Lamont proposal would remove CT watchdog’s enforcement powers
Keith M. Phaneuf
State contracting watchdog officials say they would lose
their power to suspend improper or illegal procurements under Gov. Ned Lamont’s
latest budget proposal.
And while key lawmakers hope for a compromise between the
administration and the State Contracting Standards Board, an olive branch from
the governor — beefing up the state auditors of public accounts — isn’t likely
to solve the dispute.
The budget revisions Lamont proposed on Feb. 9 are “a slick
way of basically taking away what the core purpose of the contracting standards
board was,” Lawrence Fox, a West Hartford Democrat and board chairman, told the
CT Mirror this week. “They’re saying to us, ‘You don’t basically investigate
anything any more.”
Do state auditors make contract watchdogs unnecessary?
What Lamont specifically proposed to legislators was budget policy
language that would strip the board’s enforcement powers. The watchdog
group, which has lacked a full contingent of support staff throughout its
14-year history — and wouldn’t receive funds to hire any under the governor’s
proposal — already relies heavily on free work by its volunteer board to get
its job done.
The administration has said on several occasions that it
believes the contracting standards board largely duplicates watchdog efforts
already performed by other agencies.
Some officials also have criticized the contracting board
over the years as an ally of labor unions trying to block privatization of state
services — a charge Fox denies.
“We look at [a contract] on its merits and based upon the
law,” Fox said. “We just follow what the statute says.”
Fox added that about two-thirds of the contracting group’s
13-member board have no ties to organized labor.
But Lamont says the group still should continue its work.
And if its research raises concerns, it should refer them to the state
auditors, a longstanding agency within the Legislative Branch that periodically
reviews the finances and practices of most agencies, quasi-public entities and
certain other state programs. The auditors’ office is overseen by one Democrat
and one Republican — both appointed by the General Assembly.
“Our state’s auditors are qualified people who conduct
oversight over state agencies on behalf of the people of the state while
reviewing procurement and contracting process in a non-partisan way,” said
Lamont spokesman Anthony Anthony. The governor’s new budget includes funding to
add three more auditors to that office to help accommodate new referrals.
But while there are some similarities between the
contracting board and the auditors’ office, they aren’t perfect parallels.
The auditors have almost no enforcement authority. Their
chief power rests only in shining public light on state agencies. Governors and
legislators can — and on many occasions have — disregarded the conclusions of
auditors when they report practices that don’t conform to proper procedure.
The contracting standards board, by comparison, has
authority to suspend a procurement process underway if it concludes the
department or agency in question isn’t in full compliance with state rules.
That authority, and the board itself — the linchpin in the
landmark “Clean
Contracting” system created in 2007 by the Democrat-controlled
legislature and Republican Gov. M. Jodi Rell — was Connecticut’s response to
the contracting scandals that drove Republican Gov. John G. Rowland from office
amid an impeachment inquiry in July 2004. Rowland later served 10 months in
federal prison after admitting he accepted about $100,000 in gifts from state
contractors and his staff.
Legislators and Rell envisioned a board that would ask three
key questions before major contracts were executed: Was the state purchasing
quality goods or services? Was the planned purchase cost-efficient, both in the
short-term and over the long haul? And was the process transparent and in
compliance with state rules?
Democratic governors weaken watchdog, but won’t repeal it
Not long after the board’s creation, though, Connecticut
would fall into the Great Recession, and legislators and Rell would siphon away
nearly all resources, leaving the volunteer standards board with no staff.
An executive director would eventually be hired, but once
the recession had ended, Democrats would take control of the governor’s office
— first Dannel P. Malloy, who served from 2011 through 2018, and then Lamont
from 2019 to the present.
Neither has shown much need for the contracting board, which
has remained fiscally shackled for nearly a decade and a half. But neither
would either risk the political backlash of trying outright to repeal the
centerpiece of Connecticut’s response to Rowland administration corruption.
