IPN Analysis

This section takes the voter through a detailed analysis of the key issues illustrated by the case. IPN believes these are compelling enough to warrant a major change in our town government.    

The Lack of Long Range Planning

When the original deal to construct the Newtown Youth Academy was announced, IPN was concerned about the possible lack of funds for the work described.  This letter was sent to Fairfield Hills Authority Chairman Robert Geckle on September 26, 2007, urging him to use the funds still available from the initial bonding of $21MM to complete demolition work and build the permanent parking, and to postpone the town hall project, since IPN thought that there would not be enough money to do both.

At a special meeting of the Legislative Council held on October 30, 2007, the Newtown Youth Academy deal and the town hall project were discussed.  The Council was told by First Selectman Rosenthal “that temporary parking will not be used. Greenwich will be taken down for the opening of the Newtown Youth Academy. Litchfield will also come down.”   It turned out, however, that funding for the permanent parking lot was not in place when the town committed to building it in time for the Fall 2008 opening of the Newtown Youth Academy.  No mention of this fact occurred in the minutes.

The result was that, until this special arrangement was devised, our only option was to build temporary parking that would later be torn up to make way for the specified lot at a future date, presumably at a higher cost due to inflationary expectations.  This dilemma is laid out in a piece that ran in The Bee on May 15, 2008 by John Voket.  While the deal avoided this worst case scenario, it still highlights the costs associated with a lack of proper planning:

• Because a private entity obtained a commercial loan, we financed the $3MM at 6% (at one point, 6.9% was expected) versus a cost for direct borrowing by the town of 4.5% at that time, according to reports.  That’s a difference of $45,000 per year. 

Additionally, due to the peculiar legal circumstances of the deal, any refinancing by the town must now await the project’s completion.  It is unknown whether some alternate structure to the lease or other early intervention by the Board of Finance and LC, perhaps to call a town meeting to approve a bond issue, might have allowed the refinancing  to have been completed already.  Normally, the town bonds projects before it even starts them.  What is clear is that neither the BoF nor the LC took steps at the time to explore this contingency.

• The rush to get the job done precluded competitive bidding on the project, so we have no way of knowing whether we received the best possible deal or not. 

• It is possible that additional town resources were used to complete the work, as the Highway department has acknowledged that they diverted resources to FFH but have failed since January to comply with requests for an accounting.  Still, they have stated that other road work has been delayed due to this effort, suggesting the numbers are materially significant.

• Finally, the elephant in the room is the fact that we have gone so far over the original budget for the first round of work at FFH. This despite the fact that much of the work originally covered by that appropriation has still not been done.

The Failure of Checks and Balances, Part One: The Board of Finance

As IPN Board of Finance candidate Benjamin Roberts’ 10/22 letter to The Bee elucidates, the BoF had every reason to speak up about this deal as it took place.  It is true that they may not have been able to stop or change it. Further, it’s not at all clear given the exigent circumstances created by the lack of planning that they ought to have done so.  But it is also possible that they might have set in motion steps to refinance the costly debt at an earlier date.

The main point regarding the BoF that comes out of this affair, however, is their failure to effectively protest the Board of Selectmen and Fairfield Hills Authority’s circumvention of the standard processes for capital spending.

