Council Approves Expenditures With An Eye To The Future

The Common Council took a number of steps with significant price tags, but which have the promise of future dividends. Expenditures for parking, webcasting of city meetings, and connecting to the Mattabesset regional sewer treatment plant were approved.

Parking

The Council took two actions to increase the number of parking spaces available downtown. It approved the expenditure of $200,000 for the demolition of a building on Liberty Street, and the construction of a neighborhood parking facility. The building currently houses Automatic Machine Products, a manufacturer of automated machine parts such as brass valves, milling and drilling machine parts, hydraulic press and pressure testing parts and accessories. Part of the money will help the company relocate to the Remington Rand Building.

Common Council Votes Unanimously to Bring Bond on Mattabassett District to Referendum

The discussion of a $37 million bond concerning Middletown’s full membership in the Mattabassett District dominated the proceedings at Monday’s Common Council meeting. Following a spirited and illuminating discussion of the bond, the council voted unanimously to bring the bonding question to referendum.

On Election Day on November 6th, voters will have to answer whether they support bounding “for the planning, design, acquisition and construction of a force main and inter-municipal pump station in connection with Mattabassett regionalization project”, which a portion of the ordinance reads. Middletown is currently not a member of the district, and only sends some of its wastewater to the Mattabassett.

A number of council members made their strong support for the measure clear. “For me, this is one of the most important referendum questions,” said Councilman Ron Klattenberg. “It’s transformational. This vote can change the character of Middletown. Our riverfront is valuable. Anyone who knows about the plant knows. This has to be done. There’s no question.”

Councilman Phil Pessina also spoke about the positive impact the project would have on the riverfront. “This is an important project,” he said. “Construction will mean the economic development of the waterfront. One thing we’ve been talking about is a boat launch. This is the first step in doing it.”

Majority leader Tom Serra said the benefits to the city and ratepayers would include the stabilization of sewer rates and the enhancement of economic development and environmental quality.

Former Mayor Sebastian Giuliano was one of a handful of citizens who stated their support for the project. He stated that it would strongly improve both the environmental and public health of the city. “The best message you can send to citizens and partners in the district is that it has the full support of the administration and legislative branch, recommending it be put on the ballot,” Giuliano.

Quentin “Q” Phipps, the Executive Director of the Middletown Business District, also lent his support and said the bound would me backed fully by the MBD. The bond’s importance becomes much more evident when you consider that Middletown is under federal mandate to either upgrade the existing sewer plant on River Road or join a sewer district. The stretch of riverfront property on this road that includes the city’s antiquated sewage treatment facility would be decommissioned and razed if Middletown becomes a full member of the Mattabassett District. Doing so would allow an expansion of the waterfront area.

Resident and former councilman Earl Roberts expressed significant concerns about the project. “I’m concerned about our ability to play,” Roberts said. “That’s a lot of bonding. Be cautious,” he urged the council. “What’s the urgency?” Roberts stated. “I hope you ask yourselves this question, because this is a big debt and we’re not out of the woods yet with this economy.”

Pessina addressed Roberts’s statements by saying that Middletown should counteract the cost of the project by pursuing grants. “The public worries that we spend money,” Pessina said.” But we have a responsibility to direct the finance director to get grants, to look for alternative financing to defray the costs.”

Mayor Daniel Drew summed up the bond discussion before the unanimous vote. He stated that the city will aggressively pursue state grants for the project, and that he believes its costs will not necessarily meet the full cost of the bond ordinance. Drew also spoke about how fully joining the District and its Regionalization Project would be the most cost effective way for Middletown to upgrade its water quality and stabilize the sewer rates its citizens pay.

Middletown’s Sewer Department has 10,000 customers and now maintains approximately 130 miles of pipes, 15 pumping stations and the treatment plant on River Road.

"This Is Election Grandstanding"

Charges and counter charges flew as the Council debated whether to authorize a $10,000 investigation into Mayor Giuliano's recent movement of Water and Sewer Administrators to a new office in City Hall. The issue brought out many Water and Sewer employees to City Hall.

Prior to the regular meeting, Council members used most of the "Questions to Directors" portion of the meeting to direct their fire at either Republican Mayor Giuliano, or at the Democratic majority on the Council. Guy Russo, Water and Sewer Director, was questioned for 25 minutes by Democrat Jim Streeto on the mayor's press release justifying his actions.

Streeto asked Russo to rebut point by point, every paragraph in the press release, explaining why each point was either out-of-date, or could otherwise be explained. The two most important issues for Streeto were that Water and Sewer was doing everything it could to collect on delinquent accounts and thus balance its books, and that the loss of records was due to a failure in the City IT department, not a failure in Water and Sewer.

