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Westchase CDDs In Contract Negotiations

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By JASON GEARY, The Tampa Tribune

Published: February 9, 2008

WESTCHASE - Supervisors of the two community development districts debated whether to use penalties or positive reinforcement to get the most from their management company.

During a workshop Tuesday, supervisors discussed how to structure a contract with their management company, Severn Trent.

The districts' lawyer will continue reworking the contract with the supervisors' input and discuss it with Severn Trent.

The districts are seeking to negotiate management services with Severn Trent for about $86,000. Severn Trent's previous bid was about $165,000.

Most of the drop in price would come from reducing $48,000 spent for a director of operations position. The director would instead be paid on an hourly, as-needed, basis.

Supervisors identified other expenses, including office rental and computers, where savings could be found. However, the districts agreed they should be responsible for the cost of keeping verbatim minutes of the monthly meetings.

Bob Koncar of Severn Trent attended the meeting and went over the items of concern with the supervisors, including the proposal to pay the director of operations hourly. He said the director would be available for telephone conversations without charge, but reimbursement would be needed when traveling to Westchase to oversee projects. No final decision on the contract provisions with Severn Trent has been reached. That is expected to be up for approval on next month's agenda.

At last month's meeting, some supervisors expressed skepticism at an $85,000 proposal from a rival company, District Management Services, a Tampa-based company that started about three years ago.

Some expressed concern with how much lower the price was compared with other bidders.

It was the lowest price among various bidders, including Severn Trent. District Management Services representatives suggested creating savings by removing the director of operations position.

Peter Altman, regional manager for District Management Services, attended Tuesday's workshop to defend his company's proposal and credentials. He assured the districts that his company would provide as good or better service.

"We stand by our price," he said.

Altman compared the difference between the two management proposals to a brand-new Cadillac that one company was selling for $30,000 and the other was selling for $60,000.

"Please don't treat us like a Pinto," he said. "We're a Cadillac."

Some supervisors said they think Severn Trent is a larger company with more depth and financial strength. They also said eliminating costs such as the director or operations position put Severn Trent in line with District Management Services.

The districts have complained about Severn Trent's performance, including not getting timely financial data.

Mark Ragusa, a supervisor with the Westchase Community Development District, described relations during the past two years with Severn Trent as "incredibly contentious."

But he said the performance has improved. "I would never tolerate it again," he said.

Several supervisors have said they noticed a turnaround in Severn Trent's performance and in particular singled out the company's new district manager, Andrew Mendenhall, for praise.

Lewis Patterson, a supervisor with the Westchase Community Development District East, suggested negotiating with District Management Services.

However, a majority of members from each board agreed last month to negotiate with Severn Trent, which was the purpose of the workshop.

Bill Casale, a Westchase CDD supervisor, suggested using incentives to motivate the company and keep performance up.

Greg Chesney, a CDD East supervisor, suggested a penalty clause could be put into the contract to ensure that Severn Trent lives up to critical criteria, including whether financial data are being supplied in a timely manner as well as whether deadlines are being met for audit and budget requirements.

The proposed penalty for violating one of the criteria would be to withhold a portion of Severn Trent's fee. Supervisors discussed various amounts, including about $3,700.

Bill Kemerer, a Westchase CDD supervisor, said he supports a penalty clause as a way of ensuring the districts' management company lives up to its responsibilities without having to terminate the contract. If that happened, the districts might then be in the troublesome position of having to find a suitable replacement in a short amount of time.

Reporter Jason Geary can be reached at (813) 865-1505 or jgeary@tampatrib.com.

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