Selectmen Slam Williams for Contacting Investment Bank Without Board’s Knowledge

Photo: Jim Williams (left) making his presentation to the Board of Selectmen.

In a rare public scolding of a fellow board member, the colleagues of Belmont Selectman Jim Williams – Chairman Sami Baghdady and Mark Paolillo – pointedly rebuked the newly-elected member for initiating contact with a large St. Louis-based investment bank to underwrite millions of dollars in taxable bonds to pay off the town’s pension obligations without informing them or town officials.

“It was totally inappropriate for you to have gone out and represented the town to this … organization,” said Paolillo.

While he later admitted in a qualified apology that he may have jumped the gun in terms of approaching the bank, Williams – elected a little more than seven months ago – said the letter and a presentation he made earlier to the board outlining his strategy were the opening gambit in his and his supporters push to move forward with dramatic structural change in how the town will pay its future long-term obligations.

“The dam has burst,” said Williams after the meeting to the Belmontonian, indicating the long-anticipated debate on OPEB expenses – which he ran on in the April town election to an upset victory over incumbent Andy Rojas – has begun in earnest. 

While Williams is holding his cards close to his vest – he would only say that it is up to the Selectmen to approve a change in strategy and that nearly all the information the board needs to make an informed decision has been completed or will be produced in the near future – he did drop a tantalizing political tidbit of a long-term strategy to move the town in what he believes is the correct direction.

“There are elections coming,” Williams told the Belmontonian after the meeting. Up for re-election in April 2015 is Paolillo – who said last week that he is likely to run – and Town Treasurer Floyd Carman, a supporter and architect of the current OPEB policy. 

Williams had hoped a presentation he made to the board – a 13 screen page document that was not on the board’s official public agenda having been submitted to the Town Clerk at 4 p.m. on Friday, Oct. 23 – would spark debate on his “scenario” of paying off the town’s pension and other benefits commitments with the issuance of pension obligation bonds. 

But the selectman soon discovered the spotlight fell wholly on himself for what several people saw as a serious breach of protocol that could result in serious legal consequences.

“There is an appearance that you and some of your supporters are going out and making representations to people and investment bankers and companies without first having the proper process … among the three-person Board of Selectmen,” Baghdady told Williams. 

Reading from a letter sent to Williams from the investment bank Stifel Financial Corp., Baghdady said since speaking to Williams, the bank had “confirmed certain preliminary terms of our engagement to serve as lead managing underwriter” for the town as it sells up to $60 million in taxable bonds.

Stifel, which opened a public finance branch office in Boston two years ago, is a significant player in municipal financing, working with water and sewer agencies, large schools districts and parking and transit authorities.  

Furthermore, Stifel indicated that “[i]t is our understanding that you [Williams] have the authority to bind the town by contact with us,” with Williams’ signature at the end of the letter seeming to affirm Stifel’s assertion, said Baghdady still reading from the letter.

“It bothers me that one selectman, without having brought to discussion in advance, goes and represents to an investment banker … that [he has] the authority to be negotiating these things with them,” said Baghdady, contrary to the board’s current OPEB strategy, designed by the Town Treasurer Floyd Carman and approved by Town Meeting.

Paolillo later noted that only Carman as town treasurer can initiate contact with financial entities for such town business. Carman, who arrived at the meeting midway through Williams’ earlier presentation, 

Baghdady also expanded his personal concerns that newly-appointed members  – several with Williams’ endorsement – to non-statutory town committees such as Economic Development Advisory Committee, also called Stifel and other investment banks “and purport to communicate as though they have the authority to speak on behalf of the town about these major policy decisions that this board has not taken a position on” while pressuring members of the Warrant Committee – the town’s financial watchdog agency – and town officials to sign the Stifel letter. 

Paolillo reiterated Baghdady’s irritation that Williams shared the contents of the letter to political supporters who used it to push for its approval.

“With all due respect, to share what I believe would have been a confidential document with your former campaign manager and other supporters and then lobby us on why we were delaying signing this letter. I mean, are you kidding me?” said Paolillo. 

Baghdady said the “shock” of Williams’ action goes beyond the board; members of the Warrant Committee and other community leaders who asked “‘What is going on here’? Why isn’t the board as a whole deliberating?” 

After the meeting, Williams identified the residents “pressuring” the selectmen and Town Administrator David Kale to “sign the letter” as Erin Lubien and Julie Crockett, two of Williams’ supporters during his run for selectmen.

Williams told the board that “neither of them called me, and if they called me I would have explained to them not to call. I apologize for that.” 

Paolillo and Baghdady asked Williams to “work together and agree that this is a lesson learned?”

“Let’s discuss matters first and then present a direction on what we want to do,” Paolillo said.

A somewhat contrite Williams noted that when an employee at the former Swiss Bank Corp. was sent to the woodshed, it was called “having your head washed. And I’m OK with that.” 

Williams said his colleagues points of his actions “were well taken,” admitting that the process “has taken on a life of its own.” 

“What I want to say is that it’s not how it appears, and I wasn’t totally in the rogue because I wanted to find out for the board how do you go about” hiring a firm such as Stifel.

But Williams would not be pushed from his goal of moving forward addressing what he views is a pending financial crisis Belmont is facing from the current strategy. 

“We need to decide whether we are going to let the status quo continue, whether we try to extend the pension schedule or whether we are going to do the pension obligation bond or something different,” he said. 

 

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Comments

  1. Mary Lewis says

    It is completely outrageous that Mr. Williams did this on his own. He was not elected to represent his own agenda; he was elected to represent the whole town. As far as OPEB is concerned, we as a town are already aggressively paying those obligations, well ahead of the state-mandated schedule. We cannot allow this issue to distract us from more important budgetary items like a renovated or new high school, our contribution to the Minuteman, the decaying commuter rail stations, police station and more.

  2. Jim Williams says

    Franklin’s report on the Tuesday morning’s Board of Selectmen’s Meeting is fair. However, the risk of “serious legal consequences” is largely overstated as the letter had been under review with David Kale since its receipt on October 19th. Since the Selectmen are prohibited from discussions amongst ourselves outside of a public meeting, my report on the 27th was our first opportunity to discuss the matter. It included a recommendation to issue an RFP to engage investment advisory such as STIFEL, Siegel or SunTrust to review our strategies. Otherwise, in pursuing my various well known initiatives on behalf of the Town, I am permitted to talk to anyone and discuss any publicly available information as I see fit. I do this frequently and will continue to do so except with Sami or Mark as prohibited. The important takeaway from this circumstance is that we finally got at a chance to discuss our unfunded benefits strategies. I encourage readers to view the video when available for that reason.

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