CT Construction Digest Wednesday February 16, 2022
Top Lamont officials were told of school bidding complaints in 2020
Mark Pazniokas, Dave Altimari and Andrew Brown
A year before the FBI opened its investigation, high-ranking officials in the Lamont administration were told by a demolition contractor that he believed the state Office of Policy and Management was attempting to direct millions of dollars in contracts for local school projects in violation of state law.
From at least April 2020 through February 2021, the president of Stamford Wrecking Company and his lawyer repeatedly pressed complaints that OPM was not following the legally required bidding process for demolition and hazard abatement work and was instead driving work to a small group of contractors on an OPM-approved emergency bid list.
“Any effort by OPM to circumvent the proper public bidding requirements and award a no bid contract from the emergency list would be illegal, a violation of the bid statutes and practices in the State of Connecticut,” Irving Goldblum, the president of Stamford Wrecking, wrote on April 29, 2020.
On October 20, 2021, the FBI subpoenaed records relating to state-financed school construction projects and other construction overseen by Konstantinos Diamantis, who was fired eight days later by the governor’s office as the deputy to OPM Secretary Melissa McCaw.
Diamantis said Tuesday the OPM-approved list was offered to help municipalities save money, not interfere in competitive bidding.
The initial correspondence from Stamford Wrecking, which was obtained by the Connecticut Mirror, was addressed to McCaw and Josh Geballe, then the commissioner of the Department of Administrative Services. The company eventually complained to Attorney General William Tong, whose spokesperson says he referred the matter to “appropriate authorities.”
Governor said he was unaware of complaints
Lamont said Tuesday he acted quickly to remove Diamantis, though not because of concerns over his handling of school construction bidding. The governor said he was unaware of the complaints by Stamford Wrecking about OPM interference in bidding after McCaw hired Diamantis in 2019.
The proximate cause of the Diamantis dismissal was questions over how his daughter, Anastasia Diamantis, obtained a $99,000-a-year job as executive assistant to Chief State’s Attorney Richard Colangelo Jr.
Lamont said nothing “actionable” about Diamantis had come to his attention prior to a column in The Hartford Courant about the daughter’s hiring. A review of emails by Lamont’s staff discovered that the daughter was hired while Colangelo was lobbying the father and McCaw for help in securing raises for prosecutors.
After removing Diamantis, the governor commissioned an inquiry by Stanley A. Twardy Jr., a former U.S. attorney. Colangelo filed retirement papers, effective March 31, rather than face removal proceedings from the Criminal Justice Commission after Twardy concluded the prosecutor had been untruthful.
“The two folks who looked like they maybe had some serious ethical violations are no longer with us,” Lamont said.
Colangelo and Diamantis have denied any impropriety in the hiring of Anastasia Diamantis, who also had a part-time job with a school construction management company. She was placed on paid leave earlier this month from her state job.
Diamantis, a former Democratic state lawmaker from Bristol, was a holdover from the previous administration, hired in 2015 by Geballe’s predecessor at the Department of Administrative Services as the director of the Office of School Construction Grants & Review.
When McCaw hired Diamantis as her deputy in 2019, the Lamont administration allowed Diamantis to take the school construction function with him to OPM.
Geballe: Complaints were OPM’s concern
Geballe, who took on the additional jobs of chief operating officer in February 2020 and then responsibility for coordinating of the state’s COVID-19 response the following the month, said he did not act on the complaints from Stamford Wrecking, as the school construction office and Diamantis already had moved to OPM and reported to McCaw.
He said he did have at least one conversation with McCaw about whether she was addressing the issue. McCaw, who was out of the office Monday and Tuesday after being diagnosed with COVID for a second time, could not be reached for comment.
Diamantis said in a text message Tuesday that Stamford Wrecking’s complaint was the result of confusion and misinterpretation, not interference.
“It should be made clear that OPM and DAS did not interfere with bidding process through school construction projects,” Diamantis said. “The issue was the use of state contracts by municipalities to include Hazmat abatement to keep our children safe in schools.”
In a statement issued in response to questions from the CT Mirror, the governor’s office said the complaint was resolved with a communication that made clear in March 2021 that municipalities may use hazardous materials abatement contractors from the state list without competitive bidding — but were not required to limit choices to the state bid list.
