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| Retired police officer Michael Young is opposed to the town of Winchendon's purchase of the former Winchendon District Court building on Central Street to relocate the police station. (T&G Staff / Rick Cinclair) |
WINCHENDON — As the town waits for construction bids to transform the former district court building into a police station, a state Inspector General report alleges the project was illegal from the outset.
The jury is still out as to whether the town can renovate the old Winchendon District Court on Central Street and make it code compliant with a $1.9 million budget. Town voters approved $2.75 million for the police station project, and $1.9 million is all that is left after the property was purchased for $835,000 from owner Elias I. Hanna.
Construction bids are due by 3 p.m. Sept. 18. However, some feel the project shouldn't have gotten to this point.
An 11-page, Dec. 24, 2013, letter from state Inspector General Glenn A. Cunha to the Winchendon Board of Selectmen said an investigation into the process used to acquire the building found the town violated procurement laws, did not provide for open and fair competition, was biased in favor of the old courthouse and resulted in a predetermined outcome.
The IG's office also sent the letter to the Attorney General's office. However, the IG did not refer the issue to the AG's office for an investigation, according to AG spokesman Christopher M. Loh, who was asked by the Telegram & Gazette if a referral was made.
IG spokeswoman Ellen J. Silberman said the IG has little enforcement power under Chapter 30B, the state's procurement law, but does have the power to tell a municipality not to pay a vendor if it is determined procurement laws were violated.
Town Manager James M. Kreidler Jr. said the IG did not tell the town not to pay Mr. Hanna for the property after the investigation. It is not clear why. Ms. Silberman, the IG spokeswoman, would not address that question.
The town, Mr. Kreidler said, is moving forward with the project.
"In the final paragraph of the Inspector General's Christmas missive, he says he doesn't believe the appropriation was sufficient," Mr. Kreidler said. "I don't fault them for doing what they think they need to do. There were a number of people who expressed concerns about the project and they judged that warranted an investigation."
And Police Chief Scott M. Livingston said the need for a new police station is obvious and the courthouse site in the center of town "couldn't be better."
"There is no way a new facility would have passed town meeting vote," he said.
The current station is cramped and in disrepair and does not meet the state's requirements for separation of male and female prisoners, officials say. There is also mold in the basement where evidence is stored, they said.
The chief attributes the problem with the IG's office to a "handful of naysayers" in town who are against the project.
"They have been jabbing since 2009," he said. "It is getting tiresome."
According to the IG's report, shortly after the Winchendon court relocated to Gardner District Court in June 2009, the town began the process to acquire the old courthouse, built in 1907.
Mr. Kreidler contracted with Jacunski Humes Architects of Berlin, Conn., to prepare a schematic design and cost estimate, the report says. The town then worked with Mr. Hanna on a plan to buy the property after Mr. Hanna renovated the building based on Jacunski's plans.
In September 2011, Mr. Kreidler filed a public disclosure with the Board of Selectmen indicating that he anticipated that he would soon be in a business relationship with Mr. Hanna — through Mr. Kreidler's private business Muni-Sun — involving soliciting leases for solar power projects for properties Mr. Hanna owned outside the town, the IG report says.
The IG had already investigated Muni-Sun's business dealings with nine municipalities earlier in the year and determined that Muni-Sun's bulk Request for Proposals also violated procurement laws.
Mr. Kreidler recently said his dealings with Mr. Hanna through Muni-Sun — of which Mr. Kreidler is the sole employee — had nothing to do with the courthouse purchase.
Mr. Hanna said he has been in a business relationship with Mr. Kreidler since he started Muni-Sun, but it has "nothing to do with at all" the courthouse. "It is apples and oranges," he said.
In December 2011, some time after Jacunski completed its courthouse plans, the Attorney General's office informed the town that its "turn-key" plan for the new police station violated the public construction bid law, the designer selection law and the prevailing wage law.
"… the town has set into motion a plan to engage a private party — the owner of the former Winchendon courthouse building, Mr. Elias Hanna — to renovate the building for the express purpose of selling it to the town to serve as its new police station. Such an arrangement contravenes the public construction bidding laws …," the AG said.
