Phoenix Let the International Firm Operating the City's Buses Dodge a Bill of More Than $2 Million

Phoenix taxpayers have lost out on millions of dollars from Veolia Transportation, fees the corporate giant would have paid had city officials not given its executives a four-month pass on poor-performance fines.

In October alone, the company that operates Phoenix city buses racked up nearly $560,000 in fines, mostly for arriving late to bus stops. In July, August, and September, Veolia's tab was more than $3 million, according to city documents.

However, transit officials tell New Times that a system glitch produced inflated fines for the first three months. In September, for example, an initial tally shows that Veolia amassed $1,091,369.18 in fines. A revised version of that report drops the amount to $559,081.

That means that instead of $3.5 million, the French transportation company dodged a bill for more than $2 million — still a sizable chunk of lost revenue for a cash-strapped city that has reduced bus service in the wake of budget shortfalls.

Transit officials say the money would not have made a difference to the average bus passenger in the short term.

Since transit operations are largely funded by special city sales taxes, Phoenix public transit director Debbie Cotton says, the money would have gone toward shoring up the city's budget deficit — $142 million as of January — caused by declining tax revenue.

The majority of the fines Veolia would have gotten slapped with are for late buses. For example, buses showed up late — for various reasons — to bus stops at least 57,000 times in those four months.

If a bus is six minutes late, that's a $20 fine. The company pays $40 if a bus is 10 minutes late. The fines for late buses top out at $250 each time a bus shows up more than 30 minutes late to a stop along its route.

Cotton says the fines are in place to ensure that bus patrons receive the best service, not as a way to make money off the company. She says she would be happy if the city didn't collect any fines, because that would mean customers were getting exceptional service.

"We don't want them to arrive early; we don't want them to arrive late," she says. "We want them on time. Time is important in the world of transit. And this is a way to measure their performance."

Although the four-month reprieve ended in October, Phoenix still hasn't collected any money from Veolia because transit officials say they are working out the kinks in the system that caused the initial miscalculation.

It is unclear how much Veolia will have to pay Phoenix for the past five months, but the money will be collected, Cotton stressed.

The forgiven fines are part of a complicated — yet cozy — relationship between Veolia and Phoenix officials, namely Mayor Phil Gordon.

Federal Transit Administration officials started questioning that relationship after New Times published "The Girlfriend Problem" (September 9), which revealed how Gordon helped Veolia muscle an extra $30 million from Phoenix to settle the old bus contract. That contract, also run by Veolia, expired on June 30.

It's easy to speculate about Gordon's motivation for lending a hand to the company, given that his girlfriend and former political fundraiser, Elissa Mullany, has been on Veolia's payroll as a consultant since 2007.

Mullany also was part of the team that helped prepare Veolia executives for interview panels, advising them on what questions to expect from the city and the type of responses the city wanted to hear.

While Gordon pledged his support for Veolia in June 2009, months before the City Council voted to award the company a $385 million contract, he declared a potential conflict of interest after going public with his romantic involvement with Mullany.

The mayor stopped participating on Veolia-related issues at public meetings, but he continued advocating for them behind closed doors, out of the public's view.

Gordon's close friend Billy Shields also is a paid lobbyist for Veolia.

Representatives for Gordon's office and Veolia both confirmed that the two met and discussed the Veolia contract, despite Gordon's conflict. During one of their meetings, the mayor advised Shields to tell his client to walk away from its Phoenix contract because city officials wouldn't agree to Veolia's demands for more money. When Veolia followed through and reneged on the contract it was awarded, Phoenix officials flew to Chicago, where they agreed to pay Veolia nearly $30 million.

Later, when the time came for the City Council to discuss that settlement in executive session, before a public vote, Gordon was involved in those discussions, two elected officials tell New Times.

Presumably, the feds are looking at the relationships to determine whether Veolia had an unfair advantage.

The feds asked another round of questions regarding Phoenix's contract with Veolia in early March, according to city e-mails. They wanted to know the terms of the contract and how much of it is funded by the FTA.

The 2010-11 portion of Veolia's $385 million, five-year contract, is $69.6 million, and the feds pitched in $15.6 million, or 22 percent.

Neither Leslie Rogers, FTA regional administrator in San Francisco, nor the agency's public relations office in Washington, D.C., will answer questions about their Phoenix inquiry.

In a five-page letter to the FTA, Cotton explained that the contract tied to the nearly $30 million settlement was not federally funded. She also wrote that Gordon didn't vote on the new contract awarded to Veolia and that elected officials had nothing to do with negotiating the $30 million settlement.