“When this issue was raised with the Governor’s Office, representatives of the office addressed it directly with Mr. Diamantis,” the office said in a statement not attributed to any individual. “The Governor’s Office also consulted directly with the Attorney General’s Office and a resolution was reached to the satisfaction at that time of the complainant.”
Goldblum could not be reached. His lawyer, Raymond Garcia, declined to comment.
n his April letter, Goldblum said his company was the low bidder on one Groton school project and second-lowest on another, but OPM had pushed the town toward another contractor on the emergency list. Similar concerns were raised about bids for a school project in Manchester.
Diamantis said the state-approved list is intended to lower costs, not favor contractors.
“The fact of the matter is that towns can use state contracts if they choose or they can go out to bid as part of a larger project,” he said.
The clarification of the OPM policy, which was promised in January 2021, went out to all school systems over his signature two months later.
Lamont expresses confidence
The governor proposed a budget last week that includes tax cuts, a projected surplus and program improvements — upbeat talking points. But his public appearances invariably turn to questions about Diamantis and McCaw, the latter of whom the governor insists remains a valued member of his team.
“Oh, absolutely,” Lamont said Tuesday, after announcing he would be leaving Thursday on a trade mission to Israel. “I just traded texts with her. I just wished her the best. She’s had two straight COVID diagnoses.”
Lamont said the public should have confidence in his administration, due to his directions to Twardy and follow-up actions that are planned.
“We said leave no stone unturned, zero tolerance for this type of stuff, follow where it may,” Lamont said. “And that’s what Stan Twardy’s report, you know, showed.”
“We’re hiring auditors, going over all those school projects as well, just to make sure people have confidence that when we see something like this, we act,” Lamont said. “We act fast, zero tolerance.”
When asked how he could still have confidence in McCaw, who supervised Diamantis, the governor said OPM is a challenging agency to run.
“There’s a lot going on in that office,” Lamont said, adding the secretary has “got the deputies, and they report to her. And so I think we all could have done better.”
Lawyer wrote to Attorney General Tong
Goldblum, the president of Stamford Wrecking, eventually hired the New Haven law firm of Garcia & Milas to pursue his complaints. Garcia contacted Tong, the attorney general.
Citing several school construction projects throughout Connecticut, Garcia accused OPM of using its authority over the school grants to steer between $10 million and $20 million in state-financed construction work to a select group of companies.
“We seek your assistance as Attorney General to require OPM and municipalities seeking contribution from the state school reconstruction project to follow the laws of our state and publicly bid all elements of school construction projects,” Garcia wrote in Feb. 2, 2021.
Elizabeth Benton, a spokeswoman for Tong, said the attorney general’s office had several conversations with Garcia about Stamford Wrecking’s concerns and allegations and did eventually refer the information to the “appropriate authorities.”
Tong said Tuesday he could not comment due to pending investigations by his office and federal authorities. He declined to say if his office had made a referral to the FBI.
Building Trades Council memo: ‘This is beyond unorthodox’
Meanwhile, officials with the State Building Trades Council had prepared to confront Lamont about concerns they had with Diamantis at a July 22, 2020 meeting with the governor at a union hall in Hartford.
According to talking points prepared before that meeting, officials with the building trades council planned to tell Lamont that Diamantis had created a “hybrid” method for shopping out bids for state-financed construction work.
“This is beyond unorthodox,” the industry officials noted in preparation for the meeting.
But Diamantis was a secondary issue on a long agenda that was topped by their concerns Lamont was trying to kill a proposed gas-fired energy plant in Killingly, a source of much-need construction jobs. They also wanted to talk about project labor agreements, or PLAs.
“None of that came up,” Lamont said Tuesday when asked about school construction bids. “There was real concern about PLAs. There was real concern about Killingly.”
Two union officials present at the meeting concurred Tuesday with his account.
Gov. Ned Lamont pledged transparency Tuesday in the investigation into state projects overseen by a former official, saying the administration will “get to the bottom of it” and not oppose public hearings by the legislature.
Some Republicans have called for hearings in the case of Kosta Diamantis, a former Democratic state legislator who rose to become the second-highest ranking official in Lamont’s budget office. Diamantis was fired by Lamont’s administration last year after concerns were raised by federal investigators about his oversight of public school construction and the State Pier projects.
