Mayor and Council Minutes – July 5, 2016

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MAYOR AND COUNCIL

JULY 5, 2016

Mayor Cerino called the meeting to order at 7:49 p.m. In attendance were Council members Liz Gross, Linda Kuiper, Samuel T. Shoge and Mauritz Stetson, Jennifer Mulligan, Town Clerk and guests.

Mayor Cerino asked if there were any additions or corrections to the minutes of the Mayor and Council meeting of June 20, 2016 or the Executive Session summary of the same date. Mr. Stetson moved to approve the minutes as submitted, was seconded by Ms. Gross and carried unanimously.

Mayor Cerino called the executive session to order at 8:35 p.m., June 20, 2016 in accordance with§3-305(b)(7) of the Open Meetings Act. The purpose of the meeting was to meet with counsel to consider an agreement regarding the Hospital oil spill.  In attendance at the meeting were Council members Liz Gross, Linda C. Kuiper, Samuel T. Shoge and Mauritz Stetson, Robert L. Sipes, Utilities Director, Michael Forlini, Esquire, R. Stewart Barroll, Esquire and Jennifer Mulligan, Town Clerk.  No motions were made or passed but there was a consensus among the Council in favor of signing an agreement conditional on the second party having the proper signatories and corporations execute their end of the agreement.  The meeting adjourned at 9:18 p.m.  Minutes were taken and are part of the record.

Mayor Cerino stated that total operating cash on hand for unrestricted use is $848,916.58 and there were assigned funds for waterfront initiatives in the amount of $180,480.00 for total funds on hand of $1,029,396.58.

Mayor Cerino asked for a motion to pay bills. Ms. Kuiper asked if the report distributed for the meeting closed out the fiscal year. Mr. Ingersoll stated that the auditors may make changes, noting that the Solar City bills were still being addressed and there were some grants that had to be reimbursed. Ms. Gross moved to pay the bills as presented, was seconded by Mr. Shoge and carried unanimously.

Mr. Ingersoll stated that the public hearing for 2016 Chestertown Annexation Resolution No. 1 was held earlier in the evening and asked for a motion to adopt, noting that if it was adopted at this meeting it would become effective on August 22, 2016. Ms. Kuiper moved to adopt 2016 Chestertown Annexation Resolution No. 1, was seconded by Ms. Gross and carried unanimously.

Mr. Ingersoll stated that the Council received a letter from the Planning Commission regarding rezoning in August. The Council agreed on August 1, 2016 at 7:00 p.m.

Mr. Ingersoll stated that Mr. de Mooy was working on a $200,000.00 Community Legacy Grant Application for the Interpretive Center at the Marina and a second, much larger grant through USDA which was part grant and part low-interest loan. Mr. Ingersoll asked for the Council to authorize the applications, noting that the USDA funding could be used as a match for the State Waterway Improvement grants that have that requirement already received. Ms. Gross moved to authorize Mayor Cerino to sign the grant documents for the Community Legacy Grant and USDA funding, was seconded by Mr. Shoge and carried unanimously. Mr. Ingersoll stated that once the grants were finished he would send copies to the Council.

Mr. Shoge asked if fundraising has been considered for the Marina. Mayor Cerino stated that he is not ready to launch private fundraising because the permits have just been received. He said that he would know more by fall when grants have been awarded as to what would be necessary to fund the project.

Ms. Kuiper asked if the Town has looked into Equal Access Waterway Grants which were eligible for public landings. Mr. Ingersoll stated that he did not think that any grant funding opportunity has been overlooked but he would check.

Mayor Cerino stated that if the Town was successful with the Community Legacy Grant and USDA Grant funds they would not be used for repairs until the winter after next. This winter the Town will be bidding out work for the basin near the boat ramp on the Scott’s Point side of the property which would cost approximately $380,000.00 ($200,000.00 of waterway improvement funds received in 2014 and the $180,000.00 would come from the Washington College fund).

Mayor Cerino stated that bulkhead from the boat ramp to the Fish Whistle had to be replaced and the boat ramp was going to be relocated and centered with the possibility of finding a way to accommodate the travel lift.

