Town Council Surprised by $650,000 Bond Request

Rejects Board of Finance resolution to issue bonds to cover costs of arbitration award. Who knew about the award, and when did they know it?

A Board of Finance resolution to issue $650,000 in bonds to pay an arbitration award in a dispute stemming from the construction of a bridge on Lakeview Ave. was rejected by the which voted instead to take the money out of the town’s general fund. The vote was taken at the Council’s meeting on Wednesday, May 18.

 The American Arbitration Association handed down its decision on Feb. 25, ordering the town to pay Loureiro Contractors, Inc. (LCI) $597.086, plus arbitration and administrative fees that will cost the town an additional $102,756.25, according to arbitration documents. In addition, the town has accrued close to $1 million in related costs, including approximately $800,000 in legal fees, town officials said. 

According to the documents, the town contracted with LCI in March 2007 to build the bridge. The project ran over budget and nine months over schedule (see arbitration award document at right). The town withheld a portion of the payment, and when the dispute could not be resolved, it went to arbitration.

The town paid the award in full in March.

At issue for the Town Council were questions about who knew the judgment had been handed down, and when they knew. Council members said the information was relevant to the town budget discussions which ended on April 13, when the 2011-2012 budget was approved by the Town Council.

 “Throughout our whole budget process, we were meeting weekly,” Council member Beth Jones said. “Nobody told us this was a done deal.”

Council member John Emert told the Council he was "outraged" by the story that unfolded at the May 18 meeting.  On Friday morning, he told Patch that he learned about the $650,000 award when he saw it on the Board of Finance's May 10 meeting agenda, which was posted on the town's website. He said he downloaded a copy of the arbitration report from an online news site, and sent it to Council members.

"The actual text of the award was not distributed with the materials for the meeting, so I distributed it to the other members," he told Patch.

, who also serves as the chair of the , told the Council that he had informed the Board of Selectmen about the judgment in Executive Session on May 10, the same day the Board of Finance voted to recommend the bond appropriation. Selectman Rob Mallozzi III disputed this, and said the Selectmen had not been informed of the award against the town.  Walker could not be reached for comment.

 “Nobody’s happy with the way the meeting ran [Wednesday] night,” Vice Chair Stephen Karl told Patch. “At this point we’re still trying to find the process and what broke down.”

Emert said Chair Mark DeWaele has called a meeting for Monday, May 23 at 7:30 p.m., but he has not yet seen an agenda for that meeting.

Resident Michael DeFelice attended the May 18 meeting, and expressed his dismay.

 “This is a pretty extraordinary set of circumstances. It’s unfortunate at best,” he told the Council. “Clearly there’s a mechanism that broke down or does not exist. Does a mechanism not exist or does it exist and it broke down?

Mallozzi said the information about the award should have been disseminated in time for the town’s governing bodies to use it in their budget deliberations.

“There was information that should have been spread out among all town bodies when we had two months to discuss the impact on our budget and decisions going forward. We in effect voted to spend money for next year, and we may not have that money to spend,” he said. “We based our decisions on information we had and there was information out there we didn’t have. And that is wrong.”

The Council voted 6-4 against issuing bonds to cover the payment of the award. Voting against were Kit Devereaux, John Emert, Paul Foley, Robert Hammill, Christine Hussey and Elizabeth Jones. Voting for the bond issue were Jeff Campbell, Karl, Tom O’Dea, and Penny Young. Chair Mark DeWaele and Council member Tucker Murphy were absent.