Questions also arose separately over the hiring of Diamantis’ daughter, Anastasia, by the chief state’s attorney, Richard Colangelo. Under fire, Colangelo has announced that he will retire as the state’s top prosecutor. Anastasia Diamantis has been placed on leave. Lamont said he would not oppose an inquiry by the legislature that has been suggested by Republicans. “If they want a public hearing, they can have a public hearing, sure,” Lamont told reporters Tuesday at an unrelated press conference at the UConn campus in downtown Hartford.
Lamont’s budget director, Melissa McCaw, who was the direct supervisor of Diamantis, missed a key presentation to the tax-writing finance committee Tuesday on Lamont’s tax package. But Lamont says she will be remaining with the administration.
“Oh, absolutely,” Lamont said. “I just traded texts with her. I just wished her the best. She’s had two straight COVID diagnoses. She’s got her team there talking to finance today.”
Lamont said that two of Connecticut’s former top federal prosecutors have looked into the issues involving Diamantis and Colangelo.
“Nora [Dannehy] got together with Stan Twardy — two former U.S. attorneys,’' Lamont said. “We came forward immediately. We said, ‘Leave no stone unturned.’ Zero tolerance for this type of stuff. Follow where it may. That’s what Stan Twardy’s report showed.”
Twardy was hired by the state and conducted the investigation into the hiring of Anastasia Diamantis by Colangelo. The investigation into the state projects is being done by federal officials.
“At the same time, Nora is working proactively with the other federal investigation to make sure that people have 100% confidence,” Lamont said. “We’re hiring auditors to go over all those school projects as well, just to make sure people have confidence. We see something like this, and we act fast. Zero tolerance.’'
Lamont said that he did not know about the Colangelo situation “until I read [Hartford Courant columnist] Kevin Rennie’s article about the ethics violations regarding the hiring of Diamantis’ daughter — and we acted on that promptly.’’
Members of the Connecticut State Building Trades Council were prepared to talk to Lamont about Diamantis during a meeting on July 22, 2020, according to a union meeting agenda disclosed by Rennie. The agenda mentioned Diamantis in detail concerning various construction jobs, including the Birch Grove Elementary School in Tolland that has raised concerns.
“None of that came up,’' Lamont said Tuesday. “There was real concern about PLAs [project labor agreements]. There was real concern about Killingly. That’s what we addressed then and there. I don’t remember anything related to Kosta. ... Nothing that rose to my level where it was actionable.’'
Lamont did not fault McCaw regarding her oversight of the elder Diamantis.
“There’s a lot going on in that office, but the secretary has got the deputies, and they report to her,’' Lamont said. “So I think we all could have done better.’'
Lamont said he is not sure if the probes will touch only Diamantis and Colangelo.
“I don’t know,’' Lamont said in response to the Courant. “All I can tell you is if it does, we’re going to find them. As soon as we find them, you’re going to be the first to know.’'
He added, “We’ll get to the bottom of it.’'
10 development projects on West Haven’s radar
WEST HAVEN — When will the city have another ribbon-cutting?
City planning director Chris Soto provided the City Council this week with updates on nearly a dozen development projects going on the city.
The Haven project, a planned experiential mall on First Avenue, has been in the works for a decade. City officials said they have nothing new to report since last summer.
“On our end, the approval process for zoning is pretty much set. What we’re talking now is your standard (demolition), building, whatnot,” said Soto. “They’ve completed their phase 1 and they’re continuing to remove the rubble from the (demolition). We expect that once that happens they’ll come back for a phase 2 to do the (demolition) of the rest of the project.”
State Rep. Dorinda Borer, D-West Haven, attended the meeting to express her frustration with the lack of updates after what she said was heavy lifting by the state delegation to advance the project. The developers of The Haven, Simon Property Group, requested a special taxation district for the parcel, which received Gov. Ned Lamont’s signature in June 2021.
The next step is for the city and Simon Property Group to sign an interlocal agreement outlining how that special taxation district will be governed.
“It’s been 8 months and you do not have an interlocal agreement in front of you and the developer has not come in front of you,” Borer told the council. “There’s nothing pending at the state right now. We did everything we could up to June 8. That is very difficult for us to make any other movements on The Haven until we see action.”
