Report details Flatto's 'unauthorized' actions on Fairfield Metro contract
Updated 7:27 am, Tuesday, October 4, 2011
Interim First Selectman Michael Tetreau has released a detailed independent analysis by the McCarter and English law firm regarding the 2010 agreements for the Fairfield Metro railroad station, which has run millions over its construction budget.
The report finds that then-First Selectman Kenneth Flatto did not have the authority to make changes last year to the town's tripartite agreement with the state Department of Transportation and private developer Blackrock Realty without approval from other town boards. The findings prompted Town Attorney Richard Saxl to resign.
The report, more than 300 pages long, will be posted on the town's website -- www.fairfieldct.org -- and also is available for review in the first selectman's office in Sullivan-Independence Hall.
Here are excerpts from the report:
Q: Was former First Selectman Kenneth Flatto authorized on behalf of the town to sign and enter agreements with the state of Connecticut and Blackrock Realty in 2010? If not, was the Board of Selectmen's approval of these agreements sufficient to authorize the town to enter them?
A: We conclude that the former first selectman was not authorized to enter into the 2010 agreements. While the former first selectman was authorized to administer the 2003 Tri-Partite agreement and to apply for and accept intergovernmental aid by the resolution, such authority was limited to doing so within the context of the town's obligations under the 2003 agreement. We conclude that the 2003 resolution approving that agreement did not authorize the former first selectman to increase the scope of the town's obligations with respect to construction, financial responsibility, or additional appropriations in futherance of the project ...
Although we have previously concluded that the 2010 agreements are now enforceable by and against the town, the BOS approval was not sufficient to authorize the town to enter them ... Section 7-348 of the General Statutes prohibits a town officer to "expend or enter into any contract by which the town shall become liable for any sum, which, with any contract in force, shall exceed the appropriation for the department."
Q: Was the former first selectman authorized to sign the 2010 binding letter agreement with the state changing the formula by which the town would receive a share of parking revenues from the surface parking area?
A: No. In support of our conclusion, we submit the same reasons discussed above with respect to the 2010 agreements. Further, we note that the binding letter agreement was not submitted to the BOS for approval or ratification, nor was it disclosed to any town board or commission in 2010. The former first selectman maintains that the binding letter agreement was a mere clarification of the 2003 agreement. We disagree. The 2003 agreement provided that the town would receive the first $300,000 of annual parking revenues over and above the state's operation and maintenance expenses with respect to the surface parking area. The 2010 agreement added to the state's "operating and maintenance expenses" $1,000,000 of the state's annual debt service principal on the bond proceeds it made available to the town. This sum could not have been assumed in the original 2003 agreement, but was added to the formula in the binding letter agreement. This agreement involved revenue to the town in excess of $10,000 and required BOS approval, which was never obtained.
Q: Does the town have any recourse against any past or present officials relating to the 2010 agreements or with respect to actions taken in furtherance of these agreements?
A. While officers who make expenditures or cause money to be expended in excess of appropriations can be liable to return such moneys in an action by the town, our State Supreme Court has recognized a significant exception to this general rule. Where unauthorized expenditures are made, individuals will not be liable where (1) the expenditures were for a public purpose; (2) the municipality received fair value for the money expended; (3) the official did not receive person profit: and (4) the source of the authority is clearly ambiguous.
In the facts as we understand them, we conclude that the first three elements of this exception can be proven. With respect to the final element, we conclude that public officials relied upon the advice of the town attorney with respect to the process followed, and made expenditures based upon the town attorney's opinion in statements before the Board of Selectmen on May 5, 2010 and in a written opinion letter to the town's auditors on June 10, 2010. We observe that our state courts will not easily find public officials, including volunteer board and commission members, individually liable, and that liability would be unlikely based upon the circumstances. We further note that proof of actual damage to the town is uncertain.