The town subsequently solicited RFPs for the new station with proposals due by noon March 4, 2013. The RFP indicated that the requirements for the land and/or building were detailed in Jacunski's September, 2009, space needs assessment for the project.
The RFP stated that the town would evaluate proposals based on identified minimum criteria and five comparative criteria through a three-person evaluation committee. Three proposals were submitted, but one was rejected at the outset because it was received 13 minutes after deadline.
The other two were the old courthouse and land owned by Winchendon Furniture Co. behind its existing building at Central and Railroad streets.
Both were submitted to the evaluation committee, and on April 25, 2013, the committee unanimously recommended the courthouse proposal.
The committee determined that both met the minimum criteria, but the courthouse scored one point higher on comparative criteria than Winchendon Furniture based on the cost of the project. Estimates for new construction at the Winchendon Furniture site were calculated at $5.1 million.
However, the IG determined the evaluation process was flawed and violated procurement laws. The evaluation committee picked the courthouse despite the fact that it did not meet all of the minimum criteria, purportedly the lot size requirement, the IG said.
Also, the proposal included a request that it retain five parking spaces, even though it was already undersized.
Also, the IG questioned the independence of the evaluation process. The committee's three members — Selectmen Robert O'Keefe and Guy Corbosiero, and Police Lt. David Walsh — were all on record supporting the courthouse project. (At a Feb. 11, 2013, selectmen's meeting, Mr. O'Keefe appointed himself and the other two members to the committee.)
Two selectmen who publicly opposed the courthouse site and questioned the process were ousted in a recall election.
The IG said the process was tainted for several reasons. First, Mr. O'Keefe, who chaired the evaluation committee, inaccurately summed up an environmental report on hazardous materials at the courthouse before the committee voted on it, stating there were no hazardous materials on the property, the IG said. The town's engineering firm later determined that the environmental report did not satisfy the requirements of the RFP because it did not address any potential hazardous materials in the structure. After the town awarded the RFP, hazardous materials, including lead, were discovered inside the building.
The IG also said the committee underestimated renovation costs and tailored its plan to favor the courthouse by predetermining a budget of $2.75 million, which was approved by voters at a May 2012 town meeting. That budget was developed in anticipation of acquiring the old courthouse and renovating it using Jacunski's designs from 2009. (The courthouse proposal submitted to the evaluation committee included copies of Jacunski's 2009 designs.)
Cost estimates calculated by Jacunski marked up 2009's estimates with 5 percent inflation factor and then added the purchase price of the property, the IG said.
However, the IG determined the town was at risk for significant cost exposure in bringing the courthouse into compliance with building codes, because of seismic-related requirements that could create a substantial financial impact to residents.
"The cost of quake-proofing an older building can easily transform a planned renovation into a new acquisition/build project," the IG said.
Board of Selectmen Chairman O'Keefe disagrees with the IG's report.
"I am at a loss why the Inspector General is even looking at this," he said. "There is no fraud or waste or corruption. The IG complains that we put budget constraints of $2.75 million on the project, but why would we accept an RFP for more when we have one for less and I know I can do it?"
Mr. O'Keefe said he still does not know if any seismic studies were done on the building.
"We're doing something in Winchendon that no one else has been able to do," he added. "The IG is not even looking at projects three times this size."
When residents at an April 30, 2013, selectmen's meeting raised the issue of costs to bring the courthouse up to code, Mr. O'Keefe responded that public safety buildings were Jacunski's entire line of business and that he trusted the estimate.
The IG reviewed the services Jacunski provided to the town, and determined the firm was not asked for, and did not provide, any analysis of making the courthouse compliant with new seismic building regulations.
Even after the IG's warning, no one followed up on the issue before the purchase, town officials admit.
Mr. O'Keefe said recently that he never checked with anyone to see if the courthouse needed to be quake-proofed to bring it up to code. The other four selectmen did not return calls or respond to emails for comment.
Anthony J. DiLuzio from CDR Maguire in Boston is the project manager. He said the building will need to be reinforced to withstand earthquakes to make it safe for occupancy.