Borer said the city “should be taking fierce local action including applying blight fines every day on every property for every single violation” to advance the project and bring the developer to the table.
Soto also told the council that plans to further raise the elevation of Beach Street — a project that received funding through state bonding to protect the city’s shoreline businesses against flooding — have been pushed back as the city awaits necessary approvals. The next phase of the road raising, which initially was expected to be initiated this summer, may now begin before 2023.
“We hope by the end of year to have awarded the contract to do the actual raising,” Soto said. “Hopefully by next summer that’s completed.”
It’s that street-raising, he said, that may be delaying several other expected businesses from applying for building permits and zoning ordinances.
Soto said he has spoken with the restaurateurs who purchased the site of the former Chick’s Drive-In on Beach Street, who told him they are waiting for further developments on the road-raising.
“Right now, the raising of Beach Street is one of the things holding them off; it impacts how they do their engineering,” he said.
Soto said the owners have expressed a reluctance to build anything in case they end up creating a view from the restaurant of an embankment instead of the beach.
When the nearby former Debonair Motel was sold, Soto said he was in contact with the developer and his attorney, but “we haven’t really had any updates since the purchase.” Soto said he believes the owner may be in a “similar holding pattern” as the Chick’s developers.
Soto told the council that the Planning and Zoning Commission had “to change what amounts to about three words” in the city’s regulations to advance the ongoing Cumberland Farms project on Boston Post Road. The project was stalled because of an appeal on a variance, and because a court ruled against the city’s Zoning Board of Appeals, Soto said. The project should continue moving forward next month, he said.
A planned mixed-use development on Campbell Avenue, on the site of the former American Buckle Co. factory, is “still in its infancy” because of an appeal on the project, Soto said. Because of that, he said “it’s wise for the developer to hold until that’s resolved.”
The City Council met in executive session to discuss the sale of two properties — 20 Helm St. and 66 Tetlow St., the site of the former Blake Street School. Following the private discussion and without explanation, the council decided to table the items without taking any action.
However, Soto said the city is making progress on two projects: the expected conversion of the former Stiles School into a hydroponics plant nursery business and the conversion of the former Savin Rock Conference Center into the new headquarters of the Woodbridge-based New England Brewing Co. brewery.
Soto said the Planning and Zoning Commission made “some proactive changes” to the zoning ordinance around Stiles School so the city can “usher it through” when the plan comes to the commission. Soto said the city also is in continued discussions with NEBCO about “what needs to happen in order for them to do site development.”
Foxwoods announces agreement with indoor water park developer
Mashantucket — Celebrating Foxwoods Resort Casino’s 30th anniversary, the Mashantucket Pequot Tribe and casino officials announced at a news conference Tuesday that they’ve reached an agreement with Great Wolf Resorts, an indoor water park developer they first engaged more than 14 years ago.
Foxwoods also revealed it is planning to open a new high-stakes bingo hall, convert the casino's existing bingo hall into a 75,000-square-foot convention center and renovate the casino’s main entrance.
Plans call for the Great Wolf Lodge at Mashantucket to open adjacent to the casino in 2024.
“We’re just getting started,” Jason Guyot, Foxwoods president and chief executive officer, said at the late-afternoon event attended by Gov. Ned Lamont.
In 2007, the Mashantuckets, in partnership with Great Wolf Resorts, pursued plans to develop an indoor water park on tribe-owned, nonreservation land along Route 214 in Ledyard. After town officials approved a zoning change for the project, it was abandoned in the face of an economic downturn.
Since then, other developers, including a Mashantucket tribal entity, have had interest in developing a water park at the casino, said Rodney Butler, the Mashantucket chairman. Amid the coronavirus pandemic, he said, Great Wolf Resorts revived its interest.
“They called us,” Butler said.
Great Wolf Resorts is investing most of the capital in the project, which will be built in an empty parking area between the casino’s Rainmaker entrance and the Pequot Outpost gas station/convenience store on Foxwoods Boulevard, according to Butler. A portion of Trolley Lane Boulevard will be relocated to accommodate the project.
Butler said Great Wolf Resorts will own the water park facility and lease the real estate from the tribe, an arrangement similar to that of Tanger Outlets at Foxwoods, the Tanger-owned indoor shopping mall linking the casino’s Grand Pequot and Fox towers.