• The BoF’s initial nine months of silence demonstrates an unwillingness to provide advice or criticism regarding the other branches of government.  In his letter to The Bee defending their actions, long-time BoF member Jim Gaston indicated that this was the result of their not believing the deal would be characterized as “debt.”   This argument does not hold up for a couple of reasons:
  •  It was indeed characterized as “debt” by Selectman Mangiafico, as quoted in The Bee on June 19, 2008
  •  It was deemed a “capital lease” by Finance Director Bob Tait, as reported in the June 26^th, 2008 Bee article by John Voket.  Anyone familiar with basic accounting should know that, from an accounting perspective, this specifically indicates it is equivalent to the purchase of an asset with debt (See, for example, pp.9-10 from this publication by the Financial Accounting Standards Board, or look up “capital lease” in any basic accounting textbook).
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  • Even if none of the above were true, or we excused the BoF for not catching the references in the Bee articles, the basic fact that a major capital project was being built at FFH with $3MM borrowed from Newtown Savings Bank and an arrangement for the town to cover the debt service was sufficient for the BoF to claim that this should be their turf.  If the town attorney told then otherwise, they should at the very least have demanded then and there that the loophole allowing this be closed.
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•  It is also worth noting that the BoF’s only comments came after Po Murray and Ruby Johnson questioned the special debt service line item [link and page reference]in the proposed budget at the February BoF budget hearing.
•  The BoF’s failure to demand change after the March 2009 budget meetings is equally troubling.  Even if one accepts their dubious excuse for nine months of silence, the fact that they then went on record that the deal should have gone through the normal CIP channels at both their March 4^th and March 9^th 2009 meetings begs the question of their subsequent silence.  Why was IPN the only political entity in town calling for reforms and improved planning in the wake of this affair? 
• • Consider this revelation from Mr. Gaston in his recent Bee letter: “Commencing in January 2009 (well before the elections) I (and other members of the Board of Finance) again made inquiry to review the Fairfield Hills financials as future requests for funding beyond the initial $21.8 million was anticipated. To date it has not happened, however, the circumstance is beyond the BOF to compel.” 
  •  This request did not appear in the BOF minutes, perhaps because it was made outside of a meeting.  But what is remarkable is that it is never mentioned in the meeting minutes thereafter.  Surely such lack of accountability should be cause for greater concern?  Even if the BOF cannot “compel” cooperation, it can certainly make some noise when it is not forthcoming.
  •   Even when the town came to the BoF this Fall with new capital spending requests that also flouted the normal CIP processes, the Board failed to remind them about the unmet information request, let alone any concern that the FFHA statutes that enabled the BoS to circumvent the process in the past could conceivably be used to do so once again.  One hopes that at their 10/22 meeting to once again discuss the town-side CIP, the BoF will take a sterner approach.  But their failure to do so for over a year will still speak volumes. 
  •  Compare this treatment with that received by the Board of Education.  Would the BOE would have been allowed to behave as the FHA and Board of Selectmen have in this affair without constant reminders from the BoF that they were out of line?  Consider, for example, the Hawley School HVAC project, which the BOF discussed and criticized steadily for over five years. 
    • Hawley’s not a perfect analogy in that this project has been on the CIP throughout this period, but it shows how the Board behaves when it decides that something is worthy of its concern.  For just some of the many examples of Hawley HVAC discussions, see here, here, here and here.
    • As a side note, it is worth highlighting the latest twist in the Hawley HVAC saga, involving the prospect of “piece-mealing” the project (see last link above).  To his credit, IPN critic Jim Gaston spoke strongly against this concept, and hopefully it will not be split up.  The mere fact, however, that the BOE has been so beaten down by years of struggle over this project to the point where they would suggest something like this primarily because they believe they can’t get it past the BOF otherwise speaks volumes about the stern treatment they have received.

The Failure of Checks and Balances, Part Two: The Legislative Council

On July 5, 2005, with the enabling Public Act 05-33, the Legislative Council approved the Fairfield Hills Authority (FHA) Ordinance that established a municipal development agency, the Fairfield Hills Authority, to implement the master plan for FFH development adopted by the Newtown Planning and Zoning Commission on March 17, 2005 (which can be amended from time to time).  The master plan was amended on September 2007 to allow the construction of the Newtown Youth Academy (NYA). 

The FHA ordinance allows the Authority to expend funds at the discretion of the First Selectman, Board of Selectman or Purchasing Authority (First Selectman) of the Town to implement the master plan. 

The Board of Selectmen used this provision in the FHA ordinance to spend $3MM for the parking deal without the approval of the Board of Finance, Legislative Council and the voters. 

When it became evident that the taxpayers were not getting what was promised in the 2005 Master Plan and the lease amendment was being used to spend monies above and beyond the 2001 bond appropriation, Gary Davis and Po Murray encouraged the Legislative Council to create a task force to evaluate the spending on FFH to provide oversight.  Gary and Po received no support from the non-IPN members and was told to go to the BOS to express their concerns. 

The Board of Selectmen signed the lease amendment for $3MM shortly thereafter.  

