Phillips selectmen (left to right) John Stinchfield, Steve Charles, John Wilbur and town manager Jim Collins listen to their attorney at a recent selectmen’s meeting last Tuesday. (David Hart photo) PHILLIPS –- Ongoing discussions regarding an agreement with Avon for transfer station and fire services continued at Phillips selectmen’s meeting last Tuesday, Jan 12. Discussions concluded with a vote to name selectman John Stinchfield as a Phillips representative to sit down with an individual from Avon to attempt negotiations. The selectmen’s intent is to try to hash out the differences of opinions that arose from an interlocal contract agreement for services provided by the Town of Phillips.

The differences began when Phillips sent an invoice for fire and solid waste services for the third quarter of 2009. Avon returned a check in response to the invoice with a lesser amount and little to no explanation, said Phillips town manager Jim Collins.

“The payment made by Avon to the Town of Phillips for 2009 third quarter services was $545.13 less than what was agreed upon,” Collins said after the meeting. “If you add a similar amount for the fourth quarter, it totals $1,090.26. That is a significant sum for a small town like Phillips.”

In the past, Phillips and Avon selectmen made two attempts to meet and resolve this issue, but contentious debate hindered forward progress. Further complicating things, Collins said, “this issue is being used maliciously by a select group of people.”

Collins started the discussion that evening by updating attendees with the most recent developments. Collins said they received a Dec. 22 letter from Phillips attorney Frank Underkuffler and he announced his presence at the meeting.

Underkuffler’s six-page letter detailed the problems at hand and offered some possible solutions.

“At our last meeting of Dec. 22, this board voted to invite the selectmen from Avon with Mr. Underkuffler to discuss the differences in the billing of solid waste services and fire protection,” Collins explained

He said that on Jan. 5 they received a two-page letter back from the Avon board saying that they would not be interested in having that kind of a meeting. “They said they did not feel our town attorney had a role at our meeting or workshop.”

The Avon selectmen’s letter stated, “If a one-on-one meeting isn’t acceptable, we will agree to meet with both boards but we cannot agree to your attorney being present and acting as mediator.”

Collins said they provided Underkuffler’s letter to the Avon board, and likewise provided Avon’s response to their attorney.

“I’m definitely not here as a mediator, that was never the intent,” Underkuffler explained at the meeting. “I’ve been trying to convince Avon to hire an attorney to talk to me… these interlocal agreements can get more complicated than people realize. I agree one hundred percent with Avon to their point that I’m not here as a mediator.”

Underkuffler said his job was similar to the Phillips selectmen’s which was to try to reach an agreement which was fair for the town of Phillips.

“Interlocal agreements are like sausages being made at the factory. You really don’t want to see them being made. It can be ugly,” Underkuffler explained.

After the meeting, Phillips selectman Steve Charles said that their lawyer would ultimately review the agreement in the end. Having their lawyer present during the development stages of an agreement could eliminate any additional meetings and confusion if he was to review and make later recommendations for changes.

Underkuffler explained that after a little “give and take” he had hoped they’d find something in the middle.

“The controversy with Avon seemed to have started when Avon disputed and then hindered a smaller payment last September,” Underkuffler said.

“It took me a while to figure out where Avon was coming from. They were basically discounting their September bill substantially.”

The interlocal agreement for 2009 was written to allow Avon a discount after the contract period to adjust for actual expended costs versus projected and agreed upon costs, he explained.

The confusion and controversy arose in the interpretation of the actual contract period of the agreement. Phillips has adopted a fiscal year beginning June 30 and ending July 1. Avon’s fiscal year resembles a calendar year, which Underkuffler explained was the intent of the contract.

“They (Avon) thought that the contract was written so that the first quarter payment was after the end of your fiscal year,” Underkuffler explained. This would mean a September payment and the misunderstood time for a discount, he explained.