Great Wolf Resorts bills itself as the leading developer of indoor water park resorts in the U.S. and Canada. It operates nearly 20 Great Wolf Lodge locations — rustic-themed resorts that offer lodging and pools, slides, "splash grounds" and other family fare.
The new high-stakes bingo hall, scheduled to open in the spring, will be located in the former Festival Casino area. It will include more than 30,000 square feet of event space, seat more than 2,200 people and offer bigger prize pools, Guyot said. The new Rainmaker Expo Center, which will be built in the existing Bingo Hall, will accommodate trade shows, corporate meetings and sporting events.
“It gives us another 4,000 seats for entertainment, too,” Guyot said.
Casino officials also announced the casino will donate $30,000 to a local charity "that shares Foxwoods' values" each month for the rest of the year. The United Way of Southeastern Connecticut, a nonprofit that supports the health, education and financial stability of people throughout the region, is the first recipient.
Foxwoods also is giving away $30,000 in cash and prizes to patrons every day this week.
Butler, in remarks to an audience of tribal members and guests, acknowledged the role Richard “Skip" Hayward, the former Mashantucket chairman, played in founding Foxwoods.
“Skip is a true visionary that would be on the Mount Rushmore of tribal leaders who led the way for the economic success that gaming has provided to tribes all across the country,” Butler said. “Skip's passion for his people and vision of a world-class destination still guides us to this day and has allowed the tribe three decades of success.”
Hayward was unable to attend Tuesday’s event.
Butler said gaming has always been a means to an end “that has allowed us to rebuild and repatriate a thriving community. ... It is the revenue base which allows the tribe to fund housing initiatives, cover health care, advance education, and preserve our culture and history, among other things.”
Lamont noted Foxwoods evolved from “a pizza place” to a bingo hall to, most recently, a provider of sports wagering and online gaming thanks to an agreement reached last year among the Mashantucket Pequot and Mohegan tribes and the state.
“Connecticut, you’re getting lucky,” he said, noting that the Connecticut Lottery Corp. celebrated its 50th anniversary Tuesday. Lt. Gov. Susan Bysiewicz delivered a proclamation from Lamont at an event marking that milestone at the lottery headquarters in Rocky Hill.
The Rocky Hill Planning and Zoning Commission on Wednesday is expected to discuss a site plan proposal to redevelop the long-vacant Ames corporate office on Main Street.
This represents the second site plan submitted to the town by Hamden-based developer Belfonti Cos. LLC.
The first plan was rejected by the commission about two months ago, but changes have been made to the overall project design, including the addition of more public gathering space, according to Raymond Carpentino, Rocky Hill’s economic development director.
The latest site plan calls for construction of 213 apartments in about 11 buildings, he said.
The project will include 93 one-bedroom and 120 two-bedroom units, with 10% designated as affordable, according to Planning and Zoning Commission records.
The mixed-use development at 2418 Main Street will also contain 11,067 square feet of office space and 9,959 square feet of retail with associated site improvements on approximately 12.65 acres.
About an acre of the property will be reserved for public gathering space, Carpentino said, including a large patio and fire pit.
The 180,000-square-foot former Ames property has been vacant since 2002 and town leaders have called it an eyesore at the heart of the town. Rehab proposals have come and gone over the years, but the remediation of the asbestos-tainted structure has been a key hang up.
The state last April stepped in to help push redevelopment efforts forward with its approval of a $500,000 grant to help fund demolition.
Infrastructure Investment: Tools Subcontractors Need to Secure, Perform on Projects
Last year, lawmakers in Washington passed a massive $1.2 trillion bipartisan infrastructure plan, representing the most significant investment in highways, ports, and other critical projects for years to come.
That funding is now beginning to launch projects across the country, rebuilding the nation and boosting the construction industry, but new opportunities are adding to the two core challenges subcontractors face every day: how to secure capital for the high upfront costs of materials and finding (as well as keeping) skilled labor.
Large public infrastructure projects are creating thousands of jobs, but they also are increasing the demand for limited materials. As a result, over the course of two years, material costs skyrocketed and lead times increased, forcing contractors to pay significantly more out of pocket to procure materials.
