Politics & Government

Outside Auditor Hired on Fairfield Metro Center

Board of Finance Approves Up to $20K for Audit of Financing, Control Flaws; Flatto Says Former Governor Required Silence on Tri-Party Agreement

The town's Board of Finance Wednesday evening agreed to pay up to $20,000 for an outside auditor to examine the Fairfield Metro Center's budget, with a report due in late July.

The finance board's decision to hire Joseph Centofanti of Kostin Ruffkess & Co. followed a nearly three-hour review of how Fairfield taxpayers came to face paying a projected $2.4 million to $6.4 million overrun on the massive project off lower Black Rock Turnpike, which is to include the town's third train station, about 1,400 parking spaces for train commuters and nearly 1 million square feet of commercial development.

Republican Selectman James Walsh raised the explosive possibility that money had been diverted from the Metro Center's budget to other projects. "There have been allegations some funds may have been used for other projects," Walsh said early on to the Board of Finance. "If there was money used for other projects, those should be caught and spelled out in those [audit] reports."

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Former First Selectman Ken Flatto wasn't asked during the meeting if money from the Metro Center's budget had been diverted to other projects. After Flatto left the second-floor conference room in the Education Center, he strongly denied that had happened.

"I respect Selectman Walsh a lot, but for him to raise such a silly and outrageous statement is mindblowing and not true," Flatto said. "It's totally ridiculous, untrue, and I wish people would stop trying to make things up."

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Town Fiscal Officer Paul Hiller, after the meeting, said $38,000 had been paid to the city of Bridgeport out of the Metro Center budget after work on a roadway bridge next to the 35.5-acre Metro Center property had gone overbudget. Hiller said paying for work on the bridge was shared by the town of Fairfield, city of Bridgeport and state.

Asked if paying the bridge overage out of the Metro Center budget fit the bonding resolution for the Metro Center, Hiller said he would have to defer to the town's bond counsel.

Walsh also wanted to know how much money was paid to Town Attorney Richard Saxl from the Metro Center budget, saying the town's operating budget already had a Legal Services' budget.

Centofanti, among other things, would examine a "complete flow of funds" from the inception of the Metro Center project and whether payments from the Metro Center budget complied with the bond resolution for the project. Centofanti also would review internal controls and the reporting structure on the Metro Center's budget and give recommendations to improve it, said Board of Finance Chairman Tom Flynn.

The Representative Town Meeting is scheduled early next week to vote on the funding request to hire Centofanti.

Meanwhile, Flatto repeated to the Board of Finance that the town did not give up the right to be reimbursed for its $6 million investment in the project through excess revenue from the sale of parking permits at the upcoming train station. He said the town had a "50/50" chance of getting that money back.

First Selectman Michael Tetreau said he didn't believe the town would get that money back because the April 2010 agreement among the town, Blackrock Realty, LLC and the state Department of Transportation allowed the state to be reimbursed for operating costs of the train station and for the $19.4 million of new money that the state sank into the project after Blackrock Realty ran into financial problems and was being foreclosed on by its lender, TD Banknorth.

"The way it's structured right now, I would say it's definitely out," Tetreau said.

Flynn wanted an analysis of expenses and revenues at the Fairfield Railroad Station so finance board members will have an idea of whether any money from parking revenues at the Metro Center will be left for the town after the state takes its reimbursements.

Flynn said he was "deeply troubled" to learn Monday night that it could take six to seven weeks for the town to have a detailed financial status of the project. "It shouldn't take that long for a well-managed project. I think it's extremely important we level set the project," he said.

Tetreau said the town was actively looking for a construction manager for the project to bring the deficit in as low as possible. The project is expected to be done by the end of October, but available money is projected to run out in late August.

"I think it's important we get someone on this as soon as possible," Walsh said. "We should have had a construction manager on this project from Day One."

