Review of New Canaan Paving Expenditures Shows Lack of Town Oversight

Use of Bond Proceeds for Paving Requires Improved Control Procedures

It began with a simple enough question late last year: why is there heavy equipment at Irwin Park repairing the circular drive in front of Irwin House; I was not aware of a Parks Department or Public Works Department budget allocation for the project.

The answer was that the repaving at Irwin was being financed by proceeds from a Town bond issued for paving projects. It seemed curious that bond proceeds were being used for a project that would usually be covered by a specific budget allocation. At the December 2009 meeting of the Board of Finance, I and other people in Town government from both parties asked for a report on Town spending on paving projects financed by Town bonds.

The report, produced at the January 2010 meeting of the Board of Finance, was a 104 line spreadsheet with comprehensive information on paving projects from 2004 to the present. The report showed a projected final cost of projects of $19.5 mil. These projects were budgeted and approved by the Board of Selectmen at $14.1 mil., showing overages of $5.4 mil. or 38.3% in excess of the originally approved amounts.

The Administration needs to urgently explain to the Taxpayers of New Canaan how it was possible for over $5 million to be spent with no oversight.

At the January 2010 meeting of the Board of Finance, I and other members of the Board of Finance were tasked with coming up with recommendations for reviewing the paving expenditures and for improving the oversight process. This report was ready for discussion at the April meeting of the Board of Finance. At that meeting Town legal counsel suggested that the proper forum for taking the project forward was with the executive branch of Town government, the Board of Selectmen, which is responsible for developing procedures for Town purchasing. The First Selectman said that the Board of Selectmen would follow up on these paving issues and report back to the Board of Finance. This report is scheduled for the June 2010 meeting of the Board of Finance, June 8th at 7:30 in the Town Hall Board Room. In the meantime, the Board of Selectmen has requested details of the overages. According to newspaper reports, preliminary analysis of these details indicates that the overages resulted from unanticipated difficulties in completing the paving projects as originally budgeted and from changes in the scope of the projects, but we need a full accounting of overages.

Going forward, I think the Board of Selectmen should adopt control procedures along the following lines:

1. The Board of Selectmen should immediately adopt procedures that require the Public Works Department to have the Board of Selectmen approve any overages in a paving project before committing to execute that part of the project with the overage.
2. The Board of Selectmen should review the causes of the overages to determine how it was possible for the overages to have occurred.
3. The Board of Selectmen should approve the overages on past projects. This was the procedure followed with the overages in expenditures in 2007 at Irwin Park and may be required by provisions of the New Canaan Town Charter and similar provisions of Connecticut law. The Irwin Park overages were the subject of a study entitled Town Council of New Canaan of Irwin Park Report, submitted by Kit Devereaux and Steve Karl, May 20, 2009, a copy of which can be found here. The Irwin Park Report contains recommendations for oversight of Town projects, which were not followed for paving projects.
4. In considering the approval of any proposal for use of Paving Bond proceeds, the Board of Selectmen should consider, in addition to other factors which the Board of Selectmen may establish: (i) whether the proposal is covered by the Use of Proceeds section of the Bond documents; (ii) whether the proposal is the type that in the past has been part of a particular Town Department’s budget expenditures, rather than covered under the Paving Bonds, and (iii) where the proposal stands on the priority list in the Town’s Master Plan for paving. The Board of Selectmen should advise the Board of Finance and Town Council of approvals of these proposals.
5. The Board of Selectmen should institute the following type of controls: (i) at least a monthly progress reporting process that ties finance accounts with project expenditures; (ii) a defined process for progress payments tied to the percent of the project completed; and (iii) dollar spending approval levels for various levels of Public Works Department personnel.
6. The Board of Selectmen should consider whether to appoint a Public Works Commission which would have general oversight over the execution of paving projects. The concept of a Project Manager for significant Town project expenditures was one of the recommendations of the Irwin Report mentioned above.

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