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Tuesday, September 20, 2011

Playing Monopoly at the Beach

Short-changing Charlestown taxpayers
By Will Collette

A peculiar dispute involving beach concessions surfaced at the June and July Town Council meetings involving Council member Lisa DiBello, Town Administrator William DiLibero and Parks and Recreation Director Jay Primiano. We covered the blow-by-blow in some detail, though many of the charges and countercharges were veiled in coded language.

Since so much of the dispute seemed to really be about something deeper, I decided to look deeper into the way Charlestown handles its contracts for beach concessions.

Over the past several weeks, with help from the other members of the PC team and some outside research assistance, a picture has emerged of a monopoly in the awarding of beach concession contracts that has cost town taxpayers tens of thousands of dollars. And there are questions about ethics, bid law, public safety, taxes and employment law.

This article is the first in a series of investigative reports on what we’ve found.

Welcome to the Dog Pound
Charlestown has been soliciting bids for the right to sell snacks, nonalcoholic beverages and food to beachgoers at the two town beaches – Blue Shutters and Charlestown Town Beach – for years.

These contracts don’t generate a lot of revenue for the town – less than $10,000 a year. 

For such a small item in a $25 million budget, the town’s dealings with beach concessionaires took on an air of ominous mystery in the Town Council meetings for June and July, as Town Administrator Bill DiLibero and Parks and Recreation Director Jay Primiano fired hard – but vague – shots at Council member Lisa DiBello, who held Primiano’s job until last year, when DiLibero fired her.

On the surface, it appeared to be a dispute over parking spaces that morphed into a power struggle with DiBello up against DiLibero and Primiano. Even if you watch the video of the Council meetings and read the documents posted on Clerkbase, you still don’t get the story behind the story, and the reasons why there were so many heated exchanges.

We begin with the background on how the town handles the beach concession businesses. When Charlestown advertises a request for bids for each of the two town beaches, Blue Shutters and Charlestown Town Beach, it asks for a bid for one year with the expectation of a second-year renewal at the same price, absent problems.

The patterns of bidding, winning and revenue paid to the town are drastically different for the two town beaches.

Town contracts generally must be open to competitive bidding, and that’s how it has worked out for Blue Shutters Beach concession rights. However, only twice since 2001 has there been more than one bidder for Charlestown Town Beach.

The contract for exclusive concession rights at Blue Shutters has changed hands every few bid cycles. For example, W.B. Cody’s BBQ had the contract from 2000-2002 but lost it to West’s Bakery in 2003. West’s held it until 2008. In 2009, Johnny Angel’s Clam Shack won the bid over New England Frozen Lemonade. Johnny Angel’s held it until this year, when they lost the bid – by one dollar – to the Dog Pound.

In sharp contrast, since 2001 there has been only one concessionaire at Charlestown Town Beach: the Dog Pound, a mobile hot dog stand owned by Deborah Dellolio of 35 Morley Street. The Dog Pound was the only bidder for Charlestown Town Beach rights every year except two.

In 2005, she was challenged by New England Frozen Lemonade. Both the Dog Pound and NE Lemonade bid the same amount ($2000). However, the contract was given to the Dog Pound on the judgment that the Dog Pound would generate more revenue for the town if their sales exceeded a certain level – an event that almost never happens.

The bidding for 2011 was different from prior years. This year, there were two bidders – the Dog Pound and Johnny Angel’s – bidding for the concession rights for both beaches.

On March 20, Johnny Angel’s submitted its bid of $3002 for each beach. On March 24, the Dog Pound’s bid came in – at $3003! The following day, the bids were opened, and the Dog Pound won both beaches by a dollar each.

I found no direct evidence of irregularities in the 2011 and 2005 bids to indicate that Ms. Dellolio is anything other than either clairvoyant or incredibly lucky. I carefully examined the envelopes that held the two competing 2011 bids but could see no obvious signs of tampering. Both envelopes were dated and initialed by the town officials who opened them on March 25.

The lack of bidders for Charlestown Town Beach – except for the two times when the Dog Pound pulled off near-miraculous victories over its competitors – has given Ms. Dellolio a monopoly. For that monopoly, Ms. Dellolio has paid Charlestown a total of $17,002 for the ten-year period of 2001 to 2010.

True competitive bidding at Blue Shutters has resulted in higher bids and three and a half times the revenue paid to the town than Charlestown Town Beach – that’s payments of $59,300 to the town from Blue Shutters concessionaires compared to only $17,002 paid by the Dog Pound for its monopoly at Charlestown Town Beach.

Could it be that more than three times as many people go to Blue Shutters than Charlestown Town Beach? No, based on the information I’ve gotten from the town. There are and have been some differences in the two town beaches. Though they are roughly the same size and draw roughly the same number of people, Blue Shutters seems to draw more out-of-town visitors while Charlestown Town Beach is more of a “neighborhood” beach. Until the beach buildings were closed due to poor conditions, there were better facilities at Blue Shutters. But there are no factors to support the huge difference between the two beaches in bids offered and revenue paid to the town.

On top of getting an 11-year monopoly at Charlestown Town Beach (and now the contract for both beaches), the town has also waived the business license fees for the Dog Pound in each of those eleven years.

So, why then do concession rights at Charlestown Town Beach go for so little?

Why does the Charlestown Town Beach concession contract draw so few bidders?

How does Lisa DiBello fit into the picture?

We’ll be exploring these questions and many others in future stories