MERIDEN — The city’s Finance Department violated the City Charter earlier this year by reallocating grant funding from one project to another without council approval, according to a legal opinion issued by the city’s Law Department Tuesday.
Mayor Kevin Scarpati recently requested the opinion after learning the Finance Department reallocated a $406,000 state grant, originally approved by the City Council for a new banquet facility at Hunter Golf Course, to road paving.
In an opinion issued late Tuesday afternoon, Corporation Counsel Michael Quinn concluded the City Charter required staff to get the council’s approval before moving the funds.
“Because the Council approved how the LoCIP funds would be used, it is my opinion that any recommendation as to how to alternatively spend these LoCIP funds would also require Council approval,” Quinn wrote in his opinion. “Acting under the assumption that these LoCIP funds have not actually been spent as of yet, it is my recommendation that a new Resolution be introduced to the Council for approval for a new use of these funds.”
In an interview last week, Finance Director Michael Lupkas and City Manager Tim Coon said the city redirected the grant to road paving because, while staff initially believed the grant could be used to construct the new banquet hall, they later determined it was "questionable" whether the state would allow it. So to avoid losing grant reimbursement, the Finance Department moved the grant to road paving, an acceptable use of the grant, and reallocated bonding meant for road paving to the banquet project, meaning the cost of the banquet building would be entirely bonded with no grant funding to offset it. The swap of funding sources had no impact on the city’s bottom line or bonded indebtedness, Lupkas said.
During a meeting Tuesday night of the City Council’s Finance Committee, Lupkas gave a lengthy presentation explaining the background of how the grant was used.
Lupkas spent much of the presentation, not included on the meeting agenda, defending himself and “rebutting” recent comments made by Scarpati and others criticizing Lupkas for a lack of transparency over the use of the LoCIP grant. He refuted comments that he “unilaterally” moved the LoCIP grant by saying the decision was discussed in “internal meetings” among staff and was also discussed with the city’s outside bond counsel.
Lupkas also noted the idea of moving the LoCIP grant was discussed by the Finance Committee meeting in April. The resolution that the council approved in April to approve funding for the banquet facility was supposed to indicate the reallocation of the LoCIP grant, however, Lupkas said “the wrong version (of the resolution) was submitted to council” and that version did not indicate the LoCIP grant transfer.
Lupkas, who will retire later this year after 35 years in accounting, including 12 years as Meriden’s finance director, said “I do not want to end my career on a sour note” after “my integrity was called into question.”
“In my time here, I don’t believe I have ever knowingly led the City Council or the city of Meriden down the wrong path,” Lupkas said. “... I just don’t think anyone can say that I have done anything not in the best interest of the city … I’ve got 32 audits under my belt, and if you look at any one of those, you’re not going to be finding anything where any auditor is questioning any kind of issue that’s out there.”
Scarpati angrily responded to Lupkas’ presentation with a tirade in which he criticized Lupkas for not informing councilors of the LoCIP grant reallocation or seeking the council’s input on what to do with the money after discovering it couldn’t be used on the banquet hall.
“It was not legal, it was not transparent, I will not stand by this,” Scarpati said. “This is not going to be the end of this, there will be further conversations to be had with the city manager ... For us to sit back and do nothing and then allow you to retire in a few months and collect a pension is not OK with me.”
Democrat Cathy Battista came to Lupkas’ defense at the meeting by saying she doesn’t believe he intentionally misled anyone. Democrat Miguel Castro said he was “taken aback” by Scarpati’s comments, adding he feels Lupkas has always provided accurate and comprehensive information to councilors.