May 17, 2011
We’ve been noticing a series of management failures at City Hall. For example, new details about the complex, expensive and unworkable transaction described below raise troubling issues with fallout that has persisted for four years. See what you think.
Automated Water Meter Readers
Back in 2007, the City wanted to convert water meter reading to an automated process. There was no money to fund the capital cost so City procurement staff issued an RFQ (Request for Qualifications) for an “energy savings performance contract” that would allow the City to borrow the money and repay the loan over a period of years with savings that would come from this new technology.
Staff Rushed the Project: Why?
Before the March 2007 due date for the RFQ, the City canceled it and soon issued a different one. Five companies then submitted bids. The City held no interviews with the bidders and allowed for no presentations. Just five days after the bid closing date, staff selected Johnson Controls (JCI) for the job, and placed this selection on the City Commission’s consent agenda. Mayor Giulianti commented that the back-up on this item required five hours of reading, and she made sure it was pulled from the consent agenda so that objecting bidders could speak. But in the end, the commission followed the staff recommendation.
Why was staff so quick to select Johnson Controls over Honeywell and the other bidders? At whose behest was the original RFQ revoked and for what reasons? Why did staff recommend such a costly and complex project with no opportunity for the commission to hear presentations from the bidders? (A cone of silence was in effect which prevented the elected officials from their own meetings with any of the bidders.) Why was this matter placed on the consent agenda where no discussion could occur? How many elected officials beside Mayor Giulianti actually spent the many hours required to read and understand the backup material?
Once selected, Johnson Controls ramped up the project to include not only water meter reading, but also a secure public safety communications system, automated parking meter reading, and a City-wide wi-fi network that would allow the Hollywood public free internet access.
This ambitious project received final approval by the new City Commission elected in January 2008. A few months after they took office, in order to finance the project, the new Commission approved a $16 million lease purchase agreement with Bank of America, to be repaid over 15 years. Although the City has now paid about $13 million to JCI and we continue to make payments on the BOA loan, not a single component of the project is working as promised.
The City has now accepted that the wi-fi network will not work city-wide. The new goal is downtown and the beach, only. But it does not even work reliably in these locations. The parking meters are being read by cell modems because the wi-fi network is too unreliable. Only 5,000 of the City’s 40,000 water meters are being cautiously read by the rickety wi-fi network. The City Commission has given up entirely the idea of using wi-fi for public safety communications. So the project is greatly diminished.
JCI paid the City some $926,000 in January 2011, to account for a “shortfall” in the City’s anticipated energy savings from the project in 2010. But JCI is now seeking more money from the City (as described below) and in any case, no “shortfall” payment comes close to compensating the City for four years of staff time and money spent trying to make this project work.
Although high-level staff have been touting this program for four years now, assuring us that the problems can be cured, the minutes of weekly staff meetings on this project suggest otherwise. Every Tuesday, at 3 PM, for many months, staff have been meeting with JCI representatives to discuss “progress.” The minutes of the May 3 meeting, which involve a JCI subcontractor called US Bronco, are devoted to problems with water meter reading. With perseverance, they can be read HERE.
These minutes are written so poorly and reflect so much confusion that they are an embarrassment to city residents and staff alike. The very last sentences, however, make clear that the network is not working, JCI wants the City to assume the cost of maintaining the malfunctioning network, and JCI wants additional money from the City. What we see reflected here are weeks and months and years of wasted staff time, millions of wasted tax dollars, unacceptable management practices, and profound dysfunction at City Hall.
Filed under: WiFi
July 6, 2010
When the alleys flood, as they did yesterday in the heavy rain, not only do trash or recycling cans upend, but now some of the new wifi-ready water meter lids pop up or float away — a more serious problem.
As we have reported previously, the citywide wifi project is greatly troubled, with none of its components working yet. By November 2009, we were supposed to have had all water meters and parking meters read by wifi, all police laptops operating with wifi, and all Hollywood residents with free wifi internet access. This shift to wifi was said to save the city millions of dollars.
In order to bring the water meters onto the wifi network, the old cement meter box covers were to be replaced with new lids. It appears that some of the new lids have been retrofitted to avoid the problem illustrated above, others obviously have not been. Households lucky enough to still have the old cement lids experienced no floating lid problem when their alleys flooded yesterday.
