Loading...
HomeMy WebLinkAbout1985-04-12 Finance Committee MinutesFinance Committee April 12, 1985 at 4:00 pm Present: Cox, McCarthy, Gass, Miller, Pellegrino 'Willey, Phillips, Field, Dane 1. Bids: d) Senduskeaq Stream Footbridge. The Purchasing Agent explained the breakdown of the bridge as $63,-600 for the cost of the structure and $18,300 for the labor, engineering fees, crane time and miscellaneous materials. The Committee questioned last time why thetwo areas weren't separated.. City Engineer felt: there is a problem when there are two contracts - one for the installation and one with the manufacturer - tends to cause finger -pointing to each other. A major reason why we try to have one person. Gass: Can't see $18,000 for putting down something that is already built. Pellegrino: They are rather major structures. Don't think it is an unreasonable amount. Gass: I move we hold this item for another meeting. I want more information. .Pellegrino: I got considerable info on the competence of Swing Construction. They had problems with the ARCO. building structure s they had trouble because of a design problem - considerable structural problems as a result of that work. The people there felt the construction company themselves, they felt, were perfectly competent but there was a design problem with the work. Gass: You are talking metal building there. Pellegrino: Got a considerable amount of references for the Company. They all indicated theywere pleased .with the quality of work performed by Ewing Construction. Gass: I stili can't see $18,000. 1 want it postponed for another Finance Committee meeting. McCarthy: I'd like to see somebody talk. to Walter Pellegrino: John Frawley did. Cox: Probably should have John Frawley here. Pellegrino: He did talk to them about that problem and I got all the references. Cox: Table it until next meeting. Can get Frawley here. b) Manhole and Catchbas n Covers 6 Rims. The Purchasing Agent suggested awarding the contract to Everett J. Prescott, Inc., the low aggregate bidder, at $14,908.00. Committee approved. -2- c) Manhole and Catchbasin Components. The agreed to award the annual contract to American Concrete Industries, the low bidder, at $36.25 per vertical foot of product. a) Sale of Real Estate - 13 Pearl Street. Represents of Kangaroo Con, ',_..:; Pellegrino: Before we started this process, I submitted to you the format which we would use to sell the property at 13 Pearl Street. You approved the format, which established a formal situation for the sale of the property. Subsequent to that we had advertised the sale of property, have received over 120 inquiries and sent out about 120 of these, received 4 bids by 2 p.m. on April 10, 1985. We opened the bids exactly at 2 p.m. I made mention that the provision of page two of the request indicated that if we received the full amount owned to the city by the heirs of the property that the bids would not be opened o they would be rejected. That did not happen. We did not receive anything. We proceeded to open the bids, got 4 bids, two were technically correct, two did not .contain a bank certified check (they contained personal checks)., the high bid of $18,501 from .Kangaroo Contractors was a responsive bid. It was very close to the assessed value of the property and my recommendation to the Finance Committee today is to sell the property.That's basically what I have here in my recommendation. Gass: I concur Pellegrino: Mr. Dane was in my office this morning. Cox: Could you explain subsequent to the bid, Dave? Pellegrino: There were some memos sent by Bob Miller this week, who should probably address this. We received a letter from Dane concerning the current tenants who is one of the heirs concerning health and other areas. McCarthy: As I understand it there is a issue, a suggestion that we reject all the bids and accept a late payment by the former owner. Miller: We have operated in this case as in others dealing with tax acquired property with the idea that our function is to collect taxes and not acquire real estate. After the Property technically became tax acquired 1n 1979 w attempted to work something out for the heirs to redeem the property. Those efforts were unsuccessful. In November of 1983 we went to the Council and got authorization to sell the property and shortly thereafter Parley Thibodeau indicated he was getting things straightened out, got Pete Dane involved, and the staff with the approval of the Council did drag their feet as far as that order was concerned. Late last year the Council felt things weren't getting anywhere and that caused Parley to apply for a State Housing Loan. Council advised after there appeared to be no solution to the problem to proceed with the sale of property. I most recently and in Preparing the bid aped contemplated the possibility of someone coming up with the money and asking the City to accept the back taxes - payment equal to back taxes and interest. To deal with that issue in the bid specs was a provision which would give the heirs a special priority to pay off the indebtedness and all bids would be rejected. As Dave indicated, no one was there to pay when the bide were opened. The staff has put -3- in ordinate amount of time trying to resolve this without going thrum sale process. I knew Pete has done the same. Pete called me and said he had a meeting with a bank officer