Audit: No improper dealings between former Stamford CFO and developer

Michael Handler, then Director of Administration for the city of Stamford, speaks during a meeting of the Board of Representatives' Land Use Committee inside Government Center in Stamford, Conn. on Wednesday, May 31, 2017.

Michael Handler, then Director of Administration for the city of Stamford, speaks during a meeting of the Board of Representatives' Land Use Committee inside Government Center in Stamford, Conn. on Wednesday, May 31, 2017.

Michael Cummo / Hearst Connecticut Media

STAMFORD - Red flags flew when Michael Handler said in February he was stepping down from his city cabinet post to spend more time with his family, and days later announced he’d taken a top position with the city’s largest developer.

As Mayor David Martin’s director of administration, Handler led the city’s dealings with Building & Land Technology, and now he would sit on its executive board.

“It set off all kinds of alarms,” said Rep. Jeff Curtis, D-14, who was among the elected officials who called for the mayor to investigate. “We wanted reassurance that everything was on the up and up.”

It was, according to a June 11 report by auditor PKF O’Connor Davies, a firm Martin hired in March to review transactions between the city and BLT that Handler negotiated.

The firm found nothing unusual about city leases for BLT buildings, rent paid to BLT or payments related to the Harbor Point Tax Increment Financing agreement for BLT’s massive South End redevelopment project.

PKF O’Connor Davies reviewed documents from the tax office, controller, bank and other sources, interim Director of Administration Sandra Dennies wrote in a letter submitted to the Board of Finance and Board of Representatives along with the audit.

“When Mr. Handler left, there was a lot of concern expressed by a lot of different people about how to know whether he put the city at any kind of disadvantage. A lot of deals were done during that time,” Dennies said Friday. “I sent the auditor reams of paper and he looked at all of it and found nothing. There was nothing Mr. Handler did that put the city at any disadvantage with regard to BLT.”

The audit looked at two lease agreements Handler negotiated between the city and BLT. One was for One Elmcroft Road, where Westover elementary school students and staff were moved after their Stillwater Avenue building was found to be infested with mold. The other lease agreement was for 68 Southfield Ave., which the school district uses for its Anchor alternative education program.

“We did not note any terms that we would consider to be above standard commercial property lease terms,” the auditors wrote.

According to the report, auditors did not evaluate the market value of the lease payments, but the city hired a real estate consultant that found them well within reason.

“I sent information to a commercial appraiser to make sure the rents we were charged were appropriate,” Dennies said Friday. “They were at or less than what was happening in the market at the time.”

PKF O’Connor Davies reviewed the city’s TIF agreement for Harbor Point, where BLT has built multiple apartment towers, from March 2012 to March 2020. Under a TIF, a portion of property taxes collected in a redevelopment area is diverted to pay for new streets, sewer pipes, storm drains and other improvements.

Handler “had significant involvement” drawing the TIF terms, the auditors reported. They found that the taxes collected by the city and the amounts paid to Harbor Point for the infrastructure improvements were in line.

Except for one. Because of a change in the timing of the payments to BLT, the city inadvertently held on to a $4.3 million tax revenue payment that should have gone to the developer, the auditor found.

“We’re talking to BLT about it now,” Dennies said. “They have agreed to not take the cash back and instead take it in capital projects that benefit the (infrastructure improvement) district.”

Handler said Friday he knew nothing about the results of the audit.

“I have not seen nor do I have any knowledge as to what the independent audit reviewed,” Handler wrote in an email. “As I have said all along, I welcome a thorough review of every action I took during my eight years as director of administration. I am, and always will be, proud of my accomplishments and my service to the City of Stamford and I look forward to continuing to build on our city’s success in my new role at BLT.”

BLT has no further comment than that, a spokeswoman for the company said Monday.

Martin reiterated Friday what he said when he ordered the audit — he did not think Handler had compromised the city’s interests in favor of BLT.

“I’m glad we initiated it,” the mayor said. “I think it was broad enough in scope to understand whether there was a problem, and it found there was not. I’m turning this over to the Board of Finance and their Audit Committee. It’s up to them as an independent body — if they conclude they want further examination of this issue, that’s fine with me.”

Curtis in March called for examination of the Mold Task Force, formed by Handler, which initiated millions of dollars in repairs to seal school buildings and stave off mold growth similar to what led to the closure of Westover. The task force morphed into the Stamford Asset Management Group, also led by Handler.

SAMG concluded that the city should pay a developer to rebuild, repair and run some school buildings. Handler left before the plan got far, saying he would work on such public-private partnerships for BLT nationwide.

Dennies said she gets weekly reports on SAMG expenditures in each school.

“There was an understanding when I walked into this job that we would allow them to get to $50 million (in expenditures) and then we will stop and evaluate,” Dennies said. “As of June 15, they were at $42.8 million.”

Martin is seeking to make Dennies director of administration through Nov. 30, 2021, which would be his last day in office if he does not run for another term next year. The Board of Representatives’ Appointments Committee will take up the Dennies nomination Tuesday.

Curtis said the audit is a good thing.

“If we didn’t call for one, we would have been negligent in our duties as legislators,” he said.; 203-964-2296.