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

Dan Haar

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.

‘Unprecedented’ investment in Long Island Sound to improve environment, climate resiliency, and bolster fishing, swimming, boating and tourism industries

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.