On February 15, 2021, Department of Public Works Director Wheeler, accompanied by several members of her staff, presented the financial agreement to the city’s Finance Committee for their review and approval. Prior to review by the Finance Committee the agreement was reviewed and approved by the Public Works and Utilities Committee on January 25. The Finance Committee review was the last review prior to consideration by the Governing Body on February 24.
The agreement reviewed and approved by the Finance Committee is available from the city’s web site by following the instructions to the right on a desktop browser, or below on a smartphone browser. Important for this discussion is agreement Exhibits A, which follows the agreement signature page.
Exhibit A is referred to by Section 13 of the Lease-Purchase agreement. [24 May 2021 Note: The Lease-Purchase Agreement is the second of two agreements in the packet. It follows the Escrow Agreement. Here we are interested in the Lease-Purchase Agreement.] The purpose of Exhibit A is to describe in general terms the equipment for which the financing is being sought and where that equipment is to be installed. Section 13 of the agreement requires the city to purchase and install the equipment specified in Exhibit A.
Exhibit A is divided into two parts: Exhibit A-1 and Exhibit A-2. Exhibit A-1 addresses the equipment related to the solarization project and other water and energy savings equipment covered by the Yearout Energy Services agreement. In the agreement presented to the finance committee Exhibit 1-A included notations indicating places where more specificity was needed.
In the contract reviewed by the Financing Committee Exhibit A-2 was blank. There were no annotations indicating that any content was missing from or yet to be added to Exhibit A-2. None of the Department of Public Works Staff attending the Finance Committee meeting made any reference to the blank Exhibit A-2. In particular, at no time did any of the Department of Public Works staff suggest or allude to Exhibit A-2 being not yet complete.
During the Finance Committee review of the agreement Councilor Villareal questioned Department of Public Works staff about the notations in Exhibit A-1 and their implication. No questions were raised about the blank Exhibit A-2 (presumably because there were no annotations or other indications that it was incomplete).
After discussion the Finance Committee approved the agreement for forwarding to the Governing Board for final consideration. Councilor Villareal made particular note that the Governing Body was the next and final stop. At no point did any of the Department of Public Works staff inform the Committee that any substantial changes needed to be made to the financial agreement.
Governing Body Document, Review, and Approval
Following approval of the financial agreement by the Financing Committee, the next appearance of the financial agreement was at the February 24 Governing Body meeting. Director Wheeler was the responsible staff member for presenting the agreement and for answering questions regarding it. The agreement presented to the Governing Body is available from the city’s web site by following the instructions at right on a desktop browser, or below on a smartphone browser. Once again, refer to agreement Exhibits A-1 and A-2, which follow the agreement signature page.
In the version of the agreement presented to the governing body Exhibit A-1 has been expanded in the manner understood and approved by the Finance Committee at their February 15 meeting, with greater specificity of number and type of equipment to be installed at different locations. None of these changes were substantive.
Exhibit A-2, which was empty and without annotation at the Finance Committee meeting, now includes the complete Dalkia lighting plan. Beyond the change of Exhibit A-2 from nothing to something very substantial and meaningful, that something was of much greater specificity than for Exhibit 1-A, which describes only the type of equipment to be installed (e.g., water vales, high efficiency transformer, new lights) at different building locations. The new Exhibit A-2 is exceptionally detailed: it specifies particular luminaire manufacturers and manufacturer part numbers, lighting temperatures, luminosity, etc. It eliminates the city’s choices for street lighting and materially changes the financial agreement and its implications for the city’s plans. That forced street lighting choices was not reviewed or approved by the Public Works and Utilities Committee. That change in the city’s financial commitment was not reviewed or approved by the Finance Committee.
The changes to Exhibit A-2 committed the city to particular choices in lighting that had not been reviewed or approved by the Public Works and Utilities Committee. Correspondingly, the new agreement needed to be returned to that committee for a new review. Similarly, the new Exhibit A-2 substantially changed the city’s obligations under the financial agreement; correspondingly, the new agreement required reconsideration by the Council’s Financing Committee.
When presented to the Governing Body the changed financial agreement was not accompanied by a cover memo noting any of these changes. Director Wheeler did not orally note that any substantive changes had been made to the agreement since its final review by the Finance Committee. In particular, it was not noted that the not only the Dalkia Lighting Plan, but the requirement that the city purchase specific luminaires – at the level of vendor products by part numbers – had been written into the financial agreement as a requirement on the city.
In other words,
- The ordinance and agreement that the councilor’s voted to approve was not the ordinance and agreement the councilors had been led to believe that it was voting on.
- Placing the agreement on the agenda of the Governing Body meeting was in violation of the Governing Body Procedural Rules (IV.A(2)).
- Consideration of the agreement by the Governing Body was also in violation of the Governing Body Procedural Rules (I.B(4)).
In this state of ignorance the Governing Body approved execution of the financial agreement as Ordinance 2021-4.