scheduled for the day after the bid opening and he received s indication that a loan might be available to take c of the charges. I told him that it seemed to me we had no choice unless he presented a check for the total amount. I have real concerns about us doing anything that would in effect violate the regulations under which the bid process was instituted. Bids were opened. To keep in sequence, there was a letter indicating Parley had been qualified for Social Security benefits and this i of the reasons, I understand, that the money is available now and hadnItebeen in the past. After bids were opened, I told Pete what the bids were, etc. and .the next day he called and said he had had meeting with the people involved, possibly to come up with a loan, and that he had a commitment and I advised the Fin. Committee of that. We have the issue of whether this Committee o anyone has the authority to reject these bids and accept the proposal to pay the back taxes. I gave the Committee andPetea copy of materials relating to the legality of the bid process and considerations as far as rejecting bids. As you can read., you reserve the right to reject bids with great deal of discretion by the governmental body as far aexercising that right reject. We can debate this and rejecting the bids andaccept to accept the payment from Parley. One issue which I have discussed at length with Committee members and one of the things is that if we consider a proposal by this.that it is an obligation on the part of Thibodeau and attorney to disclose the circumstances which has made the money available now and not previously. Pete has advised this morning that he has the money and that's all I know. Gass: I don't think .that is any concern of the Committee. Miller: It does become a concern if you accept the money and someone works out an arrangement which in effect subverts the bid process. Gass: Your opinion inmy mind is all, the Point it boils down to it says if the heirs or the former owners submitby the bid deadline which they did not too. I'm not an attorney with legal information - the total amount owed to the City in the form of a bank certified check or money order - then the bids could have been .rejected and the title returned to the heirs. These three individuals made an honest bid. They went through the process.. And if you other two members of the Committee think you are going to take the process to playing quote unquote a little game to allow this situation to happen - it's sacreligious to the citizens of Bangor and to the state of Maine, people who live here. It says in black and white, if this was another issue we wouldn't even be sitting here. We would have hada meeting andsaid the high bidder is so and so and we would have said fine. So how can you'legally do it when these three individuals bid a figure and came out the high bidder for that piece of property on 2:00 p.m. on April 10th. If you do it, you are dead wrong.. Miller: I think that you followed the bid process and should sell the property to the high bidder. Cox: Pete, Do you have something that you'd like to say? Pete Dane: Yes, I'm sure that most of you are familar with this but I need to briefly go over the history of this is. Mary Thibodeau died in 1977 without a will leaving at this point 23 heirs. Gass: Excuse me Jim we've heard all of this and this has nothing to do with the issue. The issues is whether or not the Finance Comm. is going to accept the bid of these3fellows or play the legal game and allow Parley to bring up same money s next week that is the i For the last 1§ years w e heard thesame story. i don't want to hear about the backround.e A legimate bid was accepted at 2:O0 on April 10 and that is the soul issue. Cox: With all due respect I think that Pete be allowed to say his remarks and represent his client as he thinks is in his best interest. Pete has a job he's got to do. Gass: If you'd just read this in black and white it says that the heirs_ have to have the amount at the time of the bid opening. Dane: You're right it also says that the right is reserved to reject any or all bids if deemed in the best interest of the City of Bangor and that's what I was trying to get to. Gass: -There you go with the legal crap again so if he's going to talk I'm going in the other room. Cox: Alright we'll let you know when he's done. Dane: The property is the only asset in the estate and obviously we had a family spread all over the country, substantial hostility;for a year Mr. Thibodeau attempted to consolidate the ownership of the property s that he could acquire the soul interest and become the soul property owner However itdid not happen and until 1983 or 84 the property was in the nam of 23 people. At that point I was asked to represent Mr. Thibodeau by some people who were concerned about the situation and I proceeded to take the first step in this problem which was to clear the title, obviously it would make no sense for Parley or anyone to pay all these taxes i as a result they wouldn't even own the property, because I believe it is the city's policy that is one of the heirs offers to pay the taxes the deed does not come back to that one heirit goes back to the heirs. So the first problem that Parley had was to establish through the Probate Court the ability to acquire title in his Own name. That w accomplished in 1984. The next step