The FHA ordinance was created by the Legislative Council therefore the Council has the right to review, revise, or rescind the ordinance.  Gary and Po called for a review of the FHA ordinance by the Council to evaluate the system of checks and balances and Chris Lyddy was the only non-IPN member who supported it. 

The non-IPN Legislative Council chose to stay silent and allow the $3MM parking lot expenditure to occur without it going through the CIP process. 

Currently, the extent of the LC involvement with FFH is limited to receiving biannual report from the FHA on the progress being made on the implementation of the master plan. 

Interestingly, when the FHA was being established, the Newtown Bee shared its concern in an Editorial Inkdrops on June 29th, 2003:

The Fairfield Hills Authority: Balancing Power And Accountability

… Earlier this month, the Board of Selectmen approved the wording of a proposed act it will ask local legislators to put before the state Legislature establishing a Fairfield Hills Authority in Newtown. The authority, for all intents and purposes, will run the show at Fairfield Hills, except for the parts of the campus designated in the master plan for municipal use, which the town will continue to control as it would any other municipal property. Under the terms of the master plan currently before the Legislative Council, most of the campus slated for town use will be a rubble field before it is groomed into playing fields or cleared as a site for a new town hall. No fewer than seven buildings will succumb to the wrecking ball, under the plan. Most of what is left standing -- Woodbury Hall, Newtown Hall, Canaan House, Stratford Hall, Stamford Hall, and other vacant residential houses -- is destined to be leased to private enterprises and, hence, controlled by the Fairfield Hills Authority….

Townspeople will get to decide whether the proposed master plan meets with their approval in a vote -- probably before the fall election campaign. The makeup and powers of the Fairfield Hills Authority, however, will be decided for them. The selectmen and the Legislative Council, with the help of the state Legislature, appear to be on track to creating a governing authority for Fairfield Hills with little or no direct accountability to the public. Yes, the authority will be bound by the terms of the Fairfield Hills Master Plan, but the proposed enabling legislation for the Fairfield Hills Authority allows for the master plan to be "amended, from time to time, by the Board of Selectmen and Legislative Council of the town." Technically, if the selectmen and the council have to take something out of the master plan to win public approval this summer, they would be able to put it back in later without a town vote under the terms of the authority's enabling legislation. It would be politically dangerous, but completely legal.

Also, the Fairfield Hills Authority would not be elected the way the Edmond Town Hall Board of Managers is. It would be appointed by the first selectman with the approval of the Board of Selectmen. After initial appointments, the standard term on the authority would be three years. The six members of the authority would have the power to demolish, repair, rehabilitate, or construct real property, make site improvements, tear up or construct streets, and lease all or any part of the land and buildings under its control, choosing, of course, the lessees. It also will be empowered to hire whatever employees and private contractors it needs along the way. Whatever funds accrue to the town from leases would be at the disposal of the authority for its various projects.

In our system of government by checks and balances, we strive always to balance power with accountability. In the case of the emerging Fairfield Hills Authority, the scale has been tipped by too much power and too little accountability. To strike a better balance, the proposed legislation should be rewritten to provide for a locally elected Fairfield Hills Authority.

A problem with Our Political Culture

One of the most troubling aspects of the FFH parking lot affair is what it illustrates about the political climate that has prevailed in our town.  There has been a pattern of criticizing and even vilifying those who question government actions.  In a sense, this is the flip-side of the lack of willingness to employ effective checks and balances.  It is apparent in the reactions Po Murray and Gary Davis received from the Legislative Council when they challenged the parking lot affair and also when they later argued for an examination of the FFH statute and finances. 

Such attacks have a chilling effect on public participation in the political process.  They display an arrogance and even contemptuousness that is utterly inappropriate for our public servants.  We should expect better.

This culture of internal collaboration combined with external criticism was on full display in the other well-publicized aspect of the parking lot affair as well, namely the controversy over the state’s prevailing wage statutes. See this discussion for details on how Po Murray correctly identified a failure by the town to comply with the law and was attacked vigorously for having done so.  Town attorney Grogins also appears once again, attempting to come up with legal justifications that are ultimately not upheld.

