nation of Indians expires in a month. Negotiations to renew the deal have been slow, secretive and contentious.
Until this year, Brown and the Council have been reluctant to raise property taxes. Other gambits over the years to increase revenue — traffic checkpoints, school zone speeding cameras, the sale of city-owned properties — have either fizzled or proved insufficient to meet the city’s rising costs.
Lawsuit settlements are among those rising costs, according to city financial data. Federal guidelines prohibit the use of ARPA money to settle lawsuits. Because the city is self-insured, settlements come out of the city’s general fund, which pays for general operations.
Lawsuits cost the city millions
Since 2021, the city has paid about $13 million to settle lawsuits alleging personal injury or property damage, most often with blame directed at the police, fire or public works departments.
Some of those payouts reached seven figures:
- $2.3 million to Firefighter Eric Whitehead, injured while fighting a fire due to faulty equipment and training, according to his claim.
- $2.25 million to the family of Maksym Sugorovskiy, the child killed by a driver on the Scajaquada Expressway.
- $1.275 million to the estate of Police Officer Craig Lehner, who drowned in the Niagara River while training with the department’s Underwater Rescue Team.
- $1.05 million to Noah Giusiana, who suffered a brain injury when an off-duty police officer working as a security guard slammed him to the pavement outside a movie theater downtown.
In 2021, the city paid $600,000 to Tricia Brand, hit by a firetruck in 2014.
Last month, the city agreed to pay $255,000 to Maisha Drayton, whose house was raided by police in error that same year.
The majority of settlements over the past three years were smaller, but they added up: Payouts of $100,000 or less accounted for about $2.5 million.
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Between 2015 and 2020, before the pandemic hit, the city paid out $11.9 million to settle 16 lawsuits involving police. The biggest of these was $4.5 million in February 2020 to Wilson Morales, who police officers shot after a traffic stop went bad, paralyzing the then 19-year-old from the waist down. Five other lawsuits alleging excessive use of force cost $1.4 million in that time period. Six car accidents cost $4.5 million. Various other suits alleging police wrongdoing — wrongful arrest, false imprisonment — cost another $1.5 million.
The city faces a number of pending lawsuits with the potential to end in large settlements, too:
- A federal jury awarded $6.5 million last year to a man who spent 10 years in prison based on what the jury determined to be a false confession coerced by a Buffalo police detective. The city has appealed the award.
- Martin Gugino, who was injured when he was pushed to the ground by police during a 2020 protest against police violence, is suing the city in federal court.
- The widow of Jason Arno, the firefighter killed in a fire in March, filed a lawsuit in state court last month alleging the city shared liability for Arno’s death with the owner of the building in which he died and the contractors who federal investigators blamed for starting the fire.
Karley Mueller, who was walking with Ellis, was also struck by the police car. She, too, is suing the city. So are the driver and passenger of a car the police officer, Branden Lowe, struck before driving his police SUV onto the sidewalk, running into a utility pole, and hitting Ellis and Mueller.
Wyatt, the chair of the Council’s Finance Committee, expressed frustration on Monday that the city’s law department had not warned the Council that a settlement of this magnitude was coming.
The Council’s Claims Committee met on Nov. 15, he noted, but the law department did not brief the committee on the Ellis settlement, even though a deal had already been reached.
“We need to know if there are others that could be potentially coming,” Wyatt told Corporation Counsel Cavette Chambers during the Council’s caucus meeting Monday afternoon. “We should have some idea of what potentially we could be exposed to.”
Chambers responded by calling the settlement “unprecedented” and said its details were not finalized in time for the Claims Committee meeting two weeks ago.
“I did not feel, in my judgment, that piecemeal information for a settlement of this magnitude was appropriate,” Chambers replied.The Buffalo News reported a settlement had been reached with Ellis and her family in October. The News reported the amount of the settlement last Friday, though Council members had been apprised of the cost earlier in the week.