"We'll see when we open the bids," he said, when asked if the project can be done for $1.9 million. "This is a volatile market. There is a lot of work out there right now. We're seeing less people chasing small projects than we did three years ago. At the height of the recession, everyone and their brother would have been chasing it. Now we have less bidders and more cost."
The IG report also alleges that selectmen violated the state Open Meeting Law on June 17, 2013, when they entered executive session under exemption 6 to negotiate the purchase price of the courthouse and also improperly discussed matters regarding the courthouse acquisition behind closed doors. The law requires selectmen to say in open meeting which property they planned to discuss in executive session, the IG said, but video showed that selectmen did not disclose they would be discussing the courthouse.
In executive session selectmen did not discuss the purchase price, the IG said, which was already set and not open to negotiations, according to town records. Most of the discussion in executive session, the report says, was related to hazardous material remediation, easements and conversations with the IG's office.
Moreover, after executive session, selectmen went back into open session and approved the purchase and sale agreement for the courthouse, but still held the executive session minutes for three months.
"Rather than release the executive session minutes, the BOS elected instead to withhold them from the public until the BOS agreed to accept the deed from Winchendon Court on Sept. 23, 2013," the IG report says. "This three-month delay helped to ensure that the conveyance of the old courthouse property to the town would proceed without full public scrutiny and would result in a situation where it would be difficult to invalidate the deed."
"It was injudicious for the BOS to proceed with the conveyance of the old courthouse property, especially after being informed by this office of associated Chapter 30B violations and while there were outstanding open meeting complaints," the report continues. "These actions reinforce this office's view that the BOS' violation of the Open Meeting Law was intentional and was done in order to conclude a targeted real estate transaction."
As for the cost of the building, Police Chief Livingston admitted that the town may have paid around $100,000 more than it should have for the courthouse, but blamed "naysayers" for delays in the project.
The chief at first said he did not know what the IG's report said, but later said he read the report and referred further questions to Mr. Kreidler.
Among the naysayers is retired Winchendon Police Officer Michael E. Young, who served on the Police Department more than 30 years.
Mr. Young said he is concerned about how much the town paid for the courthouse and potential additional costs once construction starts to bring the building up to code.
He is also concerned about how much the town paid for the courthouse and Mr. Kreidler's potential private business dealings with Mr. Hanna. The courthouse building was assessed in 2007 for $351,000.
"I think there is a question of where did that half a million dollars go," Mr. Young said. "It was never on the market. It was a private deal between Mr. Kreidler and him (Mr. Hanna) right from the beginning. There is no real estate agent. There is no one in the middle. Why isn't that question being asked? Why did we pay so much for the building?"
Mr. Young said he believes an investigation into the project should be done.
"I think some legal action should be taken," he said. "I believe he broke the law. Why pay $850,000 for a building you should have got for peanuts?"
However, Mr. Kreidler said the town did not just pay for the courthouse. It also paid for the parking lot and easements to the property.
Mr. O'Keefe said Mr. Hanna did not walk away with $835,000 because he had to pay the adjacent Athol Savings Bank $100,000 to remove a lien on the property and "environmental items had to be cleaned up."
"At the end of the day he probably cleared $600,000," Mr. O'Keefe said.
Mr. Hanna said he had spent more than $1.2 million updating the building since purchasing it for $114,000 in the 1990s. He called the town's purchase of the old courthouse for $835,000 "a steal."
"It is a grand-slam home run for the town of Winchendon," Mr. Hanna said. "If it was in the city of Worcester, I would not sell it for less than $2 million."
Contact Paula Owen at powen@telegram.com. Follow her on Twitter @PaulaOwenTG
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In related news:
IG: Town manager's solar-energy project illegal
By Paula J. Owen TELEGRAM & GAZETTE STAFF
WINCHENDON — Eight months before the state Attorney General notified the town it had violated the law with its "turn-key" plan to buy the old courthouse to relocate the police station, the Inspector General's office told Town Manager James M. Kreidler Jr. that a solar-energy project through his business Muni-Sun violated state laws.
Former Inspector General Gregory W. Sullivan said Mr. Kreidler's bulk RFP proposal violated state procurement laws and would have been "exorbitant" to taxpayers in the nine communities that Mr. Kreidler had lined up for his project.