Short answer here: something needs to be done to secure water meter lids in alleys prone to flooding.
Filed under: WiFi
May 27, 2010
We had a meeting earlier this week with senior city staff and a Commissioner about problems with the City’s WiFi project. There was much heated discussion. They believe our report (dated May 23) has misled you, the public. We disagree on the facts and think you should know where we differ.
The red printing represents our understanding of senior staff’s views expressed at our meeting. The blue print is our differing view.
City Staff: The Balance Sheet has misrepresented the facts. We have had numerous meetings with JCI and its consultants. We believe the WiFi system can be made to work. The City’s money is not at risk because if the project doesn’t work, we will sue for breach of contract.
The Balance Sheet: We don’t question that staff and Commissioners have worked hard on this project. However, we believe that staff never should have brought the JCI contract to the Commission for approval because it was incomplete, poorly drafted, and highly unfavorable to the city. Yet staff assured the Commission that this contract would cost the city nothing because JCI guaranteed, with “shortfall checks” if necessary, that WiFi would save the City $23 million over 15 years. This was simply untrue. We believe that the Commission needs to be able to rely on city staff especially when it comes to costly matters like this WiFi project.
City Staff: The Balance Sheet is wrong in saying the contract amendment was worse than the original contract. In fact,the amendment was better because it provides some “measured savings” which form the basis for “shortfall checks.” The original contract identified no “measured savings.”
The Balance Sheet: We did not say the amendment was worse than the original contract. What we said is that the amendment is worse than what city staff SAID was in the original contract. City staff told the Commission that the contract not only guaranteed city savings of $23 million, but if the savings did not materialize, JCI would make up the difference in a shortfall check. What city staff said was not true.
City Staff: The Balance Sheet said there were five costly maintenance agreements associated with this project. This was wrong. There are only three and they will cost no more than 5% to 10% of the project. Compared to the $23 million savings, this is a small amount.
The Balance Sheet: We are glad to learn the cost of these ongoing contracts, since it has not been defined until now. There may be three instead of five, but we note that the JCI contract documents identify five ongoing obligations: (1) network maintenance contract, (2) JCI Service contract, (3) water meter maintenance agreement, (4) parking meter annual maintenance, (5) Internet Service Provider (ISP). Please note that 5%-!0% could be in the range of $650,000-$1,300,000 over the life of the contract. Maybe about $100,000 a year, or more. These costs may be a small percentage overall, but the dollar amount is significant and should have been considered in the original presentation.
City Staff: Shortfall checks are not important. Either the network will be made to work in which case the city will save $23 million, or the city will sue for breach of contract.
The Balance Sheet: We see other possible scenarios in which shortfall checks would be very important. Getting the network to work now could require an additional investment, money not originally included in the cost. How much and who will pay? Moreover, parts of the project may work, and others may not, either now or in the future. Fifteen years is a long time for technology like this when new developments are constantly occurring. And finally, what about the cost of litigation?
City Staff: The Balance Sheet claims that the city will lose $23 million on this project and the city will have no savings from WiFi for 15 years. When the network is up and running the City will be saving the full $23 million over the 15 years. But everybody who reads your article thinks the city is losing $23 million.
The Balance Sheet: We said that there are no savings to date, yet the city is obligated to pay the bank $1.4 million this year. As for future years, we offered questions. Will the city have sufficient savings to cover the loan two or ten years from now? If the network is made to work reliably over the long term, the city should have savings to offset loan payments. If the network breaks down or if some of the components can’t be made to work throughout the entire city, for example, then the anticipated savings will fall short. Where will the money be found to cover the loan payments in such a case? No one can foresee the future of this project. We believe questions are appropriate.
City Staff: We are on top of these issues and have been working on them consistently. As members of the public, you may not be aware of all that we are doing, but that does not mean we are doing nothing.