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43 comments
Sunsfan3232
Sunsfan3232

Veolia is the worst company to even be here in phoenix, any two year old can do veolia's job. I dont like this agreement and mayor gordan is just stupid. He is weak. hopefully the new mayor will look at Veolia and get rid of them for ever. Give it to someone here in USA not France. Poor service and they dont like thier workers. Get rid of those nabi's too Veolia.

jim kay
jim kay

The Mayor of Phoenix is truly a schmuck who sleeps with veolia. He should be thrown in jail and the phoney contract with veolia should be voided.

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Debbie Cotton
Debbie Cotton

I am writing today to respond to the article written on Phoenix’s bus service contract withVeolia Transportation Services, in the March 31 issue of the Phoenix New Times. I wanted to make clear to your readers that Phoenix Public Transit values its customers andthe public trust, and we do not give contractors “a free pass” in regards to quality bus service.

We are implementing a prescribed plan of action for addressing contract issues, as negotiated with Veolia Transportation Services in the Settlement and Release Agreement, that was recommended by the Phoenix City Staff and approved by the Phoenix City Council in May 2010.

This new bus operation contract dramatically changes the way we do business and saves money for the city and our residents. We impose liquidated damages for a variety of reasons that help us ensure buses arrive on time, are well-maintained, and are clean and graffiti free. The inclusion of liquidated damages requires our contractor to keep performance and customer service clearly in the forefront of every aspect of their work to ensure service quality. The limited moratorium on liquidated damages in the agreement was provided to allow for transition into a large and complicated new contract with detailed performance requirements.

As we work to conclude our analysis of bus performance data, we will be invoicing Veolia Transportation Services for six months of liquidated damages retroactive to November 1, 2010. Unfortunately the available documentation quoted by the New Times reporter, contained estimates and incomplete analysis because the exact amount of liquidated damages is yet to be finalized.

Phoenix Public Transit Department is focused on providing cost-effective, reliable public transportation for our residents. We would appreciate and welcome the opportunity to meet with you as a follow up on this letter.

Debbie CottonDirectorCity of PhoenixPublic Transit Department

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Bob
Bob

Phil Gordon is a pussy who should be tried as a traitor for countering SB1070.

Crannman26
Crannman26

Monica.....I think I love you.Thank you for your reporting

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Wild Bill
Wild Bill

When you add the 27.5 million to the Veolia bid of 388,000,000 it therefore comes to a total bid cost of 415,500,000 not matter what anyone wants to debate over the nature of events. It was reported that the next bidder bid 412,000,000 and based upon my third grade mathematics -- that is the responsible low bid.

Amos Kendall

ExpertShot
ExpertShot

"In a five-page letter to the FTA, Cotton explained that the contract tied to the nearly $30 million settlement was not federally funded. She also wrote that Gordon didn't vote on the new contract awarded to Veolia and that elected officials had nothing to do with negotiating the $30 million settlement"

Well, that doesn't seem right - Gordon WAS involved in negotiating the settlement - he was in on the negotiations ON THE SIDE OF THE CONTRACTOR and AGAINST THE CITIZENS OF THE CITY OF PHOENIX!

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Michael L. Cornelius
Michael L. Cornelius

I believe that the FTA has a duty to us as taxpayers to look into what has happened here. Public agencies have been claiming poverty for too long while at the same time awarding fat contracts to companies who can also fatten the pockets of local leaders. If anyone remembers, the city lost federal funding just a few years back for transit due to another Veolia contract. The same Mayor, along with virtually the same council gave Veolia a "no bid" contract, which was unlawful. While our elected city leaders are helping their Veolia (a French Company with a terrible record for their public works divisions, namely water and transit) friends make millions (about a half of a billion here) of our taxpayer dollars, who suffers? The citizens who actually count on transit to get them to work, to get their kids to school, to help our disabled community to get out of their homes and be mobile. It is sad, it is pathetic and our Mayor and City Council should be at least ashamed and at most thrown in jail. I would remind anyone who may be reading this that if you are a citizen within the city of Phoenix, you should register (if not already) and vote on August 30, 2011. I think that I have the correct date. Thankfully our corrupt Mayor is term limited and will not be able to run again. However, Peggy Neely and Claude Mattox will both be seeking the Mayoral seat and they are both on the council and were on the council when this Veolia fiasco played out. I believe that both of them also sat on the "transportation and infrastructure sub-committee" that heavy deals with public transit. Those are no votes in my book. We must start electing leaders and then hold them accountable for how the manage their offices. We must do both, not just the prior. With more and more people counting on transit for whatever reason, we must do right be them. We must do right by our disable riders who would not be able to get around without transit. If the FTA takes their funding out at a time when service is already being cut, and fares are higher than ever, who knows what the results would be. I am just so upset, as a taxpayer, that our city has wasted so much of our money in making their friends more wealthy while screwing over the people who elected them.

