Waterworks Board Controversy, We've Seen It Before

The Indianapolis Waterworks Board has become a joke over the years because, like most supposedly independent boards in this town, it essentially rubber stamps whatever the current administration puts on its agenda. When it was first created, the board's chairman at the time, former Lt. Gov. John Mutz, tried to silence a dissident board member who raised serious questions about the 2002 purchase of the water company and its subsequent management by Veolia. That board member happened to be a retired management employee of the company who understood all too well all of the dirty shenanigans that took place when the City purchased it for twice its value and Mayor Bart Peterson and CCC President Beurt SerVaas, the two driving forces behind its purchase, failed to disclose their respective financial interests in the transaction. Mutz' answer at the time was to pass a board resolution barring board members from discussing board matters to reporters and others outside the board meeting. After he caught flack from the media for advancing such an obviously illegal and un-American idea, Mutz quickly dropped his proposed resolution. The dissident board member quit the board when he figured out it really only served as a rubber stamp for the administration.

The latest dispute among board members has CCC Ryan Vaughn calling for the disbanding of the board. It seems Democratic members of the board are refusing to show up for a meeting because they want more time to wrestle with Ballard's proposed transfer of the sewer and water utilities to Citizens Energy. The Star's Francesca Jarosz writes:

The escalating politics surrounding a proposed sale of the city's water and sewer utilities hit a crescendo Thursday when Republican leaders said they want to dismantle the bipartisan water board whose Democratic members have hindered attempts to approve the sale.


Ryan Vaughn, the City-County Council's Republican president, said he will introduce a proposal next week that would shift oversight of the city's Department of Waterworks to the mostly Republican Board of Public Works.

City leaders had intended to have the Board of Waterworks, which now oversees that department, vote on the utilities sale. But at its last two meetings, Democrats on the seven-member board failed to show up, leaving the panel without a quorum to conduct business.


Democrat Sam Odle resigned from the board last week, and its two remaining Democratic members were absent from a meeting Tuesday.

At those meetings, the board would have faced a vote on the preliminary approval of the utilities sale and $4 million in waterworks projects, including replacing wells with water lines and other measures required by the federal government.

"I'm not going to put the day-to-day operations of the waterworks in jeopardy," Vaughn said, "because they want to play politics."

Let's just start by making a public service announcement. Ryan Vaughn should not in any way, shape or form be participating in this discussion. His law firm represents Veolia, the company under contract to manage the water company. Despite stinging criticism from the IURC of the City's one-sided agreement with Veolia, which provides for payments of more than $40 million a year to the French-owned company, the City has refused to renegotiate the troubling agreement. Instead, it is insisting as part of the proposed transfer that Citizens Energy assume the agreement, which means Veolia and not the more qualified utility will be running the water company's day-to-day operations and forcing even higher water rates on ratepayers. Veolia has been receiving millions of dollars in bonuses also from the City, which the IURC says have not been performance-based. As with the original purchase of the water company, we have a key decision-maker whose firm stands to profit from the transaction, although that fact has been strangely missing from all previous reporting by Jarosz and the Star, whose editors have editorialized in support of the deal before even bothering to study its impact.

Democrats insist they aren't playing politics by not showing up at board meetings to block a vote at this early date. The proposal has been on the table for only about three months after all.  "We don't have a chance to do due diligence, and yet they want us to vote on it?", Board member Frank Short told Jarosz. "We're going to make sure we have good information and independently verify the information." Short reminds Jarosz of the waterworks board's ill-fated decision to approve variable rate interest bonds at the instigation of the previous administration, a move that cost the utility $60 million, which has been passed on to ratepayers in the form of higher rates, as a reason for taking more time to study the deal. On that point, he's absolutely correct. Short, however, does not come to the table with clean hands. The former City-County-Councilor, current Washington Township Trustee and lobbyist, formerly lobbied for the water company. In fact, he abstained from voting on the purchase of the water company when it came before the council because of his relationship with the water company.

Marion Co. Democrat Chairman Ed Treacy points out that the board has to rely on the same counsel as the administration to act on the matter. "Treacy said the Democrats' absence from the meetings was a way to put pressure on interested parties, such as Citizens Energy Group, to help the board get separate legal counsel," Jarosz writes. As I previously observed, Democratic mayoral candidate Brian Williams has performed more due diligence on the transaction than the Mayor or any of the Republican members of the Republican-led council, who are trying to ram the deal through in order to fund $450 million in street and sidewalk improvements the administration plans to make with borrowed funds and proceeds from the transfer as a way of buying votes ahead of next year's municipal election. The candidate Treacy supports for Mayor, Melina Kennedy, can't even speak publicly about the transaction because her law firm, Baker & Daniels, is being paid $540 an hour to provide legal counsel to the administration on the transaction.

The bottom line is that this transaction is all about the continued fleecing of Indianapolis citizens by a group of self-dealing, ruthless and crooked insiders who could give a damn less about what's in the public interest. If we lived in Chicago where they have a real prosecutor who actually prosecutes people who conduct business the way these crooks conduct business here, half of them would be in a federal prison where they belong. On that closing note, former Illinois Gov. Rod Blagojevich's trial got under way in Chicago yesterday, while his predecessor is still sitting in the federal prison in Terre Haute.