OPINION: PRFO Gift Was Not a Gift
Letter to the Piedmont City Council,
I was distressed to read in the Piedmont Post a front page story which discussed the long standing PRFO payment dispute and stated that the Post apparently agreed with some unidentified person who had “correctly pointed out” that the PRFO should not be expected to reimburse the City for the City’s outside legal and technical experts’ costs which allegedly “duplicated” similar efforts already provided by the PRFO.
Never mind that there is no such restriction in the Indemnification Agreement which was negotiated and entered into in secret, even more troubling is the notion that the Post apparently believes that the City should have just accepted what the project proponents asserted and should not have done their own due diligence. In other words, government for sale to project supporters? Approving a hotly contested project is a governmental function, and not something that can or should be sold to the highest bidder.
Regardless of whether Councilman McBain believes that 3000 residents wanted the Park, that doesn’t give the Council the right to abrogate its fiduciary obligation to all of the City’s citizens – yes, that’s right, Councilman McBain, even those who don’t agree with you – to independently perform whatever analysis was needed to be done to independently allow the Council to come to the conclusion that the Council was being called upon to make regarding the approval of the project and its EIR.
We know from the construction documents (eg, City/PRFO lease) that were prepared by the project proponents that they contained serious oversights (illegal under contractor’s licensing law, no bond required by PRFO (as opposed to Webcor) so the City was financially exposed, etc).
On what possible basis can anyone argue that the City should not have performed its own independent analysis which was required to discharge its governmental functions, including basically gutting the City’s own General Plan through exceptions for this project.
I am hoping that the Council does not buy into the Post’s apparent “editorial” position that the City should have just accepted everything that the project proponents said, and should forget about the prominent campaign slogan that the park was a gift. A gift to who? To the project proponents? Certainly not to the City under present circumstances, as the Council is apparently unwilling to enforce the agreement it entered into, and now according to the Post is apparently contemplating compromising its responsibilities to all of its citizens to act impartially and independently when discharging its duties.
Rob Hendrickson, Piedmont Resident
Editors’ Note: The opinions expressed are those of the author and not necessarily those of the Piedmont Civic Association.
“The voice of one crying in the wilderness.”
Rob … you have it right!
The outstanding PRFO debt to the city for costs associated with the Blair Park project has been the subject of a long negotiation which has generated many questions from residents. Hopefully the settlement agreement will clarify the positions of the two parties so our community can understand what went wrong here. To achieve that, residents need to understand the agreement the city had entered into with PRFO for project cost recovery and legal defense. First, it is the REIMBURSEMENT and Indemnification Agreement that was agreed to by the city and PRFO – project costs fall under the reimbursement clauses, costs associated with any legal challenges under the indemnification clauses. Reimbursable “eligible costs” defined in the agreement include “legal fees associated with processing all Proposed Project applications and implementing any Proposed Project approvals (including costs of the City billed to the City for the Proposed Project as determined by the City Council)”. As to how those costs will be reimbursed, the agreement states the following: “PRFO shall deposit with City the sum of One Hundred Eighteen Thousand Dollars ($118,000) in cash or other immediately available funds (“Deposit”). City shall use the Deposit to pay for Eligible Costs when such costs become due. City shall notify PRFO in writing to replenish all or a portion of the Deposit, and PRFO shall provide such replenishment to City within fourteen (14) days of same written notice. This cycle of withdrawal, notice and replenishment of the Deposit may be repeated from time to time as necessary to cover the Eligible Costs.” So in brief, PRFO agreed to pay for city legal costs associated with processing the project and would replenish the fund for paying those costs as needed. Residents need to understand these basic terms of the agreement as opinions about the pending settlement are published in the press and by this website.
Recent press accounts have suggested that PRFO is taking the position that the city should have defrayed duplicative legal costs by accepting legal analysis submitted by PRFO and pro bono lawyers assisting the project. In principle, should a municipality entering into an agreement with another party simply accept carte blanche the legal opinions provided by that party or a third party? The obvious answer is no. And as to Piedmont specifically, it was the inadequate review of legal contracts by city staff in the Piedmont Hills Undergrounding Utility Project that led to the city’s $2M liability. Council clearly intended that all project agreements proposed for Blair Park be thoroughly reviewed by the city attorney. A lesson that needs to be learned for public-private partnerships going forward is what is the roll of the city attorney in these partnerships and how are those legal costs to be reimbursed?
After the project was rescinded, City Administrator Grote presented accounting indicating outstanding billings were already present when Council approved the Blair Park Proposal on Dec. 6, 2011. Why wasn’t this revealed to residents and Council? The PRFO debt continued to grow after approval because City Administrator Grote did not require PRFO to adhere to the replenishment clause in the Reimbursement Indemnification Agreement. Had this clause been enforced the money owed by PRFO would be far less than the $200,000+.
Could it be that public-private partnerships require a lot more skeptical scruting at the front end before they are every entererd into?