Walter Concrete
Walter Concrete

So true. But we have no way to hold politicians accountable for their criminal actions. We can't force a new vote and we can't fire them. We can't make those responsible for regulating these offices do anything. We wait while they steal us blind and laugh at us behind our backs. For instance the judicial investigation into the sheriff's actions. How long has this been going on? And the Arizona Attorney General...they only have balls to steal someone's emails and sit back as people are crucified in the news as their actions are put in print. "We don't have enough evidence", how many times have we heard that cowardly horse shit?

Jj6523841984
Jj6523841984

"While our elected city leaders are helping their Veolia (a French Company with a terrible record for their public works divisions, namely water and transit) friends make millions (about a half of a billion here) of our taxpayer dollars, who suffers?"

Really? They will make 'almost half a billion on this contract'? I could only imagine what the operating costs could be. Or could it be that the $385 million contract is for all operating costs of running the operation, this includes wages for operators, mechanics, and support personnel. My minimum calculation for 650 operators at an average rate of $16 an hour for 40 hours(all 3 under-estimated) /52 weeks/5 years is well over 100 million. Maybe you should look at the bid and those from other providers to see the real costs and profit that may be realized from operating the system.

With the state of the economy the way it is and all of the cutbacks do you really think that you are exempt from any future cost savings measures to be sure 'your passengers' receive the service that you say they deserve?

I haven't heard police or fire unions complaining about their contract or the elected leaders. Your complaint about the private company awarded a bid over other providers is lame. How many contracts have been awarded throughout the valley that were underbid and they returned to the city to ask for more $.

As for this articles report of no damages being assessed during this period, could it be there was no contract with any of the unions? And be assessed penalties from the get go if there was a strike?

Your re-occuring good vs. evil rant is old and played out, gimme a break.

malasangre
malasangre

your right i'm sure they dont intend to make any profit. god bless the french

Michael L. Cornelius
Michael L. Cornelius

I appreciate your comments, even if they are lacking in any depth. It is easy for someone to jump on here and comment (using some strange combination of letters and numbers to identify yourself) on others posts who have the balls to use their real name. Clearly you are paid to post on here and it would be my guess that you received the payment from either the Mayor or his girlfriends company, Veolia. The rest of your comment is absent any clear understanding of what is really happening here and does not warrant a reply. However, I again thank you for your observation and will give it the consideration it deserves.

PS, if you do not like reading my comments, quit your job (commenting for politicians and/or their contractors) and go to work for a real anti-worker company like Wal Mart.

Michael L. Cornelius
Michael L. Cornelius

@Crannman26

I am positive that some of the posts that are done on here are by paid employees of elected city officials or contractors like Veolia. To make a stupid comment like other unions are not complaining about the city shows how these "un-named" commenters are distracting from the truth. The public employee unions have been complaining about the city for as long as I have lived in Arizona, which has been my entire life. Public sector employee unions have never have a great relationship with the city. Billy Shields, the mayors close personal friend and employee of Veolia was a former Fire Union President and not a friend of the the city while he was their President. Anyway, I am done with my good vs evil rant for tonight. I guess some people would prefer to do away with others right to free speech, as long as we keep turningbthe other way and not point out how our tax dollars are being spent. Hmmmm, makes me wonder.

Crannman26
Crannman26

@ Michael, Seems to me that Jj652******* didn't read this article or any of the others too, or haven;t been following this story for the last 18 months..... I get a kick out of these people who don't know all the facts and don't have a clue as to what is really going on here....LMAO

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ExpertShot
ExpertShot

This is one way in which republicants and democranks are the same - they both protect the "powers that be" by skewing investigations and oversights responsibilities to which ever way the favorable political winds be blowing.

Regulators and Attorneys representing government judicial offices responsible for oversight of these types of actions should be above reproach.

THEY ARE MORE LIKE THE ROACHES THEY ARE SUPPOSED TO BE REGULATING!!!!

ExpertShot
ExpertShot

Predicted Headlines: Veolia hires Ex-Mayor of Phoenix as new Vice President of Lobbying.

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jiazhuangde
jiazhuangde

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Walter Concrete
Walter Concrete

Gordon may have put away a nice portion of that three million dollars in his overseas account. Why not? He's done such a good job saving them tens of millions of dollars....surely they'd reward one of their most important employees with a large bonus. His girlfriend and his lackeys work for them....it doesn't get much better than that. Gordon's like the old mayors of Chicago. He too will have a nice and comfortable retirement from politics. After being mayor he could be a consultant to other mayors and governors to teach them how to make a fine living also. As far as new jobs are concerned, I have no idea where they are in Phoenix. I must be uninformed because I don't watch the news on television or swallow the bullshit in the Az Republic.

XSoldier
XSoldier

One has to wonder what Phoenix Mayor Phil Gordon is up to when it comes to Veolia and his girlfriend, Elissa Mullany.

$3 million is alot of money to lose in an economy like this and Gordon knows it.

Phil does and should get credit for landing some new jobs in Phoenix, though.

Thank God, after this term, he's done.

 
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