Phil Pessina and Joe Bibisi, both Republicans, would have none of it. Pessina said it was disappointing to see problems crop up repeatedly in the department. Pessina asked Deb Milardo, Director of Personnel, about labor issues in Water and Sewer. Milardo said there were problems in the implementation of a reorganization in the department and questioned Russo's characterization, "The reorganization is not as operational as was presented today."

During the public hearing, Jeff Daniels, president of the Local 466 union, spoke about unrest within the Water and Sewer workforce. He said that many positions remained vacant, and workers were waiting for training they needed, "We have internal issues over there."

The resolution calling for an investigation split the Council largely along party lines. Pessina said, "I am perplexed, he's the CEO of the city." Councilman Dan Drew, candidate for mayor, said that opposition to the investigation was a "smoke screen." Drew said the mayor should not be able to act with impunity.

Giuliano said that the resolution as written was not framed in accordance with the Charter, because it failed to specify which Department, Agency, or Office was to be investigated. He charged that the Democrats were asking for an "open-ended investigation into who knows what."

As tempers rose, Councilwoman Kasper called for 5 minute recess. The Democrats caucused in the lobby entrance, and returned to specify that the investigation was to be of the Mayor's Office, the Personnel Office, and the Water and Sewer Department.

These changes did not satisfy the Republican councilmen, but with an 8-4 majority, the resolution passed along party lines.

Water And Sewer Oversight Board Calls For Common Council to Investigate Mayor's Actions

The Water Pollution Control Authority (WPCA) unanimously called for the Common Council to investigate the "abrupt" movement of Water and Sewer administrators to an office in City Hall. Mayor Sebastian Giuliano on Friday responded to this letter by detailing a long series of failings in the management of Water and Sewer, "The department has been running inefficiently for years."

John Giuliano, Chair of the WPCA, objected to being told of the move after it had already taken place. In their letter to the Council, the WPCA pointed to the significant tasks facing the Water and Sewer Department, mostly surrounding the transition into the Mattabassett Sewer District. The letter was signed by all of the members of the WPCA, including the Democratic and Republican Council members, James Streeto and David Bauer.

The Mayor's response, in a Friday press release, listed a series of problems with Water Department finances, and suggested that future work on joining the Mattabassett District would require extensive meetings with the Mayor's office and with the Finance and Legal Departments, all located at City Hall. He cited the presence in City Hall of the Public Works director, who supervised more employees, most of whom work at a field site.

Mayor Giuliano said, "We have tried everything to get this department back on track and quite frankly this move is the last option before termination proceedings of top administration officials commence."

Dan Drew, one of two Democratic mayoral candidates, questioned the Mayor's previous management of Water and Sewer, "The buck stops with the mayor, so when he condemns the Water and Sewer Department, he is condemning the job he himself has done as mayor. He can’t claim to be the city’s leader when things go well and then disabuse himself of responsibility when they don’t."

Christine Bourne, the other Democratic candidate for mayor, has not responded to a Friday request for a comment on Mayor's remarks.

Drew also took the opportunity to repeat his call for more jobs and lower taxes, "We need to cooperate to improve Middletown’s economy, but we have too much conflict coming from the sitting mayor. We need to bring people together to expand job opportunities and reduce taxes rather than engage in internal fights.”

Sewer Department Crisis Explodes At the Close of Common Council Meeting

At the end of Monday's Common Council meeting, councilman Ron Klattenberg called Water and Sewer Department director Guy Russo, and city Finance Director, Carl Erlacher to address the issue of severe budget shortfalls in the sewer department.

These problems have been addressed in earlier posts on the Eye.

"This is one of the most serious financial problems I've come across in my time on the Council," Klattenberg said to Russo. "If you were a business you'd be bankrupt. It doesn't take a rocket science to say there are troubles in the sewer department."

"This department needs a root cause analysis," Klattenberg said. "And we need an audit of the department."

Before Russo was able to provide a thorough explanation, Council member Gerry Daley asked for a special meeting where the problem could be discussed. Nearing midnight, Daley said he, and probably most council members, were not in the best state to discuss a serious problem. That meeting will be held on Tuesday September 29, 7PM in Council Chambers.

Russo was given the opportunity to make a brief assessment of the problem which he pinned on delinquent accounts and a serious drop in consumption. He said the department's 5% drop in consumption was part of a trend that was also appearing nationwide due to conservation. He cited Ukiah, California where conservation had created a drop in consumption that left them $750,000 in the red.