The Balance Sheet: It’s true we have no way of knowing everything. But we have looked into this project extensively to uncover facts, not fiction. After numerous e-mail exchanges during the past two years, our first in-person meeting with the IT Director was in January 2010, the second in April 2010, to get updated and express our concerns. Both times he assured us JCI was going to make everything right and would pay the city a shortfall check for any anticipated savings that were not realized. Yet there was nothing in writing from JCI to back up these promises. We met with the City Manager and City Attorney at the end of April and at that time, the manager said he agreed with us that the City Commission needed to be involved and WiFi would be put on the Commission agenda. The matter is now on the June 2 Commission agenda, set for 4 PM.
Filed under: WiFi
May 23, 2010
The City Commission must re-examine its role in how the city is governed. Being overly deferential to staff is no more a virtue than meddling micro-management. Both create a climate for trouble, and in the case described below, trouble that can cost the taxpayer dearly and make life miserable for city staff.
The deal involved a “performance contract” with Johnson Controls (JCI) to build a city-wide WiFi network. The Interim City Attorney and the Director of the City’s IT Department both told the City Commission that the JCI contract guaranteed that WiFi would save the City $23 million over 15 years. They said JCI would provide a “shortfall check” to the City in any year the savings were not achieved.
In April 2008, the City borrowed money from Bank of America (BOA) to pay for the network. The repayment terms were structured to match the savings the city was “guaranteed” to receive each year under its WiFi contract with JCI. The City would repay BOA $22.9 million ($16 million principal, $6.5 million interest) from the $23 million in supposed savings that WiFi would provide. In fact, the city misrepresented its ability to repay the loan. The JCI contract does NOT assure the City $23 million in savings. A close reading of the contract documents shows that $18 million of the “savings” are simply “deemed” to occur whether or not they actually do. Furthermore, it appears the city may not be receiving much of a “savings” at all since we are required to engage in five separate WiFi operational/maintenance contracts, the cost of which has not been included in the city’s calculations to date. Unsurprisingly, now we’re in trouble. The WiFi network, which was supposed to be fully operational by November 2009, still does not work and to date the City has saved no money from the project. In addition, the City Attorney has now clarified that there is no $23 million shortfall guarantee in the JCI contract. (JCI does guarantee savings of about $5 million over 15 years and if these are not achieved, there will be a shortfall check. But $5 million is not nearly enough to cover the debt to BOA.)
The City’s obligation to BOA requires us to repay $1.4 million this year, with no WiFi savings to offset this amount. Will the City Commission raise taxes to cover the missing revenue? What programs and services will the City Manager cut to make up this loss? And what about next year? and subsequent years, all the way through 2024 when the final payment will be due?
The Balance Sheet editors have met with the Director of IT, the City Manager, and the City Attorney, first calling attention to the problems, then urging that steps be taken to address what went wrong, assign responsibility, and revise procedures so that nothing like this occurs in the future.
What this case brings to light is mismanagement, pure and simple. We don’t make this charge lightly but there is no other reasonable conclusion. City staff has misrepresented contract terms, covered up the mistakes, maintained silence, and tried to reassure the public and the City Commission that everything will be fine.
From the outset, two things were going on. IT and Budget staff were dazzling the City Commission with promises that this WiFi project would make the City of Hollywood “a regional provider with ‘best in class’ municipal services.” And at the same time, staff recommended and the City Commission approved a contract that shifts the financial risk to a shocking extent from JCI to the City.
Questions
- Who is responsible for the approval of a contract such as this that is so unfavorable to the City?
- Who is responsible for creating such a climate at city hall that IT, and Budget, and Finance, and the City Manager’s and the City Attorney’s offices can all recommend such a fiasco?
- Who is responsible for creating a climate at city hall where staff at all levels remain silent year after year about problems of this magnitude?
No one is accountable. The situation is intolerable. The City Commission has been looking the other way.
Plea to City Commission
You, our elected officials, must re-examine your own role in how the city is governed. We are told that WiFi will be on the City Commission agenda on June 2. What steps will you take to clean up this mess and install accountability at city hall? What steps will you take to get this WiFi project to produce the required savings? What steps will you take to ensure that the information presented to you on June 2 is accurate and complete?
As we said at the outset, extreme deference to staff is no more a virtue than meddling micro-management. With the 2008 city election, it appears the pendulum has swung from one extreme to the other.
