City of Indianapolis Paying $29M to Sever Contract with Veolia Water

[democraticinsurgent]

From the Advance Indiana blog:

The city's operating agreement with Veolia has been a lose-lose situation for Indianapolis water ratepayers from the day the city purchased the water company from NiSource for more than $500 million, about double what it was actually worth at the time. The city turned over management of the water company to Veolia in a one-sided deal that netted the French-owned company about $50 million a year and included tens of millions of dollars in performance-based incentive payments the IURC concluded in a rate decision last year were without merit. After incurring more than $700 million in debt after taking over the water company, the Ballard administration decided last year to transfer ownership of the water company and the sewer utilities to Citizens Energy. That agreement required Citizens to assume about $1.5 billion in debt and pay $460 million to the City of Indianapolis, which plans to use the money to fund the ReBuild Indy program, a major public works program the Ballard administration has envisioned paying for street and sidewalk improvements.

During the debate over the transfer of the water utilities, opponents of the deal as proposed, including myself, contended it made no sense to believe Citizens Energy could ever come close to reaping the tens of millions of dollars in annual savings it said it could squeeze out of its management of the city's utilities because it was being forced to assume the one-sided operating agreements the city had entered into with Veolia for the water company and with United Water for the sewer utility. The Ballard administration insisted its hands were tied and that it could not undo those long-term agreements with the private operators without paying a huge penalty. Citizens Energy went along with the gig until we learn today surprise, surprise, that the city is paying a $29 million termination fee to Veolia despite its documented record of poorly managing the company from the beginning of its contract. As the IBJ's Chris O'Malley reports:

Veolia will no longer have a role in operating Indianapolis Water after the city sells the utility to Citizens Energy Group—but the company will walk away with $29 million in the form of a contract-termination fee.


Meanwhile, Citizens plans to make job offers to “substantially all” of Veolia’s 436 employees at the water utility.

The contract-termination agreement announced Thursday, which must be approved by the Indiana Utility Regulatory Commission, came as somewhat of surprise. Citizens has been in talks with water system operator Veolia since at least July, when City-County Council members approved the sale.

This is just another example of the Ballard administration lying to the public to get a deal through the city council while withholding relevant information from the public while the debate is taking place. We saw this with the bailout legislation for the CIB last year when the public was repeatedly assured the new revenues being raised from higher hotel taxes, state revenue sharing and a state loan would not be used to provide any payments to billionaire Herb Simon's Indiana Pacers in order to secure City-County Council approval. Later, we learned the city had planned all along to divert excess property tax revenues from a downtown TIF district to make possible a $33.5 million give-away to the Pacers. Now we learn that the city planned all along to pay a huge termination fee to Veolia it said was not advisable in order to secure approval of its controversial utility transfer deal from the City-County Council.

More at http://advanceindiana.blogspot.com/2010/10/surprise-youre-paying-29-million-to.html

[LiberalFighter]

1. Does Ballard intend to run for Mayor again next year?

Maybe he has a cushy deal lined up?

[democraticinsurgent]

2. Sure doesn't look like it,eh?

I can't believe how corrupt Indy has gotten. Most of the folks that led the revolt against Bart Peterson in 07 have turned against Ballard because he's governing about like Steve Goldsmith did.

If the D's do well in Marion County next week, it's over for the Indianapolis Republicans next year. Regardless, Ballard is cementing his reputation as a pay-to-play corporate giveaway guy. Sad.

[Indianademocrat91]

3. just like the other Repuke in Indianapolis..

its disgusting

[LittleGirl]

4. As a newer resident to Indy

this info is appreciated. I've only lived in the 'city' for about 6 months so I'm just getting myself familiar with all of the goings on in this town. What I've seen so far is really sad. Thanks for posting.

[AngryOldDem]

5. How did Ballard get elected?

I last lived here in the early '90s when Goldsmith was mayor. Came back here a year ago to this. Wasn't the city warned from the start that this was NOT a good idea?

[democraticinsurgent]

6. Total Fluke

Bart Peterson became the first Dem mayor in 32 years by winning in 99, re-elected easily in 03. When he ran for a 3rd term in 07 the state had just changed the property tax formula and many homeowner bills doubled or tripled. Though this wasn't his fault, Peterson got blamed for it, at least in part because he allowed local option income taxes to go up simultaneously. He came off looking insensitive and out of touch--which, to some extent, he was.

Ballard, who got the nomination only because none of the front-line Repubs were willing to run against a then-popular mayor, ran as an outsider who would end country club politics, kind of a pre-Tea Party candidacy.

So he was elected in a big upset that most didn't foresee. He wasn't given a chance by much of anyone until some late polling showed a big movement away from Peterson.

As soon as he took office, he apparently gave control over to a couple of big law firms who ran things in cahoots with Goldsmith back in the day. Since then we've had nothing but insider dealings, conflicts of interest and public money being shoveled off to private interests.

The Libertarian-leaning cadre who helped get Ballard elected were almost immediately shut out of influence as Ballard enabled the Good Old Boy network to run things.

That's it in a nutshell. Welcome back to Indy. ;-)