was to acquire enough money to pap the taxes. We went to several banks to attempt a loan and he was turned down. His health deteriorated to such that in January 1985 he applied for social Security disability At that point to have a job, physically, and mentally he was awreck. That application process is very slow as you know. He obtained a tentative committment for a loan from a private source, someone who have known him for years and had s compassion, but the person was not interested in acquiring the property and did not feel it appropriate to loan him money unless there was some reasonable chance that it could be repayed over time as well as any current taxes and future taxes. At that time I then as you do recall bequested the City Council for a poverty abatement The Council elected not to deal with that questions on its merits feeling that because Thibodeau is not technically the Owner of the property he had no standing. Therefore as of that hearing which I believe was late a February. The choice was then get all of the money or that's its The only hope at that point then was to qualify for Social Security disability so that he would have that income stream so he could pay back the loan. On April 8th I wrote a letter to Mr. Miller that he had obtained eligibility -5 - for medical a sistance, that is his medical bills would be paid by the Federal Gov't. and his application for his Social Security disability was still pending and that point hadn't qualified for the green card. It appeared that it was an optimistic indication that he would indeed eventually qualify and there was some hope he would then be able to obtain the loan. The .next day by telephone indeed, which I confirmed myself in talking to the B.S. Administration, did qualify for SSI. That gave him income that enabled me then to go back to the bank first to ask for a loan, the bank still did not want to do it prefering not to get into a co-signed situation, so I talked to the person and asked him for a loan directly without bank involvement. This person agreed. I could not, there was no ability for me to get that money, that commitment until I had (tape turnedover) therefore I am offering this check, bank check, treasurer's check in the amount of $6,058.89 which according to Mr. Field represents the amount of taxes due a of today. I think the issue for the Fin.. Committee is to determine what i n the best interest of the City of Bangor. Does this city, Mr. Thibodeau has, processed the application as quickly as he could, he can't push the federal government around, I informed you as soon as it was verifiable and I worked as fast as I could to obtain this. There has been no delay on my part of on Mr. Thibodeau's part. The issue i what is in .the bestinterest of the city. Does this city ant to take property away from a taxpayer who has had financial, substantial financial difficulties as well as physical difficulties and is now able to get back on his feet and not be thrown out of the family house - is that what this City or is the city instead in the business of telling people who have this misfortune despite the fact they can now demonstrate the ability to recover from and may every penny of interest - 848 interest in some of these years - it's n the city's interest to through you out and sell it to someone who ants to come i and bid higher, bid through the process. You reserve the right to reject all bids, if deemed to be in the best interest of the City of Bangor. I would submit to you that what's in the best interest of the City of Bangor is to have taxpayer's paying their taxes, living in their homes, not throwing them out when they have adversity but giving them the opportunity to come back and rehabilitate themselves. The transaction obviously negates any possibility of poverty abatement. Every single penny has been calculated, due you. Gass: Are you all through? Dane: Almost. Gass: I don't want to .hear anymore. Dane: The question is as I say what is in the best interest of the City. Here is a person who has had substantial adversity but through title problems, thru physical and financial problems. He is w only n able to recover and asking, I don't think too much, asking the City to make a decision in its best interest - are we do throw him out because he was 46 hours latent because he wanted to be but he was unable because of circumstances beyond his control. Is that what the City stands for? I don't think so. I think this iscertainly in the beat interest of the City to allow its taxpayers to pay their taxes and to rehabilitate themselves. Cox: I want to confirm with Sohn Field the amount of $8,058.89 is the amount due as of today? ' Field: That's. correct. -6 - Gass: How can you go against what he is telling you, what Bob is telling you - these fellows made legitimate bids -never mind mind the hearts and flowers. The City has bend backwards for Parley.I don't know what recourse I would have - these boys should sue the city of Bangor for plenty of money.... ifyou allow this to happen. They made a legitimate bid and you are playing the game of listening to hearts and flowers. And I object to it. Cox: I think everyone has a right to be heard. Dane: I think the City is in the business of not taking property away from tax payers. I think the City is in the business of trying to get taxes paid and expecting citizens to contribute what