It has been over 18 months since ART Bus Project on historic Route 66 Central was dedicated by former Mayor Richard Berry. The building of the bus platforms has been completed in the center of a 9 mile stretch of Central from Coors going East to Louisiana with dedicated bus lanes. The electric ART buses were supposed to start running on Central once delivered by Build Your Dreams (BYD).
On Friday, December 7, 2018 Mayor Tim Keller, after over a full year in office, held one of his daily press conferences and announced Albuquerque was taking legal action against the California based BYD bus company, the manufacturer of the 60-foot, fully electric buses for the $135 million ART Bus project. The cost to the city for the electric buses was to have been nearly $22 million for 20 buses, but only 15 buses were ever delivered and then returned and the city paid nothing for the buses.
The lawsuit filed is an 11-page Civil Complaint filed against BYD with 330 pages of attached exhibits including the Request for Proposals (RFP) and the purchase contract. The complaint contains 4 separate counts claiming Breach of Contract, Breach of Warranty, Fraudulent and Negligent Misrepresentation and violations of New Mexico Unfair Practices Act. The city was also seeking payment of its attorney’s fees and costs. The significance of an Unfair Trade Practices action is that an aggrieved party can be awarded “triple damages” of proven damages and attorney fees under the Unfair Trade Practices Act.
The complaint lists several mechanical issues, including problems with the battery charge, malfunctioning brakes, and doors flying open on their own, all discovered during driver training back in September. After the law suit was filed in State District court, the case was moved to Federal District Court. Federal court records show BYD never responded to the civil complaint.
You can read the entire 11-page civil complaint with 300 pages of exhibits at the below link:
PROBLEMS WITH THE BYD BUSES
Among the reported problems found by the City with the BYD buses delivered were:
1. The center and rear brakes had zero air pressure, yet the 60-foot-long articulated buses were able to move, meaning that the center and rear axle brakes were not working and the buses were relying on their front brakes alone.
2. Rear doors would open during bus operation without any action by the driver.
3. The buses have air conditioning outages.
4. Bolts flying off doors.
5. The electric buses delivered were supposed to operate for 275 miles, but city officials found the buses could not go more than 177 miles before they needed recharging.
6. The lack of undercarriage protection.
7. Buses that wouldn’t stop when emergency doors were utilized.
8. Cracking on bus exteriors.
9. Mirrors not set up correctly.
10. Wiring problems and electrical system problems.
11. The handicap electric chair lock becoming unsecured when the driver turns on the air conditioner.
12. The bus batteries heat up so much that they can’t take a charge.
13. The batteries or not properly stored or cooled on the buses posing a fire hazard. 14.Wheelchair ramps that deploy when weight is on them
14. Doors that open while the bus is in motion.
15. Exposed high-voltage wires.
17. Failure to construct extra charging stations promised.
The 15 buses that were manufactured and delivered by BYD were picked up by BYD after the city made a demand of the company to take back the buses due to a significant number of safety and battery-life issues. One of the BYD buses returned actually broke down on the road back to California.
BRAVADO PRESS CONFERENCE
During his press conference announcing the city’s lawsuit, Mayor Keller spoke with great bravado when he said:
“The short story is we’re taking BYD to court. … We need to hold … [BYD] accountable for what they’ve done to our city and for their lack of adherence to a contract that they signed. … We think … this actually is going to all wash out at a minimum, if not us actually recouping more. … For a city of our size, the pain that we went through and the trauma that Route 66 has gone through to put this in, was that worth being the first city to have these fancy electric buses? … I don’t think so.”
https://www.abqjournal.com/1254901/city-sues-over-art-buses.html
In response to the filing of a lawsuit by the city, BYD issued a statement that it was “considering all legal options in response to the City’s actions”, which meant a counterclaim, and proclaimed:
“BYD once again disputes the Mayor’s false and misleading statements regarding BYD and its products … It is unfortunate that the City has chosen to file a lawsuit. Prior to today’s press conference the City had refused to provide BYD with inspection reports documenting alleged problems with the buses. The City has never stated the amount of damages it claims to have suffered.”
