Ohio State professor files lawsuit against Ohio State to reveal details on energy deal

Rachel Bules
Thu, 06 Apr 2017 03:02:23 +0000
Campus, energy privatization, engine and axiom infrastructure, featured, lawsuit, ohio state, ohio state energy partners, ohio supreme court, osu, university senate

In an attempt to force Ohio State to disclose details of the $1.1 billion energy privatization deal, Bruce Weide, professor emeritus of the Department of Computer and Science Engineering, filed a lawsuit with the Ohio Supreme Court.

The lawsuit was filed on Tuesday to compel OSU to make the details of the deal public before the matter goes to a vote at the Board of Trustees meeting on Friday, with the goal being that the deal will be voted down until it can be reevaluated, Weide said.

“We hope that at least some of the trustees will realize that this has not been an open or fair process,” said Fred Gittes, Weide’s lawyer. “Hopefully, they will postpone the vote on the agreement to either reconsider disclosing the information or allow the court to decide if they are violating the public records law and then act accordingly.”

The proposed deal is between OSU and Ohio State Energy Partners, a recently formed entity comprised of Paris-based energy company ENGIE and Axium Infrastructure, an investment firm.

The deal allows for a third-party energy firm to give $1.1 billion to OSU upfront, with OSU making $45 million payments to ENGIE every year at a 1.5 percent inflation rate for the next 50 years.

“If you ask (OSU) if this is a loan, of course they will say no, it’s not a loan,” Weide said. “But if you just look at the details and the cash flow, who is giving money to whom when, it is exactly a loan. They can dress it up in the guise of energy management, but it’s simply a loan for operating expenses.”

Weide said OSU is, in part, using this deal to generate an immediate influx of cash to cover basic operating costs that OSU regularly incurs.

“I think OSU is pretty much tapped out when it comes to borrowing money,” Weide said. “They borrowed a tremendous amount of money to build new residence halls and to expand the medical center. OSU is trying to make sure they don’t impact their capability of borrowing from capital projects.”

However, as a public university, OSU is only able to accept loans to cover capital expenditures, such as the construction of new buildings or purchasing machinery.

“This deal is clearly a loan to OSU but it’s not a loan for capital expenditures, which is what state law requires money to go towards — this loan covers operating expenses,” Weide said. “I think the state auditor should look into this. This seems like a surprisingly transparent attempt to circumvent limitations on how much and for what purposes OSU can borrow money.

OSU declined to comment when asked about this lawsuit, citing that the litigation is still pending.

Weide said his interest in this matter stems from the fact that when he was a faculty member, he worked very closely with University Senate on the parking privatization deal.

After that deal went through, he said he continued to keep his ear to the ground for anything else that might pop up.

“I saw this and thought ‘Well, here’s another one,’” Weide said. “I just try to pay attention to everything.”

Weide said his concern also comes from the fact that his son is a current OSU student.

“There should at least be some opportunity for public scrutiny,” Weide said. “The more people who can look at this deal, especially those who do not have a direct interest in it, the more chance there is of identifying possible problems.”

Weide and Gittes said they agree that the details of the deal should be publicized before OSU makes a 50-year commitment to an energy company whose interests are not necessarily known.

“(This deal) is fusing publicly-owned facilities and essentially turning their operation over to for-profit corporations who don’t have any duty to public interest — they exist to make a profit,” Gittes said. “The problem is that we have this deal, which not only fails to disclose all of the financial entanglements and benefits that are going to this for-profit company, but we don’t even know what control the university will have during the 50-year term of this agreement, to do anything if these private, for-profit companies do things that are contrary to the interests of the university.“

In the meantime, Weide hopes that the trustees take notice of the lawsuit and reevaluate the amount of information that is being withheld from the public potentially changing how trustees will vote on the matter.

“The lack of disclosure really raises serious questions about the financial common sense of this deal — the trustees concern should be with higher education and the larger goal is improving the quality of academics, the quality of research exploration and contributions to society through OSU — that’s why it was created, not to make deals with private, for-profit companies,” Gittes said.