“That was a mistake on their part, but it was an honest mistake. They were not trying to rip off the Town of Phillips. They just simply got confused between the fiscal year and calendar year, and the first quarter discount should apply in March 2010.”

“Avon was fully expecting that they would get a small bill in September. These guys (Phillips) were fully expecting that the bill in September was going to be like the other bills and the discount was not going to happen until March.” It was a misunderstanding and unfortunately triggered a whole lot of letters back and forth.

“The past is the past… but somehow we have to get beyond this.”

With the agreement in the spotlight, Underkuffler said the interlocal agreement should be re-examined from the Phillips standpoint.

“I think both sides left the table thinking they got what they wanted and neither side understood that what was on paper was not really what either side thought.”

“Avon was looking out for Avon and that’s their job… They were looking out for their town and I don’t hold anything against them for that,” Underkuffler explained.

An example for re-examining the agreement is Avon only paying 30.2 percent of “expended costs” for fire protection and solid waste services. “Paying expended costs is by all means, and in any stretch of the imagination, not a good deal for Phillips. Expended costs do not include things like depreciation of capital investment.” Underkuffler said originally Phillips wanted a longer term three-year contract, but a short term one-year contract, as adopted, allows Avon to shop around or avoid sudden expenses.

“Avon is looking out for Avon that’s what they need to do and are elected to do,” he said. There are also hidden costs not covered by Avon, Underkuffler explained. You have costs of management and administration. “It’s very hard to put a dollar figure on that.” This includes such things as hiring and firing, selecting insurance, writing or accepting grants and accrued employee benefits as examples that are costs to Phillips, but not an expended cost, he said.

Added liability insurance is another example of what the attorney described as hidden costs and not expended. “The costs for insurance are most likely greater if you’re covering Avon and Phillips compared to just covering Phillips alone… This contract I would say was rather generous toward Avon.”

“I’m sure these Avon proposals are absolutely made in good faith. I think they are acting in good faith and are trying to get what’s best for their town and that’s great. I admire that.”

“Anyone who has suggested that the town of Phillips has been mean to the town of Avon —that’s absolutely not true. In this interlocal agreement, the Town of Phillips bent over backwards to try to accommodate the town of Avon in several ways. Number one, going from a three-year deal to a one-year deal –-that’s completely in Avon’s favor. Having this expended cost discount was another one that Avon was insistent on and definitely a good deal for Avon. And given that all of these hidden costs are not counted are added examples,” he said.

“The difficulty of coming up with a fair arrangement should not be underestimated.”

Underkuffler threw out new ideas for doing business and the concept of “districting.” “The idea of districting is to avoid the very problems that I’m talking about.” Reaching interlocal agreements are often very difficult given the complexities.

Underkuffler said a fire or solid waste district could be established where it sort of becomes its own independent entity from the towns. The district purchases the equipment, hires its own employees and buys its own insurance, for example.

Underkuffler said the district then charges the towns by assessments through variables like valuation, population, etc.

“A lot of towns who are having trouble and who are coming up with problems with interlocal agreements have found success with districting,” Underkuffler said.

As a considered suggestion, districts are not a “holy grail” solution, but a fire district consisting of Phillips, Avon and Madrid could be established. Some form of solid waste district could also be looked at, he explained. Currently the two towns already share an established water district.

Several Phillips residents were present that evening to express their concern with the manner in which this issue had been handled.

Resident Lauri Sibulkin said that this situation has gotten out of hand. “This problem, started about the size of my hat,” he used as an analogy of magnitude. “Could have laundered it and ironed it out and been alright,” said Sibulkin. “But it became, ‘I’m gonna be right and damn you,’ and that’s the problem.” Sibulkin was referring to past communications between the two boards.

Other Phillips residents presented arguments to what was suggested that evening.

In unrelated business, resident Margaret Concenza inquired about the status of a recall petition. The selectmen informed her that the town did not have a recall provision within its legal boundaries so there was no status on the suggested petition.