Special meeting to discuss arbitration tonight
Updated 2:48 pm, Monday, May 23, 2011
The Town Council will hold a meeting tonight at 7:30 tonight discuss a $650,000 arbitration award that took many members by surprise last week.
Officials were were "stunned" and "outraged" after seeing an arbitration award on the agenda for the first time last week, nearly two months after the decision was handed down.
The Town Council approved a $650,000 appropriation from the general fund for an arbitration award in a 6-4 vote Wednesday night. However, since seven affirmative votes are required, the measure has been tabled.
The matter stems from a conflict between the town and Loureiro Contractors concerning the Lakeview Avenue Bridge construction in 2008. The town went into arbitration after withholding $250,000 from the contractors and claiming the firm was delaying the construction project. According to documents, Loureiro Contractors claim the work was delayed due to unforeseen complications with underground utilities, overhead wires and flooding.
Town Council members were shocked to learn the arbitrator made the decision on Feb. 25 and the award was paid in full without their knowledge.
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In response to this controversy, Town Council will hold another meeting May 23 at 7:30 p.m. to discuss the arbitration and the May 18 meeting in general.
"I've never seen anything like this," Council member Paul Foley told the New Canaan News. "I've been involved in town politics for 20 years. We've had a lot of meetings over the years on how to have a clean efficient form of government. It seems like all those meetings were for nothing"
Foley hopes the meeting Monday night will give the council and others the opportunity to hear the truth about what exactly happened after the arbitration decision was made.
"We'll have a meeting Monday night. The timeline that is to be drawn out will show, I think, that the arbitration case ended Feb. 24 and that the town knew as of Feb. 25," Foley said. "And for anyone to sit on this information during budget season knowing that we had a bill in the drawer for $650,000 is just outrageous. If did that in my firm, I would be fired that same day."
The Board of Finance unanimously voted to bond the $650,000 May 10 in order to replenish the general fund. However, Town Council members argued that they should been informed of the situation during budget season since the arbitrator's decision was made Feb. 25.
"My concern is that between March 21 and April 13, there was plenty of time to discuss this with all the bodies and it was not discussed," Foley, head of the Town Council's Public Works subcommittee, stressed. "We were in the middle of a budget and we had some items on that budget that some of us were for and some of us were against. I think we should have all known that this bill was coming to us. It would have affected votes. I am very suspicious as to why it was held back. This is just not appropriate."
The council spent most of the meeting deciding whether to bond the money or appropriate it from the general fund. Vice Chairman Steve Karl, who was acting chairman due to Chairman Mark DeWaele's absence, pointed out the core issue of the bridge involved in the lawsuit.
"Nothing changes the fact that we are talking about a bridge. We have an expensive tax on the bridge," Karl said. "We need to figure out if we are going to bond it or are we going to pay for it," Karl said. "That is basis of this question."
DeWaele later commented that he was not informed of the arbitration "as it was underway."
"I was not informed of the arbitration until after the arbitrator's decision was rendered and the town had paid the claim in full."
While most agreed paying for the arbitration out of the general fund would be appropriate, the matter will return to the Board of Finance since Town Council did not get seven votes in favor of the appropriation, as required by the town code. The issue will return to Town Council at some point as well. However, according to the Town Code, bonding may not even be allowed.
Section C5-25 of the Town Code outlines what should happen in the event of an arbitration or court decision against the town.
While the code says the money can be borrowed by the treasurer, it does not say anything about bonding the funds. Foley believes, according to that section, that bonding goes against the town code.
"In the town charter, you can't bond this," Foley said. "It is not bondable. It is just unconscionable"
In terms of the lawsuit itself, Michale Pastore, director of Public Works, believed the claims Loureiro Contractors were not strong enough to garner such a generous award by the arbitrator.
"It is unfortunate. We weren't expecting the award to be as generous as it was," Pastore said. "They were obviously going to get something but we didn't think it would turn out like this. We obviously would not have went forward with the issue if we thought otherwise."
The issue was in arbitration for nearly two-and-half years Pastore said. The town tried to resolve the matter through mediation early on but it became clear that the contractors were not interested in going that route, Pastore said at the Town Council meeting. The $650,000, which was paid at the end of March due to a 30-day time limit, included legal fees and other incidental costs related to the project.
It is also possible that the State Department of Transportation may reimburse the town for some of the costs at a later date because the project was initially a state contract.
As for the process of informing the necessary town bodies after the decision was made in February, Pastore did agree somehow communication had broken down.
"There were a lot of things going at the time," he said. "But clearly they all should have been informed."
First Selectman Jeb Walker also commented on the process last night stressing that the Board of Finance and Board of Selectmen acted on the matter as soon as they were informed of the issue. Selectman Rob Mallozzi commented on the process at the Town Council meeting last night as well. He reiterated that while they had been regularly informed about the arbitration for a year, they never got an indication that it was going to be a huge loss for the town.
"In fairness to the Board of Selectmen, we were certainly updated for the last year or so on the progress of the negotiations and the arbitration but in no way shape or form in my opinion were we ever told that we were standing a very good chance of losing that type of award. So it wasn't part of my budget thought process because it just didn't come to us as a number like that at all," Mallozzi said. "We didn't know that award was going down at that time and for that amount."