Malloy
tried in his first six months to suspend contracting board operations
for two years so he could more easily privatize state services and cut
operating costs.
Lamont, who also has made no secret of his plans to
privatize more state services as veteran government employees retire over the
next few years, offered a bill in 2019 to make it easier to launch
public-private ventures.
The legislature killed Lamont’s proposal, though, after
then-AFL-CIO President Salvatore Luciano called it “an alarming attempt to
return us to the shadowy Rowland years.”
The two-year budget that legislators and Lamont adopted last
June included just under $700,000 per year for the contracting board — the same
level the board was supposed to have when it was launched 14 years ago. That
included $450,000
in each year to fund additional positions.
But shortly after that was passed, legislative leaders, at
the request of the Lamont administration, included a provision in a
subsequent budget policy bill that barred the board from spending
$450,000 of its annual allotment.
The budget revisions Lamont proposed last week for the
fiscal year that begins July 1 make no changes to that funding roadblock.
Fox said those funds were to create five new positions to
support Executive Director David Guay, whose only assistance currently comes
from a college intern. And Guay has since announced his plans to retire in the
second half of 2022.
Labor: FBI probe shows importance of contract transparency
Lamont and the contracting board have bumped heads since
2019, when the latter took an interest in the Connecticut Port Authority’s
efforts to enhance the state pier in New London. The authority wants to make
the pier an optimal staging point to help Eversource and its Denmark-based
partner, Ørsted North America, develop an off-shore wind-to-energy project
ultimately capable of generating 4,000 megawatt hours of electricity.
The contracting board specifically focused on more than
$700,000 in fees paid in 2018 to Seabury Capital Group to help with search for
a pier operator. The Day of New
London first reported that those payments included a $523,000
“success” or reward fee — and that this happened three months after Henry Juan
III of Greenwich, who was a managing director with Seabury, resigned from the
authority board.
The contracting board wrapped
an investigation earlier this month, concluding those “success fees”
were eerily similar to the “finder’s fees” scandal that sent a former state
Treasurer Paul Silvester to prison in 2001.
The General Assembly banned “finder’s fees” after Silvester
admitted he had accepted kickbacks in exchange for steering investment of
state-controlled pension funds.
The CT Mirror reported earlier this month that the
FBI is investigating projects related for Lamont’s former deputy budget
director, Kosta Diamantis, including the state-financed reconstruction of
the New London pier and some school construction work.
Given that climate, labor leaders asked Tuesday, why
wouldn’t the administration embrace the contracting watchdog?
Connecticut AFL-CIO President Ed Hawthorne said the
governor’s budget proposal “is like providing enough funding for a school so
you can hire a principal, but not enough for teachers. … It’s clearly set up to
fail.”
“What he’s doing this year is completely insidious,” said
Travis Woodward, president of CSEA-SEIU, Local 2001, which represents about
4,000 state employees ranging from transportation planners, architects and
engineers to information technology specialists and some Department of
Education staff.
The bargaining unit has long been one of the most ardent
supporters of the contracting board’s mission.
“The board’s doing great work, and now you want to cap them
off at the knees?” Woodward added.
Senate Republicans quickly called Wednesday afternoon for
lawmakers to reject the governor’s proposal to de-power the contracting
standards board.
“Public trust in this administration is already declining. A
federal investigation is ongoing allegedly involving state contracts,” Senate
Minority Leader Kevin Kelly of Stratford and Sen. Paul Formica of East Lyme,
the deputy leader, wrote in a joint statement. “And yet the governor is
proposing to further weaken the very watchdog that oversees state contracts,
the same watchdog whose budget he has cut from before. The proposal is tone
deaf at best.”
Leaders of the legislature’s Appropriations and
Transportation committees said last
summer it was a mistake to dangle but not deliver resources for the contracting
board and predicted many legislators would look to correct that error in the 2022
session.
