A Response: Accountability for taxpayer losses
Published 1:01 am, Wednesday, January 27, 2010
The following is a response to the Jan. 22 article, "Fairfield Metro Center -- $20 million: Bonding not bailout, officials declare," and related editorial, "Accountability."
Both of these articles call for Blackrock Realty's (BRR) "accountability" for its failure to live up to BRR's contractual commitments on the train station project. The state Department of Transportation (ConnDOT) also points to the failure of BRR to perform its commitments under the tripartite agreement to explain its request for a bond issue.
What these well-intentioned statements reflect, however, is a failure to understand that it would be difficult, if not impossible, to prove legal liability on the part of BRR because of the terms of the agreement.
As we have repeatedly pointed out, section 6.4 (c) of the agreement provides as follows: "The obligations of the developer to construct ... the developer improvements ... shall be valid and binding against the developer when the following preconditions are met:
(c) Developer shall have received the Brownfield Grant [from the state] within six months after making its application."
Since BRR has never received the brownfield grant, its obligations cannot be considered valid and binding against it, and therefore the Developer would no longer be accountable "for everything he's supposed to do under the contract."
How Attorney Gen. Richard Blumenthal would "vigorously take action" against BRR sounds like a daunting task, to say the least. Despite our repeated reference to this escape clause and our inquiries as to who was responsible for it and why, no one from the state or town has seen fit to respond to that serious issue.
Despite the lack of official response on this vital issue, we know that First Selectman Ken Flatto has been well aware of this provision, perhaps even from the day it was inserted into the agreement, since he has always claimed responsibility for negotiating it. We also know that Town Attorney Richard Saxl cannot claim to be ignorant of that provision, since he participated in drawing the agreement.
Our conclusion concerning Flatto's and Saxl's awareness of the provision is also based on two articles that appeared in the Citizen a short time ago. In the first we pointed out that the agreement provided that BRR "shall construct the road to meet town standards," which provision we noted should have made BRR responsible to do so. However, Flatto immediately responded in the Citizen (Nov. 6, 2009), that our claim was not true because section 6.4 (c) relieved BRR of that responsibility. How could Flatto have known that and never revealed it to anyone involved? If Flatto and Saxl knew of this provision during all the time the state, the RTM and the public believed BRR was bound to do these improvements, (including giving the town a $500,000 letter of credit). Flatto's and Saxl's prior knowledge raises serious questions concerning their accountability for the present necessity of the state's bailout of BRR at taxpayer expense.
It doesn't appear that the state or the RTM knew of this provision from the start. Otherwise, why did the agreement and their budgets never provide for how BRR's work would get done and paid for if BRR were to be relieved of that obligation by not getting the grant? If BRR was never to use its own money to do the work, what contractual consideration did they think BRR was giving in return for the huge benefits it would receive if the state wound up doing its work? Why have Flatto and Saxl continually accommodated BRR, and never criticized BRR for its non-performance, but rather always found excuses for BRR? Who were they representing? These and many other serious questions now beg for answers.
If Flatto or Saxl never told the state or the RTM about this escape clause, they should certainly be taken to task for not having done so. The taxpayers should do likewise.
The Citizen editorial of last Friday asked, "Where is the outrage?" The answer should be painfully obvious: the outrage should be directed at Flatto and Saxl for knowing this escape clause existed in the agreement while at the same time allowing everyone to believe for so long that BRR had a real responsibility to do the work which the state is now forced to do at taxpayer expense.
Naturally, we are all outraged that BRR and Wittek should be enriched by the enormous infusion of taxpayer money that will benefit BRR by performing all of the work that would normally have been done by the developer himself. It rankles our sense of justice that BRR should enjoy this incredible increase in the value of its property at our expense while BRR sits back and does nothing.
We raise the cry that "[the developer] cannot have things done for him and be enriched by the taxpayers' money." However, it appears that Wittek is well on the way to doing just that. In fact, the second phase of the state's bailout indicates an intention even to pay BRR/Bank North several million more for the Road land over BRR's property which BRR was supposed to donate to the Town in addition to building the Road. That would really be fancy icing on Wittek's already too rich cake.
In conclusion then, it's clear that we taxpayers have been had by this "sweetheart deal" that has contractually rendered BRR/Wittek immune from legal liability for not performing the work the state will now do at our expense. We are told that the town is still negotiating with BRR/Wittek in the hopes that BRR will "contribute to the public aspects of the project." In other words, since we have no leverage, we can now only rely on BRR's generosity, because it has no legal obligation.
We suggest that, at the very least, it should be a non-negotiable item in any negotiations with BRR that BRR donate the road land to the town, as it was supposed to do under the agreement, and that nothing be paid to the bank or BRR for that land. It would be a real travesty if the state were forced to not only remediate and build the road, as BRR was supposed to do, but also to pay BRR/Bank North for the land BRR was supposed to donate to the town. There is no need to worry about the bank foreclosing. It does not appear that will happen. Even if it did, the bank would be happy to have the road. So why reduce BRR's mortgage at taxpayer expense.
We believe we have answered the question of "accountability" by setting forth the real facts.
The question remains "Will anything ever be done to hold those accountable for the losses the taxpayers must now bear." If not, why ask the question of "accountability?" This project is now at a stage where its problems are going to multiply. We will be watching closely and, as always, we will keep the public informed.
The Concerned Citizens are Phil Meiman, Jeanne Konecny, Joy Shaw, Pam Ritter, Les Schaffer, Ed Bateson, Jane Talamini and Alexis Harrison.