According to one recent study, since the pandemic began, lumber costs increased 122 percent, steel mill products 123 percent, copper and wire cable 101 percent, and diesel fuel 201 percent, while demand continues to rise. These materials are the backbone of every type of construction project, and large infrastructure projects are poised to continue increasing demand, while reducing subcontractors' access to them.
While lead time delays and the volatility of material prices is clearly a significant challenge for commercial and residential builders, an equally large challenge is the worsening skilled labor shortage. The COVID labor crisis has impacted nearly every industry and has severely exacerbated long-standing construction staffing woes.
According to the U.S. Chamber of Commerce Commercial Construction Index (CCI), more than 90 percent of commercial contractors reported some level of difficulty finding skilled workers, and 62 percent indicated high levels of difficulty — a 7 percent jump from Q3.
Pandemic-related project delays also have increased, with two-thirds (66 percent) of contractors expecting delays on some projects. This difficulty in finding workers contributes directly to the strain on contractors' bottom lines.
Unlike other industries, simply offering higher pay is not a viable, long-term solution. First, the average hourly construction wage is already 46 percent higher than the average $11.26 hourly U.S. wage. Furthermore, 73 percent of contractors report they have already increased base pay rates during the past year, with little success in reducing the shortage. Finally, housing and commercial costs are soaring in part because of pent-up demand, scarcity and high material costs.
Adding more wage increases into the mix will only further raise those costs, decimate small contractors with limited resources, and lead to significantly higher prices for consumers.
As more major infrastructure projects get under way, subcontractors must compete with the giant firms and the biggest contractors for the same limited materials and scarce skilled workers, a battle in which they are severely overmatched. That's because subcontractors have little control and few options when it comes to managing their cash flow and gaining access to credit.
The truth is that supply chain finance in the construction industry is terribly broken and has been for decades. Today, subcontractors sit at the bottom of the payment pyramid. Subcontractors are typically the last to get paid, often waiting 60 to 90 days to be paid for completed work. Relying on cash on hand is far too unpredictable to comfortably pay for labor or materials upfront, much less reliably finance the sizable expenses that come with scaling a construction business.
Either those subcontractors go to traditional banks — which are often unwilling to offer financing — or they go to an alternative lender for a product that's prohibitive to their growth — extremely expensive and not tailored for construction. Subcontractors need more options to compete.
Fortunately, new financing alternatives designed to champion the subcontractor are coming into existence, helping subs tackle cash flow challenges and overall liquidity of commercial construction projects. These innovative, flexible financing solutions provide subcontractors with 120-day terms to pay for materials, helping them balance multiple projects and maintain healthy relationships with suppliers. Material finance options also allow suppliers to be paid in cash up front, guaranteeing materials will be delivered reliably. Not only do material deliveries flow in, but subcontractors have more time to pay for them.
In addition, new, reliable labor advance financing has become available to ensure subcontractors have the liquidity to pay their crew on time and deliver successful results. As labor costs have spiked, pay advance options can help stabilize cash flow, allowing subcontractors to continue to grow their businesses. These effective solutions provide subcontractors same-day financing on completed work with approved pay apps, eliminating the subcontractor's responsibility to float their own capital to fund projects and pay their workers.
Complete solutions on the market give commercial subcontractors access to financing for the two largest expenses on a project — materials and labor — and secures the resources and purchasing power they need to remain liquid throughout the entire project, take control of their cash flow, and finally do business on their terms.
Skyrocketing material costs and the detrimental impacts of the construction labor shortage are hampering subcontractors. With no signs of demand slowing and few options to quickly increase the number of workers, subcontractors need new, reliable options to help bridge the gap between their outgoing capital responsibilities and incoming cash flow. Pay application advance options are a critical new tool that can help subcontractors pay for the things they need to ensure projects are completed and to lay the foundation for future growth and success.
Christopher Doyle is an entrepreneur and business leader with extensive construction industry experience and a record of launching successful startups. He is the co-founder and CEO of Billd, a disruptive payment solution for the construction industry that helps subcontractors grow their businesses with less hassle and risk. Recognizing the cash flow hurdles subcontractors face when purchasing materials, Doyle launched Billd to make traditional Wall Street working capital accessible to business owners in the construction industry.