Democratic Sens. Julie Kushner of Danbury and Mae Flexer of
Windham, who lead the Labor & Public Employees and Government
Administration & Elections committees, respectively, said Tuesday they hope
all sides can find common ground.
But Kushner and Flexer also said they believe Connecticut
taxpayers would be better served with a fully-staffed and empowered contracting
watchdog.
“If this board had been allowed to fully function” since its
enactment in 2007, Flexer said. “It would have done nothing but build the
confidence of Connecticut residents over our state contracting process.”
“We’re living in a time when we need to examine every
contract and make sure it’s above board,” Kushner said, “and that were doing
our best to make sure we’re providing services to the people of Connecticut” in
an “efficient and economical” manner.
Dan Haar: Reform? Firm in school construction inquiry removed in Hartford
Reforms in the state’s school construction finance office
are well underway even amid a federal investigation of the activities of the
previous director.
Need proof? Check out the giant Bulkeley High School project
in the city of Hartford — where a consulting firm tied to the investigation is
now off the job thanks to a notice from the acting director of the school
construction office.
The capital city is a few years into a $149 million
super-renovation of Bulkeley, one of several high schools inside the city’s
borders. If you’ve been following news of the statewide flap over school
construction, you can guess what consulting firm joined the project last April.
Yes, it was Construction Advocacy Professionals LLC, the
Plainfield construction management firm strongly recommended in several cities
and towns by Konstantinos “Kosta” Diamantis, who was head of the state Office
of School Construction Grants and Review until he retired under fire on Oct.
28.
Diamantis is at the center of an investigation by federal
prosecutors into how the school construction grants office managed contracts.
CAP, as Construction Advocacy Professionals is known, and its principal owner
are also on the likely subpoena list.
CAP hired Diamantis’ daughter, Anastasia, in the summer of
2019 and, according to a state report, fired
her in October of 2021.
On the Bulkeley High School job, CAP had a long-term
contract that was expected to be worth $2 million by 2024, when the project is
set to wrap up. Hartford city officials told me the firm was doing excellent
work and was highly responsive.
But on Jan. 26, exactly a week before the investigation was
made public, a Hartford city official received an email from Noel Petra, deputy
commissioner of the state Department of Administrative Services and acting head
of the school construction office since Diamantis retired rather than face a
paid suspension ordered by Gov. Ned Lamont.
“This email is to confirm that OSCGR will not reimburse any
project for more than one owner’s representative,” Petra wrote in the email,
using the acronym for the office.
An “owner’s representative” is the industry term for the
consultant hired to oversee construction on behalf of the client, in this case
the city of Hartford. The Bulkeley job already had a project management firm in
place, which had helped guide the entire job starting five years ago — and was
doing the task of an owner’s rep.
Petra’s email, which was read to me, didn’t mention CAP or
any other firm. But it did the trick. Two days later, on Jan. 28, Hartford city
officials dismissed CAP from the job as was their right under the contract even
without cause.
City officials told me they interpreted Petra’s email to
mean they had to take fast action because the state is reimbursing 95 percent
of the Bulkeley project costs. They’re confident that the project management
firm, a three-way consortium known as Arcadis O&G C&R, can step up and
fill the role CAP was performing at no extra cost to taxpayers.
And that’s the point. Lora Rae Anderson, spokeswoman at DAS,
confirmed the email late Wednesday, and the fact that Petra and others at DAS
believe the work done by CAP at least in this one instance was redundant.
“We have not encountered this situation in other towns since
DAS re-inherited the school construction program,” Anderson said in an email
late Wednesday.
The school construction office moved from DAS to the state
Office of Policy and Management in November of 2019 at the insistence of OPM
secretary Melissa McCaw, sources said. That move was reversed the day after
Diamantis retired.
The email from Petra and the move by Hartford put in clearer
focus the questions about Diamantis pushing cities and towns to hire CAP.
That’s alleged in several places, including New Britain, where Mayor Erin
Stewart described to me what looked like direct
pressure from Diamantis to hire CAP in 2019.
