A Tale of Two Contracts
On February 15 the Council’s Finance Committee reviewed the financing agreement for the solarization, utility savings, and streetlight replacement projects. They approved the financing agreement for consideration by the Governing Body.
On February 24 the Governing Body approved the agreement.
Except, the financing agreement presented to the Governing Body was not the one reviewed and approved by the Finance Committee or the Public Works and Utilities Committee. No one told the Council Members of that substitution. What happened, and what does it mean?
This web pages gives an overview of what we know from public records of the Council’s Public Works and Utilities Committee, Finance Committee, and Governing Body meetings. Links within the overview will take you to details. The page concludes with our recommendations for how to put out the fire and get this project back on track.
All resolutions, ordinances, or agreements presented to the Governing Body are required to have gone through the city’s committee process and been recommended for approval by one or more of the city’s committees.
The financing agreement for the entire Energy Savings Project (streetlight project, water and electrical utility upgrades, and building lighting upgrades) presented to the Governing Body on February 24 was substantially different than the agreement approved by the Financing Committee on February 15, or the Public Works and Utilities Committee on January 25. The changes committed the city to a street lighting plan that had not be reviewed or approved the Public Works and Utilities Committee. They also materially changed the financing conditions for the entire Energy Savings Project in ways that had not been reviewed or approved by the Finance Committee. The Governing Body Procedural Rules required re-consideration by both Committees before consideration by the Governing Body. The councilors were not informed of those changes before they approved the agreement on February 24 as ordinance 2021-4.
Read about the difference between the Committee-approved agreements and the agreements presented to the GB.
In other words,
- Consideration of the financing agreement at the February 24 meeting was in violation of the Governing Body Procedural Rules;
- The staff who changed the financial agreement without referring the agreement back to the appropriate city committees prevented those committees from carrying out their statutory responsibilities under city ordinances;
- By interfering with the statutory oversight responsibilities of the appropriate city committees’, staff may have broken the law.
Read more about process and statutory oversight responsibilities
The ordinance authorizing execution of the financing agreement for the Energy Savings Project requires that the city have executed the General Management and Performance Contract (GMPC) with Dalkia. The ordinance approving the GMPC deferred approval of a lighting plan until after public engagement. The financing agreement imposes a specific lighting plan and the ordinance authorizing execution of the agreement included language “repeal[ing] all actions inconsistent with the ordinance.”
In other words,
- The ordinance approving the financing agreement repealed the ordinance authorizing the GMPC with Dalkia; and
- The city has not fulfilled its responsibilities under the terms of the financing agreement to the lending institution;
- The city has no valid financial agreement to fund its entire Energy Savings Project.
The effect of these actions by the city’s staff has placed the city in what appears to us a legally precarious position and imperils the entire Energy Savings Project (i.e., the solarization and utility upgrade project and the street light replacement project).
The facts outlined above suggest that the city has two problems.
The first problem is the management and financing of the entire Energy Savings Project.
The second, larger problem is that the staff managing this project have not served the Governing Body well.
Our recommendations, which are deliberately ordered, are intended to suggest a path forward toward solving both these problems.
- The Council needs to bring the entire Energy Savings Project to an immediate halt until it can understand what has been happened and determined how to get everything back on a track to success.
- The first law of holes is that when you find yourself in a hole, stop digging. All the components of the Energy Savings Project – the solarization, utility services upgrades, and the streetlight project – are all tightly interwoven and connected through the financing agreement. The confusion and mismanagement of the streetlight project has imperiled all these projects.
- The Council needs to urgently address the personnel and process problems that
- Allowed staff to circumvent the statutory oversight responsibility of city committees;
- Led to the Governing Body being presented a financial agreement that was substantively different than was reviewed or approved by any of the required city oversight committees.
- The Council should hire a certified Professional Engineer, expert in street lighting, to advise it on a lighting plan for the city. The lighting consultant should have no other financial interest in the project beyond advising the city. In particular, the consultant should not be an installation contractor, or an operations manager, or a lighting vendor or procurer, etc.
- Since such a consultant would necessarily be working with staff, this step should not be taken until the personnel and process problems discussed above are addressed.
- A real lighting consultant would gather the city’s requirements – e.g., protecting city ambience, environment, and desire to pursue Dark Sky Community status – and advise the city on the kind of lighting – luminosity and lighting patterns needed to keep roadways and sidewalks appropriately lit, and any special needs if appropriate – that the city needs, consistent with market availability. A real lighting consulting would identify the technical requirements – BUG ratings, lighting patterns, etc. – for lights at different locations. A real lighting consultant would not specify vendors, manufacturers, lighting contractors, or lighting operations firms.
- The city should use the technical specifications developed by its independent lighting consultant as the subject of a request for proposals, followed by a request for bids. In other words, the usual bidding process should be used to get the best possible products installed and operated by the best possible contractor. The Santa Fe community deserves, and should settle for, no less.
- The city should reconsider whether Dalkia, which has misled the city on technical and procedural matters throughout the entire process, should be trusted with the installation and management of Santa Fe City streetlighting.