Tuesday, April 28, 2009

Milwaukee Water Works Lease Could Involve More Than Its Management

It appears that I had not accurately described the potential scope of the City of Milwaukee Comptroller's proposal, and now ongoing study, to lease assets of the city's Water Works to private operators.

The Comptroller is studying whether to recommend approval of a 99-year lease to private operators of city water utility assets to create a trust fund that could supply revenue directly to the city's general fund.

In this posting - - based on my reading of the Comptroller's request for proposals due April 9th - - I had said what was up for potential leasing was the system's management in an arrangement similar to that now in place at the Milwaukee Metropolitan Sewerage District.

After some more analysis on my part, I began to conclude that I might have been underestimating the extent of the assets that could be leased, so I sent an email on April 22nd for clarification to officials at the Comptroller's Office, including to Comptroller W. Martin (Wally) Morics, a city-wide elected official.

Here is the email I sent, and then text of a letter I received today in response.

"Just trying to get a lay explanation of the assets that could be leased: Is this the management of the utility, a la the MMSD's contract with its current operator, or is this [leasing] of the actual physical assets of the utility - - treatment plants, pipes, pumps, infrastructure, billing services, etc?"
By letter April 27th, Morics' response does not rule out the broader leasing of assets I asked about in my email.

"Dear Mr. Rowen:

This letter is in response to your email of April 22nd to Wally Morics and Richard Li regarding questions surrounding the analysis of a potential City Water Works Public Private Partnership. The Comptroller's Office has received 17 proposals in response to the Water PPP Request for Proposal. We are in the process of conducting a detailed review of each proposal. Regarding your questions about the specific water facilities/assets involved and the related contractual arrangements, these are matters yet to be decided but within the scope of the analysis we are about to undertake. Any public information will be promptly posted on the Comptroller's Office page of the City of Milwaukee website."

So asset leasing beyond management is within the scope of the review, though no decisions or recommendations have been made - - action s that would need the approval of a majority of the Common Council, and the Mayor.


Anonymous said...

I just was hired at the water works. Is this privatization something that we vote on? Or is it up to the common council to vote?

James Rowen said...

To Anon: Long answer, so thanks for the question

If you are a management employee, or a political appointee of the Mayor, you will have no say, though you are free to weigh in as a citizen, through your alderman, etc.

If you are in a union, well that may be a little different, as there may be some contractual issues involved.

I'm not a labor lawyer, so don't quote me. But I assume that the union contract may have language that could give it standing to he heard in ways that differ from what is available to a member of the public, or an employee not represented by a contract.

Any lease would have to be approved by the Common Council, and signed by the Mayor, or, if vetoed, approved by a veto-proof majority.

And there would several hearings at the Council level prior to voting.

The issue is so potentially huge and precedent-setting that it is conceivable that legislators, state agencies or the Governor could get involved.

So there are a lot of unknowns in this mix.

What concerns me is that the Comptroller has issued the request for proposals, and the Council will review his review, but there is far more expertise among the private sector firms writing proposals than there is in the Comptroller's office, or on the Council, when it comes to assessing these very technical and enormous issues.

No offense to the city people. I know and like many of them.

But unless they hire their own independent experts to review the proposals coming from the private sector experts, I am afraid the city is going into a risky legal, technical and financial gunfight relatively unarmed.

Anonymous said...

I am going to be a union member and also spoke with someone who works at the water works. He said that they always bring this up when the economy goes sour. It's something they've covered before, but he said he doesn't think it'll go through citing MMSD as an example of bad privatization (I thought MMSD was actually doing better). Did you contact the mayor and comptroller telling them that they may be outgunned by the private sector in this debate?

James Rowen said...

This idea doesn't "always" come up. This is directly related to projected revenue shortfalls in city government.

I think everyone in city hall knows that this will be a controversial issue, and that there are other resources that could be brought into the mix if decision-makers are interested.

Anonymous said...

Other resources? Do you mean like privatizing sanitation or forestry?

Anonymous said...

I shouldn't have said "always comes up," but rather, "has come up before."