Editor's note: The following letter was received from First Selectman Mike Tetreau:
Fairfield Metro Center Part 1 – Discovery and Disclosure
Serious issues with the Fairfield Metro Center project have set off alarm bells throughout our town. Elected officials and residents alike are demanding to know how the town’s largest construction project could be facing a projected deficit of up to $6.4 million.
Since being sworn in as first selectman on June 9, I have been working closely with the town managers and staff to determine where we are and what we need to do next to ensure the best and least costly outcome for Fairfield.
Here is an update on what has happened:
What is the town required to do?
The contracts we signed in April 2010 obligated us to follow the state Department of Environmental Protection’s plan for cleanup of the site. A company called LEA monitors our compliance with this requirement. In addition, the town is obligated to prepare the site to the specifications laid out in a 90-plus-page contract addendum complete with topographies, site grading and required elevations. There is also a second project for several million dollars for implementing off-site improvements to surrounding intersections and roadways.
What are the financial obligations?
Blackrock Realty as part of the April 2010 revised agreement put in approximately $5.2 million. The state agreed to provide $19.4 million. And the Town was supposed to use the balance of the $6 million originally approved back in 2003, or approximately $5 Million.
However while the other two partners provided funding, only the town had to deliver on the contract commitments of a clean site and a site that matched the 90-plus-page plan documents. So it appears that any overruns would be the responsibility of the town.
The revisions to the Parking Revenue Payments – allowing the state to recoup approximately $970,000 a year in addition to all operating costs before the town gets the first dollar of payments – weren’t included in the revised 2010 contract. Rather, this clarification was included in a “side letter” (editor's note: see attached pdf) that did not get approved by the Board of Selectmen. There do not appear to be any pro forma or estimated operating costs for the new station to show clearly the likelihood of the town collecting any revenues under the revised format.
Why are we having these overruns?
The simple answer is too much contamination on the site. It is obvious that the original estimates for the project were way, way off. The testing and site inspectors have made certain we met the state Department of Environmental Protection requirements.
We learned that the town attempted to bid the project as a “lump sum” job but was then required by the state Department of Transportation to use a “unit cost” method instead. This means the contractor didn’t bid an overall price but rather bid a dollar amount per cubic yard or some other unit of measure. If there are more cubic yards of soil to be excavated than estimated in the bid documents, the town is left responsible for additional costs.
The town should not have signed a contract with this much undefined risk. The town should have included a “not to exceed” clause in the bid as we often do on other town projects. On a site with a known history of contaminants, the town should perform its own due diligence and have more extensive testing done before agreeing to this type of risk.
In addition, a management summary or list of contract changes should be included with the contract documents to make it easier for everyone to review and understand the revised agreements.
On a project with this type of risk exposure, we should have a full time construction manager representing the town. We should not be asking department managers - without the required background or the available time - to manage these two very important projects. The most qualified member of the town’s senior financial management team – our town chief financial officer - should not be kept to a minimal role on a project with this maximum financial risk.
How to report this to the public?
I am committed to getting all town bodies the information they need to make informed decisions as early as possible and as complete as possible.
The update to the Representative Town Meeting on June 27 was more detailed and more thorough than any in the past. The goal was to give everyone a complete picture of where the project stood, what might happen if all went well and what the financial risk was if all didn’t go well. We wanted everyone to understand exactly where every major aspect of the project stands.
What is next?
We are now in the problem solving phase. We will take the next 4 to 6 weeks to get firmer estimates, evaluate the different possibilities available to us in order to minimize the costs to the town and provide all the information that the Board of Selectmen, the RTM and the Board of Finance need to make an informed decision.
With any significant problem, the sooner you are aware of it, the sooner you can start pulling together the resources needed to solve it in the best possible way for the town.