Troubled Waters

The nondescript box of a building at the corner of Hillcroft and Westpark hardly merits a second glance, even with the giant blue tank perched nearby like a bloated steel sausage awaiting a bun. Inside the steamy prefab structure, a pair of city workers earnestly rinse, fill and cap five-gallon jugs of water pumped from the tank. Technician Marian Washington slaps a Houston Superior label on every jug. The slogan reads, “Drinking water you can trust from people you know.”

As business ventures go, it’s relatively modest: Two full-time employees manage the setup and produce about 100 bottles a week, which are then distributed to coolers in five city buildings and drained by thirsty bureaucrats.

But the city-owned bottling plant isn’t supposed to be a business venture. When then-Public Works deputy director Dan Jones first pitched the idea of selling bottled municipal water to consumers in July 1997, he helped convince a skeptical City Council to try a pilot project that was supposed to last only three months. If the response to the product was positive, Council could then decide whether to hire a marketing consultant to take Houston Superior to the next level: supermarket shelves.

The entire operation, Jones said, could be pieced together with existing city resources and would require only about $1,200 in new spending for bottle caps, a hand truck and a few other odds and ends. Of course, any expenditure more than $5,000 would be brought to Council for approval, as required by law.

After a Council committee authorized the pilot project, it took about a week to exceed the $1,200 figure. Using various Public Works contracts that had nothing to do with water bottling, the managers in charge of the project shelled out $38,000 for the building and rehabbed the tank for another $34,000 — all without Council’s knowledge. The equipment and miscellaneous expenses added another $50,000 to the start-up costs. Including the $57,000 in materials and labor required to operate the water bottling plant each year, the city has thus far invested more than $250,000 in its little pilot.

That’s news to Councilmember Chris Bell, the most gung ho bottled-water enthusiast among the city’s elected officials. “My understanding was that there were no expenses over $5,000,” says Bell, who chairs the committee that gave the pilot the go-ahead. “They said everything they needed was already on hand.”

Even though the Houston Superior label has Mayor Lee Brown’s name prominently displayed on it, former Public Works director Jimmie Schindewolf took credit for the idea when it first leaked to the public. While strolling the aisles of a local supermarket, Schindewolf said at the time, he saw people loading relatively pricey jugs of water into their carts. The city’s water could compete favorably with commercial waters, he figured, and at a cost of only fractions of a penny per gallon to produce, the profit potential seemed enormous.

Jones, one of four former and current Public Works employees now under indictment for Schindewolf-era shenanigans, was equally enamored of the concept. In presentations before Bell’s committee, he envisioned blind taste tests in malls, with Houston Superior capturing the blue ribbon. The city might eventually wholesale its water to companies like Ozarka for bottling under their own names. Artiste Jones even helped create the Houston Superior logo.

With Schindewolf and Jones behind it, the pilot moved quickly onto the fast track (perhaps to get it done before a new administration had the chance to shut it off). Pete Dobrolski, who heads the utility maintenance branch of the Public Utilities Group, led the project and reported directly to Jones. Dobrolski assembled a team to design the building, purchase the equipment, work with regulators and otherwise bring the bottling plant on-line. “We had about 15 people involved,” he says.

Tapping an open-ended cement contract, Dobrolski ordered a $7,800 concrete pad poured to support the prefab building. Though none of the documentation requesting payment noted specifically what work was done, it appears that the nature of the contract technically permitted that use.

The same cannot be said of the building purchase, which was tacked on to a wastewater contract with Boyer, Inc. A memo from former wastewater program administrator Lynn Raschke authorizing the buy plainly states the case. “Boyer Inc. … builds prefabricated buildings and has submitted a cost-effective proposal for this additional work,” Raschke wrote. “That additional work is to be added to Boyer, Inc.’s contract.”

Such a maneuver, which pushed Boyer’s contract over its limit, is a clear violation of competitive bid laws, the same laws that landed Jones and his fellow indictees in hot water. So was the directive from former Public Utilities Group chief Fred Perrenot to use an engineering contract — intended solely for the Spring Branch water treatment facility — to get the bottling plant its own tank. “I am requesting that you direct Pate Engineers to design, manage and arrange for the rehabilitation and erection of the tank at the new site under their existing tank rehabilitation contract,” Perrenot wrote in a memo.

What’s more, Perrenot’s note was dated July 28, 1997, a month before Chris Bell’s committee authorized the pilot project to proceed. “It was a done deal” from the beginning, says Max Jennings, a project manager in the Water Production Division who helped design the plant and was involved throughout the construction phase.

By the time Lanier left office in January and Brown was ensconced at City Hall, the big money had already been spent. “The management group knowingly went ahead with this,” Jennings says.

Jennings believes the entire process violated numerous laws, and he’s blowing the whistle. He put together an annotated volume citing each transgression with a corresponding chapter and verse of the City Charter; a copy now resides in the Office of Inspector General. He has also filed a grievance against the City for not paying him overtime for his work on the project and plans to sue if his grievance is rejected. “I’m a tuba-blower,” Jennings says. “Whistles don’t count.”

Dobrolski says the building and tank can be dismantled and used elsewhere, so the purchases won’t go to waste even if the pilot project flops. And he says the expenditures exceeding $5,000 were appropriate because the Competitive Initiatives Division somehow repaid the money to the wastewater program and general fund, though he could produce no evidence to prove it. When the Department of Public Works installed a new computer system last year to keep track of finances, he says, the records from previous years were lost. “All the old documents were purged.”

It’s not likely the strategy to circumvent City Council came from Perrenot, who was never enthralled by the plan to sell bottled city water. “He hated the project,” says Bell, an assessment confirmed by others (Perrenot has since resigned). Nor was Dobrolski piloting the ship, even though he signed several of the dubious authorizations. “It was a high-priority project,” he says vaguely.

Rather, it appears that like so many other Public Works projects under Schindewolf, the order came from above to get the pilot project done, and done quickly. If the cumbersome process of seeking Council approval got in the way, well, there were ways around that. “Here we go again,” says Councilmember Joe Roach, who opposes the water bottling effort. “Same song, second verse.”

Bell still thinks the idea to market city water has potential. An informal customer survey by the City in February (as yet unreleased) shows that most drinkers like the quality of Houston Superior, though only 18 percent said they’d be willing to pay for it. But the Brown administration has chosen to let the project drift along rather than move it forward. “As it is, with no enthusiasm in the administration, we’ll just have to wait for another day,” Bell says.

Employees at City Hall and the other four city buildings serving Houston Superior may soon be switching to another brand. According to figures provided by the Department of Public Works, it costs the city more than $10 per five-gallon bottle, about twice the cost of commercial vendors. “We’ve kind of determined that it’s not cost-effective,” says department director Jerry King, who will soon present his findings to the administration.

The Office of Inspector General, already swamped by the indictments and various related Public Works investigations, might take a bit longer to issue its findings. Unless Dobrolski and others come up with a few novel excuses, however, they may have to rely on the line that would make an apt epitaph for the Schindewolf years: Hey, that’s just the way business was done. “At the time, we did that stuff a lot,” says a former Public Works official familiar with the project. “Now, it wouldn’t be kosher.”

“I guess it wasn’t kosher then, either.”

E-mail Bob Burtman at bob_burtman@houstonpress.com.