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untanglingwebs
El Supremo
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The citizens and taxpayers of Flint have an intangible right to expect the honest services of all of our elected officials.
It starts with the Mayor because he has the authority to supervise, direct and control all of the departments. He also has the duty and obligation to ensure that his department heads and appointees are discharging their official duties in compliance with the laws and policies that govern them.
While the City Council is forbidden by the Charter to interfere in the administration, they are obligated to ensure that the administration has used due diligence in awarding contracts and incurring financial obligations. They should not vote on contracts and other budget imatters of the City if these matters are of a questionable nature or in conflict.
The operative words here are "due diligence" because without this process, especially with federal funding, the City becomes open to federal investigations, costly repayment of misspent and misallocated funds, as well as third party lawsuits. All three of these elements are now occurring due to the failure of the Department of Community and Economic Development, the administration and the Council to use appropriate due diligence in implementing federal contracts.
The Department of Energy Grant, under the administration of Interim Mayor Michael Brown, went through the proper procurement and review process. The grant after thorough review was awarded to Clean Energy, a company with 17 years experience out of Ypsilanti. The first time the resolution to award the contract appeared on the Council Agenda, certain council members began to corrupt the process and generated a revised process. The contract, under a previous council, went to a newly formed company Advanced Solutions Group, whose only cllaim to expertise in energy efficiency was the construction of two energy efficiency homes on Flint's east Side.
Under the principles of "due diligence", the history of the principal owner, Kate Fields and her past experience as the CEO of Greater Eastside Community Association (GECA) should have been reviewed for at least the past five years. The past due property taxes, property tax foreclosures and lawsuits should have been part of that evaluation.
There should have been an ongoing monitoring to check for signs of financial insolvency of the new company. The Advanced Solutions Group office was the same office that once housed GECA. The office at 2822 N. Franklin was being purchased on a land contract from the land Bank. at least twice the Land Bank prepared to foreclose on the property for non-payment and Fields lobbied the Board of Directors to stay in the building. This year Fourth ward Councilman Josh Freeman, the last President of GECA, deeded the property back to the land Bank. Kate Fields testified her records and remaining office equipment were in storage.
When the City of Flint under Mayor Williamson sued GECA, Freeman and the GECA board allowed Fields to place leins on all GECA properties and signed over the office equipment and Van to her to satisfy her claims of unpaid salary and vacation time. The van was paid for with federal funds. GECA has not prepared an audit or sent 990's to the IRS in at least 2 to 3 years. In the lawsuit it was revealed that GECA had incurred IRS fines for failure to timely file.
Gregory Eason was originally to be the CEO of the newly formed Advanced Solutions Group. After he became the City Administration he claimed to back away from the contract and yet he still paricpated in meetings on the grant according to the testimony of Fields in the investiagtive hearings.
She alleged the administration failed to implement her proposals. Steve Montle testified in the investiagtive hearinghs that at least one proposal put forward by fields was too costly to implement and said cost projections were as high as $20 million.
Last edited by untanglingwebs on Wed Dec 07, 2011 9:53 am; edited 1 time in total |
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Mon Dec 05, 2011 11:46 pm |
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untanglingwebs
El Supremo
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| I have been advised that even the procurement process under Interim Mayor Brown and conducted by Tracy Atkinson was flawed. The internal review by the City and the constituent review overwhelmingly selected Clean Energy/Resource Recycling. However a proper cost analysis may not have been conducted and there was some lobbying behind the scenes. Council may not have received all of the information necessary to make an informed decision. |
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Tue Dec 06, 2011 5:58 pm |
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untanglingwebs
El Supremo
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astutediligence.con defines due diligence as:
"Due diligence is used to investigate and evaluate a business opportunity. The term due diligence describes a general duty to exercise care in any transaction. As such, it spans investigation into all relevant aspects of the past, present, and predictable future of the business of the target company. Due diligence sounds impressive, but ultimately it translates into basic commonsense succcess factors such as "thinking things through" and "doing your homework"."
