Lawyers Fight Plan to Build Overpasses With Housing Aid : Lancaster: A firm accuses the city attorney of a conflict of interest. But officials say their program would promote low-cost accommodations.

A Los Angeles law firm Tuesday filed a legal challenge against Lancaster’s plan to build $24 million in roadway overpasses with housing funds and accused the city’s attorney of a conflict of interest in the process.

The challenge by the law firm of Kane, Ballmer & Berkman, which specializes in redevelopment law, claims Lancaster wants to illegally build two overpasses with redevelopment funds that state law says must be used for low- to moderate-income housing.

But Lancaster officials Tuesday defended their financing plan, saying the construction program also would promote low-cost housing in accordance with state law.

And, the city’s contract attorney, David McEwen, denied having a conflict of interest in the proceedings.

The effect of the challenge, filed in Lancaster Superior Court, is to force a court hearing on the city’s complicated financing scheme. It also begins a potentially months-long process of having a judge untangle the legal disputes before the city could proceed.

The complaint was filed on behalf of Lancaster resident Dolores Dibley.

But the law firm, which represents nearly two dozen redevelopment agencies, including the city of Los Angeles, said it decided to pursue the case pro bono because it considers Lancaster’s plan an abuse of redevelopment law.

“We think it’s important that redevelopment, as a very powerful tool, be used wisely and within the confines of the law. This is not that kind of a proposal,” attorney Kathryn Reimann said.

Technically, the firm did not file a lawsuit. Lancaster had initiated a court proceeding in November asking a judge to bless its financing plan. The legal challenge filed Tuesday is a response to that request.

The law firm has waged similar fights over redevelopment law in past years, including challenging the city of Hidden Hills’ redevelopment plan, fighting Irwindale’s now defunct attempt to lure the Los Angeles Raiders, and winning a recent court battle against the City of Industry.

At issue in the latest dispute is the proper use for redevelopment funds that state law often requires cities to set aside to promote or improve housing for low- and moderate-income residents.

Lancaster had about an $11-million reserve of those funds at the start of the fiscal year.

Under the city’s plan, Lancaster would issue bonds to pay for overpasses on avenues H and L that would enable traffic to cross over the Southern Pacific railroad line along Sierra Highway.

The city then is proposing to pay off the bonds using the housing funds, which Reimann says is illegal.

But City Manager Jim Gilley said the plan is legal because the city also would encourage developers to build low- to moderate-income housing near the overpasses by offering to waive most of their city traffic fees.

If they choose not to build such housing, most of the fees would go to replenish the housing fund.

Meanwhile, the conflict-of-interest issue stems from the dual role of Lancaster’s city attorney in both advising the city’s redevelopment agency and then serving, at an extra charge, as bond counsel for its financings. Reimann said McEwen could be giving the city advice that would mean more money for his law firm.

McEwen and his law firm, Stradling, Yocca, Carlson & Rauth of Newport Beach, have performed both jobs for Lancaster since shortly after the city’s 1977 incorporation, handling at least five bond issues totaling nearly $32 million in 1991 alone.

McEwen said the arrangement is common and proper.

However, the state Fair Political Practices Commission wrote a letter in February advising the city of Orange, which also uses McEwen’s firm, that the combination could violate the state’s conflict law.

Orange officials said Tuesday that they had asked the FPPC to clarify its advice and expects to hear from the agency next week.