Privatization successful in neighboring Northwest cities

Two shining examples of how privatizing a municipal water system works can be found in two nearby Northwest communities. The community of Wilsonville, Ore. has experienced a great deal of success in the last couple of years since it has contracted out with a private firm to run its water system, while the city of Vancouver, Wa. is one of the pioneers in privatization.

Jeff Bauman, Wilsonville public works director, said his community went to privatization just a few years ago.

"It has worked out pretty well," said Bauman. "It has been great. There haven't been any (problems) at this point."

Wilsonville entered into a contract with Veolia in 2001, a year before its new wastewater treatment plant came on line, which was in April 2002. Bauman said prior to the new plant, the city received its water supply from eight local wells. The reason the city went with privatization for its new plant had nothing necessarily to do with cost efficiency, said Bauman. What it did have to do with was the city not having access to trained and qualified staff to operate the new facility.

"No one here had operated a system like this," said Bauman of the new plant. "Our current staff wasn't trained."

So it was determined that for the city to be successful in operating the new facility it needed to get the outside expertise of a firm such as Veolia, the same firm Sunnyside is considering to operate its water system.

"For us, it wasn't a cost issue," said Bauman. "It was switching to a new facility."

The process for selecting a firm to operate the new plant is similar to what the City of Sunnyside has been doing as it looked for proposals from interested companies. Bauman said the city issued a national request for proposals. Oral interviews of interested companies were then conducted. Bauman said city officials then visited numerous communities that have been utilizing privatization services. The end result for the City of Wilsonville was contracting with Veolia.

A key part of the partnership with Veolia was the city hiring the firm a year prior to construction being finished on the new treatment plant, said Bauman. Bauman said Veolia officials were on site during the construction phase of the new plant and oversaw the initial start-up of the facility.

Wilsonville is a city similar in size to Sunnyside with a population of 16,000, located halfway between Portland and Salem.

After hiring Veolia, the city kept its current public works employees to maintain the existing wells the city was operating to serve as a back-up system. The city owns the new plant with Veolia only being in charge of running the facility.

There are several benefits to having a private firm operate a municipal water system, said Bauman. Bauman said the city has access to national experts in the area of water management when a problem does occur. He also said the expertise of a firm like Veolia will help the city meet and maintain federal and local standards for water management. Bauman said it is also important to have someone aboard with a wide variety of expertise to help with future growth. Bauman said the treatment plant was built with the idea of future growth.

"This treatment plant in the future is capable of serving more than Wilsonville," said Bauman.

Bauman said the community and public works employees did have concerns when the issue of privatization first came about.

"At first concerns were about jobs," said Bauman. "People then very quickly realized what is going to work for us (here)."

Bauman said what has been crucial with the partnership working so well is the initial operating contract that was written between the two sides.

"We wrote a contract that (was) very specific about what they have to meet," said Bauman. "It obligates them to operate this facility."

As an example, Veolia has to meet very specific drinking water standard requirements in Wilsonville, said Bauman. The company also splits any savings beyond the scope of the contract with the city.

Vancouver has had a private company operate its water services since 1978, said City Engineer Victor Ehrlich. Ehrlich explained during that time, the city had to build a secondary wastewater treatment plant to meet the requirements of the Clean Water Act. Ehrlich said the city opted to privatize because the public works staff didn't have the expertise to operate the new facility.

"Our staff just didn't have that knowledge," said Ehrlich.

Around the time Vancouver decided to privatize, the city was serving in the neighborhood of 45,000 residents, which has since grown to 150,000, said Ehrlich.

Vancouver was one of the first cities in the country to privatize water services, said Ehrlich. Privatization has allowed the city to meet permit requirements that it was not meeting before. Ehrlich said the city also has valuable access to experts through Veolia.

"It has worked well for Vancouver," said Ehrlich. "They (Veolia) have been able to be part of our management team. We don't really see a downside."

Veolia has access to experts who are beneficial in operating the treatment plant in Vancouver, who without them would have cost the city an extraordinary amount of money, said Ehrlich.

Ehrlich said what has been key for the city with the privatization of services was the development of the work contract. He said Vancouver was a pioneer in constructing the wording for the contract. Ehrlich said Vancouver brought in the requirements of having the company spend money for maintenance to keep the facility in top standards.

Ehrlich said one of the initial concerns the city heard about privatization was that the system was going to be poorly kept, which hasn't been the case.

"The privatized outfit has their reputation on the line," said Ehrlich.

The city has two treatment plants, one of which has won a national award.


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