Guest column / Legal review of Metro Center error-plagued, deceitful
Published 4:45 pm, Tuesday, November 1, 2011
Now that the McCarter and English report about the 2010 Metro Center agreements has been discussed by the Board of Selectmen, RTM and Board of Finance, I am keeping my promise discuss the report's flaws. I will point out some of the errors made by Attorney Fisher (paid $400 per hour) and Attorney Vitarelli (paid $450 per hour). I (paid at a significantly discounted rate of $195 per hour) supplied McCarter and English with hundreds of pages of documents and spent hours both in person and on the phone trying to help them comprehend this complex arrangement.
The bottom line is that apparently I didn't spoon-feed them enough.
Let me begin with Fisher. He and I disagree on whether Ken Flatto had authority to enter into the 2010 agreements -- more on that later. Fisher stated time and again before town bodies that the town was legally bound by the 2010 agreements under the legal doctrine of "implied authority."
However, the Connecticut Supreme Court has repeatedly said that there is no doctrine of implied authority that binds a municipality. In Fennell v. Hartford 238 Conn 809 (1996), Justice Berdon writes: "No ratification or estoppel can make lawful a municipal contract which is beyond the scope of the corporate powers, or which is not executed in compliance with mandatory conditions prescribed in the charter or statutes." There are other cases standing for the same proposition, but the point is simple: there is no doctrine of implied municipal authority. Mr. Fisher's advice to the town bodies on this point was dead wrong.
Vitarelli's long report is very slanted against Ken Flatto's actions in 2010 -- more on that later. During questions from the Board of Selectman, Vitarelli gave at least two inaccurate responses. As town officials discharging our duty to the best of our ability, Ken Flatto and I would be held harmless from any lawsuits brought against us. If sued, the town would have a duty to defend us. See Connecticut General Statute section7-101a. Vitarelli apparently was unaware of these statutes.
A second error came in response to a question from Selectman Jim Walsh when Vitarelli claimed that prior drafts of the report and communications were subject to "attorney-client privilege." I strongly disagree. In my opinion, Walsh, as a member of the Board of Selectmen, is entitled to see prior drafts of the report and other communications. He, as a member of the town's executive body, is the client as much as the other selectmen. I am sure the Freedom of Information Commission would support this position.
Vitarelli's report shows an embarrassing lack of knowledge when it comes to the Fairfield Town Charter. Vitarelli cited Ken Flatto's failure to follow Article 12 of the Charter in obtaining town approvals of the 2010 agreements. He completely missed the boat. Article 12 of the town charter concerns the town's annual budget process. It does not apply to bonded projects such as the Metro Center where the bond document itself is controlling. To call this section of Vitarelli's report a mere blunder would be a polite understatement.
Both Fisher's and Vitarelli's analysis of the documents entered into in 2010 is deficient: they failed to read thoroughly the 2003 agreement which was ratified by all appropriate town bodies. Section 4.3 (a) of the 2003 agreement states in pertinent part: "The town shall cause the construction and installation of the Town Improvements ... all at its sole cost and expense ... The Town shall do and perform all acts and things necessary or appropriate to secure any and all funding that may be required."
Like it or not, the town was contractually obligated to complete its portion of the project without regard to the spending limit approved in 2003.
Undoubtedly, the most egregious misstatement in the Vitarelli report relates to his analysis of the side letter regarding the town's foregoing of parking revenues. Vitarelli writes: "The 2003 Agreement provided the town would receive $300,000 of annual parking revenues over and above the state's operating and maintenance expenses." That statement appears in bold type in Vitarelli's report, by the way. Vitarelli then concludes that Ken Flatto's side letter did not address either operating nor maintenance expenses and was therefore improper. But Vitarelli left something out, obviously on purpose.
If Vitarelli had been interested in accuracy, he would have quoted all relevant portions of that sentence. His report should have read, "The 2003 Agreement provided the town would receive $300,000 of annual parking revenues over and above the state's operating and maintenance costs and expenses and expenses for the Surface Parking area and its Improvements." (Emphasis supplied.) Vitarelli never mentioned that the "expenses for the Surface Parking area and its Improvements" cost the state another $19 million. That cost was properly characterized as a deduction from net revenues. Ken Flatto acted properly and within the scope of the 2003 agreement when he signed the side letter. And, by the way, I told Vitarelli that both the town's bond counsel and I agreed with that interpretation in June of 2010. That's not in Vitarelli's report either.
The Vitarelli report fails to mention that the town was on the hook for the cost of road construction in the 2003 agreement. The developer's cost of constructing the road was to be covered by a brownfield grant. As the cost of the road is approximately $5 million, the town would have lost the first $5 million from increased tax revenue generated from the private development which would have been used to repay the brownfield grant. That part of the 2010 agreement saved the town $5 million, but the Vitarelli report doesn't mention it.
The 2010 agreements were approved by the Board of Selectmen on May 5, 2010. They were filed with the town clerk at that time. No other approvals were needed as it was anticipated that no additional spending would be required above the amounts approved in 2003. The town's bond counsel saw no issues with that position in June of 2010. No one complained two months later when the construction contract was awarded in July of 2010. It's only when we discovered too much "dirty dirt" on this old factory site that had to be dug up and moved that the project cost exceeded the initial funding levels. Only then did people begin finger pointing and trying to affix blame.
So, from my perspective, McCarter and English: Was incorrect on municipal implied authority; was unknowledgeable on the immunity extended to public officials who are discharging their duty to the best of their ability; was wrong on attorney-client privilege; was ignorant of potential Freedom of Information requests; was completely wrong in their interpretation of the Fairfield Town Charter; was inept in interpreting the 2003 contract; was downright deceitful in omitting words from the 2003 contract in order to arrive at a biased and incorrect conclusion concerning the side letter; and omitted any mention of $5 million in savings.
So how much did McCarter and English charge the town in legal fees? Their budget was $50,000. Sometimes, you don't always get what you pay for.
In my judgment, Ken Flatto clearly acted within his authority in 2010 pursuant to powers given to him in the 2003 agreement and the town charter. I think the McCarter and English report and accompanying presentations were an embarrassment of errors. I stand by my 2010 decisions on the Metro Center.
Richard Saxl is the former Fairfield Town Attorney.