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Nelson McDuffie--Mayor c/o City of Delray Beach P. O Box 7959 Delray Beach, Fl.33483 RE: Mr. Shutt’s Performance Dear Mayor McDuffie and Commissioners: In connection with the ongoing Trash investigation, I have reviewed some of City Attorney —Brian Shutt’s related work product which I find disturbing and believe you may also. The following memorializes what I believe are some of his shortcomings to date and problems he has created for the City. 1- WM Contract and Amendments A)- Mr. Shutt signed “Approved as to Form and Legal Sufficiency” the base 2001 Contract and the three subsequent amendments. The Contract is a poorly drafted document, outdated, and cause for much confusion in the Trash administration. Commissioner Frankel has previously criticized it and the FRB report will also do so. It is a mid 90s version of the SWA form contract which the SWA has updated and improved several times since. When I uncovered this fact in a conversation with the SWA, they asked, “Why didn’t Delray use our current contract version like most other Palm Beach County municipalities have done? It is readily accessible on our website.”. B)- The Contract still lacks crucial verbiage necessary to protect the City—Indemnification. The Contract has a heading “Indemnification” #26. However, it only has a hold harmless provision and no indemnification protection for the City. Obviously, Mr. Shutt is familiar with the “boilerplate” verbiage to protect the City because he included it on a restricted basis for lawsuits outstanding in the 2003 amendment. Also, it is included in the City’s prior Beach Cabana contract. The omission could give the impression that Mr. Shutt was looking out for WM’s best interests (Read on. You will see this trend unfortunately more on issues below). C)- At the last two FRB meetings I attended, Mr. Shutt has dodged my direct question, “Does the Contract have language confirming whether or not the City receives WM’s Clamshell truck services free of charge?”. Re-read the 7/2/10 email “Special Collections” from Mr. Reade to which you were copied. Scroll down and read Mr. Shutt’s evasive email and his citation of par. 5 from the RFP as the governing contractual language (I found the Code recitations to be a ‘red herring’ because they are not part of the Contract). Since par. 5 fails to state that the City is to receive the WM Clamshell services free of charge, I pressed Mr. Shutt again for an answer at the 7/6 FRB meeting. He told the FRB members he would discuss the matter with the Commissioners privately. Bottomline, he failed to include the “No Charge” provision in the Contract. The City is “out” at least $51,000 already and he knows he has put the City in a precarious situation. I’ll play Mr. Shutt’s “game” for the same reason he is doing it. If any Commissioner wants
Kenneth MacNamee 1049 Del Haven Dr. Delray Beach, Fl. 33483 to know the City’s exposure, feel free to phone me (610-506-2097). For further background on this matter, re-read A-7 in my 5/12/10 report (Sanitation Fund Examination) to you .
2-“Letter of Capitulation” You have previously read City Manager Harden’s 2/8/10 letter to WM which I have previously referred to as the “Letter of Capitulation” because an attorney who read it for me stated, “I don’t think WM could have drafted a better letter to exonerate themselves and blame the City for WM’s failures in paying commercial franchise fees. “. Mr. Shutt was certainly aware and most likely involved in its issuance. Did he draft it for Mr. Harden or assist him in composing it? The different type set on page 2 with the CC to Mr. Shutt is a glaring red flag that something is amiss here and was inserted for some unknown reason ‘after the fact’. Then, Mr. Shutt attended the 2/16 Commission meeting and didn’t tell the Commissioners about the letter nor that WM had threatened to sue the City. That was already public knowledge because Finance Director Safford disclosed WM’s litigation threat to the FRB on the morning of 2/2/10. Commissioner Eliopoulos expressed his dissatisfaction with the “Letter of Capitulation” in email correspondence with Mr. Harden. Mr. Eliopoulos requested Mayor McDuffie to include the matter as an Agenda Item at the next Commission meeting which the Mayor apparently refused to do. Is it the Commissions’ intention to permanently “bury” this matter? Is the Commission going to continue to ignore Mr. Shutt’s ‘strange’ involvement with the letter and his failure to apprise the Commission of WM’s threatened lawsuit? If so, please don’t tout that you stand for “transparency in government” because it might appear to be hypocritical. 3-Flawed City Ordinances As I have previously informed the Commission in the Commercial analysis of the WM Contract, Mr. Shutt failed to include in the 44-08 Trash Rate Ordinance enabling language for City to charge commercial customers for dumpster unlocking and rollout services as set forth in the Contract. Since WM is rightfully entitled to charge the customers but the customers aren’t subject to the charge pursuant to the Ordinance, the City could owe the affected commercial customers up to an estimated $400,000 since the inception of the Contact (An attorney with whom I spoke believes “trash’ is a utility in this instance and stated Fla. Court cases have decided that there is no statute of limitations for utility billing errors. Keep this important thought on statutes of limitations in mind and read on!). 2-3 months ago, I requested from Mr. Safford and received the current fiscal years Trash Rate Ordinance (45-09) to verify some analyses. I made sure I received the Mayor’s signed version because I seek the ‘highest level ‘of data integrity and accuracy. I utilized the set forth rates to calculate the City’s lost/missing Residential Trash billing revenues. I emailed my calculations to Mr. Reade and he told me I was ‘using the wrong rates’. He went on to provide me a copy of the 9/22/09 Commission meeting minutes where at Mr. Harden’s suggestion, the Residential rates were lowered at the eleventh hour by $.20 per month ($.10 for multifamily).
