You probably already know that your water and sewer services are provided by a government agency known as the Gateway Services Community Development District.
For those who have just begun reading this publication, the day-to-day operations of the GSCDD are managed by a company called Severn Trent Environmental Services.
Severn Trent helps manage dozens (hundreds?) of government entities all over Florida. In Gateway’s case, Severn Trent provides the District Manager, the Operations Manager and the district’s accountant.
The elected five member Board of Supervisors hired Severn Trent and they can fire Severn Trent if need be. However, since Severn Trent supplies the GSCDD’s top two members of operational staff, they are the ones who are ultimately responsible for the main functions of the district.
Yesterday we discussed a report by Gateway Greens HOA President and future GSCDD Supervisor Ed Tinkle, which details the fiasco surrounding the Water Meter Replacement Project. In brief summary, out of 6,300 meters that were installed a staggering 1,200 problems were discovered.
Today we discuss the $1,244,000 contract that was awarded to perform the new meter installations, and outline several discrepancies Tinkle uncovered.
PART 2 OF 2
In June 2013, the issue of water metering problems were first introduced to the Board of Supervisors. Meters were failing or giving false readings with increasing frequency. The district’s staff advised the board that water meters generally have a maximum useful life of 15 years, and in Gateway many of the meters were over 20 years old at that time.
The Board of Supervisors directed the staff to start organizing a meter replacement program for the district.
By March 2014, the district was prepared to put the project out for bid, which they did in April.
Four qualified bidders had emerged by July 2014, and the district’s engineering firm, Tetra Tech, suggested that the GSCDD select a North Carolina-based company named Fortiline, who were the “lowest responsive bidder” at $1,244,000.
In their application, Fortiline disclosed that they would be sub-contracting out the actual installations. There’s nothing unusual about that, but what did scream out from the Fortiline application was that the company they were going to use to do the installations was a company by the name of Severn Trent Environmental Services. Yes, the very same Severn Trent.
Red flags go up among several people who are familiar with GSCDD’s inner workings.
Nevertheless, in August 2014, the GSCDD board authorizes Severn Trent to procure a $1,350,000 loan from Iberia Bank to pay Fortiline for the water meter project.
On September 30, 2014 the GSCDD board officially authorizes to Fortiline to commence a 240 home pilot project to be completed within 90 days, followed by a 60-day monitoring period.
Tinkle states in his report that on November 20, 2014 at the GSCDD meeting: new Board member, Rod Senior, addresses a conflict of interest issue whereby Severn Trent Environmental Services, Inc. is installing meters and is also managing the entire CDD and thus Severn Trent Environmental Services, Inc. is in the intractable position of managing itself.
What Tinkle doesn’t note, and maybe it’s only me who finds this interesting, is that Severn Trent also arranged the financing of the meter replacement project. So Severn Trent helped secure a loan on behalf of the residents of Gateway knowing that some of that money would be funneling directly back to themselves.
Not only is the whole thing a blatant conflict of interest, but it also seems to violate the contract between Severn Trent and the GSCDD.
Section 8 of that contract specifically states: The MANAGER (Severn Trent) represents that it has no interest and shall acquire no interest, either direct or indirect, which would conflict in any manner with the performance of services required hereunder, as provided for in the standard set forth in section 112.311 of the Florida Statutes.
(EDITOR’S NOTE: emphasis mine.)
Section 9 of the GSCDD/Severn Trent agreement states that if there would ever be a time when a conflict of interest existed, that Severn Trent is required to notify the GSCDD in writing via certified mail about the conflict within 30 days. It is not known if Severn Trent sent such notice to the district, but perhaps they did.
In attempt to appease the concerns of then Supervisor Rod Senior and others, Gateway’s lawyer Anthony Pires Jr. shares his legal opinion that so long as Ivan Velez – who was the GSCDD’s Utility Manager at the time – was placed officially in charge of the Water Meter Replacement Project then Pires felt that would address the conflict of interest.
The board approves GSCDD Resolution 2015-04 which makes it crystal clear that Velez is in charge of the meter project, and under no circumstances may Severn Trent interfere with Velez or any decisions made by Velez.
It’s obvious that the board, Pires and Severn Trent are all aware of the conflict of interest. So why did everybody allow this to proceed?
For Severn Trent the answer is obvious. The sub-contract paid them approximately $191,000.