Mayor Cerino stated that he wanted people to understand that the Town was not making a marina to compare with full-service marinas such as Rolph’s Wharf or the marinas located in Rock Hall. The Marina was being renovated as a destination marina. He said that he was hoping Chestertown could send boaters to other full-service marinas in the area, noting that a full-service marina has already failed at this site. The Town was trying to preserve public access to the water.

Mr. Ingersoll stated that this year’s fireworks were a success and thanked Mr. Nasatka and Mr. Procter for their work. He said that there were many phone calls as other cancellations confused people about whether the Town’s show was going to happen. He said that Chestertown always sets off the fireworks on the 4th of July as they are loaded in the ground and could not remain there. He said that if it is raining the Town always waits for a break in the rain and then shoots the fireworks.

Mayor Cerino stated that the main topic he wanted to discuss this evening was the Agreement between the Town and the Hospital.   He said that the document was signed on June 22, 2016 and marked the culmination of over two years of discussion.

Mayor Cerino stated that it was important to know that the Town wells are not and have not been contaminated by the oil spill at the Hospital. A pump and treat system is in place which pumps the groundwater towards a central location on the Hospital campus where any free heating oil that has leaked into the ground is collected. It also prevents any oil from the leaving the zone of hydraulic control.

Mayor Cerino stated that over the past 30 years this spill has been contained and the amount of oil still in the ground was debatable. The Hospital was moving toward a different mode of treatment which is a cause of concern to the Utilities Manager, Town Manager and Mayor and Council.

Mayor Cerino stated that he considered the Agreement with the Hospital as pre-emptive and would be implemented in the worst case scenario if and when the contaminants reach the Town’s production wells.

Mayor Cerino presented a timeline on the Hospital spill as follows:

1987                            Hospital begins having tank test failures on site;

MDE inspectors make field investigations;

1988                            Hospital spill continues, more MDE field investigations,

no actions taken to contain spill;

1989                            First two monitoring wells installed; free product immediately detected;

June 15, 1990            MDE sends violation letter to Hospital; 1’ of product found in Well #1; Hospital ordered to install recovery system within 30 days;

May 13, 1991              MDE cites Hospital for groundwater contamination.  Lead paragraph states, “This groundwater contamination is an immediate threat to the production wells of Chestertown. The impact on the production wells would be a threat to the public health and safety of the citizens of Chestertown.”

May 17, 1991              Town is notified of the heating oil spill for the first time;

MDE orders Town shallow water well #8 shut down;

Sept 1991                    Mayor Horsey writes to MDE to cite concerns about 1) lack of communication with the Town, 2) size of the heating oil spill, and 3) Hospital/MDE’s ability to contain the spill;

1992                            Heating oil discharges into Town’s storm drain system; recovery wells found to be rusting and in disrepair; additional well maintenance ordered;

June 1992                    2’ of free product discovered in MW #20 on the south side of Brown Street.  Additional recovery wells installed, which immediately begin removing 75 gallons of oil/day;

January 1993               Hospital reports that 35,000 gallons of oil have been recovered

Town estimates cost of losing well #8 at $20,000/year;

October 1993              Hospital reports that 49,165 gallons of oil have been recovered;

August 1995               Town requests to have Well #8 turned back on;

Request denied due to “the continuing presence of liquid phase heating oil”;

July 1996                     Hospital reports that 65,000 gallons of oil have been recovered

2008                            University of Maryland Medical System acquires Hospital;

2011                            MDE/Hospital turns off pump and treat system;

2013                            Spring 2013 – oil levels “rebound”, system re-activated;

Town learns for 1st time that p/t system had been off for over 1 year;

2013                            UMMS merger with Shore Regional Health;

April 21, 2014             Ken Kozell discusses Ivey Sol remediation proposal at M/C meeting;

July 14, 2015               MDE officials hold Public Meeting in Chestertown to discuss proposed Ivey Sol pilot tests with concerned citizens;

July 25, 2014               MDE approves Ivey Sol pilot test with modifications requested by the Town of Chestertown;

