Questions emerge over Wausau lead pipe replacement partnership

By Shereen Siewert | Wausau Pilot & Review

Wausau will reconsider a highly anticipated public-private partnership to replace lead service lines amid questions about language in the proposed agreement and connections to a company at the center of a controversy over military housing plagued with mold, rodents and lead paint.

The City Council in December unanimously approved working with Community Infrastructure Partners, the only company to submit qualifications for the project, to replace thousands of lead service lines over a five-year span beginning this year. Mayor Katie Rosenberg in December said Wausau was making history in tackling the lead service line issue and forming an example for other communities to follow. The project, which has been lauded by state and federal officials, will cost tens of millions of dollars, some of which is grant funded.

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Though all council members voted in favor of the partnership with CIP some questions and concerns emerged, even in December. As part of the discussion last year, Dist. 5 Alder Gary Gisselman openly asked how much city officials knew about the relatively new company, spearheaded by CEO Shawn Kerafsky, and wondered out loud whether the group had the experience and capacity for such a large-scale undertaking. Rosenberg replied in part by saying that a “previous iteration” of the company was engaged in New Jersey in similar work and had previous projects in Maryland.

That previous iteration appears to be Corvias, which was at the center of a 2018 Reuters investigation that reported the company collected hundreds of millions in fees and equity returns while presiding over “rodent-infested and dilapidated housing.”

At least 10 military families filed suit against the company alleging gross negligence and fraud amid accusations that conditions at base housing caused children and their parents to develop long-term health problems. At least one soldier sought a medical discharge after he and his children developed breathing problems that his doctors attributed to unmitigated mold in their home. An amended complaint alleged that the defendants “conspired to conceal harmful environmental and structural housing defects from unsuspecting service members and their families and failed to comply with applicable building and housing codes.” Congressional hearings were held weeks later.

Kerafsky’s LinkedIn profile shows he spent more than six years with Corvias, most recently as a managing director responsible for day-to-day management of the Corvias Infrastructure Solutions business line. He left that role in August 2022, one month before becoming president and CEO of Community Infrastructure Partners, his LinkedIn page shows. Several other key personnel involved in Wausau’s project were also previously employed by Corvias including financial structuring co-lead Sean Agid, senior program manager Eric Jones and implementation lead Pete Littleton.

Wausau Public Works Director Eric Lindman. Wausau Area Access Media screengrab

But the company’s 64-page statement of qualifications sent July 18 to Wausau Public Works Director Eric Lindman describing the project team’s “more than 40 years of collective experience” fails to mention Corvias at all, even in its lengthy lists of past projects and partnerships. Rosenberg, in an email to Wausau Pilot Monday, said she is aware of the connection and pointed out that Corvias has several divisions, from military to education to stormwater. Kerafsky worked with the stormwater team, she said.

But multiple documents over the course of several years show Kerafsky is also listed as the “Lead University Contact” for Corvias, which has seen backlash for its management of university dorms during the pandemic.

A single proposal

For Wausau’s massive lead lateral replacement program, the city received just one proposal, opened by the Board of Public Works on July 18. One week later, when the BPW officially forwarded a recommendation to Wausau’s Water Commission to move ahead, City Attorney Anne Jacobson pointed out that the proposal received only an average 6.8 ranking on a scale of 1-10, with one rater giving the company a rating of 5 across the board. But Lindman, according to meeting video, assured Jacobson that the company was capable of the work involved. The proposal then went through the Water Commission before being approved by the council on Dec. 19. No other options were on the table.

Under the terms of the council’s motion in December, open meetings and open records provisions were to be attached to the city’s agreement with CIP, a caveat requested by Dist. 3 Alder Tom Kilian. Rosenberg and Jacobson said that language could indeed be added – and if the company rejected the request, the matter would be brought back to the city council. So far, that language has not been added to the agreement – and no agreement has yet been signed.

Now, Kilian is asking the council reconsider the agreement altogether.

“There are continued, unresolved questions from the December 19 city council meeting about agreement language in regard to transparency as it relates to records and meetings,” Kilian told Wausau Pilot & Review early Monday, in a prepared statement. “Furthermore, additional relevant information has come up in the interim that is worthy of discussion and deliberation.”

Some alders say they now want to know why Kerafsky did not disclose his lengthy relationship with Corvias in his application materials to the city. The agreement between Wausau and CIP is a community based public-private partnership, or CBP3, a model championed by Corvias that is now being mirrored by Kerafsky’s organization. In the company’s statement of qualifications that formed the basis of Wausau’s decision to approve the partnership, Kerafsky lauds his team’s experience as “unrivaled” in the CBP3 arena, yet does not mention that much of that experience comes from years spent under the Corvias umbrella.

Rather, the document states that CIP key personnel have “highly relevant experience serving in a similar consultant/lead role across CBP3 programs.”

“CIP offers a deep understanding of how to partner with communities to successfully incubate the local workforce, leverage private sector financial expertise and accelerate progress towards each community’s resilience goal,” the document states.

Corvias partnerships prompt investigations, criticism

Today, Corvias is one of about a dozen contractors responsible for 79 military housing developments nationwide and has been embroiled in a national scandal over conditions on some bases. Lawsuits filed against Bragg Communities LLC and Corvias Management-Army LLC, which are affiliates of Corvias, contain disturbing depictions of living conditions at homes under the company’s management – and strong condemnation.

“Defendants’ culture of concealment was driven by corporate greed where financial gains were maximized to the detriment of military families and their children,” the complaint alleged.  

