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Clout-heavy joint venture gets $140 million city water management contract

Updated: April 28, 2013 6:45AM

Mayor Rahm Emanuel’s administration has awarded a $140 million contract to a clout-heavy joint venture to ride herd over a massive rebuilding of Chicago’s water system bankrolled by a four-year doubling of water rates.

Center Joint Venture lists three managing partners in its disclosure forms: Jack Hartman, Robert Bailey and Tim Neumann.

Hartman was a former high-ranking city and CTA official under former Mayor Richard M. Daley who went on to run the Illinois Tollway under now-convicted Gov. Rod Blagojevich. Blagojevich was subsequently accused of shaking down tollway contractors.

Hartman now serves as president of the Rise Group, now owned by Arcadis. Center Joint Venture is a partnership that includes Arcadis U.S. Inc.; exp.US Services Inc. and CH2M Hill Engineers.

The joint venture was chosen by an evaluation committee that ranked the most qualified candidates and received pricing proposals in a separate envelope. Only after a winner was chosen was the pricing envelope opened and used as a starting point for negotiations.

Center Joint Venture lists Ardmore Associates LLC as one of its minority subcontractors.

Last year, Ardmore founder Cherryl Thomas, a former Chicago buildings commissioner, resigned as vice president of Chicago Public Library Board amid questions about the apparent conflict posed by her firm’s work as a subcontractor on public libraries.

Ardmore worked on the Richard M. Daley library in Humboldt Park named after her former boss.

The firm now has eight employees working under the Rise Group’s contract with the Public Building Commission, which oversees library construction, at a cost of $40,300 a week.

Emanuel’s first budget nearly doubled water and sewer rates over four years to replace Chicago’s crumbling water mains — 900 miles of them a century old — and update the city’s two water treatment plants and 12 pumping stations.

Roughly 70 miles of water mains were replaced last year, but it was not enough to stop 3,800 water main breaks. That’s prompted the city to pick up the pace.

The Department of Water Management recently posted more than 160 job openings — for laborers, plumbers and equipment operators — to meet Emanuel’s stepped-up goal of installing 75 miles of new water mains and 57 miles of new sewer mains this year.

Last fall, the Chicago Sun-Times shined the light on the Rise Group’s no-bid, five-year, $95.6 million deal to oversee government buildings constructed by the Emanuel-chaired Public Building Commission.

The company had 95 people working under contract with the agency in 2011, dwarfing the PBC’s own 62-employee payroll. The highest-paid was a retired construction regiment commander in the U.S. Navy paid $275,000-a-year, $58,790 more than Emanuel and nearly $110,000 more than PBC Executive Director Erin Lavin Cabonargi.

At the time, Cabonargi defended the costly arrangement, arguing that Rise had saved taxpayers millions by delivering the projects it manages by an average of 8 percent under budget.

“They’ve put in the controls that have allowed us to execute projects on time and under budget. . . . There were no Millennium Park cost overruns,” Cabonargi said of the showcase park that came in at triple the original cost estimate.

Water Management spokesman Tom LaPorte was asked Tuesday why the city can’t manage the water system overhaul in-house. He replied that the department has been hiring outside project managers to ride herd over its construction projects since Daley opted for that approach in 1996 — after the cost overruns that plagued Millennium Park.

“It was instituted in order to improve efficiency and save costs. This allows the department to economically and efficiently meet its infrastructure-renewal goals without entailing hiring and scaling operations,” LaPorte said

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