Tetreau's report to the RTM that revealed the projected $2.4 million to $6.4 million deficit was as of April 30. He said he expected to have updated figures, as of May 30, by the end of next week and figures as of June 30, by the third week in July.

Up to $2 million of that deficit is due to excess contaminated soil on Blackrock Realty's property that may have to be carted off-site. If none of the 12,500 cubic yards of soil has to be taken off-site, the cost would be $0.

State Sen. John McKinney, R-Fairfield, said some of the contaminated soil may be able to go to landfills that are being closed and capped by the state Department of Environmental Protection. The DEP allowed Blackrock to keep contaminated soil on its property, as long as PCBs weren't present and as long as the soil was capped with a membrane, clean soil and asphalt. But apparently there isn't enough room on the property for all of the contaminated soil.

Flatto downplayed the significance of the potential deficit, saying a 5 percent overage on a $40 million project "is a pretty good picture."

"It's not a crazy picture on this type of a complex construction project," Flatto said. He said the town put the least money into the Metro Center and would get the most benefit, from more parking spaces for train commuters to tax revenue from Blackrock's commercial development to a revitalized eastern section of town.

"Sixty million over 10 years is worth more than a few million," Flatto said, referring to town officials' estimate that a fully-built commercial development could generate $6 million a year in tax revenue.

Flatto repeated Wednesday night that he had no information that the Metro Center project was running a projected deficit when he resigned May 3 to take a job in Gov. Dannel Malloy's administration. He said the excess contaminated soil had eaten away at a $2 million savings in the project but the amount of known excess contaminated soil wasn't as great then as it is now.

"There was no knowledge of an overrun, there was no documentation of an overrun," Flatto said. "I was told most of the extra soil fit there. The significant quantities that now are there weren't known."

Walsh asked if everything related to the Metro Center was still in Sullivan-Independence Hall so Tetreau could get a complete picture of the project.

"I have left everything," Flatto said. "Nothing was removed from that office. Everything there is in the files."

Walsh asked if a financial projection had been done on the project before Flatto agreed in April 2010 to have the town assume liability for cost overruns.

"We relied on the DOT to vet those numbers," Flatto said. "I felt pretty comfortable with that."

Flynn pointed out that the DOT wasn't taking any risk if the project went over budget, and Flynn also expressed surprise that only Flatto and Saxl were present during negotiations. "We enter into an agreement on a $40 million project...and we put the chief fiscal officer on the beach," he said.

Flatto said no one in the town's Finance Department could have predicted how much contaminated soil would be on the property.

Flatto added that former Gov. M. Jodi Rell's administration required silence during negotiations that resulted in the April 2010 agreement, which left the town likely to lose its $6 million reimbursement and which also left Fairfield taxpayers liable for cost overruns on the project. "They said negotiations cannot be shared with anyone else," he said.

Board of Finance Vice Chairman Robert B. Bellitto, Jr. said, "What concerns me is the flow of information. There was no flow of information to people who could have brought something to the table."

The 2010 agreement didn't have to be reviewed or approved by the Board of Finance or RTM, Flatto said. He said Saxl believed Flatto had the authority, under the original tri-party agreement, to make decisions.

Flynn said the risk to the town from the April 2010 agreement was known last year. But he added, "There's an anticipation there's a certain amount of risk mitigation done behind the scenes."

"It seems apparent these general risk mitigation steps were either not taken or were inadequate."

Finance board member Kevin Kiley, who likely will be chairman of a three-member committee that will work with Centofanti, questioned why Saxl wasn't present for Wednesday night's meeting.

Hiller said Saxl had other commitments.

"We're his largest client. He should be here," Walsh said.

A funding request to cover the Metro Center deficit likely will go before town boards in August, according to Tetreau.

Pam Iacono, vice chairman of the Board of Education, was disheartened to hear that paying for the Metro Center overage may cause some capital projects to be deferred. The Board of Education had wanted to do a $9.1 million expansion and renovation of Riverfield School in the fiscal year that starts Friday.


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