A state lawmaker blamed the French conglomerate Veolia for the city’s diversion of casino impact funds set aside for South Baltimore communities, the money instead channeled to a steam-heating project.

State Sen. William C. “Bill” Ferguson IV, who chairs the casino’s Local Development Council, said Veolia refused to pay for the relocation of a large steam pipeline at the Horseshoe Casino, thereby “forcing” the city to tap into $3 million earmarked for communities impacted by the new casino.

Veolia is the long-term leasor of the underground steam line that serves downtown institutions and businesses. Asked for comment last night, Veolia officials have not yet responded.

The allocation of impact funds for the steam-pipe project is expected to be approved this morning by the Board of Estimates.

The city had ordered Caesar’s Entertainment, the casino operator, to relocate the pipeline in May, but the matter was not publicly disclosed until the board’s agenda was published Monday afternoon.

“My sense is that there would have been protracted negotiations and potential litigation if the city did not go ahead and pay for the relocation itself,” said Ferguson.

“These types of costs arise with old infrastructure and someone has to bite the bullet,” he added in an interview last night.

By law, local impact grants are to be used for improvements in communities “in immediate proximity” to a gambling facility. They may be used for public safety, sanitation, infrastructure improvements, job development, new housing and other public services.

The Horseshoe Casino, set to open next Tuesday, is expected to generate $10 million in community impact funds in fiscal 2015, and $15 million or more in future years.

Already, the city has diverted $6 million of those funds (over three years) to reimburse Caesars for making street and sidewalk improvements around the casino located on Russell Street.

Vote Not Taken

James Alston, a member of the development council, said the pipeline project was discussed but never voted on by the council. In a recent email to Ferguson, Alston wrote:

“The surrounding communities have already taken a hit from the ‘never voted on’ infrastructure reimbursement deal that takes away from the pool of impact funds that is supposed to come to the community. Now the ‘powers-that-be’ are expecting communities like my own to sacrifice more?” (Alston represents the impoverished Westport neighborhood south of the casino.)

In an interview with The Brew, Ferguson said a vote was not taken because the $3 million would not come from the current year’s spending plan.

Instead, the $3 million would come from future impact funds beginning in fiscal 2016. The LDC will vote on those allocations in November.

However, the expected Board of Estimates approval today of the $3 million agreement will legally bind the city to pay for the steam line relocation regardless of how the development council votes.

As Transparent as Possible

Ferguson defended City Hall’s handling of the matter, saying the mayor’s staff were “as transparent as possible” in telling him that the city had to get the new steam line built.

The relocation was necessary, he said, because the old line was located directly under the casino’s main drop-off entrance on Warner Street.

“I was told that Veolia had to maintain the line constantly. That’s maybe not a problem when it’s vacant land, but to have the front entrance [of the casino] blocked by equipment was not acceptable,” Ferguson said.

He said casino and city officials also worried about the potential for “a catastrophe” if the aging steam line ruptured, sending scalding steam and perhaps flying manhole covers into an area crowded with gamblers.

$8.7 Million to Veolia for Circulator

In addition to approving an amendment to the developer’s agreement with Caesar’s that will cover the steam line construction costs, the board also is expected at today’s meeting to pay Veolia Transportation Services $8,686,005.40 for operating the Downtown Circulator bus service.

According to the minutes, the payments are for expanded service last year that were delayed because of the lateness of a grant from the Maryland Transit Administration.

The $8.7 million allocation will pay Veolia’s operating expenses for last year and fiscal 2015. The Downtown Circulator is subsidized by both city parking taxes and state grants.