Mayor-President Kip Holden issued a news release Tuesday defending his office’s handling of federal Homeland Security grants, saying “no money has been misused, mismanaged or misallocated.”

The release was Holden’s first public comment since the Governor’s Office of Homeland Security and Emergency Preparedness stripped the Mayor’s Office of authority over the grants for refusing to follow state and federal guidelines.

Holden said his office has retained attorney Murphy Foster III to represent the city-parish in its dispute with GOHSEP over how the state agency is administering the federal grants.

Holden has challenged GOHSEP’s legal authority to require that the parish sheriff review and sign off on certain Homeland Security grants. The mayor has said that essentially gives the sheriff veto power over grant spending.

Holden said in Tuesday’s news release the city’s legal position “remains very strong” that the Legislature intended for the Mayor-President’s Office to manage and administer grants that come into the parish.

“The East Baton Rouge Parish Attorney’s Office, whom I consulted with when this issue first arose, agrees with our position,” Holden said.

Foster said in an interview Tuesday that, “There are significant legal issues at play” in the dispute.

“This is a legal dispute,” Foster said. “It’s not a political dispute. We hope we can reach accommodation with GOHSEP short of having to file a lawsuit.”

Foster said city officials believe that all spending under the grant programs has been in “strict accordance” with grant rules.

“The city anticipates reimbursement of all monies spent pursuant to those grants,” Foster said.

In a prepared statement, GOHSEP Executive Counsel Thomas Enright said Tuesday the state agency would continue to cooperate with East Baton Rouge Parish and its attorneys but “will not deviate from the rules and procedures applicable to this federal grant program.”

He added, “We were contacted today by the law firm hired by the Mayor and freely directed them to the applicable rules and regulations that give GOHSEP the authority and responsibility to prudently manage these federal grants.”

Federal Homeland Security funds are awarded to the state, which in turn apportions grants to Louisiana parishes based on population and various risk factors.

GOHSEP removed the Mayor’s Office of Homeland Security and Emergency Preparedness from authority over the grants.

GOHSEP officials said they took the action because East Baton Rouge Parish was refusing to follow state and federal guidelines that all other Louisiana parishes are following.

GOHSEP designated the East Baton Rouge Parish Sheriff’s Office and the Ascension Parish Office of Homeland Security and Emergency Preparedness as the new grant managers over $4 million in grant funds.

As of mid-April, the city-parish had spent at least $1.2 million on homeland security-related purposes, for which the city-parish is expecting to be reimbursed.

GOHSEP Deputy Director Clayton Rives has said the city-parish will need to find another funding source or work with Sheriff Sid Gautreaux to get reimbursed for any Homeland Security-related items or services that have already been purchased.

He said GOHSEP would have to decide the reimbursement requests on a case-by-case basis since anything purchased so far had not received the required pre-approval of GOHSEP.

Gautreaux said last week that if money the city-parish has already spent “fits the criteria allowable under the grants, I’m certainly not going to fight that.”

Rives also said last week that the city-parish will not be reimbursed for $362,784 under separate homeland security grants for fiscal year 2008 because the city-parish did not comply with program rules or exceeded the amount that was available in the grants.

Several Metro Council members have expressed concern about the potential fiscal impact of GOHSEP’s decision to strip Holden’s office of control over the grants.

They said they are concerned the city-parish faces having to find money from an already tight budget to cover homeland security expenses that might not be reimbursed by federal grants.

Mayor Pro Tem Mike Walker questioned Tuesday the mayor’s decision to hire Foster as special counsel.

“He keeps telling us we don’t have any money,” Walker said. “How is he going to pay for Mr. Foster? Whose budget is he going to take it out of.”

In Tuesday’s news release, Holden said the Mayor’s Office of Homeland Security has received high marks from federal regulators.

“This office recently underwent a United States Department of Homeland Security Office of Inspector General audit on the Homeland Security program funds with no adverse finding and the office programs were recognized by the audit as ‘Best Practices,’ ” the release states.