March 4, 2015             Chestertown, through attorney Michael Forlini, sends letter to MDE expressing concerns about Ivey Sol remediation plan;

Aug 31, 2015               Ivey Sol injections begin;

Sept 2, 2015                Mayor Cerino sends letter to MDE Secretary Grumbles requesting face-to-face meeting, 3-way Consent Order between MDE, Hospital, Chestertown;

Nov 2, 2015                Cerino/Sipes/Ingersoll meet with MDE Secretary Grumbles and MDE team in Baltimore, request 3-way Consent Order;

Dec 1, 2015                 Mayor Cerino attends Kent Co Commissioners meeting, requests Local Courtesy Bill in state legislature to provide Town with financial assurances in worst-case scenario with oil spill remediation.  The bill does not pass.

May 9, 2016                MDE approves Hospital’s Work Plan for Ivey Sol remediation process;

May 7, 2016                Consent Order between Hospital/MDE executed;

June 22, 2016             Hospital/Town agreement signed.  Hospital indemnifies Town for costs of well replacement in a worst-case scenario, providing the Town can prove that the contaminants came from their spill.

Mayor Cerino stated that for 30 years, the Town has never had a meaningful seat at the table with MDE or the Hospital. Mayor Cerino stated when he knew MDE was not going to engineer a three way consent order, the Town began making overtures with the Hospital asking them to indemnify Chestertown since they were confident that Ivey-Sol was going to solve the issue of the oil spill and the Hospital agreed.

Mayor Cerino stated that most of the discussions regarding the Agreement with the Hospital have happened in Executive Session explaining that when a legal document is being negotiated it does not work to have legal counsel and anyone in the audience chiming in with their ideas. He said he understood that it was frustrating to some but it was not realistic to negotiate a contract in that manner.

Mayor Cerino stated that on June 20th in Executive Session the Council agreed in principle to an Agreement. There was no formal motion at the meeting but there was a four to one majority where the Council essentially endorsed the signing of the Consent Agreement with the Hospital assuming that some other conditions/issues were agreed to, such as UMMS would sign as the parent company of the Chestertown Hospital.

Mayor Cerino stated that there were many technical aspects to the Agreement, but what he wanted first and foremost was someone to say that they would pay the Town in a worst case scenario. Indemnification, item 5a of the Agreement reads, “the detection of contaminants of concern above the trigger levels in an active Town production well used as a drinking water source and proximately caused by the oil spill or the remediation shall trigger the Hospital’s obligation to indemnify and hold harmless the Town for all costs of remedial actions necessary to insure the production and delivery of safe drinking water by the Town to residents and businesses without interruption. This may require the relocation or relocation of the impacted well or the addition or additional treatment depending on the nature and extent of the contaminants. If the parties are unable to agree whether the contaminants originate from the oil spill or remediation, then the parties in good faith shall agree to attempt to resolve the issue through non-binding arbitration using a neutral arbitrator. Each party reserves the right to seek a declaratory judgment or injunctive relief to establish the origination of the contaminants.” He said that if that was all the Agreement said he would have signed it the first day it was presented to him.

Mayor Cerino stated that putting themselves in the shoes of the Hospital, the Hospital does not want to sign an Agreement that could tie them to a multi-million dollar payment to the Town if the contaminants in their wells are not proven to be from their spill. He said that item 5b reads, “In the event that any contaminant of concern is detected above the trigger levels in a Town production well but has not been detected above the trigger levels in any sentinel monitoring well, that shall establish a rebuttable presumption that the contaminants in the production well did not originate from the oil spill or the remediation.” He said that this was the wording that concerned Mr. Sipes.

Mayor Cerino stated that there was a plume of oil that the Town hoped would never move and that MDE was going to clean in conjunction with the Hospital. In theory, the oil would travel toward the sentinel wells, of which there were four (4) that should show contaminants if the plume moves. He said that the Town asked for three (3) additional wells and the Hospital agreed. There will now be seven (7) sentinel wells in place between the plume and the Town production wells.