Filed under: WiFi
November 21, 2009
Pioneering is often worth the effort but is not without disaster along the way. Hollywood’s complex citywide WiFi project falls in this category. We hope that despite the setbacks, it can be made to work as promised. Over a year and a half ago, the City Commission approved a 15-year $15.9 million WiFi contract between the City and Johnson Controls, Inc. (JCI). Fortunately, this agreement guarantees that by utilizing WiFi, the City will save money (specific dollar amounts to be saved in each of the 15 years). If the City does not achieve the specified annual savings, JCI must make up the difference.
The WiFi project has three components1. Dual Band Wi-Fi Network covering 95% of the City – to provide a secure network for police communications, eliminating the need to purchase Verizon cards, plus a free outdoor network for residents, businesses, and visitors, eliminating cost of CRA’s beach Wi-Fi.2. Automated Water Meters – to be read via WiFi, saving the cost of hiring meter reading personnel, eliminating estimated readings, enabling enhanced leak detection and repair.3. Solar-Powered Parking Meters – to be read via WiFi, saving the cost of hiring meter reading personnel, enhancing revenue collection, reducing carbon emissions. |
Right off the bat, in Year 1, we have a major shortfall, according to City Information Technology Director John Barletta’s Nov. 4 presentation to the City Commission. Although the entire project was to have been completed this month, each of the three components (described in the adjoining box) is functioning either not at all or poorly.
Network Problems
Delays arose from an incorrect software installation and a design flaw. But more problematic, to be successful, the network has to cover 95% of the city. And JCI has been unable to install the network in the following places for a variety of reasons (lack of suitable FPL poles, dense tree canopy, etc.):
- All gated communities
- Oakwood Mall
- Port 95 Commerce Park
- Carriage Hills
With this lack of coverage, the police cannot rely on the network and must retain their Verizon cards (savings of $295,200 not yet realized).
Automated Water Meters
The contract calls for replacement of over 39,000 water meters by the end of this month. Only about 11,000 meters had been installed by the first week in November. JCI has hired additional crews and the new completion date is the end of March 2010. (savings of $579,855 not yet realized).
Parking Meters
The meters are installed but the City has received many complaints. They are not user-friendly, the bill inserter is too low, the screen is hard to read, the instructions are too complicated, and credit card payments have not been properly processed, causing some users to incur bank fees for overdrawn accounts. The City is working to resolve all of these problems. (savings of $368,822 not yet realized).
Shortfall Check
The first-year savings for the three components should have been $1,243,877 according to the JCI contract. Mr. Barletta said the City will be sitting down with JCI before the end of the year to finalize the amount of the “shortfall check” JCI is to pay the City.
What we have here according to Mr. Barletta is “a very large and complex system — the largest Motorola dual mesh network — over 700 Access Points and 9 Backhaul sites.” WiFi rollouts in other cities have not gone smoothly and obviously neither has ours. Mr. Barletta said he has learned a lot and so has JCI. The bright side (if there is one) in all this mess is that the risk of failure falls on JCI, not the City. How soon all the bugs can be worked out and how willing JCI will be to write the big shortfall check in December are open questions right now.
City staff touted Hollywood’s WiFi project as a fail-safe way to cut spending. As originally conceived, the project had three components.
- Dual Band Wi-Fi Network covering 95% of the City – to provide a secure network for police communications, eliminating the need to purchase Verizon cards, plus a free outdoor network for residents, businesses, and visitors, eliminating cost of CRA’s beach Wi-Fi
- Automated Water Meters – to be read via Wi-Fi, saving the cost of hiring meter reading personnel, eliminating estimated readings, enabling enhanced leak detection and repair.
- Solar-Powered Parking Meters – to be read via WiFi, saving the cost of hiring meter reading personnel, enhancing revenue collection, reducing carbon emissions.
Note: As of July 1, 2011, not one of these components is working. The City is saving on the parking meters but not because they are being read by WiFi. Parking meters are being read by cell modems provided by Johnson Controls, Inc., the company that the City hired to install the WiFi project. It is widely believed now that the WiFi project cannot be made to work. A settlement between the City and Johnson Controls, if it has been worked out, has not yet come to public light.
BALANCE SHEET BLOG - HOLLYWOOD, FL 