In court documents, attorneys for the Corvias affiliates either denied all the allegations or said they had no knowledge of specific alleged conversations such as contractors showing or telling families they found mold in the homes.    

In addition to its military partnerships, Kerafsky’s former company has been roundly criticized for its management and policies of student university housing, when Kerafsky was a lead contact.

In 2014, Corvias entered a $548 million contract with the University System of Georgia, a 40-year deal to lease and manage housing properties for nine universities. That was a solution for the USG to manage $300 million in collected debt, and included maintenance for more than 9,000 dorm beds. Under Corvias’ management, Armstrong Housing underwent more than two dozen projects totaling more than $800,000. Then, the work orders began to roll in – nearly 1,000 of them in a five-month span – for issues ranging from mold to pests to leaks for a population of about 700 students.

And, during the pandemic, Corvias faced accusations of pressuring universities to alter their student safety plans to ensure dorm occupancy – and avoid a decrease in revenue for the company. That led to an investigation from multiple lawmakers in 2020, and prompted university newspapers in Georgia to speak out.

“The financial interests of corporations … were prioritized over the lives and well-being of students and workers,” Georgia State graduate student Ben Fowler said in light of Corvias’s insistence to increase the dorm capacity.

Critics say Corvias’ military and student housing performance highlights the potential perils of privatization, including loss of control for colleges that want to decide how to best manage student health during a pandemic.

Wausau Pilot reached out to Corvias and Community Infrastructure Partnership officials for comment but have not received a response from either company.

Vetting process

Wausau previously faced criticism for the way partners in line to receive taxpayer-funded incentives are chosen and vetted. As recently as 2018, the city came under fire in the wake of a Wausau Pilot and Review investigation that revealed a key partner in the city’s Riverlife project had been embroiled in a multi-million dollar fraud scheme in Colorado. That revelation took city leaders by surprise and raised serious questions about how developers were vetted and chosen for major redevelopment projects and how Wausau handled public-private partnerships in general.

Wausau officials ultimately rolled out an updated application for potential city partners, and now asks crucial questions of both developers and shareholders with at least a 20 percent stake in a proposed project. The city’s application poses questions about current and former bankruptcies, lawsuits, criminal charges and outstanding tax liens and requires applicants to explain those situations in detail before a partnership is approved.

But in this case, no such process appears to have been used. Typically, Wausau sends out requests for proposals, or an RFP, for major projects. This time, in June, Wausau Water Works issued a request for qualifications, or RFQ. The main difference between RFP and RFQ is that an RFQ is sent when a business or municipality already knows what they want to purchase and only needs more information about the price. An RFP is sent when seeking more detailed information about the product or service itself, experts say.

Unclear is why Wausau sent out an RFQ for the project. And ultimately the city received just a single response, from CIP. That response was reviewed and scored by staff members on a scale of 1-10 with an average rating of just 6.8, according to statements made in a July 25 Board of Public Works meeting. The ratings given by staff do not appear to be included in city council meeting packets.

Public Works Director Eric Lindman has not responded to questions or an invitation to comment.

The deals between CIP and Riverlife developers are markedly different, even though in both cases public dollars are being sought by a private company. In Riverlife’s case, Wausau had approved a deal with Mike Frantz for a development that included about $2.74 million in incentives. In the lead line replacement program’s case, which involved a vetting process that was even less stringent, Wausau is considering passing an ordinance that would, in effect, require every eligible person in the community to do business with the entity officials choose for the project.

Even critics acknowledge that the CBP3 model can have some benefits and a positive impact for the community. The principals use local labor, which is part of he unique selling process of CIP’s model, one that is given a great deal of credibility. But others, including Public Water for All campaign director for Food & Water Watch, reject the entire idea of privatization for utility projects, specifically those dealing with water systems and call it a “terrible idea.” FWW has analyzed water privatization deals for years, finding that they it often leave communities with “worse service, job losses, and little control to fix these problems.”

Rosenberg, in a statement to Wausau Pilot, said she remains confident in CIP and is thrilled to provide local tradespeople an opportunity to get into work that provides family-sustaining wages for a lifetime – far beyond the life of this project. Every bit of the work that is done by any one of the contractors will be inspected by a third party to ensure it was done correctly and meets the specifications we set in our performance contract, she said Monday.

“I am confident that CIP will deliver the work that we are asking them to do but moreover, I am confident in the work our community is set to embark on because of the fact that this work is going to be done by our community,” Rosenberg told Wausau Pilot. “While CIP may have been the only organization to officially respond, we had a few other inquiries about it from organizations who do similar work. One of those organizations has even reached out to see how they can be a part of this current project. We’ve engaged a whole slew of partners to help us get the work done including H2N, the Medical College of Wisconsin, organized labor, and other units of government from local to state to national.”

Rosenberg said she understands this is a different way of doing things. But if Wausau keeps doing things the same way, it could result in increased costs and longer rates – despite the fact that the new lead and copper rules are encouraging local water utilities to replace all lead service lines in 10 years.

“We have the opportunity to capture the available federal funds right now, including the more than $5 million that was already awarded through the revolving program through the DNR,” Rosenberg said.

City leaders may indeed be reluctant to put the lead pipe replacement project on hold, given the public health implications and the millions in funding at stake. But on Tuesday, the council will officially reconsider the resolution approving a master partnership agreement between the city, Wausau Water Works and Community Infrastructure Partners for lead service line replacement and related infrastructure work. A meeting is set for 6:30 p.m. at City Hall, 407 Grant St., Wausau.

CIP Statement of Qualifications for Wausau’s program

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