After the return of the buses to BYD and the filing of the lawsuit, the city contracted with New Flyer bus manufacturing company for 20 diesel-powered buses that have a price tag of $870,000 apiece to replace the electric BYD buses.
SETTLEMENT ANNOUNCED
On May 31, 2019, after close to six months since the filing of the lawsuit, the Keller Administration and Build Your Dreams (BYD) issued a joint, two paragraph statement that the parties had settled the case. Following is the full statement release:
“BYD and the City have reached a settlement that resolves litigation, allowing the parties to move forward at no additional cost. Since the contract was terminated, both BYD and the City have engaged in good faith dialogue to reach this resolution. Although the parties made public statements in defense of their respective positions during the dispute, they are now committed to moving forward and wish each other success.
The City supports BYD’s pursuit of its mission to expand zero-emission public transportation with the next generation of high-quality electric buses. BYD supports the City’s commitment to the Albuquerque Rapid Transit project and wishes the City best of luck on its completion and successful operation.”
RATIONAL FOR THE SETTLEMENT
In announcing the settlement Albuquerque’s private outside counsel Robert Desiderio said:
“The city and BYD are completely freed of the contract. There are no damages paid to either. A lawsuit like this would take years – discovery would be extensive – therefore the costs would be very great. … And comparing to what we saw would’ve been the possible damages [to the city and taxpayers] it wasn’t worth proceeding. It was better for the city to move forward.”
Private counsel Desiderio noted it would have been difficult to demonstrate the city had incurred significant monetary damages because of the 60-foot electric buses and that BYD could also counter sue. According to Desiderio settling the case was the best option.
The city paid $138,322 in private outside legal fees in the case and BYD ostensibly paid its own attorneys fees and costs. In the original lawsuit filed, the city was seeking the award of attorney’s fees and costs. The City Attorney’s Office for its part has said they consider the settlement a win because Albuquerque won’t have to pay nearly $23 million for 20 electric buses it won’t be using.
https://www.abqjournal.com/1322358/city-settles-lawsuit-against-art-bus-manufacturer.html
TERMS OF THE SETTLEMENT AGREEMENT AND MUTUAL RELEASE
The “SETTLEMENT AGREEMENT AND MUTUAL RELEASE” is a mere 6-page document signed between the parties. You can read the settlement agreement at the below link.
The main terms of the settlement agreement are:
1. The City and BYD release each other from “any and all claims that each party … had, now have, or can or shall have” against each other.
2. The City and BYD agreed that “no money is being exchanged” as part of the settlement and mutual release of claims.
3. Both the City and BYD agreed that the manufacturing and purchase contract for the buses “is terminated”. The City and BYD agreed to release each other from any and all compensation, damages or claims allowed under the contract.
4. The City and BYD agreed to the dismissal of the city’s complaint and any counterclaims BYD had. NOTE: According to court records, BYD never filed an Answer to the City’s Civil complaint and BYD filed no counterclaim.
5. The City and BYD agreed to issue the specific joint press statement and agreed to the language in the release issued.
MAYOR KELLER IGNORED INSPECTOR GENERAL REPORT
On June 6, 2018, a 73-page Office of Inspector General (IG) report on the ART Bus project was released to the public. The entire Inspector General report on the ART Bus project can be read here:
https://drive.google.com/file/d/1fA-D6dk6lp3DZgQzQCWVEVbziQ2vXov/view
The report found that former Mayor Berry’s Chief Operations Officer Michael Riordan allegedly “threatened” to terminate the city’s $22.9 million contract with the manufacturer of the special-order ART buses. Michael Riordan was said to have demanded a new bus be delivered in time for Berry to ride and have a photo op before he left office so he could say ART was up and running.