Finally, we have the recent letters to The Bee from BOF member Jim Gaston.  The first letter, which appeared on 9/17 and attacks IPN BOF candidate Benjamin Roberts , is remarkable primarily for the fact that it bears so little connection to the actual statements made by Mr. Roberts in the 9/10 letter  and  9/14 BOF meeting that prompted the attack.  One side note about the term “old guard” that prompted such a strong response from Mr. Gaston: for the record, the term was not intended as a slur, but simply as a convenient short hand to describe a group of people who have effectively dominated town affairs for many years.

But it is Mr. Gaston’s 10/17 letter that truly illustrates the apparent acceptance within our political culture for vilifying outsiders who dare to question the status quo, even as they call for a tone of “civility” to dominate our discussions.  This kind of personal attack, based on utter disregard for the facts of the matter, should never be tolerated by our electorate.  Yet Mr. Gaston, a veteran player in town affairs, feels free to engage in such inappropriate, divisive and uncivil behavior.  The irony of his insistence that it is IPN (or “I Prefer Nastiness” as he likes to refer to us) that is the party engaging in such behavior is too rich for words.

The accusation that Po Murray hid information from the BoF and LC.  In his letter, Mr. Gaston claims that “most shocking of all… Po Murray did know of the lease/loan agreement debt service in 2008” but failed to tell anyone about it.  Mr. Gaston continues: “here is a Legislative Council member who knows of the debt service, knows that the debt service is not contained in the December 2008 CIP, never mentions it in the Legislative Council discussions or debates on the CIP, and votes on the CIP knowing the parking lot debt service is not in the CIP!” 

In fact, as our annotated timeline shows, Po’s actions included the following:

Emailing LC chair Will Rogers on June 12^th 

Bringing up the parking lot issue at the LC meeting on June 18^th 

Asking the LC in August and October to consider reviewing the FHA statute and finances in light of the parking lot deal, including the suggestion that the FHA be required to make monthly reports to the BOF. 

Po did not know that the payments would be classified as debt service.  But she is on the LC, not the BOF and should be forgiven for not being familiar with the specific meaning of the term “capital lease.”  On the other hand, when the 2009 budget season started in January, Po did make an inquiry to Finance Director Bob Tait as to how the payments would show up in the budget and learned about the debt service classification.  This led her to comment at the February 25, 2009 BOF Public Hearing.  It was after she raised the issue that the BOF itself finally went on record the next month objecting to the way in which the CIP process had been circumvented.

The accusation of “lying.” 

Mr. Gaston has professed that he only learned that the parking lot expense was being booked as debt service in 2009.  The “lie” he claims we told in our letters is that we allegedly claimed he understood this fact from the get-go.  Except that there is no such statement in the letters from either IPN BoF candidate (see here and here). True, Mr. McNerney stated that “the finance director made it clear he would treat it as debt service,” because Mr. Tait had indeed described the deal as a “capital lease” according to reporting in a June 26^th, 2008 Bee article.    

As noted earlier, anyone familiar with basic accounting should know that “capital leases” are booked as an asset purchased with debt.  Still, we have no idea what the BoF knew or didn’t know prior to March 2009, nor have we made any claim otherwise.  But Mr. Gaston’s suggestion that he was unaware either of Mr. Tait’s statements or of their import hardly seems like something he should be holding against his IPN opponents.  It certainly isn’t grounds for attacking them as “liars.”

Perhaps Mr. Gaston is excusing himself by relying on town attorney Grogins statements that the lease payments would be “operational” expenses, which appeared in the same Bee article cited above that included the “capital lease” characterization.   But while that may be an excuse for not having dug further, it still doesn’t justify the accusation of lying, since all we claimed is what the finance director said.  

Conclusion

IPN believes that the details of the parking lot affair show a history of poor decision-making by both major parties, an unwillingness to acknowledge, let alone fix the problems that were revealed and an effort to criticize and even attack those who dare to point out these problems.  It is hard to have confidence that a government that behaves in this was is truly prioritizing the needs of its citizens.  

There were many other issues we could have explored to further illustrate this problem, but our time, as well as yours, is limited.  We think the facts in this case are compelling enough to stand on their own as a basis for choosing between the parties in town.  We thank you for taking some of it to review this case.  If you found it to be illuminating, we hope you will pass on what you have learned to your neighbors and direct them here so they can judge for themselves. And we hope that we can count on your support on November 3rd.