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Flatto: Town Isn't Losing Fairfield Metro Parking Revenue

by Kenneth Flatto

[Editor's Note: Former Fairfield First Selectman Ken Flatto told Patch he sent the following letter to the about two weeks ago. The letter is included in a press packet of information disseminated at Wednesday's meeting and Flatto requested that Patch give it attention on the site.]

Dear Mike, Cristin, and Jim, as Members of the Board of Selectmen

re: December meeting on train station             

I am very happy that the historic train station project is substantially complete as significant benefits will accrue to our community and the region.  As a new Board, I’d like to give you personal information to help explain the 2010 accords which saved the Fairfield Metro project from collapse and reduced the town’s liabilities. Much of this was provided to the BOF and RTM this summer, but I’d like to try to help explain any remaining confusion.

The negotiations and agreements entered into in 2010 were made solely to benefit and help our town.  They restarted the Fairfield Metro Center Project, which had been mired in foreclosure and pending litigation.. The BOS discussed some of these issues in executive sessions in 2008, 2009 and early 2010. The state, the private owner and the town resolved all remaining issues based on the intent and workings of the 2003 Tripartite Agreement. These additional accords saved the Town over $15 million in contractual obligations assumed in 2003 relating to constructing the public parking lot and associated cleanup, utilities, grading, retaining walls, and required offsite traffic improvements. The 2010 accords eliminated the risk of costly litigation between parties. For example, the bank filed suit on the property the town had rights to parking.

In working to achieve the goals of this project, my Administration obtained over $30 million in financial benefits and grants to complete this project.  This $30 million was made up of the $19.1 state grant, $5.2 million received from the private developer, the elimination of town’s 2003 obligation to repay the state $5 million for road construction loan costs, and $3.5 million in federal grants that I obtained for off-site traffic improvements. We had to react to major unforeseen conditions, from permitting delays to cost escalations, to lawsuit risks, to project issues not anticipated in the 2003 Agreement.

The 2010 Project budget estimate of $29 million was prepared by consultants for the town and the private developer and reviewed, approved and reduced to writing by DOT engineers. The town portions of the work remaining required a town cost of over $15 million, well beyond what was anticipated in 2003 but that risk was adopted in the town Agreement in 2003. At my urging and cajoling, all parties agreed that the town would not incur new funding for any part of this $29 million beyond the town’s $5 million in issued bonds that remained available. Attorney Saxl explained the First Selectman could not authorize new bonds but had authority from the 2003 resolutions to sign off on any state grant and the closing document since no new town expenditures were required. We believed we had eliminated any town cost exposure when we presented the finished arrangements to town bodies for their information.

During negotiations, it became clear to parties that the town was getting the best of discussions, as the state and the private developer committed to ante up significant new funding while the town saved over $5 million by eliminating the 2003 provision requiring town pay back of road construction funds, now to be provided free. The DOT started asking for an additional town contribution. One idea they raised was to take our future parking revenues. Upon reviewing the original Agreement’s parking revenue language, the negotiators realized that the state had an apparent right to apply their new “expenses related to the parking areas and their improvements” against future parking revenues before the town got $300,000 per annum of any profit. Dick Saxl and I helped write the 2003 language and we believed this was a correct interpretation. The DOT decided to take this approach. They dropped the idea of asking the town to give up the rights to future net profits after state costs. This was not written up to be approved by the parties as it was determined an existing right for DOT.

The town no longer has to repay the state reimbursement for the roadway construction loan and interest which have risen to over $5 million. Thus in real net terms, no future revenue stream was given away. In fact, the town now has this guaranteed savings of more than $5 million plus any proceeds from parking revenue profits, as compared to a lower $3 million net amount town boards had assumed in 2003 ($6 million in parking revenues, less $3 million state loan repayment projected). In addition, I still feel that Fairfield will ultimately receive a chunk of future $300,000 net profit based on assumptions that the parking lot will be oversold and state costs to operate the lot will be low. Either way, the town is better off in 2010 than 2003.

The parties completed negotiations and instructed attorneys to draw up the two agreed upon negotiated documents: the state grant agreement and the private developer Closing letter. These were prepared, circulated, and signed off in March 2010. (note - Closing letter signing was delayed until April waiting for TD Banknorth releases and the private developer’s funds). It was a very exciting hectic time as the Project was finally resuscitated. Before the April announcement, Dick called to say he got a call from an attorney at DOT requesting that I sign a new letter never discussed during negotiations. I was surprised and asked why. He indicated they wanted more assurance on their future costs being reimbursed from parking fees. I suggested they reword their grant agreement if they wanted language about that and he asked them. They said it would delay things. Based on their requested letter’s content as a clarification to the existing 2003 Agreement, I signed it as requested. This letter was never intended as some secret deal but as a security statement to the DOT as to our mutual understanding of their existing rights. I did not think it made sense to give it out to the Boards and I did not tell the Boards we gained $5 million in future revenue due to no longer repaying road costs. I did not believe these things affected what we were announcing. In retrospect, I wish I had cleared up this confusion earlier to show we gained from 2003.

My Administration presented the negotiated accords in 2010 to town Boards and, as you know, the BOS approved resolutions in 2010 regarding those accords. When presenting costs of construction, I did tell the Boards there could be some possible financial risk, as meeting minutes show, and I said we would manage any such issue. I can understand the surprise and frustration that the project ran over budget due to additional polluted materials having to be removed from the shoreline after I left office. I would have done everything possible to reduce or eliminate the town exposure, as the First Selectman has.

I and others in my Administration took every action we could to get the Project back on track only for the town benefit. We saved the town significant money and allowed the town to prosper in the future from this project and from so many others. I started this train station public plan in 1999 when we convinced the state to go forward. I worked my very hard for Fairfield and thankfully accomplished many major achievements. I have had 16 years of service to the town with hundreds of negotiations and contracts. The accords in 2010 were completed solely to protect our town’s interest and for the benefit of the public and for our community. Thank you.

Yours truly,

Kenneth Flatto

Sol Briks January 05, 2012 at 04:29 PM
Ken saved the day when the developer defaulted. The town is a big winner and will reap the benefits for years to come. Thank you Ken.
steve sheppard January 12, 2012 at 03:38 PM
Sol Briks.....saved the day? Sol please do some checking before you make a grand statement. When Norwalk did the Merritt 7 project it took over 15 years to get it 80% occupied. They still have not gotten a positive return on their investment and it will be 20 to 30 years before we see a positive return on our investment. We will have elevated costs to water/sewer, police, fire, and town employees for the foreseeable future. There was no feasability study done to see if there was or is a demand for all this build out. When I was on TPZ one of the reasons it passed was there was suppose to be no residental buildings. Now it looks like residental condos are part of the plan, so we will have an increased burden on our school with more kids. At a time when we are trying to bring down costs to the town this will only increase our costs. If this was and is sure a great project there would be a bunch of private developers fighting to get involved. Go talk to any large developer and they would not touch this project. Just you wait....the only way it will get built out will be by State tax credits which cost us tax payers. A a town we had no reason being in the development business (tri-party agreement).

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