Privatization Could Rescue Detroit Fire Service

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Detroit may wish to consider outsourcing its fire department, as other cities have done.

A recent series of articles in The Detroit News exposed a tangled web of trouble besetting the city's fire department. The long and short of it is that the citizens of Detroit have a right to expect reliable protection from fire and other emergencies—but they're not getting it.

To remedy the situation, Mayor Dennis Archer is considering a host of options, including contracting with outside firms to deal with maintenance, bill paying, and driver training. But why not go even further? The problems outlined by The News are so deeply ingrained and bureaucratically entrenched that it may be time to try a completely or nearly completely privatized fire department.

The idea is not as radical as it sounds. In fact, it's been done in other cities, with positive results. Detroit could contract with a private company for virtually every duty currently performed by the city-run fire department, including fire-code enforcement, arson investigation, training, communications, maintenance, emergency medical services, and fire fighting itself.

Would a private company perform as well as the city force? First, as The Detroit News reports, the current city-run department has many serious problems. Second, the city would have the option of mandating, as conditions of a private contract, performance standards such as response time, maintenance of vehicles, number of open fire houses, and cost of operations, just to name a few.

Detroit could even make it profitable for a private company to prevent fires, and unprofitable when it fails to do so. For example, Rural/Metro of Scottsdale, Ariz., a private fire-fighting company, actually loses money when fires break out. This creates a profit-based incentive for the company to prevent fires while adhering to its other contractual mandates. Last year alone Rural/Metro held 1,000 fire-prevention education events.

How has the profit incentive prevented fires in Scottsdale? Since 1997, there has been only one fire-related death in Scottsdale's Rural/Metro territory, which covers 183 square miles. By contrast, Detroit, which covers 140 square miles, has lost 18 lives in fires due to "failed fire equipment" or closed stations during the same time.

Granted, there are many technicalities to consider when contemplating privatization of an endeavor as complex as a large urban fire department, and the matter would have to be handled carefully. For example, municipalities too often ask for bids from private companies only as a threat to frighten firefighters' unions into submission during contract negotiations.

In order to demonstrate to private contractors that Detroit is serious about privatization, Mayor Archer would need to play a prominent role. He would need to announce that services will be privatized, award the contract himself, and make it clear that his office would be responsible for carefully monitoring the contract for compliance.

It is likely that privatizing Detroit's fire department could not only provide better service, but save money at the same time.

Fire departments and cities often express their rates of spending as an amount of money spent per unit of property value being protected. The technical term is SEV, or "state equalized value," and the rate of spending would be expressed as a dollar amount "per $1,000 of SEV," which represents half a property's market value, which is what property taxes are based upon.

In fiscal year 1998, it cost Detroit $16.78 per $1,000 of SEV to operate its fire system. By contrast, Scottsdale's for-profit Rural/Metro spends only $6.89 per $1,000 of SEV. In other words, Scottsdale, by contracting out its fire-fighting service to a private company, not only gets better service, it gets fire protection for dramatically less.

Right next door to Detroit, in the city of Troy, fire protection costs just 57 cents for every $1,000 in SEV. Troy has a tradition of relying heavily on fire-fighting volunteers, supervised by full-time fire personnel. It now maintains a complement of 11 career and 170 volunteer firefighters.

Oddly enough, Detroit isn't even spending all of the money it allocates for fire protection. Budget records show that despite being desperate for new and safer equipment, Detroit spent $13.5 million less in 1999 than was appropriated for the fire department. In fact, the city spent only $1.5 million more in 1999 on all public safety expenditures than it spent in 1990. This doesn't even keep up with inflation.

Now, faced with The Detroit News exposé, Mayor Archer has announced that the city will provide Fire Commissioner Charles Wilson with "an open checkbook" to improve the Fire Department. But if more money were the answer, Commissioner Wilson would have spent the money he already has.

Clearly the problem is not a lack of money, it is mismanagement and the danger this mismanagement poses to the citizens of Detroit, who die in fire-related deaths far more often than citizens in Troy or Scottsdale. Indeed, combined, these smaller cities have experienced only two fire-related deaths since 1992.

In one year, 1999, the value of residential property destroyed by fire in Detroit was more than the value of all new residential property built in the city during the entire decade of the 1990s. What type of message do these numbers send to the people and businesses considering a move to the Motor City?

A reputation for providing poor services hurts the city of Detroit and discourages those families and businesses that might consider locating there. If Detroit wants to experience the economic renaissance it has yearned for, it must become willing to do things differently. One way to begin might be to privatize its failing fire department.

Michael LaFaive is managing editor of Michigan Privatization Report.