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HomeMy WebLinkAboutCRC-05-01-02CRC Meeting, May 1, 2002 1 CARMEL REDEVELOPMENT COMMISSION Meeting, Wednesday, May 1, 2002 President Rick Roesch called the meeting to order at 5:05 p.m. Commission members present were John Koven, Luci Snyder, Ron Carter, and Ed Burke, constituting a quorum. Also present were Councilor Wayne Wilson, Steve Engelking, Karl Haas, and Christopher J. Braun from Plews Shadley Racher & Braun. Phyllis Morrissey as support staff. Cathy Kightlinger from the Indianapolis Star arrived at 5:11 p.m. Environmental Mitigation Mr. Roesch said in addition to the single agenda item of mitigation, he has received an up-to-date financial report so cash flow will be known. Mr. Haas said he had met with Mr. Renken’s insurance representative. The initial offering for settlement from the insurance company today was $200,000. While they were on the phone, this was raised to $250,000. Mr. Haas: It looks like at this point we have damages somewhere in the neighborhood of a half million dollars. That does not include the amount we paid for delayed work on the demolition contract. With respect to those amounts, the insurance company is taking the position that SESCO was high in their cost to investigate. They don’t want to pay the full amount that SESCO has charged. With regard to fees from my firm, they are taking the position that they shouldn’t have to pay any of those because those result from a landlord tenant dispute and not from an environmental matter. And with regard to the fees from Chris’s firm, they have taken the position that they don’t want to pay those fees because they don’t want to. We discussed with them a counter offer at $400,000. That would have reflected two things: one was, decoupling the two matters that are in litigation right now. One is a landlord tenant dispute with Mr. Renken. What we were hoping to achieve was a global settlement with respect to both the landlord tenant and with respect to the environmental claims. So our proposal was to decouple those and we would then be able to pursue Mr. Renken for fees with respect to a landlord tenant dispute which would have been mostly the fees from my firm, also the delay payment to the contractor. That would have left us short about $30,000 what we’ve been charged by SESCO to date. We thought maybe there was room to save $10,000 on the cleanup costs because it is possible there won’t be ground water monitoring. I thought we had made a pretty sizeable concession. They called back a few minutes ago and raised their proposal to $272,000. Mr. Braun: Basically, there are three components of the demand we made for $450,000 last Friday: $114,000 for the prior costs of SESCO’s work, $308,000-312,000 to do the remediation, and attorneys’ fees for two firms. CRC Meeting, May 1, 2002 2 Mr. Braun expressed concern whether the insurance company is taking seriously the sense of urgency to get the remediation done. He said he did not know how they arrived at their latest proposal. He said, “If they feel they can do the work for less than the $308,000-312,000, then let them step up and do it.” He has pointed out to them the longer it takes to settle, the more the final costs will be because of attorney fees, etc. He would like to have the opportunity get back with them and go through their proposal, again stating disappointment in the amount they were offering. Mr. Roesch said he had had three calls from Jerry O’Callahan, from IDEM, saying they did not want any delays on the mitigation. IDEM is not concerned about who pays for the work, they just want it done according to the plan as soon as possible. If the work is not started soon, IDEM might come back and request more stringent requirements. Mr. Braun agreed, noting there is a very good chance if this plan is not implemented, IDEM can come back and require seven years monitoring rather than just four quarters which would raise the cost considerably. He also noted 8% annual interest can be collected from the insurance company. Discussion followed at length, including discussion on the cash flows. Ms. Snyder asked what our choices were. Mr. Braun: We are going to tell them the $272,000 is not acceptable. We counter back but before we counter we tell them about the time pressure and ask how they arrived at the figure. “I want to know on what basis they believe there is basically a $100,000 reduction cost. So we find out the basis of their increased offer and go back to them with a counter offer, keeping the dialogue going.” Ms. Snyder: Meanwhile giving the order to start. Discussion continued. Mr. Wilson asked how we knew the contamination wouldn’t be even worse once we “got into it”. “Are they not going to want a limit of liability on their end to settle?” Mr. Braun: What we posed back to them today was two-fold: One was if they wanted to keep the counter claim alive, they keep their checkbook open and that if there were cost overruns that was a quid quo pro. If they wanted to have a global resolution, dismiss the counter claim, and proceed with a total resolution here, we would take SESCO and their numbers and get it resolved there. With IDEM, though, in terms of approving a plan, it’s kind of a two step process. The first one is an ISC (initial site characterization). They want to make sure you have fully documented the extent of the contamination out there, lateral and vertical extent, types of contaminants, etc. Once you’ve diagnosed the problem, the next step is a corrective action plan, or remediation plan. What to you CRC Meeting, May 1, 2002 3 propose to cure what’s out there? They wouldn’t say what you’re proposing makes sense unless they feel like we have done a good job of canvassing this site. They don’t want surprises. They don’t want