In addressing solutions, Erlacher noted that 2800 delinquent notices had been mailed with warnings that liens would be placed on non-paying accounts and that the phones had been busy with Water and Sewer customers inquiring about making payments.

Erlacher and Russo promised to make full reports on September 29th on efforts to collect delinquent accounts.

WPCA Endorses Solvency Plan

The Water Pollution Control Authority voted Thursday to endorse a plan submitted by Mayor Sebastian Giuliano and city Finance Director Carl Erlacher to pump money into Middletown's sewer fund.

The sewer fund is currently operating at a deficit.

"It's crucial that we do something, extremely urgent," Erlacher said at the meeting. "We haven't been paying our operating bills, just our payroll."

In the past, the Sewer and Water Department, under the financially independent WPCA, has budgeted on a consumption basis, but that budgeting process has been problematic.

"That trend seems to be a little aggressive, at the least" Erlacher explained, noting that the optimistic billing figures have left the department in the hole for three years straight.

The plan to infuse cash, as detailed in a press release earlier Thursday from Giuliano, includes borrowing money from the $2.5 million General Sewer Improvement Fund, aggressively pursuing delinquent accounts through an outside collections agency, and cutting spending in the department.

Erlacher contended that rate increases may be likely, though his plan, if pursued aggressively may push off those hikes. They mayor feels that any rate hikes are unfair to residents.

"I don't think its fair to hit people who have been paying their bills with a rate increase because other people haven't been paying their bils," the mayor said.

WPCA member and Common Council member David Bauer also suggested that partial payments on water and sewer bills should apply first to the sewer deficit. Currently partial payments apply first to water bills.

The group also discussed tactics to convince delinquent accounts to pay bills. Those tactics included placing a lien on property, and shutting off service, something the mayor said the city has avoided doing in the past.

The group voted to endorse the plan unanimously, but WPCA member and Common Council member James Streeto attempted to convince the members of the Authority to make the language of their resolution stronger. Instead of endorsing the plan, he suggested that the group vote to implement the plan, but other members felt that the endorsement was strong enough.

Water and Sewer commissioner Guy Russo vowed to take immediate action but warned that his department could not avoid repairs or replacements that they are obligated to make to "protect the waters of the state of Connecticut."

Busted Sewer Budget Means Probable Rate Hikes

In a memo to Mayor Sebastian Giuliano and City Finance Director Carl Erlacher, Water and Sewer Director Guy Russo revealed that only two months into a new fiscal year the Sewer Department is out of cash.

In his memo, Russo indicates that because of "(the economy, conservation, lack of usage, wet weather) that total sales are down" to about 6.5% below anticipated revenues. In addition he cites a 7.1% delinquency rate, further anticipated "low sales," anticipated slow collectibles as ongoing issues which will prevent solvency in the near term.

The Sewer Operating Budget is currently out of cash and is owed $1.4 million.

The city is meeting Sewer and Water payroll, but all vendor and supply payments are on hold.

Russo is suggesting a rate increase of $1.45 per thousand cubic feet treated to help make up for the shortfall. This increase would generate $128,000. Another rate increase may be needed in May.

While the lack of revenue is part of the problem, the department has, for at least the past two years, set budget at a higher number than would be available from actual billings. In 2007, the department budgeted $3,730,757 but only billed $3,568,690 resulting in a difference of -$162,000 and an actual shortfall of -$388,446 because of non-collections.

In 2008, the department budgeted $3,960,899 when actual billings were only $3,876,072, a difference of -$84,827 leading to an actual shortfall of -$386,325.

And in 2009, the department budgeted $4,386,272 against anticipated billings of $3,941,888, a difference of -$444,384, and an actual shortfall of -$724,000.

By state statute, the Water Pollution Control Agency (WPCA), the controlling agency for the Water and Sewer Department, is financially autonomous from the city, meaning that once the city has approved a budget, the WPCA is solely responsible for managing expenditures and revenue which applies to that budget.

Among the strategies suggested for making up the shortfall are the rate increase, an immediate loan of half a million dollars from the General Sewer Improvement Fund (which would have to be repaid by fiscal year 2010), an aggressive stance toward collection of unpaid bills (using a collection agency already working for the city), a freeze on filling vacant positions, and cancellation of several sewer projects and the purchase of a new sewer vehicle.

Erlacher will be making a presentation on the Sewer budget crisis at tomorrow's meeting of the WPCA (5:15 PM, Water and Sewer Department headquarters).