According to the Inspector General report, then Chief Operations Officer Michael Riordan “was adamant about having a bus transported to the City before the end of the Mayor Berry administration.” An Albuquerque transit employee told the Inspector General that “core processes on manufacturing buses was altered to ensure delivery of the first bus by the deadline.” The IG report described two city employees interviewed who recounted a “tense” and “unusual” phone call between then-city Chief Operating Officer Michael Riordan and top executives from the manufacturer. According to the Inspector General’s report the first bus delivered in August 2017, was assembled by the manufacturer using a “frame intended for buses being built for [another city’s transit authority].”
Frames intended for the Albuquerque’s buses had not yet been shipped nor received by the manufacturer. The Inspector General found that the bus manufacturer used “parts and pieces” intended for another city’s buses for the first ART bus delivered.
The city employee further reported that the first bus was moved to whatever assembly station was available to ensure it was assembled in time in order to get it shipped to Albuquerque before Mayor Berry left office.
The last 4 sentences of the 72-page Inspector General’s findings and report relating fraudulent activity is worth quoting:
“The inspection was proactive in nature and not due to any allegations that were made. While this inspection didn’t identify instances of fraud, it is important to note that it doesn’t mean fraud did not occur. The inspection did identify several problems that offer opportunities to improve and could be vulnerabilities for fraudulent behavior. City leaders should consider the problems identified and recommendations made to develop a more efficient and stronger procurement process that will help prevent and deter fraud, while also ensuring more quality and confidence in the products and services that the taxpayer funds. This is essential to protecting the public’s trust.”
Mayor Tim Keller and his administration never even bothered to forward the Inspector General’s report to a criminal investigating agency.
COMMENTARY AND ANALYSIS
A) ATTORNEY FEES PAID
Robert Desidereo is a very prominent and respected trial attorney in the legal community and he is the former Dean of the New Mexico School of Law. Ostensibly, he prepared the 11-page civil complaint and then cosigned it with City Attorney Estaban Aguilar. Desidereo evaluated the case and did the settlement negotiations in good faith acting in the best interest of the city taxpayers.
It is very difficult for the public to assess the reasonableness of the settlement not knowing the full extent of the damages the city could have proven in court, including loss revenues for two years and the viability of the threatened counterclaim. According to court records, BYD never filed an Answer to the civil complaint and never filed a Counterclaim. The only good news with the buses is that the city has never paid for any of the buses delivered and returned to BYD. One thing that appears to be certain, given the defects of the buses found and proven, it was highly likely the city would have prevailed on the breach of contract and breach of warranty claims, but the public will never know because the case has now been dismissed. There is no doubt the potential years of litigation played a major part in the settlement with continuing litigation being nothing more than stuffing taxpayer money down a “black hole”.
When outside counsel Desidereo said: “The city and BYD are completely freed of the contract. There are no damages paid to either side” he was saying to taxpayers you will not have to pay anything to BYD for the buses returned to them and that the city never used. The City gets nothing from BYD in the form of damages originally alleged in the lawsuit, including loss of use of the buses for two years and revenue. No punitive damages for unfair trade practices that were originally alleged will be paid to the City. The City will not be reimbursed for the attorney’s fees and costs of $138,322 paid to its private outside counsel for seven months of work to file and negotiate the settlement.
The City’s Legal Department, or City Attorney’s Office, employs 60 full time employees and has a budget of $6.3 million a year. The City Attorney’s office employs upwards of 30 attorneys’ in the office. City Attorney Esteban Aguilar Jr. is paid $110,296.80 a year and former Berry Administration City Attorney Jessica Hernandez, under whose watch the BYD contract was approved, was paid $150,217 a year. Assistant City Attorneys and Deputy City Attorneys are paid anywhere from $75,000 a year upwards of $110,000 a year depending on their years of experience. City attorneys review city contracts, terms and conditions and they are licensed to practice law in both state and federal courts. You can review the entire city attorney budget on page 118 of the 2019-2020 approved city budget at this link: http://documents.cabq.gov/budget/fy-20-proposed-budget.pdf
It is pathetic when Mayor Tim Keller and the City Attorney Estaban Aguilar have to retain outside counsel to represent the city in a contract dispute such as the one with BYD. Retaining outside counsel gives the appearance that the city attorneys are incapable of doing trial work. If Mayor Keller does not have faith in his own City Attorney’s Office to the point he has to pay an outside council $138,322 for 7 months of representation in a contract dispute, Mayor Tim Keller and City Attorney Estaban Aguilar need to start recruiting attorneys who have the know how and the experience to do trial work and who are not afraid of a courtroom and who will not settle cases to avoid trial.
