Kenney's connection with firms that got contracts challenged
March 26, 2010 4:00 AM
Michael Kenney, executive director of the Pittsburgh Water and Sewer Authority, listens as City Councilman Bill Peduto asks him questions about the problems with the authority's opt-out line insurance program. Earlier in the meeting, Councilman Patrick Dowd called for Mr. Kenney's resignation.
By Rich Lord Pittsburgh Post-Gazette
Past business ties between Pittsburgh Water and Sewer Authority Executive Director Michael Kenney and men whose firms got contracts with his agency prompted a call for his resignation at a city council meeting Thursday.
Mr. Kenney revealed that he once held 20 percent stake in Utilishield Inc., a firm headed by his longtime friend and sometime colleague Christopher H. Kerr. While the two were business partners and Mr. Kenney was director, he hired Resource Development and Management -- another firm which counts Mr. Kerr as a member -- to analyze the water authority's management structure, for $85,000. And after Mr. Kenney sold his shares in Utilishield, he contracted with another one of Mr. Kerr's companies, Utility Line Security LLC, to provide water and sewer line warranties to city households.
"I don't have time, and I shouldn't, quite frankly, spend time asking the executive director if he is a business partner with each company bidding for business with the water authority," said Councilman Patrick Dowd, a water authority board member. "The executive director has to resign."
"I have no response" to the resignation call, Mr. Kenney said as he left Council Chamber two hours later. He said that he reported his interest in Utilishield on disclosure forms, which he later released, but did not tell the authority board about his business relationship with Mr. Kerr before hiring his firms. Asked why he didn't make such disclosures, he only shrugged.
Mayor Luke Ravenstahl, who appoints the authority board, issued a statement calling on the authority to "compose a formal report to me on the questions and issues that have been raised."
"I believe Mr. Kenney has been doing a good job," he added. "Before anyone levies accusations and calls for resignations we should all have the facts and nothing but the facts."
Council called its meeting to quiz Mr. Kenney about the authority's contract with Utility Line Security, which gets the $5 warranty charge added to city water and sewer bills since January. The warranty was assigned to ratepayers, who may opt out.
Like Mr. Kerr, most of Utility Line Security's principals also are executives with Utilishield, which sells water line warranties outside of the city, and Resource Development and Management, which is led by former Allegheny County officials Joseph M. Hohman and James J. Dodaro.
Mr. Kenney described a long professional and personal relationship with the firms and Mr. Kerr.
Mr. Kenney's daughter briefly worked at Utility Line Security, and his niece now works there.
"It just looks absolutely terrible, the way this was done, the cozy relationships, the affinity for one another," said Councilman Doug Shields.
Barry Kauffman, executive director of Common Cause Pennsylvania, said the key question under state ethics law is whether Mr. Kenney made a decision that brought him, or his immediate family, monetary benefit.
"If you just gave a contract to your friends and don't have any financial remuneration in any way, shape, or form, it's kind of slippery, but it's probably not against the law," he said.
Mr. Dowd said that state and local investigators should probe the Utility Line Security contract, which he previously supported, and the pact should be rebid.
Councilman William Peduto argued that the opt-out billing arrangement violated a city consumer protection rule. "My feeling tends to be that we don't need to rebid this contract," he said. "We need to end this contract."
Mr. Dowd's call for Mr. Kenney's resignation did not appear to have support on the authority board. Chairman Dan Deasy, a state representative, said Mr. Kenney should have disclosed his relationships, but added that such relationships can be useful.
Board Vice Chairman Robert P. Jablonowski said that "it would be premature to ask for his resignation right now," but future failures to disclose business relationships will be taken "very seriously."