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Norwalk rejecting low bid due to unpaid taxes; will pay $100K more

Grasso Construction won't be getting a city contract anytime soon.
Grasso Construction won’t be getting a city contract anytime soon.

NORWALK, Conn. – The low bid for a contract to do paving and sidewalk work in Norwalk is likely to be rejected by the Common Council next Tuesday in favor of a bid that is $115,000 higher.

The action to pay Grasso Companies LLC $976,002 for the work, which includes work on Washington Street in SoNo, was withdrawn at the last Council meeting. On Tuesday, the Council will vote to give the work to Deering Construction at a cost of $1,091,004.

This is because Grasso owes the city about $162,000 in taxes, Finance Committee Chairman Bruce Kimmel (D-At Large) said, citing that as the figure given in an email from Tax Collector Lisa Biagiarelli.

Department of Public Works Director Hal Alvord explained the situation to Public Works Committee members on Tuesday, citing a meeting with Grasso’s attorney, Assistant Corporation Counsel Diane Beltz-Jacobson, Biagerelli, and Assistant Tax Collector Al Palumbo.

“We went through the city’s concerns with awarding a contract to someone who is in arrears on taxes when a resident who is in arrears on taxes can’t get a beach pass, or they can’t get a building permit, or they can’t get a food permit, whatever the case happens to be, and yet, here was a company that was about to get a $900,000 contract and they were in arrears on taxes,” Alvord said.

Grasso is in bankruptcy, and Grasso Companies LLC  is “the one healthy company to be pulled out of this mess they are in,” Alvord said. The attorney “went through a very legal description” of the four different legal entities involved with Grasso, he said.

“It was all correct but basically the city said, ‘We don’t care,’” Alvord said.

Alvord cited a “cavalier attitude” from Grasso toward zoning violations. Kimmel replied that that goes back 20 or 30 years. “They just keep going on forever,” Alvord said, explaining that a zoning enforcement officer will visit the Wilson Avenue business and the violation will stop, but will then resume as soon as the officer leaves.

“The DEEP (Connecticut Department of Energy and Environmental Protection) has cited them a number of times for filling in wetlands and all that kind of stuff down behind their properties as well,” Alvord said.

The crux of the meeting with the attorney was that there were personal taxes owed to Norwalk as well, Alvord said.

“The companies that have been filed for bankruptcy were originally filed for Chapter 11 in 2009, which is restructuring, and in February of this year all those companies filed for Chapter 7, which is dissolution,” Alvord said.

Taxes were owed to Norwalk from that original filing in 2009 to February, he said.

“There were taxes owed by Grasso Companies LLC, the supposedly healthy company, that were also in arrears,” Alvord said. “The result of the meeting was the attorney was go back, meet with the owners, get his personal taxes paid, get the bankruptcy trustee in contact with Diane Jacobsen and determine what they could do about paying those taxes that were between the Chapter 11 filing and the Chapter 7 filing. So everybody left and nothing happened, for weeks nothing happened.”

So staff suggested it be withdrawn at the last council meeting.

“This morning, the attorney for Grasso showed up in Diane’s office with a letter and a check for $15,000,” Alvord said, referring to Tuesday. “The letter basically said everything’s hunky dory, here’s the personal taxes and by the way, I didn’t bring the bankruptcy trustee because what little money the bankrupt companies had was used to pay the federal taxes and the state taxes and when they got done with that there was nothing left for you guys, so there’s no sense in introducing you to the bankruptcy trustee. So we spent a lot of time on the phone and decided that staff still recommends that the contract not be awarded to Grasso.”

“What we have is essentially the beginning of a policy change, the way I look at these things,” Kimmel said.

Grasso has done the paving work for the city this season and has a contract to do drainage work as well, Alvord said. David Watts (D-District A) said Grasso has just done a great job on paving on Spring Hill Road. “They are performing well on the work they are doing,” Alvord said.

Rejecting the contract might not be as expensive as it appears, Alvord said.

“My suspicion is they have had probably been able to restructure the Grasso Companies LLC – for example, they don’t own any of their own equipment, they are leasing the equipment that they use in the Grasso Companies LLC, I suspect that is saving them some money,” Alvord said. “They have been able to bid low but that’s gotten the other guys to keep their bids low as well. So one of the reasons we wouldn’t want to rebid this, we thought about this, when the other bidders know that the lowest guy in the street is no longer in the picture everybody’s prices go up again. So our expectation is we are still getting a good price with Deering even though it is $103,000 higher than what the low bid was.”

There may be a lawsuit, he said.

Grasso’s attorney “outright said that if we disqualify Grasso then it would be unfortunate to have to go into litigation,” Alvord said. “But they don’t have anything to hold onto. In every bid package we put out, we put our language that says ‘the city reserves the right to reject any or all bids, or any portion thereof, or to award to other than the low bidder, to waive minor informalities, to advertise for new bids or to proceed to do the work otherwise if in its opinion the best interest of the city will thereby be promoted.’ So the advice from the law department is that protects us.

“That’s been in every one of our bid packages that goes out,” he continued. “Now I’m going to tell you it’s in exhibit three. The next thing that I am going to tell you is in the years that I have been in this business contractors and their attorneys never read bid packages. So I will be amazed if any of them even know this language is in the bid package. That’s their problem, it’s not the city’s problem.”

Michelle Maggio (R-District C) asked why the city didn’t give Grasso the contract and then withhold the money that is owed to the city.

