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|New Mayor Tries To Abandon Surety Bond
For Housing Authority and Council Votes NO
Loveland - November 20, 2007
Loveland City Manager Don Williams opened the last agenda item by stating he placed it on the agenda since he felt it was not an
administrative decision but policy instead. At the end of the discussion, however, Mayor Pielin betrayed that explanation by telling his
fellow councilors, â€œIf I thought Sam was any developer I wouldnâ€™t have him up here doing thisâ€� while arguing in favor of the
waiver indicating it was Pielin not Williams who instigated placing the item on the agenda.
Samuel G. Betters, Executive Director of Lovelandâ€™s Housing Authority, presented an argument to council that the Housing
Authority is a trusted organization in the city and should not be asked to provide surety bonds for work being performed currently on the
Mirasol project currently under construction. He mentioned the Housing Authority did appreciate the over half a million dollars in fee
waivers from the city already received for the project.
Betters summed his argument by stating, â€œWouldnâ€™t it be better to invest that money back into what we do best instead to some
bank or insurance company.â€�
Surety requirements are used by municipalities to enforce a mandatory warranty on streets, sidewalks, sewers and other general
improvements constructed by the contractor but later handed over to the city to maintain once the project is completed. Surety bonds
are purchased by developers as a kind of insurance in case the improvements are damaged by natural events or due to poor materials or
workmanship that doesnâ€™t reveal itself until after the city has taken responsibility. While each developer can warranty their work the
city has no leverage to access necessary funds to fix damaged streets if there is a dispute over the cause of the problem. In addition, the
Councilman Walt Skowron stated he had some comments and wanted Bettersâ€™ reaction. Skowron stated he was hesitant to
support the request since Betters already stated they really didnâ€™t need the waiver to complete the project so his preference was to â
€œleave it the way it is.â€�
Skowron stated that he spent some time looking into the Housing Authority and was surprised to learn the governing board had been
appointed by the mayor and didnâ€™t realize how heavily funded and controlled it is by the City of Loveland.
Skowron stated, â€œI would like to know more about governance since I didnâ€™t know the mayor appoints the members of the
boardâ€¦.â€� He was later interrupted by Pielin who had already been complaining about the late hour and said, â€œWalt, can we go
back to the subject and can we talk about the housing authority transparency at another time but its kinda [sic] late and I want to get
Annie home before it is too late.â€�
Councilman Klassen asked some probing questions regarding ownership of the property in question to which Betters answered, â€œit
is owned by several different entities â€¦.. quite frankly it gets really complicatedâ€� failing to provide a direct answer. Klassen added
his concerns were a little different than Skowronâ€™s since he believed this was an issue of the city treating itself differently than others
which created a big problem for him in supporting the request.
Klassen used as an example Councilman Dave Clarkâ€™s construction company and asked if they have received waivers from surety
bonds and Clark nodded his head in the negative indicating they have not.
Keith Reester, Director of Public Works, informed the council he never new of any such waivers during his past five years with the city.
Council was informed that historically most repairs do not exceed 15% of the total cost of the original improvement thus creating the
surety bond total requirement if only 15% of the total cost of the improvements.
Councilman Glen Rousey offered support for the item being pushed by Pielin by stating that he believed the â€œ$115,000â€� spent for
the bond by Lovelandâ€™s Housing Authority could be better spent providing affordable housing instead of purchasing the bond. In
fact, the total requirement of the bond is only 15% of the public improvement cost therefore the bond itself only costs the Loveland
Housing Authority approximately $5,000 as the presenter had already stated.
Dave Clark was very articulate in explaining to his colleagues the purpose of surety bonds and explaining that since the Housing
Authority doesnâ€™t actually perform the work it is really not a matter of whether or not the council trusted Sam Betters or the Housing
Clark stated, â€œwhat this is is a warranty on public improvement workâ€¦why do we have a warranty? Because things changeâ€¦.
those warranties are not there because we distrust developers or builders they are there because we donâ€™t know the future.â€�
Clark explained the real cost of the warranty is only five to six thousand dollars for the Housing Authority therefore it really is a very
small incidental cost to the overall project. Conversely, he pointed out, waiving the bond requirement puts the City of Loveland at risk
for hundreds of thousands of dollars. Don Williams added the concern that council is giving-up control of the remedy since contractors
will often disagree on the cause of problems after the work is completed.
â€œThis is a warranty on the work that is in place so that the city is sure they can warranty the work.â€� Councilman Clark stated. He
also informed his colleagues that he didnâ€™t support the waiver for the same reasons stated by Klassen who asked the rhetorical
question of why would the city treat itself different than others.
As became the practice that evening, Carol Johnson responded to a nod by Mayor Pielin and stopped the discussion by making a
motion to approve the waiver. In fact, Roberts Rules of Orders call for discussion after a motion is made but the council appears to be
following its own tradition of ignoring Roberts Rules of Order also called â€œParliamentary Proceduresâ€� which they claim to follow
Before calling for the vote, Mayor Pielin emphatically argued for the waiver by saying they were compelled to provide the waiver
because of what Sam represents and not because of any financial necessity. In the end, a new council majority emerged on a 5-4 vote
of the waiver request not passing with 5 councilors opposing the waiver.
Mayor Pielin voted yes along with Johnson, Heckel and Rousey while Klassen, Clark, Solt, Skowron and Gutierrez all voted no thus
defeating the motion.
|Samuel G. Betters
Loveland Housing Authority