Indianapolis makes it clear: System works
Sunday, August 9, 1998 by STEPHEN GOLDSMITH Decades old wastewater facilities deteriorate even as the city's needs grow. An aging sewer system is in dire need of repair. Massive rate increases loom.
Sound familiar? It may be Atlanta today, but not long ago it was Indianapolis. When I took office as mayor of the nation's 12th largest city in 1991, the Chamber of Commerce presented me a report indicating that the city needed more than $1 billion in infrastructure improvements. Sewer rates had not been raised since 1985, and by some estimates a 37 percent increase was needed to fund overdue repair work.
Our waste water treatment facilities seemed an unlikely place to look for savings. The plants had won numerous awards for efficiency and environmental quality. A Big Six accounting firm concluded we could expect private management to reduce operating costs by just 5 percent.
In addition, there was widespread opposition to private involvement in the city's wastewater operation. Environmental groups clamored about accountability and insisted private management and concern for the environment could not coexist. Union workers at the plants were terrified that the quest for reduced costs would mean lower wages and fewer benefits. Even the corporate community had concerns; major generators of waste wanted to make sure that their rates were not raised and their environmental obligations were not increased.
Five percent savings probably would not have been enough incentive to confront these political obstacles. Yet our prior successes in allowing private firms to compete against public employees convinced us that competition could improve even the best government operation.
We decided to test the marketplace, asking the best wastewater treatment firms in the world whether they could improve plant operation while saving taxpayers money. Faced with competition, our own inhouse team¾which only weeks before insisted $30 million a year was the absolute minimum amount required to run the plant—reduced that figure by 10 percent. The eventual winner went much further, promising to cut costs by 40 percent while matching or exceeding previous environmental performance.
After four years, the results speak for themselves. Our private vendor has used world-class management expertise and cutting-edge technology to exceed its original savings projections of $65 million over the five year life of the contract. These savings have helped the city fund important sewersystem repairs. Employees at the plants receive better wages and benefits than under city management, and worker grievances have fallen 99 percent. The wastewater plants continue to meet high standards for treatment even as the volume treated has increased. Of equal importance, our private partners are good corporate citizens, contributing part of their profits to the community and dramatically increasing minority business participation.
There were several key ingredients to making private wastewater management a success. Clearly specified outcomes—from cost and preventive maintenance to minority participation levels and environmental quality—empowered a talented private vendor to meet customers' needs. Close contract monitoring focused on performance, not processes, ensured accountability. Perhaps most important, an open, inclusive competitive process inspired the public confidence critical to a successful longterm relationship.
Atlanta will need to define its own criteria for success. Whatever those goals, competition can provide a powerful tool for achieving them.
Stephen Goldsmith, Mayor of Indianapolis, is author of "The Twenty-first Century City: Resurrecting Urban America." ©1998 The Atlanta Journal-Constitution About George Kelling: articles, bio, and photo |
