March 17, 2013

Suit filed against city

Attorney: City, LMU lacked authority to seek proposals for public-private partnership.

by Mitchell Kirk

LOGANSPORT — A Logansport citizen filed a lawsuit against the city last week for what she feels was an unauthorized execution of power in the way it is going about seeking the development of a new power plant.

Last November, Logansport Municipal Utilities issued a request for proposals, or RFP, from companies interested in entering into a public-private agreement to develop a plant powered by refuse derived fuel. In January, LMU endorsed a proposal submitted by Pyrolyzer, LLC, a renewable energy consulting firm based in Boca Raton, Fla. Logansport City Council has since voted to engage in negotiations with the company.

The lawsuit was filed by attorney Jim Brugh on behalf of Julie Kitchell, a Logansport citizen and LMU ratepayer who has said she disagreed with how the city is handling the power plant project at public meetings.

The lawsuit cites a part of Indiana Code that states a city must adopt a provision pertaining to public-private agreements before entering into one. Brugh has mentioned the provision at previous city council meetings.

City council adopted the public-private agreement provision at its March 4 meeting. Brugh and Kitchell are saying it needed to be done before the RFP was submitted in November.

“When you read that law, there’s a procedure that states the city does not have the authority to engage in that public-private procedure unless they have first authorized themselves to do that,” Brugh said. “So last November, as soon as the city acted like it had the authority to issue the RFP, from the beginning, everything they’ve done has been without authority. The mayor has to follow the law.”

Kitchell agreed.

“There are rules and laws and regulations you have to follow,” Kitchell said. “They didn’t follow the law, so it should be thrown out.”

Logansport Mayor Ted Franklin was out of town when the lawsuit was filed and unable to comment. According to city officials and city-hired attorneys, the city has done nothing wrong.

John Molitor, an attorney working as special counsel for the city, dismissed Brugh’s claims.

“This is just a political stunt,” Molitor said. “[Brugh] took a technicality which was easily addressed and is trying to make a lawsuit out of it with no merit at all.”

City council’s March 4 resolution addresses Brugh’s claims of out-of-order sequencing, citing Indiana Code 36-14-16, which states, “A unit may ratify any action of the unit or its officers or employees if that action could have been approved in advance.”

“The point that [Brugh] brought up was one of sequencing,” Molitor said, referring to Brugh’s mention of the public-private provision at previous council meetings. “We didn’t ever think it was a problem, but just to be safe, we passed that resolution and put the language in there about the ratification. It ratifies all prior actions, which is perfectly legal and put in years ago by the legislature just to deal with this sort of thing. Sometimes a city council will pass things out of normal sequence. All this says is you’re allowed to do that. It’s perfectly legal.”

Paul Hartman, superintendent of LMU, agreed with Molitor.

“All throughout this entire process, we were very careful in always wanting to follow the rule of law,” Hartman said. “I’m confused as to why there is a problem with this, I really am.”

Alvaro Almuina, director of EllSo Consulting and the project manager leading the study team for the power plant project, spoke on behalf of the team.

“Our position has always been once we had a project in hand we would pass the necessary legislation to move forward to go through the negotiation stage,” Almuina said. “That’s when everything had come together and that’s when the LMU recommendation came to the council. That was the right time to pass the legislation, which we did. This action is really not going to affect our project and I just don’t see any merit in it.”

Brugh contested the claims of Molitor, Hartman and Almuina, citing the part of Indiana Code called the Home Rule Act, which he also cites in the lawsuit.

“That’s the point about municipal law from the Home Rule Act that says if there is a statute that applies to the city, the city has to strictly follow the law and the law says the empowerment has to happen first before the city can presume to exercise the power,” Brugh said.

Brugh said the city’s act of ratifying all prior actions is unjustified, and Kitchell agreed.

“They put the cart before the horse and now they’re trying to rectify that and it’s too little, too late as far as I’m concerned,” Kitchell said.

Mark Crandley of Indianapolis-based law firm Barnes & Thornburg LLP, working as special counsel for the city, said he did not want to comment on the lawsuit itself until he was able to review it.

“There’s no reason to believe the city has done anything wrong,” Crandley said. “We will vigorously attest the lawsuit once we have it in hand. We will be prepared and ready to go forward.”

Logansport City Attorney Randy Head said he did not want to comment on pending litigation.

Scott Powers, general counsel for Pyrolyzer, said the lawsuit wouldn’t affect the company’s plans with the city.

“Pyrolyzer is looking forward to working with the city to develop a waste-to-energy power plant to serve the needs of the city and we’re optimistic that the litigation will be resolved in favor of the city and we intend to stay the course,” Powers said.

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