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Thursday, November 03, 2005

Ind. Decisions - More on "Judge cancels Lawrence water utility contract"

"Judge throws out Lawrence water deal: Cantwell wants city to resume control of utility, cut rates" is the headline today on the front-page of the Indianapolis Star. Some quotes from today's story by Kevin Corcoran:

In public forums, Cantwell has accused water company officials of spending millions in customer money to buy lavish homes and luxury cars.

Water company officials include Michael L. Lawson, a former deputy mayor of Lawrence under [then-Mayor Thomas D. Schneider], who became company president; Mark H. Branaman, a former city engineer under Schneider who became vice president; and Micheal R. Couch, who has developed and leased property at Fort Benjamin Harrison and, under Schneider, managed construction of city projects, including the new city building.

The contract Schneider wrote gave them almost everything they needed, including a $4.84 million infusion of start-up cash, vehicles and other assets from the city. Lawrence Utilities' owners had invested $1,000 to get their company going.

The contract sparked a voter backlash that helped Cantwell defeat Schneider in November 2003.

For nearly two years, the FBI has been investigating questionable financial transactions by Schneider, including his decision to hire Lawrence Utilities. The investigation is ongoing, no charges have been filed, and it's not clear how long it will last, said Drew Northern, a supervisory special agent in the Indianapolis office.

Schneider, an ex-Marine corporal and former Indianapolis police detective, declined to comment on the ruling Wednesday from his Arizona home. He has testified in a deposition in July 2004 that when he put together the deal giving his supporters control of the city's $14 million-a-year water operations, no lawyers were present and no notes were taken.

Schneider said he had been in a hurry to protect the water utility from an outside buyer. And he trusted Lawson and Branaman, who had approached him with a plan for letting their new company take over the city's sewer and water operations. Schneider stated he had ruled out taking bids, figuring no one else could have provided such a smooth transition.

But Dreyer ruled that Indiana law is unambiguous, and that "no reasonable reading" would allow Schneider to turn over control of the utilities without bidding.

Lawrence Utilities' Chicago-based attorney, William N. Howard, said the company plans to appeal. In court, he told Dreyer the private firm has no control over the city's water rates. The proposed rate increases were written into the contract by Schneider, and the City Council, then entirely Republican, unanimously approved them in December 2001.

For more, see yesterday's ILB entry, including a link to Judge Dryer's ruling.

In addition, the ILB has located this 8/5/04 ILB entry titled "Lawrence mayor seeks to bar law firm" and this 11/20/04 ILB entry titled "More on Lawrence mayor seeks to bar law firm." The latter points to an 11/21/04 Indianapolis Star story that is still freely available online, titled "The story behind Lawrence's controversial utility contract." A side-bar to the story provides links to a weath of documents the Star has amassed and made readily available:

Current version of city's contract with Lawrence Utilities

2001 ordinance terminating sale of water utility to IWC, etc

Dec. 2001 ordinance in which Lawrence Council adopted water rate increases

Integrated Resources LLC takes $2.5 million loan

Condo loan taken from Integrated Resources LLC

Review of Lawrence Utilities 2003 finances by FSG

Lawrence Utilities' response to accounting review

Mayor Cantwell's lawsuit

Former Mayor Schneider testifies under oath

Lawrence Utilities responds to Cantwell's criticism

Ice Miller responses to Indy Star questions: April 21, April 29, May 12, July 2, July 23

"What's next" according to the Star story today:
Dreyer has set a hearing for 9 a.m. Friday. He could establish a timeline for returning the water and sewer utilities to city control. If Dreyer allows Lawrence Utilities to appeal his ruling, the transfer of control could be put on hold.

City officials say they will push for Dreyer to schedule a trial to determine whether ratepayers are entitled to money back.

Posted by Marcia Oddi on November 3, 2005 07:20 AM
Posted to Ind. Trial Ct. Decisions