is due and not to throw people out of their houses under adversity. Gass: I'm the first one to try to help someone. I am the first one and I have in the last 13years. It goes against my grain that these three fellows did it the proper way. If it was somebody else you would be sitting there saying give it to these boys. I don't se a how you can go against the law. This bid was put it, it had to beput in my 2 p.m. and you tell me as an attorney how you are going to break that law. vane: I'm saying you have the right torejectany.... Gass: If those people had been there at 2 p.m. on the 10th. That's what it says. Paul I have a question for Mrs. Dane. If I'm not mislead here, I understand the back taxes amounted to seven years.' You said the federal government is slow on him getting his money of funding or whatever - they are slow but ? years - they're not that slow. At the bank why was he now able to secure any money. Dane: I went over that. Paul He couldn't secure money but you didn't say why he couldn't. The bottom line is is it really fair to the rest. of the citizens of Bangor. Gass: That's right. We have to accept the fact that we owe the people, the citizens just as much right and they went through . the proper procedure. Cox: I would ask you to briefly go over what you perceive to be the consequences if this Committee or Council refused, rejected this bid.The City's exposure or liability? Miller: I haven't been able to find any Maine cases due to specifically this issue. However, in my judgement, the way this property is characterized, the law is clear that under the tax lien process that once the period of redemption, once a lien is filed then the taxpayer has a right of redemption (gave Committee copies Of a case in Auburn dealing with this). The taxpayer's right of redemption under Mine law expires when the redemption period expires. The title by operation of law rests in the municipality. Bangor has a practice _7_ when and we're not unique in this has a practice of/property technically be- comes tax acquired of trying to work with the taxpayers to resolve the problem. Those of you who .have been on the Council know we have a good success rate. Every year we have a few': people who for reasons beyond their control get themselves in a situation where they are unable to meet the statutory deadline. This particular case is unique because we have spent more time, I've personally spent more time on this case than all other cases in 15 years with the City. Ph inordinate amount of time. In my judgement when the Council finally made the decision to put the property out .for bid that the property then became any remaining equitable right the Owner might have had became in effect loss because it was treated like the sale of any other city asset. Recognizing the practicality of the situation and perhaps also. dealingwith this equitable issue, I recommended to all people involved in the sale that we put a provision in the document which would permit by a certain deadline that the heirs could redeem the property. That's why that language was put in just to deal with the issue and the possibility that somehow our experience with Parley onthisthing had been that when push came to shove he seemed to be able to find a solution. Gass: That's not either here nor there, Bob. Miller: we're talking of questions of what the status of the property was when it went into the bid process. In my judgement, I think it's difficult to defend that there is no clear cut answer admit that. There is a judgement of what is in the best interest of the city and you have a lot of discrestion. The discretion seems to be entered around the concept of having competitive bidding and insuring the market is properly sampled in the bid process. That's where the discretion to reject bids arises. Where you have a third party who is going to acquire the title to the asset through a process other than through the bid process. That's where I see the exception. Pete has represented to you and I have no reason to not believe the thing is on the up and up but one of the reasons you have a bid process and strict rules is to avoid bad .faith, improprities as far assale of property. In my judgement it raises the possibility, there's no protectionagainst that possibility by accepting money under the circumstances. I think your obligation is to go through the bids and make the judgement as to which is the beat interest to the City. If none fit the criteria then you put it out again. I don't MinkAu have discretion to reject all bids and accept the proposal that comes in after the bidding. Cox: You're saying, Bob, that if we rejected this bid then... Miller: Youhave to make a judgement that the bid... Cox: If we did not accept it and v accepted. Mr. Dane's offer there is a strong possibility of exposure... Miller: Thequestionyou have is what is the potential damage. You find cases that say because of the broad discretion to reject bids the only damage that can be successfully claimed is the cost of preparing that bid. When you havea situation of an asset being sold and everyone complied with the terms, there is a possibility the City may be liable to them something equal to what the assets were. Cox: In this case, the asset is. Phillips: I'm a little hesitant to give you an estimate on the property value. Dave has the assessed value - $18,900 - I think