CITY PAYS NOW, AVOIDS PAYING MORE

It will cost Amarillo $5 million to avoid a costly trial and
potentially overwhelming payments to former defendants in the Tulia
drug cases. The $5 million payment will come from two sources: the
city's self-insurance fund, which has a $14.6 million balance, and
money seized by the task force, of which the city has access to
between $2 million and $3 million, said City Manager John Ward.

The proportions from each source will be determined later, Ward
said.

The city's insurance fund is fed by interest and annual premiums of
about $2.5 million.

Using the fund to help pay for a civil settlement is unusual, said
Dean Frigo, finance director.

"We can take this one, but I'd hate to have too many of them," he
said.

Typically, the fund covers claims for property damage, unemployment,
automobile liability, automobile physical damage and, its largest
volume, workers compensation.

The city also has contracted two lawyers: Michael Loftin to represent
the city's interests and Tod Mayfield to represent Lt. Mike Amos and
Sgt. Jerry Massengill, both of Amarillo Police Department and who were
named as co-defendants in the lawsuit.

The two lawyers' fees have totaled $110,000 since August.

Mounting attorney and court fees were the impetus for this week's
settlement, said Marcus Norris, city attorney.

Norris said the settlement was reached at this time because 69
depositions were scheduled for later this month, and the attorney and
court fees would have skyrocketed.

"Both sides were rational enough to say, 'You know, why should we
spend hundreds of thousands of dollars on these depositions if we've
got a chance to resolve this?"' Norris said.

The biggest financial burden the settlement avoids is the potential
damages a jury could have found the city liable for.

By settling, the city avoids the risk of having to pay $50 million or
more in damages, Norris said.