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DARIEN — Town officials are not telling the public why they’ve asked for a seven-month extension before finalizing the $103 million purchase of Great Island, except to say that environmental, access and easement issues require additional due diligence.
That’s a concern for Board of Finance Member David Martin, who questioned at a meeting on Tuesday night whether the extension means that there were undisclosed problems when the town signed the purchase and sale agreement.
“That extension period is pretty long, relatively, so it seems like there’s something serious that’s either been newly discovered or something that had previously existed that we didn’t consider appropriately at the time of the purchase at a time of the contract signing,” Martin said.
Martin said the extended due diligence raises concerns about other possible issues that could warrant investigation and asked that the board receive a briefing on the cause.
Board Chair James Palen said that he didn’t think there were any new issues that had arisen.
“I think it’s just dealing with the ones that they had started investigating and just needed more time,” said Palen.
Board member John Wolcott questioned how First Selectman Monica McNally would explain the reason for the extension.
“Would Monica say that the total cost of acquisition has not increased? It’s just the amount of time necessary to accomplish the same scope of work that was originally envisioned?” he said.
Palen said the cost of the acquisition cannot change from the amount approved by the RTM.
Town administrator Kate Buch told the board that the cost to the town was not the issue in the extension and that she would ask McNally to brief the board on specifics of the due diligence during an executive session.
Palen said that the seven month extension was not a requirement and that due diligence could be completed sooner than the new deadline of March 6.
He said that from a financing perspective, the 30-day window between the end of the diligence period and the closing had been increased to 45 days to allow more time for the bond sale.
“That will give us a couple extra weeks to be able to deal with any type of market hiccups or delays or anything,” Palen said.
He said that rates, compared to the end of June when the RTM approved the purchase, had moved a little bit in favor of the town.
“The market seems to be cooperating and rates have generally been on a sort of slow downward track with most believing the Fed will have some type of cut in Q1 or Q2 next year. So I think, you know, so far things are moving in our favor,” he said.
In other business, the board approved a transfer of $27,493 to the selectman’s professional services account to cover due-diligence expenses paid before the Great Island appropriation was approved.
Buch said the transfer was needed because the town spent money on “phase two” environmental costs before the approval of the purchase by the RTM on June 27 for $103,465,000 — of that amount, $103,000,000 was the sale price and $465,000 was for additional costs.
“Unfortunately, we had to start the phase two work before that appropriation was finalized and approved by the RTM, so we can’t pay the costs out of that appropriation,” she said.
Buch said the request was to transfer funds from positive balances in the administration’s FY22 budget, coming from a part-time position that wasn’t filled until midway through the year, the retirement of the former HR director who is not being replaced until the beginning of the fiscal year, and the fact that McNally does not travel as much as budgeted.
Palen queried whether, in theory, the town will bond $27,493 less due to these expenses being paid now — if costs do not change.
Buch said that was possible “if everything else stays the same.”
Wolcott asked about the complications of tracking the costs related to the island purchase.
“[In] moving these costs from ‘one bucket to another’ do you conceivably lose control of the costs that are all being accumulated to acquire Great Island?” he asked.
Buch said the costs were going into an account for Great Island and that it was possible for the staff of Finance Director Jennifer Charneski to report on each cost.
“You know there might be some in two different funds but it’s not a problem to [account for our] money. This is in the general fund, but it’s totally possible for us to account for them and report on them,” Buch said.
The board unanimously approved the transfer of funds.
The August 16 Darien Board of Finance meeting can be streamed via Darien TV79 here.