East Chicago refuses to pay for faulty filtration plant fix

2012-10-08T00:15:00Z 2012-10-08T12:14:11Z East Chicago refuses to pay for faulty filtration plant fixSteve Zabroski Times Correspondent nwitimes.com
October 08, 2012 12:15 am  • 

EAST CHICAGO | The city has rejected a proposal by designers of its new and still non-functioning water filtration plant that taxpayers foot most of the bill to make the facility operational.

Problems with a state-of-the-art purification system installed by Siemens USA in the $30 million waterworks have kept the East Chicago plant offline since its planned opening in November.

Since then, residents have continued to get water from the city's 1960s-era filtration plant which was set to be torn down in January, and $2,000 per day in damages have continued to accrue against Siemens which now top $600,000.

The company maintains the problems are the result of "unforeseen circumstances" and last month offered a plan to install extra equipment to bring the plant up to its specified 17 million gallons per day capacity.

Though pledging upward of $100,000 for its suggested fix, the company admitted that "other equipment" -- paid for by somebody else -- would still be needed, and that "other circumstances" such as winter storms could still keep the plant from meeting its rated capacity.

The equipment, five vortex separators and four strainers, would nearly double the amount of electricity needed to prepare raw Lake Michigan water for public use.

In exchange for its contribution, Siemens sought modifications to its contract which would remove the company's liability regarding "other circumstances" such as winter storms, and its original energy usage guarantee.

Siemens sought to remove the liquidated damages contract clause of per-day penalties for the delay.

The city's Water Board refused to accept the proposal, responding to Siemens' project manager Jose Tavarez last week.

A solution should be implemented by Siemens, the board wrote, but "the costs of the equipment, engineering and installation shall be at Siemens' expense."

"(The city) shall not release Siemens from any warranty or other contractual representation, assurance, or responsibility, or agree to any contract modification that amounts to such a release," it said.

The board did allow that, should Siemens bring the plant up to promised specifications, they would be willing to discuss a potential release of claims for non-performance up to that date.

The filtration plant and related infrastructure came with a price tag of $52 million when the project was begun in 2008. The city borrowed $14 million in 2009, supplemented with $6 million in tax increment financing funds, $5 million in federal grants, and a City Council pledge of $3 million per year in casino revenue.

Last month, the board enlisted the Indianapolis law firm Baker & Daniels for assistance with any potential litigation which could arise over the continuing failure of the new water filtration system.

In the meantime, workers at the old lakefront waterworks continue a daily struggle to keep the aging electrical and mechanical systems functioning to prevent any disruption of service.

"We try to be prepared for any contingency," electrical maintenance foreman Tom Yuran told the Water Board last week. "We're holding our own."

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