you to get out there and find another hazardous site. In response to a question, Mr. Braun said the total cost at this point is $454,000. His company’s total fees through the end of March are $9800. Mr. Haas’ fees are approximately $24,000 through the end of March. These fees are included in the $454,000 figure. Discussion continued. Mr. Haas pointed out that the CRC has two issues. One is the settlement amount, the other, which is in some regards separate, authorization for SESCO to start. You can authorize SESCO to start without accepting the $272,000 as settlement. Alternatively, which I strongly recommend against, you can accept the $272,000 as the settlement. Authorizing SESCO to start doesn’t preclude trying to increase the amount of the settlement. The lawsuit’s already been filed. There’s no reason to expect that their settlement offer would be reduced below $272,000. So on a cash flow basis, you know as against the $286,000 relatively immediate cleanup cost, you’re fairly safe in planning on having $272,000. Mr. Roesch: I wouldn’t recommend doing that. Mr. Haas: I would recommend strongly against accepting $272,000 as a settlement amount. I believe the correct amount is $400,000. Mr. Koven: We were told insurance was going to take care of this; we were going to get all our money back. This was going to have a zero impact. Discussion continued. Mr. Braun said he thinks there is still some doubt in the insurance company’s mind that the decontamination will cost over $300,000. They could be saying, “Is there a different or more cost effective approach to the mitigation”. Mr. Haas: One possible approach is that they pay us $350,000 now and wait and pay us the other $50,000 when the costs are actually incurred. Ms. Snyder: Why are you willing to settle for $400,000 when the costs add up to $434,000? I think this is a ridiculously small amount. I think we should go for it all. Mr. Burke: Suppose we didn’t get any money from the insurance company for a year. How would we fund the cleanup? Cash flows were discussed. It was determined the CRC has adequate funds to pay for the cleanup. In addition there is the good possibility of selling more property. CRC Meeting, May 1, 2002 4 Mr. Haas: They don’t have to pay the portion of the fees that are associated with the landlord tenant dispute. Mr. Haas continued: The $400,000 is based on a small amount of concession. Mr. Roesch: I think we need to authorize the cleanup to begin at this point. I think we need to give these guys some direction on what we want them to go for. Mr. Burke: $454,000. Ms. Snyder: That’s it. Mr. Burke: Tell them you tried to argue $400,000 but they all got p------ off and said they wanted $454,000. Sorry. Mr. Koven: What’s the opportunity to get a $250,000 draw at the beginning? Discussion continued. Mr. Haas said if we expect to get 100 cents on the dollar it’s going to take longer. If we want to get the money right away, we’re probably going to have to accept less. Mr. Braun: It will give us leverage if we’re able to tell them we’re going forward, we’re not going to get slapped by IDEM with any penalties, but we are coming after you. We’re going to want full reimbursement for those things which were reasonably incurred and properly documented. We were hoping to get it before we started but we are going forward. General consensus. Mr. Roesch: I’d like to entertain a motion that we approve the commencement of the work by SESCO on the cleanup and counter with full expenses for our total expenses and let the attorneys… Mr. Koven: I have a concern on settling today for $450,000 and then finding something else under there. Then it would be our expense. Time for the cleanup is estimated at four weeks. Mr. Roesch said IDEM has expressed an additional concern because the pad [under the cleaners] was not intact. When they put the equipment on it, it crumbled. Mr. Koven: I don’t want any more than we’re entitled to, but I want everything that we’re entitled to. So if we agreed to $448,000 but they’re still on the hook till the project is complete, should we incur anything else, I’d be okay with that. CRC Meeting, May 1, 2002 5 Mr. Braun: We could certainly do that. Mr. Burke moved the CRC give authority to SESCO to proceed with the cleanup. Following a second by Ms. Snyder, the motion was unanimously approved. Consensus and direction to the attorneys from the CRC members to recover what the contamination has and will cost. Mr. Braun: One of the arguments that may come up…they may try to say that the reason you are moving forward with this has really very little to do with pressure from IDEM, but has to do with your own concerns and schedule and it’s for the convenience of your development. Mr. Roesch: You can tell them that because of this [contamination] we basically had that plot sold to Brian Shapiro and we had to pull this out of the equation because it was polluted. Mr. Carter: And we may want damages. It was determined this was in October or November 2001, and the value was $260,000 [.8 acres at $325,000 per acre]. Plus 8% on lost revenue. No one could get that property financed because of the pollution. Mr. Haas: In fact, we were lucky to be able to close with anyone. Ms. Snyder: What about the extra cost of running drainage lines around the polluted area? Mr. Carter: We also had to put in extra driveway space because they could not work back there. Mr. Roesch: We did not get to demolish part of the Kroger parking lot because we had to have a staging area provided for Shapiro’s because that [area behind them] couldn’t be used. The attorneys will take this into account in the negotiations. Adjournment Mr. Burke moved the meeting be adjourned. Following a second by Ms. Snyder and unanimous approval of the motion, the meeting was adjourned at 6:06 p.m.