Kenneth MacNamee 1049 Del Haven Dr. Delray Beach, Fl. 33483 When I brought this error privately to Mr. Shutt’s attention at the 7/6 FRB meeting, he didn’t seem to indicate it was any big deal and was non- committal when it would be rectified. He didn’t seem concerned that for the past 10 months that the City has had an outstanding ordinance with ‘WRONG’ Residential trash rates. Let me explain why in my opinion correcting a faulty ordinance in a timely manner is important. If anyone uses a city Ordinance document in good faith and the City made a mistake in preparing it, I’m confident a court would find on behalf of the user. Secondly, the traditional rate setting table in the Trash ordinance won’t work. Where did the rate reduction come from? It should have come from WM because as Mr. Harden explains in the 9/22 minutes (and I objected to previously) WM should have never been granted that additional charge. However, to come from WM, the reduction would require another Contract amendment which I highly doubt occurred. Also, now the 10% Franchise fee calculation doesn’t compute unless the rate setting table is reconstituted. Am I correct in assuming one of Mr. Shutt’s primary responsibilities is to ensure accuracy and propriety of City Ordinances? Please instruct him to forward me a copy of the corrected 4509 with the Mayor’s signature.
4- Statute of Limitations/ WM Investigation Commissioners, hold on to your hats here! We are talking about a lot of money at risk in the WM investigation that Staff wants to give back to WM. In calculating back the WM residential billing overcharges, Mr. Shutt informed staff that there was a 5 year statute of limitations. So, Staff stopped its recalculations at April 2005 and didn’t go back to the inception of the WM contract of October 2003. Without Staff providing the necessary recalculations, I estimate the City is forgoing $60,000-$80,000 on the statute issue alone. Let’s assume Mr. Shutt’s opinion on the applicability of the statute is correct (which I doubt based on his citation of Fla. Statute 95.11.). Why did he bring it to the forefront? Any business person would calculate the entirety of the amount due (i.e., going back to 10/03) and present it to WM. Let WM bring up the statute issue and provide their legal citation. A “standup” business partner who was unjustly/undeservedly enriched wouldn’t even invoke a limitation. He/she would apologize and pay it in full. So, let’s find out the ‘character’ of our business partner (WM) before minimizing its legitimate obligations to the City. At each of the last two FRB meetings, I have requested that Mr. Shutt re-visit his opinion on the applicability of the statute and discuss it with other attorneys, namely his staff associate. Try to interpret the Statute in the best interests of the City—not WM. I went over the matter and 95.11 with two attorney friends of mine. Both thought Mr. Shutt’s applicability of the statute was flawed. One said, “I disagree with Attorney Shutt’s interpretation of 95.11. I would understand WM’s attorney taking that position, but certainly not any attorney representing the City.” Now perhaps you understand my comment in 1-B above about for whose interests Mr. Shutt is looking out. In my business experience, I’ve seen attorneys instructed to, “review this issue thoroughly as if you employment was dependent upon it.”
Kenneth MacNamee 1049 Del Haven Dr. Delray Beach, Fl. 33483 There are at least two other significant dollar issues outstanding in Staff’s Residential investigation of WM which should be thoroughly discussed with the Commission. Mr. Safford has stated the City intentionally withheld and never paid a $177,926 WM invoice for Dec. 2005 service which the City now claims is due and payable to WM (yes, WM didn’t raise the issue!). Secondly, there is level of service classification question about Villa D’Este apartments where Staff appears ready to concede a $40,000 credit to WM. Mr. Shutt has been silent at FRB meetings about these matters. Hopefully, he has been working privately behind the scene with Staff to protect the City’s best interests, especially with WM present at the FRB meetings. I will withhold comment about the $177,926 matter until I see the FRB’s final letter to the Commission and I receive the 8 WM invoices I requested from Mr. Reade on 7/6 via email. As far as WM’s request for the $40,000 Villa D’Este credit, a little common business sense should result in the City denying that payback. But, I’ll wait to see Mr. Shutt’s resolution and the opinion he gives the Commissioners. ______________________________________________________________________________ Given Mr. Shutt’s actions to date as set forth above, you have yet another significant senior staff personnel matter which probably needs to be addressed. In my 30 years of “for profit” business experience, I’ve seen attorneys services terminated for less egregious (in)actions. I am not familiar with municipal government expectations of legal performance but would think they would be the same. I will wait and see what action the Commission decides to take. Finally, please instruct Staff to complete its detailed recalculations of amounts incorrectly billed by WM back to the Contract’s inception. Even if Mr. Shutt’s 5 year statute proves correct, it is necessary to know how much money was left on the table because the City ignored my 2/13/09 initial report. The City lost 14 months ($45,000-$65,000) there because it failed to heed my initial warning and has been so slow in addressing it since. If you need any questions answered about the above or any trash related matter, you can reach me at 610-506-2097. Very truly yours,
Kenneth MacNamee CC: Mr. Harden—City Manager Mr. Shutt—City Attorney
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