The reasons for conducting due diligence;
Confirmation that the business is what it appears to be;
identify potential "deal killer" defects in the target and avoid a bad business transaction:
gain information that will be useful for valuing assets, defining representations, warranties, and/or negotiatiating price concessions;
verification that the transaction complies with investment or acquisition criteris. |
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Wed Dec 07, 2011 7:44 pm |
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untanglingwebs
El Supremo
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The Miller Act (40 USC section 3131 to 3134) A United states law that requires a contract surety bond on all federal construction projects. Two bonds are required under this act for a federal project: a performance bond and a labor and material payment bond. Every year the US Department of the Treasury issues a list of companies qualified to issue these surety bonds.
Under the Miller Act any contract that exceeds $150,000 for any "construction, alteration or repair of any building or public work of the United States must issue to the federal government the following:
1. A performance bond in the amount that the contracting officer regards as adequate for the protection of the federal government.
2. A separate bond for the protection of suppliers of labor and materials. The amount of the payment bond shall be equal to the total amount payable by the terms of the contract unless the contracting officer awarding the contract makes a written determination supported by specific findings that a payment bond in the amount is impractical, in which case the amount of the payment bond shall not be less than the amount of the performance bond.
"The Miller Act payment bond covers subcontractors and suppliers of materials who have direct contracts with the prime contractor. These are called first-tier claimants. Subcontractors and material suppliers who have contracts with a subcontractor, but not those who have a contract with a supplier, are also covered and are called second-tier claimants.'
Many states have adopted what is known as "Little Miller Acts" for use at the state level.
This information can be found at www.sio.org
Surety Infornmation Office
1828 L St. NW, Suite 720
Washington,DC 20036-5104
(202) 686-7463 |
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Wed Dec 07, 2011 8:04 pm |
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untanglingwebs
El Supremo
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These bonds should have been part of the City of Flint Smith Village Construction file and would have protected the Urban Builders construction company for their work in Smith Village.
Council approved the contract for Smith Village Construction LLC on June 27, 2011when they also voided the agreement with Metro Community Development.
A $900,000 NSP2 Smith Village developer Agreement was signed by Young and Eason on 7/15/2011 but Inez brown and her witness did not sign until 7/20/2011. City Attorney Peter Bade had another individual initial approveal of the contract for him, but there is no date. the actual developer contract was ivoted on later.
It is my understanding that Charles Young Jr. contracted directly with the urban Builders and had them start work prior to the execution of the development contract. Because of this HUD will not pay for their services. However, if the bond had been in place the bond would have covered the labor expenses incurred by Urban Builders of $71,000. Now Young and the City are trying to cut the amount owed by approximately one-third. Federal projects must use Davis-Bacon wages and a cut this significant might cut wages below the accepted standard. The company shoudb be paid for it's entire invoice. |
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Wed Dec 07, 2011 8:58 pm |
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untanglingwebs
El Supremo
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WHO IS THE RUSSELL BUILDING GROUP AND WHY ARE THEY CONTRACTING FOR SMITH VILLAGE?
Champion Home Builders and Russell Building Group Sign ...8 Nov 2011 ... Champion Commercial Structures today announced in partnership with RussellBuilding Group that the company will build a series of 83 ...http://www.businesswire.com/news/home/20111108005178/en/Champion-Home-Builders-Russell-Building-Group-Sign - 81k - Cached - Similar pages
I have searched Michigan Corporations and no company under this name exists. There are 492 corporations starting with Russell so I checked all of the obvious to no avail.
