"There will be no mass layoffs," Rainford wrote. "However, we do have to look at how we configure the water division and how we can sell more water to non-city customers. So, the water division is likely to retain an outside consultant to help us with both sides of the ledger."

Despite promises that neither privatization nor layoffs were on the table, on October 6, 2010, several managers and other employees of the water division attended a Veolia presentation at the Drury Inn on Hampton Avenue. Some noted the attendance of Veolia's attorney John Temporiti as he welcomed the water-division invitees in the parking lot.

In the ecosystem of St. Louis politics, Temporiti ranks high on the food chain. He was the chief of staff for former St. Louis mayor Vincent C. Schoemehl Jr. and chair of the state Democratic Party. He served as St. Louis County Executive Charlie Dooley's campaign manager and as the county's lobbyist. And he's been accused more than once of using his political ties to lobby on behalf of his clients. Most recently, eyebrows rose when Temporiti's son was given a $70,000 a year job with the county at a time when there was a supposed hiring freeze.

Mayor Slay and his challenger, Lewis Reed (far right), discussed Veolia during a January mayoral debate.
Theo R. Welling
Mayor Slay and his challenger, Lewis Reed (far right), discussed Veolia during a January mayoral debate.

"John Temporiti has been a power broker. He's been involved in a lot of significant deals political and commercial," says former Democratic State Senator Joan Bray. "He's been in a key position in a lot of things in the region."

Temporiti referred questions for this story to Veolia's press department. Demo, at Veolia, confirms that the company hired Temporiti's former law firm — Gallop, Johnson & Neuman — back in June 2010, and that Temporiti was one of the attorney's tapped to help the company with the "contract procurement process." When Gallop closed its doors last spring, Veolia kept Temporiti on retainer as a "legal consultant."

"Veolia's going to want to work with people with the deepest understanding of the local community," says Demo of Temporiti's well-known political connections.

At the Drury Inn, employees for Veolia gave a long PowerPoint presentation titled "Veolia Water North America Sustainable Initiatives for Saint Louis." It pointed out many of the utility's ongoing challenges: shrinking revenue and population, aging infrastructure, a rate-hike-fatigued customer base. The slides suggested making the utility a "stand-alone authority" that would be controlled by the city but run by Veolia. Perhaps most alarming to the assembled water workers was the slide that addressed staffing.

"Staffing levels are high when compared to benchmarks," the slide read.

"Currently stated at 325-330...1:500 employee-to-customer ratio is approximate industry benchmark."

That worked out to roughly 180 to 200 employees.

"That was totally bogus," says a water-division manager who was at the meeting. "That certainly raised our ire. It was an extremely contentious meeting. Extremely contentious."

Stephen Siegfried, director of business management for Veolia, was a part of the presentation and conceded that it was a tense gathering. But he disputes the characterization of Veolia's intent.

"We were there just to do a cursory review of the system and what kind of findings we could, what kind of system they had. And that's all we did," he says. "There was never a conversation about taking over the system."

A few months later, in December 2010, Veolia followed up the presentation with a letter proposing a "Try Before You Buy" option.

The letter proposed a $250,000 contract to set up a "parallel command structure" and work with the division to cut costs. It included a mention of the 1:500 employee-to-customer ratio.

"They moved things around a little bit but not much," says the water-division manager. "It was the same thing they'd come in with."

Without the support of the division, the Veolia partnership went belly up.

A year later the water division, working in conjunction with the mayor's office, went public with its desire for a third-party pair of eyes to review the utility. According to the request for qualifications sent out, the bid asked for someone to come in and assess all levels of the water division's operations, from addressing declining water sales and aging infrastructure, to staffing levels, to rethinking the governance of the utility.

Three firms made the short list. On January 14, 2011, a search committee made up of water commissioner Curt Skouby, the utility's chief financial officer Jim Kummer and representatives from the Board of Public Service settled on the Kansas City-based firm Black & Veatch.

"They were doing a great job for us," says a water-division manager familiar with the search process.

The committee drew up the contract with Black & Veatch for $245,100. The only formality left was final approval from city's Board of Estimate and Apportionment.

It never happened.

Five months later the water division sent Black & Veatch a letter informing the company that "it will not be necessary to execute a contract for these consulting services at this time."

"I don't understand either," says Tom Ratzki, vice president of Black & Veatch, today. "We were told that we were selected, but then never were presented with a contract to sign."

According to sources who worked on the contract within the water division, no explanation was given to them either, from Skouby or from the mayor's office.

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