Mayor Cerino stated that he thought it likely that at some point if the plume moved, one of the wells will be triggered and at that time 5b would become irrelevant. He said this is not the most perfect Agreement, but by a 4 to 1 margin the Council agreed that the Agreement should be signed it the remaining conditions requested were met.

Mayor Cerino stated that indemnification is critical in this Agreement but another important thing is that for the first time in 30 years the Town has a meaningful Agreement with one of the two entities involved in this spill. He said that this would fundamentally alter the dialogue that the Town now has with the Hospital. He said at some point someone had to bargain in good faith with the Hospital, whether dealing with the spill or the services the Hospital offered. The Town had to have a professional working relationship where trust could be rebuilt and he thought this was the first step in that process.

Mayor Cerino stated that Mr. Sipes and some others felt the Town may be better off without an Agreement but looking at the 30 year timeline he did not believe that was a logical approach. He said that in 30 years the Town has never received a penny and has lost a valuable well.

Mr. Ingersoll stated that on the advice of Stewart Barroll, Esquire and Chip Macleod, Esquire it was suggested to ratify the Agreement publicly at this meeting since at their last meeting there were still elements that had conditions and this was the first public meeting following the signing of the Agreement. Mr. Stetson moved to ratify and affirm the final negotiated version of the Agreement as executed by the Mayor on June 22, 2016, was seconded by Ms. Gross and carried unanimously. Ms. Kuiper stated that her vote was for the purpose of bringing the agreement to the public.

Mayor Cerino stated that there was a public information request about the Hospital Agreement and one of the questions asked was how much money has been spent to date. He said that in the last four (4) years, the Town has spent over $40,000.00 trying to get to this point and it was not the way he wanted to be spending tax payer dollars. He said that if people were angry over the cost, he was as well.

Mayor Cerino stated that the Hospital had no legal obligation to have an Agreement with the Town and he commended Mr. Ken Kozel and his team for working with Chestertown. Ms. Gross stated that a court case over contamination of the wells will cost much more than $40,000.00 with no guarantee of the outcome. She said that there is nothing binding on the Town in this Agreement, but it does bind the Hospital to several things such as sharing test results, installing new sentinel wells, a certain period of sampling which will be longer than MDE may require depending on the outcome of samples, and reimbursement to the Town for expenses should there be a problem. Ms. Gross stated that this Agreement also does not expire and is open-ended.

Mayor Cerino stated that an Open Meetings Complaint has been filed through the Kent County News about how the Agreement was approved in closed session and a public meeting should have been reopened where a vote was taken publicly. Mayor Cerino stated that the Town would find out the Compliance Board’s ruling but if there was something violated it was not the Town’s intention. He said it made no sense to him to reopen a meeting when nobody was in the room just to make a motion when they could have a discussion with a camera rolling at their next meeting. He said that the Town has nothing to hide and the only reason this Agreement is in place is to try to protect the Town.

Mr. Shoge stated that the timeline shown described by Mayor Cerino shows the precarious position that Chestertown has been in for 30 years. He said that with or without the Agreement the Town has to prove contamination in court, but the Agreement gave some assurances that the Town did not have until now.

Mr. Dan Menefee stated that it has been documented for 30 years that the Hospital was the responsible party and if the rebuttable presumption raises the burden of proof, why would the Town put itself at risk. He said he spoke to an attorney about this and said that the Town has given up something in the sense of where there is a steeper hill to climb if they have to go to court. Mayor Cerino stated that if one of the sentinel wells gets a hit the “rebuttable presumption” clause is moot. He said that if a production well was hit without any agreement in place, the Town would have to prove the Hospital caused the contamination anyway.

Mr. Menefee asked if Michael Forlini and Mr. Barroll were in agreement with the Agreement being signed. Mayor Cerino stated he did not want to speak for any of the attorneys but there were questions regarding 5b by Mr. Barroll and Mr. Forlini seemed neutral. Mayor Cerino stated that the discussion became split but as Mayor he had to make a tough call. Mayor Cerino added that this was a main reason why there were so many executive sessions regarding the matter as the Council wanted to have everything on the table before a decision was made.

