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Letter: Developer Should Pay for Fairfield Metro

Whether or not the Fairfield Metro Center train station was ever needed, it is becoming a financial millstone around the necks of Fairfield's taxpayers.

We have been forced to assume obligations that were never ours because town officials failed to protect our interests when they were in conflict with those of Blackrock Realty LLC (BRR), the developer of the FMC project. Consider the following:

• Section 4.4 (d) of the Tri-Partite Agreement of 2003 provided that “The Developer [BRR] shall construct the Road to meet Town standards. . . .”

• Section 5.2 provided that “In the event the Developer does not receive the Brownfield Grant, the developer shall be reimbursed for the construction of the road from future tax abatements and/or revenue credits to the extent permitted by law….”. §5.2 also provided that if the tax abatements or revenue credits are insufficient to reimburse the developer, the town shall have no obligation for any insufficient amounts.

However, §6.4 (c) provided that the developer would not be obligated to build the road if it did not get the Brownfield grant, an obvious conflict.

[Then-First Selectman Kenneth] Flatto and [Town Attorney Richard] Saxl should have insisted that § 6.4 (c) be removed because, under § 5.2, building the road was Blackrock’s obligation, grant or no grant. Of course, it was in Blackrock’s interest that § 6.4 (c) remain, and so it did when Flatto signed.

Blackrock knew the state had to have the road or it would have a “Bridge to Nowhere.” So after it failed to get the grant, it did nothing for years, claiming it didn’t have the money even though it had Bank North behind it.

This led to the state-town Agreement in 2010 by which the state agreed to contribute a maximum of $19.4 million to build the road and other items on condition that the town contribute $5 million and also be liable for any excess costs incurred on the state-town project. Incredibly, Flatto not only agreed to those terms, but even signed a side letter that assigned the town’s share of parking revenue until the state was reimbursed which could cost the town $6 million.

The town had limited obligations under the 2003 agreement, which did not include building the road. So, why did the town agree to be saddled with these high-risk obligations, instead of refusing to be responsible for Blackrock’s obligation? The failure to do so created a financial windfall for Blackrock at our expense.

Concurrently with the state-town agreement, the town entered into the town-developer agreement with Blackrock.

After Flatto resigned, First Selectman Michael Tetreau discovered that the amount of contaminated soil to be remediated was grossly underestimated as were other items required under the town-developer agreement. We were then repeatedly led to believe that the town was obligated to pay for the excess cost involved, a cost that could be millions of dollars.

While the town would be liable for excess costs incurred on the state-town project, I do not believe there is any town liability for excess costs incurred on the town-developer agreement project for the following reasons:

• The town-developer agreement requires Blackrock to pay a total of $5.2 million to be used only to pay for expenses related to construction of the items listed in the town-developer agreement project.

• There is no requirement that the town contribute any money.

• There is no provision for payment to the town for its services in managing the town-developer agreement project.

• There is no provision that Blackrock’s payment of $5.2 million would be the maximum it would pay nor that the town would be responsible to pay for any excess costs incurred over Blackrock’s $5.2 million (contrary to such provisions in the state-town agreement).

Under § 5.1 (c) of the 2003 Tri-Partite Agreement, Blackrock remains responsible for all environmental remediation requirements of the state Department of Energy and Environmental Protection and the Conservation Commission under the Remediation Action Plan, which requirements include the town-developer agreement items.

On July 18, 2011, Flatto informed the Board of Finance Subcommittee that the contaminated soil involved had been on Blackrock’s private site and the site engineers said it had to be moved because it wouldn’t support a future Blackrock building. It was then moved to a town stockpile area. The town is not obligated to prepare Blackrock’s site for its future buildings.

While the town agreed to complete the town-developer agreement project, it was clearly understood that the $5.2 million paid by Blackrock would be sufficient to do so. There being no provisions in the town-developer agreement holding the town liable for excess costs, the town is not liable for such costs which must now be paid by Blackrock to enable the town to complete the town-developer agreement project.

Blackrock has been enriched at state and town taxpayers expense by the failures of town officials for too long and that enrichment must be brought to a halt.

In a recent deposition in another case, Mr. Wittek of Blackrock, testified that in 2007 Bank North had an appraisal done on Blackrock’s mixed use project at 21 Black Rock Turnpike and that appraisal indicated a value of $77.3 million in its then “as is” condition. When asked if he had an opinion as to what the project might be worth on Dec. 16, 2009, Wittek answered, “Much more than that.” When asked, “Much more than that?” Wittek answered, “No, I don’t have an opinion.”

Now, if it was worth much more than $77.3 million in 2009, it will certainly be worth even much more today as the project nears completion. And what has Blackrock done to increase its value? The only significant construction by Blackrock was the removal of a building for which it was paid $650,000 by the town and its now inadequate $5.2 million contribution, most of which was a loan from Bank North to Blackrock.

Bank North’s interest in completing the Fairfield Metro Center project is the same as Blackrock’s. Given the gap between the bank’s $25 million investment so far, and a value near $100 million when the project is completed, the bank can easily afford to loan Blackrock another few million to cover these excess costs.

It is time for the town to take a hard line and refuse to pay for any more of Blackrock’s obligations. Enough is enough!

George R. Bisacca

Fairfield, CT

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