Stewart said she was annoyed the New Britain school board
hired CAP for a small project, as she believed the city could have done the
task itself — although there, as in Hartford, by all accounts CAP did its job
well.
Antonietta Roy-DiBenedetto, principal of CAP, did not return
my call late Wednesday seeking comment about the firm’s dismissal from the
Hartford Bulkeley job.
It’s not clear whether Diamantis pushed Hartford city
officials to hire CAP last spring. The former chairman of the school
constriction committee left and has been recently replaced. The owner’s rep
work was put out to bid and CAP beat out three other hopefuls.
Regardless of whether Diamantis or anyone else applied
pressure, it appears that Petra and others at DAS and perhaps other agencies
are taking steps to right the system. Anderson, the DAS spokesperson, put it
this way: “Since re-inheriting oversight of school construction grants, DAS has
followed all laws, guidelines and policies that govern it, and towns and
districts should expect that practice to continue.”
Diamantis, for his part, denies he did anything wrong and
said in comments to my colleague John Moritz that he was working to save
taxpayers’ money.
Other reforms are already coming out of this caper, even in
the early stages of the federal investigation. One is related to the short list
of pre-approved contractors for emergency hazardous waste removal and
demolition in school projects. Diamantis apparently expanded the use of that
list dramatically, I’m told by several people.
As for allegations he steered local school systems to use
favored contractors, we will have to wait for more news to come out — but the
actions in Hartford might point to a recognition that such steering happened.
Apartments planned for East Hartford cinema site
Joseph Villanova
Developers of the former Showcase Cinema property in East
Hartford discussed their plans to build as many as 420 upscale apartments at
the Silver Lane site during a recent special meeting of the Town Council,
saying they also plan to seek a nearly three-decade tax abatement on the
project.
The Town Council in September voted 6-3 along party lines to
authorize the mayor to execute a purchase and sale agreement of $1 for the
property, a process that could take up to 18 months.
New Britain developer Jasko Development and Zelman Real
Estate have proposed an “amenity rich” rental housing project of 360 or more
market-rate apartments with a number of facilities for tenant use.
Mike Goman, principal of economic development firm Goman
& York, said at Thursday’s special meeting that current planning suggests
that they may ultimately build about 420 units.
A presentation shown at the meeting lists amenities that
include a pool, dog park, club rooms, a community bar, conference and “work
from home” rooms, fitness centers, and bicycles for tenant use. Plans have not
been finalized, and neither a site plan nor the development agreement have been
completed or approved.
Goman said the town has contributed $16.2 million to the
project, with $3 million in borrowing from the town, and the rest from state
grants.
About $6 million has been spent on cleanup and acquisition
of the site. The $10.2 million will be used “to help catalyze the project and
help the developer make this project make sense,” Goman said, adding that
developers would also infuse about $81 million in private funding into the
project.
Goman said that, in turn, the town would receive about $1
million in permitting fees and annual net property taxes, starting at $625,000
per year. That’s in addition to an expected $15 million in revenue to the town
from the new residents’ disposable income.
Development Director Eileen Buckheit said Monday afternoon
that the developer is proposing including the property into the town’s
Enterprise Zone, a state program that could allow a 27-year tax abatement for
the new owners.
“It was put into place for distressed municipalities to
provide additional incentives for development in their communities,” Buckheit
said.
Buckheit said the “tax stabilization” would allow the town
to fix the taxes collected from the proposed units at $2,100 each, increasing
annually at 2%. At 360 units, the minimum proposed amount, the town would
initially receive $750,000 in annual property taxes from the development.
Goman said at the meeting Thursday that without the
abatement, taxes owed per unit would be $5,500 — or at least $1.98 million to
the town annually based on 360 units — which would either make building costs
unsustainable or rental rates noncompetitive.
“That would put this project at an insurmountable economic
disadvantage,” Goman said.
