Recording reveals City of Florence overbilling America’s most secure prison millions for water
FLORENCE, Colo. (KRDO) – It all started with the Florence former city manager bragging on the phone on September 1, 2021.
“Nobody really understands what I did.”
Mike Patterson didn’t know the Florence Police Department was recording him. It was the night after the Florence City Council fired him for sexually harassing the women he supervised.
"Legally under federal law, they're not supposed to agree to that,” Patterson told a Florence city employee on a police-recorded phone line.
While talking to a former employee who accused him of sexual assault, Patterson revealed how he convinced the federal government to pay nearly double rates for water at the Florence ADX prison complex.
“They’re so foolish,” Patterson said. "The problem is we have council members who don't even understand."
"When I came there, Florence was losing $600,000 or 500,000 some a year in water because the feds had cut their water consumption down. So, you know, we did? You know how it works in water? What, what, what I got them to agree to?"
Patterson got the Bureau of Prisons to agree to pay more than any other customer for water.
"They're paying an extra $28 a month times 2,100 people or whatever it is. It's $600,000 a year, and legally under federal law, they're not supposed to agree to that. They're supposed to pay the same rates."
The federal government agreed to pay up to 40% more than the city’s highest public water rates, despite a contract indicating they can’t pay higher rates for water service than others.
The City of Florence charges the federal government four-tenths of a cent more per gallon. The city told 13 Investigates all water billing records are confidential.
However, a few weeks later, the City of Florence released one of the bills tucked away in a former employee’s personnel file through a public records request.
In March 2021, the federal government paid a total of $132,451.80 for water the city’s water plant debt.
Four-tenths of a cent more per gallon may not seem like a lot until you factor in that the prison complex used more than 9.3 million gallons – totaling an upcharge of $37,501.38 for just that month. Those rates projected over the Bureau of Prisons' current 10-year agreement with the City of Florence and the federal government would pay an extra $4.5 million.
A day after seeing TV commercials for this story, Patterson provided 13 Investigates with a lengthy explanation of what he’s describing in the police recorded call about the prison water billing. He says the agreement is great for the City of Florence and its citizens.
“I felt like this was the equivalent of David overcoming Goliath,” Patterson wrote. “To even imply that I somehow did something wrong and took advantage of the Bureau of Prisons in these negotiations with their attorney is ridiculous and frankly, insulting.”
Patterson told 13 Investigates he discovered in 2012 that the City of Florence was under financial strain because of an Obama Administration directive for federal facilities to reduce their carbon footprint. He says a former city council instructed him to cut the prison water off if the federal government refused to pay higher rates to make up the difference in profit for the city. The former manager estimates the federal prison system cut its water usage by about a third.
Patterson says he eventually got the federal government to agree to pay more by convincing them that the city’s 2003 water plant was built solely for the prison. Nearly a decade after the prison complex opened, Former Florence manager Tom Piltingsrud applied for loans for the plant. Piltingsrud told 13 Investigates that the inflated water rates for the federal government were because the prisons use more gallons of water than any other customer.
“It was never my job to approve the legality of the agreement. That was the job of the Bureau of Prison’s Legal Department and the City Attorney. All agreements were reviewed by legal counsel on both sides and no lawyers objected,” Patterson wrote.
However, a recording provided to the Federal Bureau of Investigation last year includes audio of Patterson admitting in 2020 to other employees that aren’t even following all the terms of its contract with the Bureau of Prisons.
You can listen to that here.
Six current council members and the City of Florence’s new manager released this statement to 13 Investigates about its prison billing structure:
The City of Florence is committed to maintaining transparent and accountable relationships with all its partners. The contract for the provision of treated water, negotiated via public process with the Bureau of Prisons, manager of the Federal Correctional Complex, is executed with the utmost care by the City. To the best of our knowledge, and after recent and continuous review by members of City staff, City Council, and others, any assertions that City billing of the BOP is in a manner inconsistent with said contract are baseless -- though the City will certainly re-examine if any unknowns need new or further investigation. With a new City Council, new City Manager, and new City staff, the City of Florence is focused on the future and remains committed to providing quality services to the Florence community.
Statement from six current city council members
Councilwoman Debbie Gibson is excluded from the statement, according to the city attorney.
Former Florence court clerk Nicole Phillips provided these recordings to the FBI.
Whistleblowers and Federal Response
BaIn020, after suspecting something was wrong with the prison water billing, Phillips started recording any time it was discussed in city hall.
Shay Ardrey, a former Florence city planning technician, connected Phillips with the FBI last year. Ardrey collected thousands of records for state and federal authorities, interviewed with state and federal agents, and provided them a list of 52 names of people who could help with their investigation into the alleged corruption at Florence City Hall. In January, Patterson was sentenced to two years of state-supervised probation after pleading guilty to criminally harassing Ardrey and providing alcohol to a 20-year-old woman he previously supervised.
The FBI would not comment on its interactions with Ardrey, Phillips, or the other former employees its agents interviewed.
The Government Accountability Office put the Bureau of Prisons on a high-risk list for fraud, waste and abuse. The report says the Bureau of Prisons has "has not always demonstrated sound resource stewardship."
The Bureau of Prisons told 13 Investigates it has no comment about why it’s paying millions more of federal tax dollars to a city repeatedly accused of mismanaging money. The federal prison system says it can’t comment on pending investigations or litigation matters but is looking into our questions, including an allegation by Patterson that the feds came up with the overbilling formula.
The US Attorney’s Office in Denver also has no comment but tells 13 Investigates it also sent our questions to the FBI.
The City of Florence and Bureau of Prisons water contract for the Supermax prison complex expires in 2030.
13 Investigates obtained the police-recorded audio from the Florence Police Department through a Colorado Criminal Justice Records Act request.
Do you have a tip you want 13 investigates to look into? Email us at 13investigates@krdo.com