On November 8, 2011 Champion Home Builders announced their partnership with Russell Building Group for the construction of 27 homes using 7 custom designs of Champion. Delivery of the homes began on October 18,2011. They indicate Brett Russell is the CEO of Russell Building Group. |
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Thu Dec 08, 2011 6:05 am |
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untanglingwebs
El Supremo
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MICHIGAN NSP2 CONSORTIUM POLICY AND PROCEDURES MANUAL
page 11 B 22 establishment of a construction file that contains:
a). description of contractor selection method
b). all bids received
c). Bid tabulation
d).
verification of contractor eligibility
e). contract for services
f). records of progress payments, including retainage
g). contract change orders, if any
C. Competative Proposal
This area indicates competative procurement of professional services which include
THE CONTRACTING OF A CONSTRUCTION MANAGER
MARKETING: HOUSING COUNSELING, INTAKE SPECIALIST FOR INCOME, BUYER/RENTER AFFORDABILITY, AND FINANCIAL STRUCTURING AND PROFESSIONAL SALES AND RENTAL MARKETING.
While a small portion of these professional services were bid out, I do not believe all were and if they were they were not reviewed properly. |
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Thu Dec 08, 2011 7:40 am |
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untanglingwebs
El Supremo
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MICHIGAN NSP2 CONSORTIUM POLICY AND PROCEDURE MANUAL
lX BONDING REQUIREMENTS
"Federal requirements at 24 CFR part 85 require payment and performance bonds for construction contracts in excess of $150,000 (notethat the federal "simplified acquisition threshold" was recently increased from $100,000 to $150,000, resulting in changes to the point at which bonding is required. However, some references on the HUD website still refer to the $100,000 figure.)
However 24 CFR 85.36(a) also requires that states follow their own standards when those standards are more stringent than the federal requirements.
Furthermore, state law (MCL 129.201) require payment and performance bonds for all construction contracts of $50,000 or more in the case of publicly owned buildings-which would include an NSP funded project where title is held by an local unit of government or land bank. Notably, contractors, subcontractors, and suppliers cannot place construction leins on publicly owned properties either.
There is no specific state law requirement for payment and performance bonds in case of construction contracts for privately held buildings. In such cases the construction lein act helps protect subcontrsctors and suppliers.
So when trigger payment and performance bonding differs depending on who owns the property:
When a unit of government (including both Cities and land Banks) holds title to the property, payment and performance bonds will be required for all construction contracts of $50,000 or more. (Note that this analysis holds true regardless of whether the project is funded with NSP2, NSP1 other HUD funding or even state funding, so grantees need to ealuate their non-NSP programs that involved real estate development to ensure they are in complaince with state law.
When NSP funds are being provided to a developer that holds title to the assisted property, payment and performance bonds are required for all construction contracts of $150,000 or more.
For construction contracts or subcontracts exceeding $50,000 on publicly owned properties or for construction contracts or subcontracts exceeding $150,000 on developer owned properties with NSP2 funds in the project, the following is required:
1. A bid guarantee from each bidder equivalent to fivr percent (5%) of the bid price. The "bid guarantee" shall consiist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of his bid, execute such contractual documents as may be required within the time specified.
2. A performance bond on the part of the contractor for 100 percent of the contract price. A "performance bond" is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract.
3. A payment bond on the part of the contractor for 100 % of the contracted price. A "payment bond" is one executed in connection with a contract to assure payment as required by law of all persons supplying labor and material in the execution of the work provided for the contract.
Where the bonds are required, the bonds shall be obtained from companies holding certificates of authority as acceptable sureties pursuant to 31 CFR part 223, "Surety Companies Doing Business with the United States".
OR
In lieu of acquiring the payment and performance bond, Grantee will accept an irrevocable line of credit listing Grantee as the sole beneficiarynand equal to (a) the greater of the contract award or (b) 25% of the total construction contract. The line of credit must be issued for the entire construction period plus one (1) year following completion. |
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Thu Dec 08, 2011 8:17 am |
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untanglingwebs
El Supremo
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Requests for these required bonds under the Freedon of Information Act (FOIA)have resulted in only the bond for Champion Homes.
The OIG has cited some states and grantees of NSP programs for bonds that failed to list the NSP program as a covered entity in the bonds.
