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Mid-stream switch:

City officials reverse course on privatizing water operations

After 20-plus years of service, City of Sunnyside Finance Director Bud Schatz is no longer working for the City of Sunnyside.

Whether he was asked to resign or was fired is not clear.

Schatz's departure follows a decision by the Sunnyside City Council over the weekend to no longer pursue the issue of privatizing the city's water and wastewater services by entering into a contract with Veolia Water.

Council was presented this past Saturday with new figures released by Sunnyside City Manager Bob Stockwell that said the city will only be saving $23,810 if it privatized its water operations with Veolia Water. The figure released at Saturday's meeting is starkly different to the numbers released before by city officials, which estimated an annual savings of $289,851.

Stockwell said at Saturday's meeting it was the original figures given to him by Schatz that sparked the city to pursue the privatization issue.

Beginning this Tuesday, Art Housler will be serving as the city's interim finance director.

"Mr. Schatz is no longer the finance director for the City of Sunnyside," said Stockwell. "As is all personnel matters, I will not be making any additional comments about the specifics of Mr. Schatz's departure from the city."

Housler comes to Sunnyside from Edmonds, where he served for 22 years as the finance director and administrative services director. He has also served as the interim finance director in Bainbridge Island, Lake Forrest Park, Puyallup, Bothell and Marysville.

"Mr. Housler brings a wealth of knowledge in all aspects of municipal finance and I am confident that the City of Sunnyside will benefit from his interim assignment here."

Stockwell said Housler will serve as interim finance director for a period between 60 to 90 days.

"During this time, I have tasked Mr. Housler to examine all aspects of the city's finance operations and make recommendations for improvement," said Stockwell. "Particular emphasis will be placed on fully integrating our automated data processing system to include all budgeting and financial reporting.

"When we have completed a detailed examination of our finance systems and have implemented the most pressing improvements I will conduct an open recruitment for a permanent finance director."

Schatz was not available this morning (Monday) for comment.

The Sunnyside City Council had been looking at approving a contract with Veolia Water to operate the city's water and wastewater systems. Council was set to approve the contract with Veolia Water at the Monday, Feb. 28, meeting until a few councilmen suggested the idea of holding further public meetings to better educate the community. At the Feb. 28 meeting, Council had set a date of March 28 to consider approving the privatization contract, following further public meetings on the subject.

During Saturday's meeting, Mayor Ed Prilucik explained the reason for the special gathering.

The mayor said that Sunnyside City Manager Bob Stockwell was in contact with him late Thursday evening regarding a change in the circumstances surrounding the privatization issue. Prilucik told those in attendance Saturday that considering the impact of the news for the community, he felt it was important to hold a special Council meeting on Saturday.

"Myself, along with the City Council, felt it was very important to get this information out," said Prilucik.

Prilucik then turned the meeting over to Stockwell, who provided some background on the privatization issue.

Stockwell said the city began pursuing the privatization issue last September, asking for proposals from interested companies. Stockwell said the city received three proposals from different firms interested in operating the city's water and wastewater systems. A committee of five individuals was formed to evaluate the proposals and the recommendation ended up being Veolia Water as the best fit for Sunnyside.

"We selected the one we felt was the best," said Stockwell.

Stockwell said as part of the process he had asked Schatz to do a cost analysis of city operations of the water and wastewater systems. Stockwell said he received the analysis from Schatz the first week of December, which the city manager used as the basis for his recommendation to privatize operations.

Schatz's analysis basically outlined how the city could save $289,000 in costs annually by privatizing water and wastewater services, said Stockwell.

The city began negotiations with Veolia Water in January. Council held a public workshop on the issue in mid-February and was set to approve the issue late last month before deciding to hold further community meetings.

"This week the finance director notified me he had a different view of the numbers," said Stockwell.

Instead of $289,851 in annual savings the city would have realized by privatizing, the new figures released by the finance director showed the city will only be saving $23,810, said Stockwell.

Stockwell said the only reason the city was considering privatization was the significant cost savings identified by Schatz in his original proposal. Stockwell said a $23,810 savings doesn't justify the city entering into a contract with Veolia Water.

"The differences are dramatic enough," said Stockwell.

Councilwoman Bengie Aguilar on Saturday wanted to know why there was such a huge difference in the estimates submitted by Schatz.

"I would (like to know) too," said Stockwell. "I can't get (an) answer I am satisfied with, or I would be sharing it with you. I intend to find out why it changed."

Councilman Jim Restucci was upset with the new findings by Stockwell, saying he was glad Council found out now instead of after entering into a contract with Veolia Water.

"We can't sit up here and make good, sound fiscal decisions for the city if we are not provided good information," said Restucci.

Restucci suggested hiring an outsider auditor to conduct an audit of the city's financial records.

Mayor Pro-tem Mike Farmer said he didn't think the mistakes by Schatz were intentional.

"I think these were just mistakes," said Farmer.

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