Mr. Menefee stated that Ms. Kuiper did not vote in favor and asked her to explain why. Ms. Kuiper stated that 5b concerned her because Mr. Sipes was not in favor of it and neither was Mr. Barroll. She said that Mr. Barroll told her that the UMMS Board should have a resolution for the president to sign the Agreement and it is not there. Ms. Kuiper stated that she thought having Mr. Macleod was a conflict of interest since he was a member of the board at the Hospital when UMMS took over, adding that he was not a trial lawyer and he had no environmental background. She said that Mr. Barroll also said that the “University of Maryland Shore Medical Center at Chestertown” was a trade name and not the name of an entity that could be sued.

Mr. Menefee stated that since Mr. Barroll is a trial lawyer he would be the lawyer to represent Chestertown in a suit. Ms. Kuiper stated that she called Mr. Barroll to make sure that she was not doing anything that would violate ethics and wanted him at the meeting on June 20th.

Mr. Ingersoll stated that he was very uncomfortable that MDE followed up with PCE and MTBE after dropping the ball years ago by closing those cases with no mitigation or correction of the actual problems. He said that it was analogous to their failures at the Hospital project over the 30 years.

Mr. Ingersoll stated that working in Annapolis trying to get the Local Courtesy Bill through changed the Town’s position and opened the eyes of the legislature to what MDE was not doing. He thought the MDE letter about PCE and MTBE was because of that and their perceived failures by the Legislature and he did not have confidence in them. Mr. Ingersoll stated that he thought Mr. Forlini was fully in favor of the Agreement although he did not want to discuss what had been said in any Executive Sessions. Mr. Ingersoll stated that this document was an important tool and will allow the Town to do things that they could not do before, such as finger printing the oil in the spill.

Mayor Cerino stated that there could be a ton of hypothetical scenarios where the Agreement could be viewed as bad. He said that he thought the Agreement put the Town in a better position, if only it gave them a seat at the table with the responsible party that the Town did not have before. He said that having no agreement since 1991 has not helped at all.

Mayor Cerino stated that he would like to appoint Alice Ritchie to the Historic District Commission. Mr. Stetson moved to appoint Ms. Alice Ritchie to the Historic District Commission, was seconded by Ms. Kuiper and carried unanimously.

Mayor Cerino stated that he received a request from Mr. Peter Newlin on behalf of Janes Church for a letter of support as they are applying for grants to restore the roof and windows. Ms. Kuiper moved to support the application for the grant for Janes Church, was seconded by Mr. Shoge and carried unanimously.

Mr. Stetson stated that the portable toilet in the Bailey Park was knocked over today and was still there.

Mr. Stetson stated that he enjoyed the MML Conference and held the flag at the Parade of Municipal Flags. He said that he enjoyed the session on small towns and the Governor speaking at a dinner. Mr. Stetson stated that he also attended a session on aging and said that he learned that it cost $72,000.00 per year for someone to live in a nursing home and there were more seniors in the country than there are children in school.

Mr. Shoge stated that he also attended the MML Conference and was pleased to see that there was an active effort to engage the younger elected officials and said he was part of a panel on that subject.

Ms. Kuiper stated that while at MML there were sessions on women in government as well. She said that the Governor’s talk at the convention was focused on Highway User Funds which are to be restored. She said she met with Secretary Gill and said he was aware of the Marina project.

Ms. Kuiper stated that fireworks were wonderful and it was a busy weekend around Town.

Ms. Gross stated that she would like to discuss the parking restriction on Philosopher’s Terrace and Campus Avenue at the next meeting.

Mr. Menefee asked why he has not seen any food trucks downtown. Mr. Ingersoll stated that this matter would be discussed as the Town was working on a pilot project for vendors but it has been deferred due to more pressing issues. He said a resolution would be brought forward at some point.

There being no further business, Mr. Stetson moved to adjourn the meeting at 9:00 p.m., was seconded by Mr. Shoge and carried unanimously.

Submitted by:                                                 Approved by:

Jennifer Mulligan                                            Chris Cerino

Town Clerk                                                     Mayor

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