“In Grasso’s case, we have special financing procedures set up right now because they have a financing company that doesn’t want the funds to pass solely through Grasso’s hands,” Alvord said. “Now you can draw your own conclusions from that situation but every time we sign a payment voucher for Grasso it doesn’t go to the comptroller…. It goes to corporation council’s office. Grasso has to come in, sign a release with their financing guy and the check gets handed to their financing guy.”

The work in question is for improvements to Walter Avenue, the Broad River Firehouse, the Meadow Street Firehouse, Washington Street and concrete sidewalks at various other locations, according to the agenda. Alvord said it’s been held up because of this problem, and no physical work will be done this year. He said some of that work involves state roads and he will push Deering to get the permits over the winter so the work can start as soon as possible in the spring.

On Thursday evening, Finance Committee members considered new language to be put into bid requests to explicitly say that outstanding taxes could disqualify the bidder.

“It should be done before it gets to our level,” Doug Hempstead (R-At Large) said. “It puts us in a quandary, we want to get to the lowest possible bidder.”

“If they owe the city money they are not a responsible bidder,” Finance Director Thomas Hamilton said.

John Igneri (D-District E) suggested a pre-bid sheet to pre-qualify bidders 14 days before bids are accepted. Purchasing Agent Gerald Foley said that would add a “tremendous amount of work.”

“If we got 100 you’d have to review every single one,” he said. “… Then contact all 100 and tell them where their shortcomings are.”

One of the complications was the different names people do business under. Reference was made to a “shell game.”

Biagerelli said situations like the one with Grasso “don’t happen very often.” She said she has, in the past, garnished future payments with the power she has been given by the state.

Kimmel suggested keeping things in perspective before overburdening the staff. He asked the staff to come back next month with an action item, language they could vote to approve.

Correction, 2:25 a.m., Oct. 11: Deering will do the work for $1,091,004.

Comments

11 responses to “Norwalk rejecting low bid due to unpaid taxes; will pay $100K more”

  1. Norewalk Lifer

    Then why allow them to bid in the first place? and the town purchasing agent should have a pre-qualification review, that’s nonsense.

    Also if the town is going to Deering, regardless of the background situation, what is the right price to pay for the work to be done? should the town benchmark Deering’s offering against the Grasso quote? exactly what is required, and what SHOULD the cost be?

    That is getting lost in the story.

    Regards
    Norwalk Lifer

  2. srb1228

    confused, 1,009,000-976,000 = 33,000 not 100k? somebody’s numbers are off. 3% higher bid from a firm that is civically responsible should beat out a tax delinquent who skirts and cheats on zoning issues.

  3. Taxpayer Fatigue

    This is the right decision. Good job staff and council! Thank you!

  4. Scott

    So now Hal Alvord is the purchasing dept, the tax collector, the legal dept and conservation all wrapped into one. Boy is he good. Isn’t it his job to set the parameters for the bid and then hand it off to purchasing to put it out to bid? Please correct me if I’m wrong. As it seems to happen all too often Mr. Alvord has his hand in far too many departments that aren’t his.

  5. EveT

    Agree with @srb 1,009,000-976,000 = 33,000 not 100k? …. 3% higher bid from a firm that is civically responsible should beat out a tax delinquent who skirts and cheats on zoning issues.

  6. Oldtimer

    As part of the bid process the bidders should be required to list major outstanding obligations, if it is unpaid taxes or unpaid lease payments for equipment, or unpaid mortgages. These are legitimate questions to determine if a bidder is, in fact, a responsible bidder.
    In this case Alvord has done a good job. Doing business with people who are already in bankruptcy is risky, at best. They should also be required to identify all the corporate entities involved in their bid.

  7. Scott

    Oldtimer i asked that very question when City Carting took over solid waste collection. When it’s your own people you have more control and say over how things are run

  8. Phil Theigieu

    We are in deep trouble. Someone needs a math lesson. The difference is $33k for one. Also, since when does the City gold back taxes against any one? The developers of 95/7 owed back taxes but that didn’t disqualify them. Council members who are behind on their taxes are permitted to direct how tax money is spent. Since when did the City become so concerned with being current with taxes to do business with Norwalk.

  9. Oldtimer

    Phil
    The bidding process requires awarding the bid to the lowest RESPONSIBLE bidder. Alvord, and others, don’t think that much in unpaid taxes is a good indication of responsible. The next lowest bidder is only about $33,000 more, and considerably more responsible.

  10. I have just corrected the story. The figures given for the cost were wrong, therefore you have correctly pointed out that there was only a $33,000 difference.
    Hal Alvord said it was a $103,000 difference.
    The agenda lists both bids as two segments. The council would have authorized the mayor to execute an agreement with Grasso for not more than $887,275.77. The DPW director would have been authorized to issue orders on the Grasso contract for not more than $88,727.58.
    $887,275 + $88,727 = $976,002.
    The agenda now calls for the council to authorize the mayor to execute an agreement with Deering for $991,822. The DPW director will be authorized to issue orders on the contract for $99,182.20.
    $991,822 + $99,182 = $1,091,004.
    That’s a $115,002 difference. I went with the figure Mr. Alvord gave, $103,000. I just changed it in the story to this mathematical conclusion, $115,002.
    I evidently hit the 0 instead of the 9 when I wrote the story, making $1,091,004 into $1,001,004. Hence the confusion. I apologize.

  11. Casey Smith

    @ Phil –

    “Also, since when does the City gold back taxes against any one?”

    Here’s the link…

    https://www.nancyonnorwalk.com/2014/07/norwalk-tax-sale-yields-5-1-million-for-city-coffers

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