ISLAMORADA -- On June 5, when the village administration put forward a $94.5 million contract with the sewer team of Veolia Water North America and AECOM, it was presented to the Village Council as if negotiations were complete.
However, emails obtained by the Free Press through a public records request reveal that Veolia/AECOM had not signed off on the deal ahead of that crucial meeting. Further, a Veolia attorney had made the situation clear to Village Manager Ed Koconis and the town's negotiating team.
In a June 2 email sent to Koconis, village attorneys Lily Arango and Nina Boniske, Wastewater Program Manager Greg Tindle and the village's lead engineering consultant Tom Brzezinski, Veolia Water North America Assistant General Counsel Van Cates lamented the company had not even seen a completed version of the contract to that point.
He added that even if negotiations could be completed ahead of that Tuesday, June 5 meeting, the Veolia/AECOM team would need until the end of that week to get final approvals by company management.
"The bottom line is that if you present the contract to the Village Council for approval on Tuesday, you should understand that Veolia and AECOM will not have approved the final form of the contract at that time and there may be additional changes to the contract after that point," Cates wrote.
Still, with pressure for a final contract coming from the council, and the village in a crunch to sign on the contractor in order to lock up a $20 million low-interest loan from the state, the administration pushed forward with the June 5 meeting.
Unaware of Cates' words, the council passed the contract by the required 4-1 supermajority that night. The resolution allowed only for "non-material" changes to be made between the meeting and the signing of the document, leaving little wiggle room for Veolia/AECOM to forge ahead with negotiations over two disputed appendices.
When the contractors substituted pages in those appendices after Mayor Michael Reckwerdt had signed the document, the deal imploded, prompting Reckwerdt to declare, "Hell will freeze over before I will sign a contract with you," as he held the two different contracts aloft at a June 28 Village Council meeting.
The village's subsequent decision to negotiate instead with Reynolds Water Islamorada has left Veolia/AECOM with only two clear options; go home quietly or go to court.
In an interview last week, Vice Mayor Ken Philipson said he was unaware at the time of the council's June 5 vote that Veolia/AECOM had not accepted the contract. But he expressed little desire to look back, stressing that Reynolds has since offered a deal that is $3.2 million cheaper than the $94.5 million Veolia/AECOM contract.
Philipson further said it wasn't just Koconis and his staff, but Veolia and AECOM as well, who could have made it clear during the meeting that negotiations had not been completed. The companies were at fault, he said, for not having their final decision-makers at the meeting.
"We were willing to negotiate as much as they wanted to negotiate," he said.
Councilman Ted Blackburn also sought to move past the Veolia/AECOM situation.
"It's always good to look back and see where the communications could have been better or whatever," he said last week. "But right now, we've got to move forward."
But at the emergency meeting the council called the day after learning about the changes Veolia/AECOM had made to the contract, Blackburn was more circumspect.
"We should be talking about things like is our staff serving us well that gets us into these type of situations," he said.
In an email sent by Koconis last week in response to a Free Press request to interview him and other members of the town's negotiating team, the manager said the decision to go ahead with the June 5 contract approval was based in part on Cates' June 2 email, as well as on an all-day negotiation meeting that Cates attended on June 4 "to finalize the agreement."
"The agreement was sent to all parties on the 5th and the item was then heard by the Village Council," Koconis wrote.
But in his June 2 email, Cates had written that company management would need three days to review the contract once negotiators reached a deal.
A month later, when Cates appeared before the Village Council, on the day the council officially decided to open talks with Reynolds, he emphasized that not even the preliminary deal had been fully worked out by the June 5 meeting.
Veolia, he said, only sent a draft of proposed changes to appendix 13, dealing with insurance, to village attorney Arango at 2 p.m. on the day the council approved the contract.
"We never got a response," he said. "It was totally understood that we were going to negotiate that after June 5."
Records back up Cates' assertion.
Cates sent appendix 13 to the various negotiating parties at 2:15 p.m. June 5. At 2:55 p.m., less than three hours before the meeting, Tindle sent a copy of appendix 13, absent the proposed changes, to the village clerk's office for inclusion in the contract to be presented that evening.
A similar scenario transpired with appendix 14, which dealt with guarantor commitments. At 2:54 p.m. June 5, Tindle sent an email to Village Clerk Debra Eastman containing two versions of the appendix, one with the proposed Veolia language, the other with language that Eastman was to include in the contract package.
Three weeks later, when Veolia/AECOM changed pages in the signed contract, leading to the village's decision to terminate the deal, the changes were made in appendices 13 and 14. In fact, many of the changes inserted were negotiating positions the village ignored in those last hours before the June 5 meeting, records show.
Philipson said he became aware a couple of days after the June 5 meeting that Veolia/AECOM wasn't fully satisfied with the contract. Shortly thereafter, he met with AECOM's Norm Anderson, to whom he explained AECOM and Veolia's options. Their team could either sign the contract as it was or negotiate changes. But negotiated changes would have required a new vote before the council, where they again would have needed to secure a 4-1 supermajority.
"They wouldn't have gotten a 4-1 vote," said Philipson, who had supported the contract on June 5 and, therefore, had the ability to flip the outcome with a change of heart.
Ultimately, Veolia/AECOM had no excuse for changing out pages in the signed contract, said former Key Largo Wastewater Treatment District attorney Tom Dillon, who has followed Islamorada's effort to secure a sewer contractor but has no stake in the matter.
"I think it is unacceptable to do something like that," he said last week.
But Dillon also said there is plenty of blame to go around.
"Staff, if they got this email suggesting changes, they should have put the council on notice and not brought it forward," he said.