Buckheit said Monday that the fixed taxes both help increase
confidence for the developer’s lenders and ensure future tenants will have a
steady rent.
“If someone signs a lease, they can count on that annual
increase and not something unexpected,” Buckheit said.
Buckheit said the town council would likely vote Tuesday
night to expand the boundaries of the Enterprise Zone in order to incorporate
the Showcase Cinema property, parts of Silver Lane, and portions of the
Rentschler air field that’s being developed into a manufacturing and warehouse
distribution site by National Development.
Vice Chairman Don Bell said at the meeting Thursday that the
project won’t fix East Hartford’s economic problems, but it’s an important
piece in the town’s investment into a community that has “struggled for a very
long time."
“This isn’t a panacea,” Bell said, adding that “in a vacuum
I’d have a lot more concerns about this project, but I know that it happens in
the context of not just trying to revitalize Silver Lane, but also Founder’s
Plaza.”
Councilman Travis Simpson said at the meeting Thursday that
as the town moves into budget season, it needs to evaluate why such a tax
agreement is necessary, and look at what policy changes could drive private
sector development without heavy lifting from the town.
“The fact that we cannot tax at the normal, fair market rate, and have this be a viable business should tell us something about our taxes at the fair market rate,” Simpson said.
Simpson also said he’d like the developer to ensure the area
would be walkable for tenants, with proper access to public transport.
An “unprecedented” $106 million investment in the Long
Island Sound will improve the estuary’s environmental health and increase
climate resiliency along its shoreline, federal and state leaders said
Wednesday.
“The Long Island Sound is the center of one of the most
densely populated coastlines in the country, so it’s no surprise that some of
the biggest challenges the Sound faces include vulnerable infrastructure along
the coast and stormwater pollutions,” Janet McCabe, EPA deputy administrator,
said in a press call.
The $106 million allocated for the Long Island Sound is part
of a much broader $50 billion effort by the EPA to improve the nation’s drinking
water, wastewater and stormwater infrastructure.
The funding will be delivered through the Bipartisan
Infrastructure Law to the Long Island Sound Study — a partnership between the
agency, Connecticut and New York — over the next five years. Through the
funding, officials said, communities in Connecticut and New York will be better
equipped to reduce stormwater pollution, restore wetlands and prepare for the
impacts of climate change, including sea-level rise and more severe storms.
Gov. Ned Lamont called Long Island Sound “our treasure, our
Mona Lisa” — but said it is a resource that has not been properly cared for in
the past.
“This money’s going to be invested and make an extraordinary
difference in our lives,” he said.
Mark Tedesco, the director of the EPA’s Long Island Sound
Office, said the agency plans to make decisions about how the $106 million will
be allocated this spring, and that projects will likely begin this summer.
“In many cases, projects that will affect or improve water
and wastewater infrastructure will also have the benefit of climate resiliency,
when we’re talking about flooding and stormwater controls,” he said.
U.S. Sen. Chris Murphy, D-Conn., emphasized the urgent need
to protect residential communities, industry and infrastructure along the
shoreline from the devastating impact of climate change.
“With sea level rise happening at a rate never before seen
in the last two millennia, we have an overabundance of projects to protect our
shoreline,” he said. “We have low-income communities in Connecticut that can’t
afford on their own to make the investment in resiliency and clean water,
without help from the federal government.”
Safeguarding the Sound’s clean water has already improved
habitats for whales, dolphins and seabirds, said Holly Drinkuth, Connecticut
co-chair of the Long Island Sound Study Citizen’s Advisory Committee, who is
also the director of outreach and watershed programs for The Nature
Conservancy. The expanded federal funds will deepen those efforts, while also
bolstering fishing, swimming, boating and tourism industries in the Sound, she
added.
U.S. Sen. Richard Blumenthal, D-Conn., noted that the
funding represents the single largest investment in the Long Island Sound.
“It’s only a down payment — the beginning, not the end,” he
said.