By Chris Lane
By Jeff Balke
By Aaron Reiss
By Angelica Leicht
By Dianna Wray
By Aaron Reiss
By Camilo Smith
By Craig Malisow
The last time City Hall politicians jumped into the middle of a water fight, it resulted in an FBI investigation of pass-through contributions to councilmembers.
This time around, the city tried to get the politics out of the construction of a multimillion-dollar water-processing plant on Lake Houston. Officials created an impartial panel of private citizens, the Houston Area Water Corporation, to oversee the awarding of the volatile no-bid contract.
The HAWC also was supposed to save money by allowing a single contract team to handle all aspects of the plant construction, rather than bid out the functions separately as would otherwise be required under state law. The group would recommend a contract winner, and City Council would have the final word.
The political purification effort hasn't failed yet, but it has spilled enough blood in the water to attract a whole new school of greenback-hungry corporate piranhas and area politicos eager to take more bites out of bumbling Lee Brown.
Among them are state Senator Jon Lindsay, the former county judge who rarely misses a chance to take a whack at the city on anything. Lindsay is allied with the competing North Harris County Water Authority and would like to wrest control of area water rights from the city. District A Councilman Bruce Tatro is Lindsay's inside-the-Loop confederate.
"Lindsay is pulling Tatro's strings," says one councilmember. "Lindsay and Tatro are working together, in my judgment," a HAWC source agrees, blaming the duo for stirring the media pot with a largely prefabricated controversy.
"They've done a fantastic job of destroying our credibility here in one week's time, partially because the mayor's media skills are dog shit and his credibility is down to nothing." The blitz convinced former county flood control official Art Story to resign his position on the HAWC board, removing the only member with solid experience in water matters.
Beneath the roiling surface are three large sharks with an eye on what could be the biggest single contract prize on the city scene since the billion-dollar Houston Wastewater Project of the mid-'90s.
One is U.S. Filter, a subsidiary of the French corporation Vivendi. It's backed by a full-court press from Jim Royer, of engineering giant Turner, Collie & Braden, and a host of other engineering interests who have contributed heavily to councilmembers and Mayor Brown. Veteran lobbyists Larry and Nancy Berkman are working the political ropes for U.S. Filter.
Then there's good ol' Montgomery-Watson. It co-managed the Houston Wastewater Program that spewed dollars like a busted water main to a host of questionable characters. Those included Rosalie Brockman, girlfriend of then-councilman and current federal convict Ben Reyes.
The last of the less-than-awesome threesome is the ill-starred Enron subsidiary Azurix, whose main claim to fame is sopping up more than a billion dollars in assets from its parent while its stock went in the tank. It also dunked the Enron career of high-flying, high-heeled executrix Rebecca Mark, who was forced to resign in disgrace. The water business is usually rather boring, at least until the players start drowning in it.
The Azurix curse may have rubbed off on Brown, who starred in an incredibly overblown Houston Chronicle front-pager last week detailing his brief and unsuccessful investment in the company. The mayor recently claimed he had not known his broker bought him 1,000 shares last August. Brown sold the stock a month later at a loss of $1,000, when he discovered the potential conflict.
Azurix has the heft of local gorilla Enron and retired CEO Ken Lay behind it. The company initially seemed to have the inside track on the deal, with mayoral fund-raiser Sue Walden working City Hall for the Azurix team. In addition, U.S. Filter's team had some built-in conflicts because of their designs on building a plant for the North Harris County Water Authority, a potential rival with the HAWC to supply water to area suburbs. Then came a sudden turnabout from HAWC officials.
Early last month Stephen Jacobs, the Locke Liddell & Sapp attorney who represents the HAWC, wrote Azurix asking for an explanation of a Chronicle business story reporting that Enron planned to buy back Azurix's public stock and dismember it. "The corporation is interested in the truthfulness of the report," Jacobs wrote, "and, whether accurate or not, the viability of Azurix and its continued participation as a proponent in the Northeast Water Purification Plant Project."
Azurix Senior Vice President Michael Wood responded with a defense of the company's proposed merger with mother ship Enron. He pointed out that competitor U.S. Filter had had its own structural changes, including acquisition by the French Vivendi. No corporation can guarantee it won't be acquired or restructured, argued Wood, and Azurix is no exception.
That wasn't good enough for Gary Oradat, the city public utilities division director and vice president of the HAWC. He fired back a letter last week to Azurix executives notifying them that their corporation was not an acceptable guarantor for the project. Despite Azurix's emergency presentation to HAWC chair David Berg and city officials last week, it's increasingly looking like a long shot for the contract.