For the Board of Supervisors, they were wanting to save the residents money, since the next lowest bid was $377,000 above Fortiline’s bid.
For Pires, well … I’m not sure what he was thinking at the time. He didn’t really have anything to gain either way. I will say that other attorneys may have spoken out more forcefully against the Fortiline / Severn Trent arrangement.
By April 2015 the pilot project is completed and Velez reports that everything looks good. Velez recommends the board proceed with installing the remainder of the meters throughout Gateway. And with that, the main part of the project is a go.
Severn Trent starts installing meters in community after community. But reports of sloppy work and malfunctioning equipment are flooding in. In a future email focusing on the performance of Severn Trent, the district’s billing manager noted the following problems occurring: Paperwork not being turned in promptly by Severn Trent, information being entered incorrectly into handheld units, after replacement water not being turned back on, lines not being properly flushed, parts being left behind at meter sites, damages occurring on the curb side of the meter pits, Meter Interface Units being thrown into meter pits, not properly installed, poor and incorrect communication with Fortiline and Tetra Tech.
Fast forward to December 2015 and Velez announces he’s leaving the GSCDD. Even on his way out the door he expresses concerns about the performance of Severn Trent.
Despite the issues, the meter replacement project presses on in to 2016. By February, 95% of the meters have been changed out.
For some reason that isn’t entirely clear, Severn Trent doesn’t complete the final 100 or so meters. By May 2016, Severn Trent has been fired (as the meter install sub-contractor).
Then in June 2016, according to Tinkle’s report, the board instructs Pires to draft a motion rescinding GSCDD Resolution 2015-04. After-all, now that Severn Trent isn’t a sub-contractor there’s no more conflict of interest. Right? Wink, wink.
In July 2016 a company named US Water Works is hired for $18,000 to complete the final meter installations.
Tinkle’s report painstakingly documents the conflict of interest we’ve written about above. But Tinkle also has two other major complaints about the situation.
One issue Tinkle has is with several “change orders” that occurred. Basically, a change order is when a contractor realizes they need to change the terms of the deal as a result of unforeseen circumstances.
But as Tinkle notes, when the meter replacement project was put out for bid it specifically stated that bidders needed to make themselves completely familiar with the entire situation before submitting their offer.
Regardless, two change orders totally approximately $12,000 were approved by the GSCDD board.
Said Tinkle: “Both change orders were for pass through costs to the installation subcontractor, ST Services.”
More money for Severn Trent, essentially.
And the final major concern Tinkle expresses is the failure of Fortiline, Severn Trent and meter vendor Zenner USA to meet the contract terms.
The whole thing was supposed to be turn-key, but even aside from the installation issues there were constant issues with the meters not transmitting water usage data to the district. As a result, over 30 signal amplification devices had to be installed by district staff on light poles around Gateway.
Further, district staff had to spend an immense amount of time and effort on billing problems that the new meters have created.
As it turns out, there is a final payment due to Fortiline. I haven’t been able to determine the exact amount but I believe it’s somewhere between $100,000 to $200,000.
Tinkle would like to see the board document all of the problems, calculate the costs to the GSCDD, and deduct that amount from the final payment. Tinkle also wants the district to be refunded for the change orders.
As a final recommendation, Tinkle says in his report that the GSCDD board should resolve to never again enter an arrangement that has such an obvious conflict of interest.
On the other side of the coin, even if the problems this contract have costed the district amount to $150,000 (which seems to be on the high end), Fortiline did come in $377,000 below the next lowest bidder. So before anyone tries to take the Supervisors behind the barn, we do need to keep that in mind.
But I believe Tinkle is correct in his two main points. Agreements like the Fortiline contract should be avoided in the future, and if there is the possibility of recouping costs due to Fortiline failing to fully meet its end of the bargain then the district should aggresively pursue that option.
This was supposed to be turn-key. It was anything but.
Tinkle plans to raise his concerns at today’s GSCDD meeting. It will be interesting to see how much time and leeway Chairman William Guy grants Tinkle to present his report. As long as Tinkle focuses on the recouping costs aspect, and doesn’t dwell on decisions that were made 1-2 years ago, the board should hear Tinkle out.
The meeting will take place at the district offices at 13240 Griffin Drive at 3:00pm.
Should be fun.