In letters to the municipalities on March 30, 2011, the IG's office said Mr. Kreidler's brokerage of solar projects through his one-man Ashburnham-based company Muni-Sun LLC would have been diverting millions of dollars to his company that would otherwise have gone to the communities.
At the time, Mr. Kreidler strongly denied the accusation and said his project would have meant big savings for the communities.
Mr. Kreidler, a former Ayer town administrator, set up contracts between his business and Ayer, Shirley, Gardner, Sturbridge, Westminster, Orange, Clinton, Ashby and Palmer. Mr. Kreidler told them he would find a solar developer that would lease space in each of the communities, usually at the landfill.
The solar company would provide the communities with cheap, green energy to run municipal buildings, and would sell the balance of the energy produced to the utility grid.
Under the contracts, the communities would save money on energy and would have the option of eventually buying the systems.
Mr. Kreidler did not receive money upfront for his consulting services but would have taken a percentage of revenues from the energy generated. Muni-Sun stood to make an estimated $7.2 million in 20 years and $10.8 million in 30 years, according to Mr. Sullivan.
Mr. Sullivan's letters said Muni-Sun's requests for proposals violated state procurement laws, and the communities were not getting the good deal they thought they were getting.
"In our view, by establishing this kind of compensation plan you will be significantly overpaying for the services associated with leasing your land," Mr. Sullivan said in his letters.
The communities ought to have been able to find a solar developer on their own that, without having to give money to a middleman, would have given more to the towns, he said.
Other communities, Mr. Sullivan said, negotiated solar projects on their own for under $100,000 for consulting and legal services.
Mr. Kreidler said his understanding was that energy contracts were exempt under the state's procurement law.
Mr. Kreidler said Muni-Sun has negotiated three private contracts with solar developers in the last 18 months and has a portfolio of thousands of potential sites.
Contact Paula Owen at powen@telegram.com. Follow her on Twitter @PaulaOwenTG
Former Inspector General Gregory W. Sullivan said Mr. Kreidler's bulk RFP proposal violated state procurement laws and would have been "exorbitant" to taxpayers in the nine communities that Mr. Kreidler had lined up for his project.
In letters to the municipalities on March 30, 2011, the IG's office said Mr. Kreidler's brokerage of solar projects through his one-man Ashburnham-based company Muni-Sun LLC would have been diverting millions of dollars to his company that would otherwise have gone to the communities.
At the time, Mr. Kreidler strongly denied the accusation and said his project would have meant big savings for the communities.
Mr. Kreidler, a former Ayer town administrator, set up contracts between his business and Ayer, Shirley, Gardner, Sturbridge, Westminster, Orange, Clinton, Ashby and Palmer. Mr. Kreidler told them he would find a solar developer that would lease space in each of the communities, usually at the landfill.
The solar company would provide the communities with cheap, green energy to run municipal buildings, and would sell the balance of the energy produced to the utility grid.
Under the contracts, the communities would save money on energy and would have the option of eventually buying the systems.
Mr. Kreidler did not receive money upfront for his consulting services but would have taken a percentage of revenues from the energy generated. Muni-Sun stood to make an estimated $7.2 million in 20 years and $10.8 million in 30 years, according to Mr. Sullivan.
Mr. Sullivan's letters said Muni-Sun's requests for proposals violated state procurement laws, and the communities were not getting the good deal they thought they were getting.
"In our view, by establishing this kind of compensation plan you will be significantly overpaying for the services associated with leasing your land," Mr. Sullivan said in his letters.
The communities ought to have been able to find a solar developer on their own that, without having to give money to a middleman, would have given more to the towns, he said.
Other communities, Mr. Sullivan said, negotiated solar projects on their own for under $100,000 for consulting and legal services.
Mr. Kreidler said his understanding was that energy contracts were exempt under the state's procurement law.
Mr. Kreidler said Muni-Sun has negotiated three private contracts with solar developers in the last 18 months and has a portfolio of thousands of potential sites.
Contact Paula Owen at powen@telegram.com. Follow her on Twitter @PaulaOwenTG
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