Team Up For Toilets

by DOUG NADVORNICK & r & & r & & lt;span class= & quot;dropcap & quot; & W & lt;/span & hen Spokane County runs the first gallons of effluent through its new wastewater treatment plant in east Spokane -- perhaps in 2012 or 2013 -- employees of a private firm, and not county workers, will be at the controls. County officials are evaluating two companies that have been invited to submit bids to design, build and operate the plant.





"By having one company in charge from start to finish [rather than hiring separate firms to design and build], that will help us get the project done quicker," said county Utilities Director Bruce Rawls at a November event sponsored by Spokane's Center for Justice. "We felt we would save 10 to 15 percent off the cost of the plant" [estimated at more than $100 million].





It isn't the decision to have a private firm design and build the plant that's catching people's attention. That happens all the time. It's the decision about who will be running the plant that's raising eyebrows, raising the question now familiar in government in America -- which government services are appropriately farmed out to the private sector and which should stay public?





Rawls says the county plan isn't a true privatization proposal because the county will finance and own the plant. The private firm -- either CH2M Hill or Veolia Water North America, both of which have been pre-approved by the county -- will provide skilled workers who will carry out the county's wishes for operating the plant, he says. The two companies are due to submit their formal applications in March. After several months of review, County Commissioner Todd Mielke says the county will pick a winner and sign a long-term contract -- as long as 20 years -- with that company.





Privatizing municipal wastewater systems has become more popular as city and county governments face the sometimes staggering costs of replacing old infrastructure. State governments are often providing fewer dollars than they used to for infrastructure projects, so local governments are looking for other ways to fix or replace old plants without overwhelming taxpayers. Many have turned to the private sector.





"Companies with money see this as a business opportunity," says John Keesecker from Food and Water Watch, a Washington, D.C.-based consumer group.





"If this was such a bad thing, municipalities wouldn't be renewing their contracts [with private companies]," says Rawls. "But more than 90 percent of contracts are renewed."





Critics, like Keesecker, are eager to point to the cases that don't work. Take Stockton, Calif., where, on March 1, the city will re-assume control of its wastewater plant after five years of private control and a protracted legal battle waged by a citizens' group.





"People complained about higher rates and infrastructure went unfixed," says Keesecker. Other jurisdictions, including New Orleans and the commonwealth of Puerto Rico, have also cancelled their privatization agreements.





For every case like Stockton, county officials say they can point to five or six other cities where private involvement has been a success, including Veolia's more than 20-year arrangement with the city of Vancouver, Wash., what Mielke calls the "poster child" for how a public-private agreement should work.





& lt;span class= & quot;dropcap & quot; & C & lt;/span & ritics say there are some services provided by governments that should not be subjected to the profit motive. Police and fire protection. Municipal water systems. Rachael Osborn puts wastewater on that list, too.





"I don't understand why the county is contracting this out," she says. "It's a county's responsibility to provide those services."





In some cities, private companies hired to run wastewater plants have been accused of neglecting the plant infrastructure and laying off workers to reduce costs. The main concern for Osborn, the Sierra Club's Spokane River project coordinator, is accountability. Who is responsible in case the plant sends too much pollution into the river? She believes the company that wins the bid must put its name -- as an equal partner with the county -- on the permits that allow the new plant to discharge phosphorus into the river.





"If the plant operator's name isn't on the line," says Osborn, "then the public is not fully protected."





Who then, if the plant spits out too much phosphorus or ammonia, would pay the government fines that accrue? The county as the owner of the plant, or the private company as the operator of the plant?





"A lot of corporations don't want to own these facilities because of the liability," says Rick Eichstaedt, an attorney for the Center for Justice.





County Commissioner Todd Mielke acknowledges that. He says county officials initially sought a private partner whose name would appear on the county's water pollution discharge permits: "But once we started down that path, we got push back."





So, Mielke says, the county abandoned its strategy and instead hired a New York law firm that specializes in writing contracts. "We sat down and asked, 'Which risks should be the county's and which should be the private firm's? How do we hold our partner accountable within our contract? How do we protect ourselves when the plant doesn't meet the standards?'"





Mielke says the county is proceeding under the assumption that it can protect the public's investment and the river's health through a well-written contract.





"Every time we look at a case like this that went bad, the problem was usually an ambiguous contract," says Mielke. "We'll try to spell everything out. We will retain the control of rate setting. We'll require the proper maintenance and operation of the plant. At the end of the contract, we won't want to get stuck with something that's in poor shape."





"We have performance standards in the contract," says Bruce Rawls, "and we have remedies if the company doesn't meet those standards. They'll either pay damages or, ultimately, we could terminate the contract for cause. Our preference is to work with the company to make sure any problems are fixed."





Eichstaedt credits the county for trying. He says the contract recently released by the county does a good job of trying to create accountability, but if something goes wrong, "it's not easy to get out of a contract," he says. "And we think a 20-year operating contract is too long. That's such a large resource to let one company operate for nearly a generation. Why not break it into shorter terms?"





& lt;span class= & quot;dropcap & quot; & A & lt;/span & t the Center for Justice's November gathering, after a documentary about the Stockton case was screened, audience members fired questions at Bruce Rawls.





"How can a private company [operate a wastewater treatment plant] so much cheaper than government?" asked one person.





"The public sector doesn't have the same entrepreneurial culture," answered Rawls. "The private sector doesn't have unions and it watches the bottom line closer."





"Will these be union employees?" asked another.





"Yes, they will be if the plant is run by the county," responded Rawls. "If it's run by a private operator, I don't know.





"If we hire a big company to do this, they can come in and start work on the plant right away," Rawls continued. "The county doesn't operate a plant now and it would take awhile for us to get the expertise we need to operate the plant properly."





Commissioner Bonnie Mager said she was initially alarmed by the concept of a private operator, but says she was convinced by Dale Arnold -- the man in charge of the city's wastewater plant -- that "it would be hard to find qualified people [to operate this plant]." She said she's resigned to the county's strategy. "I'm committed to make sure our contract is tight," she told the crowd.





As the county moves forward, Eichstaedt hopes officials will be as transparent as possible in their dealings with a private operator and that, when the new plant opens, the company's plant-related documents will be public. "We should have access to the day-to-day records," he says.





Until that happens, Eichstaedt hopes the county's proposal is the subject of a robust public debate.





Bruce Rawls is a little wary of that debate and the timing: "It's not like this is news. We've been talking about the 'design-build-operate' scenario since 2001." He worries that public outcry would further delay a plant that will be needed soon. Officials believe that by mid-2013, the county will run out of its budgeted capacity at the city wastewater plant and could have a development moratorium imposed by state and federal agencies that protect water quality in the Spokane River.





Mielke says the county has been transparent about its planning for a private operator and will continue to be open as the process continues this year.