Flatto Angrily Denies 'Insinuations' of 'Wrongdoing' on Metro Center

Former First Selectman Ken Flatto angrily denied what he termed "insinuations" and "accusations" of "wrongdoing" on the Fairfield Metro Center budget during the Representative Town Meeting Tuesday night.

Flatto, who spoke about 20 minutes before the RTM voted 36-5 to approve up to $20,000 for an audit of the budget, said he was "totally supporting this audit" and that "no one would be more pleased to have this project reviewed every which way."

"Go do it. Spend as much money as you can to prove every dollar was spent for a rational reason, a common-sense reason, for the benefit of this community," Flatto told the RTM. "Do your due diligence. Do this audit. Get the information and get it out there."

Flatto, who left office May 3 to take a job in Gov. Dannel P. Malloy's administration, said he was personally offended by "a couple of the insinuations and accusations," which he said had been made when "not one scintilla of evidence, not one seed of any kind of wrongdoing" was evident.

Flatto said he had worked with some RTM members for 12 years and had never acted in bad faith.

"Go look away. Good luck, and I hope this will be managed well to bring it in under the projected overrun," Flatto said in conclusion.

First Selectman Michael Tetreau, who was sworn into office on June 9, discovered a projected $2.4 million to $6.4 million deficit in the Metro Center's budget, and it appears from an April 2010 agreement signed by Flatto, the state Department of Transportation and Blackrock Realty, LLC that Fairfield taxpayers are liable for the overage.

However, George R. Bisacca, an attorney who represented seven residents who sued the project's wetlands compliance officer because he wasn't under Town Conservation Director Thomas Steinke's general supervision, said he wants the April 2010 agreement reviewed by outside counsel to determine if Blackrock Realty is actually responsible for the overage. He also wants outside counsel to review whether the April 2010 agreement was valid since it hadn't been reviewed or approved by the town's Board of Finance and RTM.

Earlier, RTM member Faith Dillon, R-9, said she wanted an outside legal opinion on whether the April 2010 agreement was valid. She said she wouldn't have voted in favor of the April 2010 agreement if it came before her and she knew the town could potentially be liable for $12 million - $6 million in cost overruns and $6 million in lost reimbursement through fees for parking permits at the new train station.

"If the dollars were changing, I want to know why we weren't asked 'Yay' or 'Nay,' " Dillon said.

The Fairfield Metro Center is a joint project of the town, DOT and Blackrock Realty, LLC, a private developer, that includes construction of the town's third train station, about 1,400 parking spaces for train commuters and nearly 1 million square feet of commercial development, mostly office buildings and a hotel, if fully built out.

The April 2010 agreement became necessary when Blackrock Realty ran into financial problems and was being foreclosed on by its lender, TD Banknorth. Blackrock owns most of the 35.5-acre property at 21 Black Rock Turnpike where the project is under construction. The deficit is on public portions of the project - not construction of the commercial development, which Blackrock has to finance on its own.

The projected deficit, which Flatto repeated Tuesday night he was not aware of before leaving office, reflects budget numbers as of April 30. Tetreau said Tuesday night that he expected to have numbers as of May 30 by the end of this week.

RTM member Thomas McCarthy, R-8, asked if there was "another land mine waiting to be stepped on" with the Metro Center budget.

"The Board of Finance does not know any more than anyone else sitting in this room," said Kevin Kiley, a finance board member who will serve as chairman of an audit committee. "We don't know what the overruns could be to date."

Meanwhile, several RTM members questioned whether the town should hire Kostin Ruffkess & Co. to perform the audit of the Metro Center's budget since the town has used the firm in the past and the firm may have prior relationships with town officials involved in the project.

Kiley said the Board of Finance chose Kostin & Ruffkess because the firm was familiar with how Fairfield's town government operated and knew where to go for information and who to ask for information. He said the board also had confidence that Kostin & Ruffkess would do a good job and that it was "a top-notch firm in the Northeast."

RTM member David Becker, R-1, asked if $20,000 was enough to do the audit, and Kiley said, "We believe it is. We hope it is. We don't know until we get in there to see how much has to be done."

Kiley said it was possible the scope of the audit could expand, and Joseph Centofanti, from Kostin & Ruffkess, said, "Until I start and get going, it's hard to answer that question."

A draft audit is expected to be done by July 27, and a funding request to cover the Metro Center overage is expected to be voted on by town boards in August. The funding request would have to be approved by the Board of Finance and RTM. The Board of Selectmen would be the first board to vote, but its vote is only a recommendation.

Kiley said the audit would ensure that all money in the Metro Center budget was spent appropriately and that expenditures were in compliance with the bond resolution for the project. He said the Board of Finance didn't have in mind a "search for any fraudulent activity" and that the audit was to determine "how, when, why and where, from A to Z, everything that's been spent."

Kiley said the audit also would ensure that money spent from the Metro Center budget was in compliance with agreements and contracts.

"It looks like the project has some issues. It looks like it's financial in nature. We're this close to the goal line, but we have a big problem," Kiley said. "We need to find out what is happening. We need to find out what is happening now."

Regarding some RTM members' preference for outside counsel to review the April 2010 agreement and whether it leaves the town liable for overages and needed approval from the Board of Finance and RTM, Kiley said, "The legal side, I think is still open to suggestions."

"I think that's something we will need to seek advice on."

Kiley said meetings of his subcommittee would be noticed in the Town Clerk's Office and would be open to the public, a requirement of the state Freedom of Information Act.

RTM member Peter Ambrose, R-2, asked Kiley when the Board of Finance was first aware that the town would lose $6 million in reimbursement from the April 2010 agreement. The town was initially to recoup $300,000 a year for 20 years in parking permit revenue from the Metro Center, but the state wanted to be reimbursed for the $19.4 million it put into the project in April 2010, as well as operating costs of the station, from that revenue. That left the town highly unlikely to receive any money from parking permits, though Flatto said Tuesday night that it was still possible.

"I don't know that we ever were," Kiley said. He said the board was told in April or May of 2010 that the town was liable for overages in the Metro Center budget but also was told that the project was well within budget.

Ambrose replied, "I am just appalled at the fact we...were not informed we were going to lose $6 million of revenue over a 20-year period. I just find that absolutely disingenuous with openness."

RTM member Richard Santalesa, R-3, said he didn't support the audit because he believed the Metro Center was close enough to completion that an audit could be done when the project's finished. He said it was important to identify overruns in the project.

Town Attorney Richard Saxl said Blackrock Realty also had asked for an audit.