private contract status of concession contract(s

Cohasset’s May 12th, Annual Town Meeting will be asked to vote on a water concession contract. We asked our Water RFP Expert to discussion the legal ramifications of the same.

Tinytown Unleashed: Here’s a question for you, Water Expert.

Legally, what rights does a concessionaire have that the town doesn’t’ know about.

The RFP looks pretty safe, but Corporate Accountability says the concessionaire calls the shots, that the state will treat our water contract as a private (not municipal) contract, and that investors have rights. 

Re water system governance and

private contract status of concession contract(s):

Tinytown Gazette Water Expert: The proposals will tell more than the RFP, but the language of the RFP certainly invites a backdoor takeover, either though explicit contract terms or through after-the-fact interpretation of contract terms by reference to recitals in the RFP.

Basically, if you want to confuse the public in setting the terms of a utility contract or other contract with a municipality, use several mirrors, not just one. For instance, the interest rate swaps that got so many states and municipalities into deep financial hot water a few years ago and led to congressional hearings, law suits and criminal complaints against some of our country’s largest banks were, in reality, piles of interlocking contracts, agreements, memoranda and exhibits that Sherlock Holmes would have been challenged to diagram, with the help of his magnifying glass.

Even with a computer and many hours to read and take notes, we (Water Expert’s company) were hard pressed to provide a defrauded municipality that contacted us on one such deal with a truly definitive summary of the rights and obligations of the parties. Municipal utility privatizations/PPPs/concessions usually involve fewer documents, but the ping-pong reference games that can be built into these deals are capable of being just as complex.


Of particular concern: inclusion of poorly-understood law by reference can make for essential deal points that can only be brought into clear definition through litigation. Not a great way to start a 10-year arrangement for services.

 

So public scrutiny and legal/financial due diligence will be a critical to understanding what is being proposed and what is being entered into where the proposed concession arrangement is concerned. On a related point, with  qualified management contract provisions of the Internal Revenue Code in mind on this special day (April 17) we hope that the Town’s bond counsel will look beyond “97-13″ requirements, which seem to have been taken into account in drafting the RFP, and further into any proposed provisions, whose interpretation by a manager in an operating environment could, depending on the action(s) taken, trigger taxability for a substantial amount of the Town’s outstanding tax-exempt debt. That would not be pretty.

Implications for the setting of water rates would, of course, be of the greatest concern for Town residents. Unfortunately, there is no substitute for doing one’s homework.

Tinytown Unleashed:  I think you’re saying we should not get ourselves into a concession contract. That there are no safeguards.  

© Copyright 2012 Tanna Bk, All rights Reserved. Written For: Tinytown Unleashed
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  17 comments for “private contract status of concession contract(s

  1. peter decaprio
    April 20, 2012 at 11:49 am

    You’re assuming we will have something to vote on. We might not.

    I’m still trying to figure out how to “hotwire” this to Aquarion.

    For the third time, November 18th, 2002 special town meeting. Article 14.
    Annual Town Meeting, March 28th, 1998. Article 7.

  2. Mike Coughlin
    April 20, 2012 at 8:27 am

    You might want to rethink your digs towards Governor Patrick. Please remember that Chairman of the BOS Ted Carr was formerly a top appointee of Governor Patrick and a democrat. Finally– will the Town Meeting be allowed to vote on the contract/contractor– a simple yes or no will do

  3. peter decaprio
    April 20, 2012 at 8:05 am

    Mike:

    I don’t have any Macquarie contacts anymore (it’s one R, by the way). Haven’t since 2009. Can you confirm through your FBI contacts how your IG investigation is going?

    I could care less what Aquarion is doing. At your next Democrat Hack Politician Convention, when you are sitting next to Governor Patrick, you should ask him to annex Connecticut, thereby beating Aquarion to the punch – time to turn the tables on Aquarion. Let them become the hunted for once. It’s time to stop them once and for all. I mean, a company that owns two piddly little water systems is striking fear into everyone and causing you to apparently go insane (or at least head further down the path. . .)

    Do you even know what a bond covenant is? Have you ever read ours? If you did, you would understand once and for all that our water assets will never change hands. See strawberry reference above. . .

    The language we will include for a vote, if there is even a need for one, will be to ask town meeting if the water company is authorized to paint a picture of your smiling face on the Scituate Hill tank so that no one in town will ever forget you, much as we all would like to try.

    November 18th, 2002 special town meeting. Article 14.
    Annual Town Meeting, March 28th, 1998. Article 7.

  4. Mike Coughlin
    April 19, 2012 at 10:21 pm

    PETER– Tom Walsh of the Massachusetts Water Infrastructure Finance Commission thinks otherwise. If you have an issue with Tom– contact Governor Duval Patrick — through Chairman Ted Carr. Peter– through you Macquarrie contacts could you confirm rumors that Aquarion is interested in purchasing United Water assets in Massachusetts after their recent purchase of United Water assets in neighboring Connecticut. Finally can you confirm whether voters at Town Meeting will vote on the actual contract/contractor rather that the mere authorization required by MGL 30B?

  5. peter decaprio
    April 19, 2012 at 7:12 pm

    Try this one instead (search under Google. G-O-O-G-L-E)
    Mayor’s Guide to Water and Wastewater Partnership Service Agreements: Terms and Conditions

    In case you’ve forgotten, a decision is required prior to June 30th, so something will be chosen and we will indeed forge ahead. Exactly what proposal am I pushing? I fought to get one (of three) possibilities included in the queue to be available for consideration. That’s it. Any proposals come in yet about which I am unaware? How do you know what will be decided? Have you seen the bids?

    Do you usually make decisions on things before all the facts are in? – Never mind, of course you do. We all saw it every day. I think the opposite approach is better: get all the facts first and then make an objective evaluation.

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