that -a - is probably a reasonably accurate figure. I have not inspected the property and would hate to get into the actual market value of the property without doing so. But based on the info I have I feel the bid received is reasonable and from that point of view I would be surprised if you got a substantially higher bid if you went out again. Dane: I want to again reiterate - the city is in business of buying and selling land to make a profit? I don't think so. If this money had been here 46 hours earlier there would have been no discussion. I cannot believe because of a 46 hour delay because of things beyond his control that .this is going to, he is going to loose his home. Gass: Hold o - this memo says the money will not be available by the time if the scheduled meeting on Friday, April 12th. How come you got the check today? Dane: I was told I should get it as soon as 'possible. Gass: But thisis what the memo says. I get tired of this legal... Dane: I'm asking for a straight -ahead fairness... Gass: Straight ahead? The City could have done this five years ago. COX: Let. Sohn have his say. McCarthy: It seems to me there iso question that Kangaroo Contractors have made an appropriate bid and under ordinary circumstances it would simply be. passed. Although I do think there is a question a to whether the bid is for the fair market value. But there is no require- ment that is be such. I also think that Mr. Dane has made a legitimate presentation on the behalf of Mr. Thibodeau. No question but what the City is not in the business of making money by selling property. The administration on the other hand has beeninthe business, has been involved with this for a long time and the City Solicitor is taking the position .there are some legal problems. If there are to be risks for the city then that should affect our decision. We are placed with the legal requirement of making a decision of whatisn the best interest of the City and there is no question but what the bid proposal contract ir form says we can reject any and all bids if we feel it is in the best nterest of the City. I think Mr_ Dane has made a presentation that at least raises that i n However, because of the risk involved with possibly rejecting all bids in these circumstances, I am going to make a motion that werefer this matter to the entire Council for their, in order to get their position since the City may be at risk, and then we may come back to consider if after we have had an opportunity to consider their view .and the opinion of the City Solicitor. Gass: Bob Miller said to me that the Fin. Committee makes the decision. So again you are using the same old crap to bring it back to the Council. I don't understand what you think. You are chickening out because you don't want to make the decision. You two do not want to make a decision. It's up to the Fin. Committee because the C.O. has already been prepared. You are chickening out so you don't have to say toPerley that you had to vote for it. Or it will come out 5 - 4 and you will have enough time to swing 5 people to say give it to Parley. But you are neglecting these citizens rights. I don't know what legal process I have but I am going to find out somehow. You are not facing up to being member of the FIa. Committee. You are taking the easy way out. The -9 - decision should be made today with the Fin. Committee. Again, I asked Bob specifically if this had to go back to the Council. McCarthy: Let's make this clear - I did not ask this be referred to the Council... the decision. I moved it be referred to the Council in Order to get their opinion because of the legal risk Bob Miller has raised. I for one am not interested in putting the City at risk for what may be a substantial amount of money without taking it up with my fellow councilors. I think they have a right to have input in this decision. I intend to give them and ammoving they be given that opportunity. I'd like to make another thing clear. I have no connection with Parley as, if anything my connection would be in the other direction. I have no desire to has him get anything in the world that he.. Gass: Of the 13 years I've sat here this one smells to high heavens. This one stinks. And I've seen a lot of situation. I have a question. The format of the bid process which MrPellegrino drew up and I assume you approved - correct? McCarthy: Go ahead and make any statement you want. I don't have any disagreement with you. Why are you now renegging on what you okayed. McCarthy: Read that sentence outland. .MCCarthyi The right is reserved to reject any and all bids. I have no -desire to reject your bid. Accepting your bid is good for the city. we have a citizen, all we are doing is try to collect taxes, he is prepared to pay his taxes, Ithink the Council should have a opportunity to look at this question before we take one citizen who has had a lot of unfortunate experiences and throw him out of his house and let him sit on the street. Gass: Against the advice of our own attorney? I'd like to address the same question to you? Cox: On what? I assume you gave your approval of this format. Cox: That is the accepted bid format._ __ !If we .didn't have the tax money by 2 p.m. on April 10th, the highestbidder would assumably get, with a reasonable bid which I think ours was, own the property. Cox: Again I would reiterate what John has said. We