On October 31,2011 the City did receive a communication from the bank of Brett Russell stating he had over $500,000 in the bank and an unspecified line of credit for his business. This does not meet the standards of the NSP2 program or the State of MIchigan. |
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Thu Dec 08, 2011 8:24 am |
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untanglingwebs
El Supremo
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despite repeated Foia requests the City of Flint declines to disseminate the names, resumes or biographies of the construction manager, marketing person or other key personnel and principals of the construction of Smith Village, even those who were required to be bid out.
Brett Russels show up as the registered agent of Smith Village Construction . He was the builder who pulled permits for the Urban Builders, who never got paid. His company had not even incorated at the time of the permits and the city does not have an application on file or they refuse to comply with the FOIA act. He now pulls permits through his company SE Metro Properties. He contracted with Chapion Homes under the name of Russell Building Group, which cannot be located in the Michigan Corporations division.
So who is running the Smith Village project? Charles Young Jr and his cohorts are fronted in all of the media reports? it would appear that Russll is the real head of the operation.
Both Russell and Young are named as defendants in the lawsuit against the City and Greg Eason by CIG . Strayhorn and Demaria founded the company Smith Village Development in anticpation of becoming the builder/cotractor through Metro Community Development and brought in Young as their local agent and Russell to help with financeing. Young and Russel then formed Smith Village Construction and the development contract went to them instead of Metro Community and Smith Village development.
In Resolution 110922 the City stated Metro Community Development Board of Directors approved the corporation participation in the development of Smith Village on May 14,2011.
The Flint City Council approved the proposed contract on May 23,2011.
Greg Eason and the administration never executed the contract. Funchiture, the architectural firm owned by Shannon White, wife of Ridgeway White, submitted design plans for construction in Smith Village as evidenced in the lawsuit brought by CIG.
On June 27, 2011 the resolution signed by Eason for Walling was presented to Council as an add on and the Council approved the change in developer.
The proposed contract with Metro Community Development could not be attained by FOIA. The back up documents for resolutions 110597 (deveopment fee for Metro) and the back up documents for Resolution 110922 were requested under FOIA but not received.
The Genesee County land bank had already deeded property for Smith Village to Metro Community and metro Community had incurred "third party expenses" of over $110,000 although they did not have a signed contract.
The City paid these expenses, which cannot be reimbursed by HUD as there was no legitimate contract in place. Metro did not charge for any of their services and released all documents to the City upon payment.
If i understood the MSHDA NSP2 policies and procedures correctly, the professional services should have been bid out. A total of $593,000 was budgeted for professional services:
Legal $80,000
Marketing/advertising/advertising $48,305
Real estate sales Commission $348,600
Title Insurance and recording $62,250
The total development costs were $16,074,932.60.
Under B Grantee Responsibilities (4) ALL INFRASTRUCTURE, PUBLIC IMPROVEMENTS AND SMITH VILLAGE AREA SURVEY (WHICH COSTS ARE NOT PART OF THE BUDGET) WILL BE COMPLETED BY THE GRANTEE [NOTE: CITY OF FLINT IS THE GRANTEE] |
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Thu Dec 08, 2011 9:07 am |
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WTH
F L I N T O I D
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| It is hard for me to accept that so much time and money has been spent with so little to show for it. I wonder why nobody is in prison yet? |
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Sat Dec 10, 2011 7:03 pm |
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untanglingwebs
El Supremo
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Smith Village is a disaster waiting to happen.
The original documents showed only $80,000 for marketing and yet company after company is selected with new marketing proposals. Concerned Pastors newspaper, the Courier had a weekly deal until the council stopped it beecause it was more like an advertisement for walling, who was running for re-election.
The city has sold 11 of the 35 homes supposed to have been built already. verification needs to be done to see if the purchasers are really first time homebuyers.
With the weak housing market, will anyone buy these houses that are to be sold at market rates. |
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Fri Oct 19, 2012 4:41 pm |
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