Going private with municipal services: Seattle eyes a sewage task
Should some public services be provided by private companies? And can the work of government be done at a profit by private businesses?
King County Councilor Paul Barden thinks so. By definition, he says, ``A government body can't do anything at a profit. But almost anything can be done at a profit by a private company.''
Some government services would seem to lend themselves to privatization more easily than others. It's hard to imagine companies elbowing each other for the opportunity to bid on, say, running a shelter for the homeless.
But even that quintessential dead-end public-sector job, leaf-raking, could and should be done at a profit, Mr. Barden suggests. ``You could contract a landscape-maintenance firm to take care of it. And you wouldn't get stuck with leaf-rakers on the payroll in the winter.''
And speaking more to the front edge of the privatization issue in Seattle, he notes, ``If the byproducts of our sewer system can be made marketable, it should be done by a for-profit company.''
He's referring to moves to involve private companies in disposing of the byproduct from a waste-water treatment plant near Seattle.
Firms specializing in composting technologies and in dewatering processes are expected to take part when the project goes to bid later this spring.
``I don't know whether they make a profit selling the stuff, or just send it to politicians,'' says Mr. Barden, opening an eight-pound package of ``sterilized professional growing media'' sent to him by a sludge-treatment firm in Oregon.
But of all the ``products'' of a major city, waste water and sludge seem the most attractive ones for private companies to get involved with.
For some time, Metro (the Municipality of Metropolitan Seattle), a special government district for water and sewage and also public transit, has been turning the sludge byproduct of its Renton waste-water treatment plant into a ``soup.'' The soup is then trucked up into the mountains east of Seattle and sprayed on the trees.
Mr. Barden, also a member of the Metro Council by virtue of his County Council seat, cites the expense and hazards of municipal trucks driving around with tanks full of sludge. He observes, ``We could pay someone else to drive the stuff away and still come out ahead.''
``We'll be asking for two bids,'' says Metro executive director Alan Gibbs. ``One is with the private company owning and operating the facility [under contract with Metro], and the other is with Metro owning and operating.''
The decision, he says, will be made on economics -- and indeed, Metro may even decide to continue the squirt-on-the-hillsides approach.
``Privatization'' is in some contexts an ideologically charged term. Some of its enthusiasts are interested in the concept primarily on ideological grounds, as a way to shrink government -- the Thatcher government's denationalization of British Telecom is an example of this.
But local officials are drawn to privatization on pragmatic grounds -- as a way to build facilities such as waste-water plants when federal grants and bond issues are becoming less reliable sources of funds.
Don't expect radical changes immediately, though.
Says William Reinhardt, senior editor of Engineering News Record in New York, ``The trends in privatization are that it's still difficult, the municipalities are still afraid of it, and the economics of these projects are still hard to put together.''
Privatization is getting considerable attention in ``areas of super growth -- in affluent areas, with a lot of forward-thinking people who would rather see services contracted out than grow a bureaucracy.''
And in the Western states, there is more of a tradition of private companies providing what are thought of elsewhere as public services, such as local water supplies.
Private companies have their advantages primarily in getting things moving fast -- they don't have to pace their construction to the federal grantmaking process -- and in personnel costs. ``A private company doesn't have to hire the mayor's brother,'' Mr. Reinhardt says.
On the other hand, not every municipality is averse to a little bit of pork barrel here or there. ``Cutting those red ribbons has been what's elected so many people to office,'' says Reinhardt.
More seriously, some municipalities are concerned about being skewered by a major company coming in to build a sewage plant.
``The whole privatization thing would fall apart tomorrow if a private company came in and did a number on a dumb municipality,'' he goes on. ``The companies that have been going into this so far are all big, credible companies that have been in business 100 years, but if this really catches on, there are a lot of snake-oil salesmen that are going to come out of the woodwork.''
But privatization could be a ``wonderful way to get private companies committed to clean water.''
``Privatization has the greatest amount of potential in certain areas,'' says Mark Ashcraft, assistant to the chairman of the Governor's Infrastructure Review Task Force in California. It works best in ``areas where there's some type of income flow, such as the user fees for a waste-water plant, and where there is a large capital investment, though not necessarily in land.'' The capital investment enables the private owners to get tax advantages, such as depreciation.
He insists, though, that private companies operating waste-water plants, for example, do manage them as regular, in-the-black businesses, not just as tax shelters.
In some cases, state laws preventing municipalities from establishing long-term contracts have been an obstacle. Because of the heavy capital expense, a private contractor needs a long-term (20 years or so) contract with a city to justify building a waste-water plant.