Four Jacks May 20, 2011 at 02:32 PM
So much for working together. Remind us, who is the head of the Finance Committee?????
Serenity Now! May 20, 2011 at 02:55 PM
Jeb and Paul Giusti talk the talk about transparency but they can't walk the walk. We need a first selectman who brings accountability, transparency and new blood to the office and the board of finance. Rob for the job.
Four Jacks May 20, 2011 at 03:01 PM
Rob for the job.
eugene milosh May 20, 2011 at 03:15 PM
$800,000 in related legal fees ? Please explain ! Perhaps same lawyers could build Main St sidewalks pro bono.
JAVA May 20, 2011 at 03:39 PM
And to think that if the Town would have just spoken with the Contractor when requested instead of sticking there heads in the sand they could have at least saved the rip off legal fees incured. I would think they should also look into the Engineering firm who designed and had oversight of the project for legal action
NCParent May 20, 2011 at 03:43 PM
Can someone help me understand?? If we paid the award in full in March, how did no one know about it until May 10? How is that possible?
ruth May 20, 2011 at 03:48 PM
SJ, It is because Jeb Walker, Paul Guisti and Mark DeWaele believe in "open, transparent" government!
Peggy May 20, 2011 at 03:59 PM
Are we the taxpayers expected to pick up the tab on government screw-ups?
NCParent May 20, 2011 at 04:15 PM
So wait, just so those of us who don't fully understand how this process should work can follow: is the implication that Walker/Guisti/DeWaele knew of this and kept it under wraps so they could get their 2011-12 agenda/budget passed without this additional expense creating opposition? Additionally, how can the town council not know in May that a $1mm check was written back in March?
Jim Davis May 20, 2011 at 04:46 PM
The current administration spends too much time worrying about how people "feel," and not enough time managing the town. This inexcusable financial mess would never have happend under Judy Neville's leadership. Since she's not running for First Selectman, it's Rob for the job.
Sheryl Shaker May 20, 2011 at 04:51 PM
SJ: The article neither states nor implies who knew about this, with the exception of the First Selectman, who said he told the other selectmen about the arbitration award on May 10, a fact that was disputed by Selectman Mallozzi. Members of the Town Council have told me they are looking into this matter. We have also been informed that there will be a special town council meeting on Monday night at 7:30. Though no agenda has been set, I suspect that this will be a discussion item.
Jon S. May 20, 2011 at 05:02 PM
Agree with Jim. Of course, the only people whose feelings the current administration really seems to care about -- themselves. They "feel" they know what's best for everyone else. They "feel" we should build sidewalks straight into their own neighborhoods. They "feel" Perkins-Eastman is the only vendor out there. They "feel" Waveny Park is free land for every scheme they think up. They "feel" the way to solve business problems downtown is to pay consultants a lot of money to rip up and play chess with municipal buildings. They "feel" there are only a handful of people in all of New Canaan who are qualified to serve on boards and commissions and they keep picking the same few people over and over again. They "feel" they don't need to tell us about what's really going on with town finances, and that we should just be happy with their fairy-tales instead. Most of all, they "feel" anyone who brings up other opinions isn't a citizen, but a "complainer." How about you... I "feel" I'm not voting for them again. Not this summer, not next November.
NCParent May 20, 2011 at 05:04 PM
Ok, then my questions for the article as written would be: asking Jeb Walker exactly how and when he came upon the information, who approved the payment and then, as your article points out, was a process not followed or is a process not in place to notify the chain of command about said award payment. Not trying to point fingers, just trying to understand both the article as written and also inferring what should have happened to prevent this. It's a little confusing. But to clarify, the town definitely paid this back in March? And when the payment was made, we were still deciding the next budget?
Sheryl Shaker May 20, 2011 at 05:07 PM
SJ: Patch has the same questions -- who knew what, and when did they know it? We are continuing to ask those questions and will share the answers as soon as they become available to us.
NCParent May 20, 2011 at 05:33 PM
Sheryl, I understand now. Thank you.
JAVA May 20, 2011 at 05:34 PM
$800,000 in legal fees???? Someone should look into that bill!!!!! Where was Public Works on all this?
JAVA May 20, 2011 at 05:40 PM
Who approved the legal bills???? I heard that the Contractor was only looking for around $600.000 before they were forced into arbitration by the Town and public works
Jim Pickering May 20, 2011 at 08:00 PM
Mr. Guisti wants to bring corporate management skills into the management of the New Canaan municipality? If this happened in the corporate world someone would be fired!
Four Jacks May 20, 2011 at 08:01 PM
Vote Rob for the Job and that will be a start!
Ginny May 20, 2011 at 08:54 PM
This issue requires more than a comment on a blog, it is important that we all show up Monday Night at the Town Council meeting (7:30pm Town Hall). After watching the meeting Wednesday night, I filed FOIA request for information regarding this matter. We as a town need to demand the answers and Monday Night is the start.
eugene milosh May 20, 2011 at 09:05 PM
Great opportunity for more investigative reporting. Probably fortunate no consulting fees---so far.
JAVA May 20, 2011 at 09:07 PM
Trust me they had consulting fees from the Engineering firm!!!
eugene milosh May 20, 2011 at 10:23 PM
Mallozzi looking better with every governance revelation
MPM May 20, 2011 at 11:36 PM
I have a feeling, had Mr. Mallozzi known (as he supposedly did) about this, it would have been handled without the additional $650,000 in costs to the tax payers.
NCFamily May 21, 2011 at 01:09 PM
Just keep in mind that work on the Old Norwalk Road bridge started in May 2010 with a timetable of 6 months (if I recall correctly from what I read approximately one year ago). Work is still being done on that bridge......what legal fees, arbitration settlement and other expenditures will arise in the coming months and how will it be handled?
Sheryl Shaker May 21, 2011 at 01:39 PM
A comment was removed from this thread because it was considered inappropriate. Patch welcomes different points of view, but, please, stick to the issues: no name-calling and no personal insults. No one wants to walk into a room where people are fighting, but we can all learn from listening to spirited debate. We are here to provide a platform for informed discussion.
Four Jacks May 21, 2011 at 01:49 PM
Work on the Hickock Road Bridge starts Monday, that will probably take 5 years.


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