B) WHAT? NO PRESS CONFERENCE?
During the first year he was in office, Mayor Keller would give monthly updates on the ART Bus project, the status of the construction project and delivery of the special-order electric buses from BYD. During his early press conferences, Mayor Keller declared ART “a bit of a lemon” and then declared that the buses were “unsafe at any speed” and he grounded the buses, all which were major news stories for him.
It was very disappointing that Mayor Tim Keller used opportunistic references to Route 66 when he first announced the civil lawsuit and admitted for the first time the damage done to the historic Route 66. In an effort to distance himself from his own failure to act for well over a year, Keller proclaimed harm to local citizens. Mayor Keller made no mention of the pain the Federal lawsuit filed by 250+ businesses along Central caused with many of those businesses having to close or go out business because of ART construction.
During his campaign for Mayor and while he has been Mayor, Tim Keller has proclaimed his administration is “open and transparent.” Mayor Keller held a press conference to announce that the city was filing a lawsuit, but when the city settles the case, the settlement is announced by press release without any press conference, without fanfare and late on a Friday afternoon with the paid outside counsel responding to all the news inquiries. So much for openness and transparency.
C) NOT HOLDING PEOPLE ACCOUNTABLE
During his year and a half quest to become Mayor of Albuquerque, Tim Keller never called upon his predecessor to stop the ART Bus project, nor to cancel the bus contract nor did he ever condemn it as destroying historical Route 66. Tim Keller did not attend a single public hearing or meeting held by the Berry Administration on the project, including the meetings hosted by city councilors where councilors were urged to place it on the ballot. When the federal lawsuit was filed to enjoin and stop the construction of ART, Keller did not attend any of the federal court hearings to stop the project.
When announcing the lawsuit, Mayor Keller proclaimed “We need to hold … [people] accountable for what they’ve done to our city … .” When Tim Keller was New Mexico State Auditor before becoming Mayor, he was a champion for accountability to stop “waste, fraud and abuse of taxpayer money”. The lawsuit filed and the settlement negotiated is not holding “[the people responsible for ART] accountable for what they’ve done to our city … .” As NM State Auditor, Keller was never reluctant to turn cases over to prosecuting agencies which garnered him much publicity.
Those truly responsible for ART were not BYD. The ones that need to be held accountable for “what they have done to our city” are former Mayor Richard Berry, former Chief Operations Officer Michael Riordan and former Transit Director Bruce Rizzeri. What many taxpayers feel is that crimes occurred with the ART Bus project, but we will never know because no law enforcement agency has investigated it.
CONCLUSION
Keller supporters are always quick to go to his defense over ART saying it was a project he inherited and he is doing his best to fix it. No matter what Mayor Keller says or does now, no matter what eventually happens with the ART Bus Project and if it ever is up and running, it is now Mayor Tim Keller’s lemon to own.
Keller must be held responsible and accountable for his failure to act given his reluctance to scrap and suspend the project from the get-go after he was sworn in as Mayor. Keller failed to turn the entire ART Bus project matter over to law enforcement for a complete investigation.
The Albuquerque City Counsel bears a significant amount of responsibility for the ART Project by refusing to place it on the ballot for voter approval and repeatedly voting to fund the project with no questions asked. The Albuquerque City Council should demand and schedule a public hearing requesting Mayor Tim Keller, City Attorney Estaban Aguilar and Outside Counsel Desiderio to explain to the public the details and rational of the settlement.