havethe right to reject any and all bids and I want to know the affect of accepting or rejecting any bid because I think it's very important we explore what is going to happen. I would also like to emphasize I don't think we are chickening out on anything. Gass: You are. You are playing legal games. You said the city is in the business to collect taxes. You said that about fiveminutes ago. McCarthy: One thing you should understand - I have voted to reject your bid. You should understand that. -10 - I'm not saying that. But if the City is in the business to collect and they don't follow the guidelines that they set for themselves are they really running the business correctly. McCarthy: That is a worthwhile arqument - absolutely legitimate. Gass: Why .don't you listen to what he is saying. McCarthy: We think the Council should have a chance to listen to these arguments. Gass: It will give some of them time to get five votes to give it back to Parley. That is why everyone is here - city officials to represent the citizens of Bangor. Gass: I'm going to ask the question - how is he going to pay taxes next year? Dane: Do you want me to talk about it? Gass: No, I don't want to listen to you Cox: You can't deal with that - don't know if he is going to be here in .the future. Gass: i understand that - but the city has bent backwards to him for seven years and we could have done this five or three years. I asked you in December to give him an extra month.- but I can't understand how you two can play .the game - decision has to be made here. I don't like the idea of giving the Council .the rest of the week for someone to pressure someone to get a 5-4 vote to give it back to Parley.. Cox: The Finance Committee is going to make the decision. Pete this has been asked of you before informally but I want to ask at this time - are you prepared to state the name of the '_o nwho is giving loaning this money. These gentlemen have c nwitha legitimate bit and if they are circumvented so to sneak - Iwould like to know. Gass: What difference does it make. Dane: This is a person living in Bangor, a friend who is doing it purely out of compassion, will take security interest inthe property to make sure of repayment. If you are asking if somehow this person going to own the property that is absolutely not the case. I would be willing to divulge the same to. Councilors individually - don't think it's fair to the person as a matter,ef publicity. Miller: How do you avoid the issue which comes into a situation when someone pays security interest on property - they may be doing it out of compassion but they also want security for the loan.- they aren't giving an unsecured loan. In effect, they want a remedy i e he doesn't pay the loan back. What barrens if he doesn't paythe loan and they foreclose? Dane: Parley is going to have to ready the loan just as if it were a bank loan. Millers But if they foreclose and then obtain title to the property... Dane: Any secured lender in the event of forecloses would. I am representing Parley through this not any third party and am going to make sure those taxes are escrowed just like you do in most bank loans - insurance will be escrowed and I'm going to pay it. Miller: What is there to assure that Parley who. is in a situation of stress isn't taken advantage ofbyrthe transaction. But the loan is being given not because they are in the business of lending money but Because of certain feeling of wanting to help. That is one aspect I think the Committee should consider and should get s ort of explanation of what is going to happen if he doesn't pay the loan back. Dane: I'm representing Parley's interest and am going to make sure sufficient funds are wed so that payments a made regularly and on time. Due to the fact that he has the SS Disability, I... Miller: My concern is the bid process here. Base: Why don't you tell these two as the City Attorney that that is the only issue. They don't seem to want to here you. Dane: I think the issue is what is in the best interest of the City. Mr. Dane says that if something happens On this loan that he has got to pay it back. He was unable to pay his taxes for 8 yrs. how is going to pay an $8,000 loan. Dane: I think I explained it all before. Cox: You could take to Mr. Dane later. Gass: Are you going to put this back to the Council? McCarthy: I vote in favor of going back to the Council. Gass: No way. Cox: I vote in favor also. Gass: I think this is one of the saddest situations I've dealt with for thirteen years. When will it be public record where this money came from? Gass: Never will be probably. _ I think in all fairness to us. McCarthy:No one has accepted this money yet. Cox: We are simply going to the Council for a recommendation due to the many. Gass: Why don't you make the decision naw. What is the sense of sending it back to the Council. -ll- McCarthy:- The reason I suggested we do it is because Bob has suggested that there isa liability issue that may affect the City's financial future. AndI think we should have the input of Council'. Gass: The issue comes up because you don't follow the bid process. Dane: I. would say this to be the first time the city would not haveaccepted a check in full satisfaction of taxes. (tape turned over) We followed the guidelines and we did what the process stated. We've done everything right. Adjourned at 5:10 p.m.