In the meantime, the ART platforms will be sitting empty for some time and according to the City Transit at least to the beginning of 2020. Further, absolutely no one will be held accountable for the disastrous ART Bus project that destroyed so many businesses and historic Route 66.
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POSTSCRIPT OF ART UNDER MAYOR TIM KELLER
The $135 million ART Bus project was considered a legacy project of former Mayor Richard Berry and spans 9 miles of Central Avenue from the West side to Louisiana with dedicated bus lanes and specially built platforms to transform the Central corridor into a Rapid Transit area.
CHRONOLOGY OF ART UNDER MAYOR TIM KELLER
Former Mayor Richard Berry dedicated the ART Bus project in November of 2017 with only one bus that had been delivered to the city. The only purpose for the delivery of the one bus was so that Berry could have his photo op before he left office.
Keller was sworn into office December 1, 2017.
Within 6 weeks after taking office, Keller proclaimed the project “as bit of lemon” but pushed forward to try and salvage the project anyway.
https://www.petedinelli.com/2018/01/10/this-project-is-a-bit-of-a-lemon/
In January of 2018, Mayor Tim Keller and the City Attorney were urged to file a civil complaint for breach of contract, breach of warranties, misrepresentation and unfair trade practices and Keller declined the suggestion.
Two months after taking office, Mayor Keller was urged by many within the community to scrap the project and find alternatives, but he refused saying it would be too costly.
In June of this year, Mayor Keller said the buses were like kids in a divorce where parents are fighting for who gets custody.
https://www.petedinelli.com/2018/06/04/want-a-divorce-hire-a-lawyer/
On June 6, 2018, the city of Albuquerque’s Inspector General (IG) issued a report on the ART Bus Project. According to the Inspector General’s report the first bus delivered in August 2017, was assembled by the manufacturer using a “frame intended for buses being built for [another city’s transit authority].” Frames intended for the Albuquerque’s buses had not yet been shipped nor received by the manufacturer. The Inspector General found that the bus manufacturer used “parts and pieces” intended for another city’s buses for the first ART bus delivered. The last 4 sentences of the 72-page Inspector General’s findings and report is worth quoting relating fraudulent activity:
“The inspection was proactive in nature and not due to any allegations that were made. While this inspection didn’t identify instances of fraud, it is important to note that it doesn’t mean fraud did not occur. The inspection did identify several problems that offer opportunities to improve and could be vulnerabilities for fraudulent behavior. City leaders should consider the problems identified and recommendations made to develop a more efficient and stronger procurement process that will help prevent and deter fraud, while also ensuring more quality and confidence in the products and services that the taxpayer funds. This is essential to protecting the public’s trust.”
One question Mayor Keller was asked during one of his many the status conference after the Inspector General’s Report is if any attempt will be made to hold former Mayor Richard Berry accountable for the ART Bus Project given that he rushed to have buses delivered to dedicate the project before he left office. Keller laughed off the question and declined to answer.
After the Inspector General’s report was released, Mayor Keller was urged turn the ART Bus project over to the City Attorney, the New Mexico Attorney General and the District Attorney, to investigate for criminal activity but Mayor Keller declined to make the referral.
On November 1, 2018, Keller proclaimed that the buses delivered were “unsafe at any speed”, demanded the manufacture pick up the buses and he threatened litigation by the city.
https://www.petedinelli.com/2018/11/02/keller-new-art-buses-unsafe-at-any-speed/
On Tuesday, November 13, 2018, Mayor Tim Keller held a press conference to announce the city’s plans to cancel the manufacturing contract with Build Your Dreams (BYD).
On November 28, 2018, it was reported that all 15 of the BYD buses were picked up by the manufacturer.
https://www.kob.com/albuquerque-news/art-buses-sent-back-to-manufacturer/5160241/
https://www.krqe.com/news/albuquerque-metro/bye-bye-buses-art-vehicles-leave-albuquerque/
On May 31, 2019, the Keller Administration announced in a joint press release with BYD that it settled the civil lawsuit with a mutual release of claims and no damages would be paid to either party and the case is dismissed.