Private Water Trends: Portage Goes with the Flow

The Kalamazoo County city of Portage has finished the first year of its five-year contract for the private operation of its water and sewer treatment facility. A review of the firm's work has shown that contracting with Earth Tech Operation Services has saved the city money while improving services.

The private firm Earth Tech Operation Services, which began operation of Portage's water and sewer treatment plant in 1997, has exceeded the city's expectations, according to City Manager Michael Stampfler. Stampfler reports savings of $785,000 in the first year of the contract31% more than the city's projected goal of $600,000 in savings. The extra savings have allowed Portage to reduce its water and sewer fund expenses by more than 11%.

Stampfler noted that these savings have coincided with an improvement in all areas of service delivery, including storm water management. In the process of improving its storm water management, Earth Tech swept about 3,000 miles of curbside so that unnecessary waste would not enter the sewer system. In the previous year, the city of Portage maintained only 1,400 miles of curbside.

Contracting out to manage Portage's water/wastewater treatment plant has helped the city save money while dramatically improving services.

The firm has also increased the number of catch basins and drains it cleans, improved water shut-off notification procedures, expanded customer service, and retained all fourteen of the former city employees who worked at the wastewater facility when it was under municipal management.

This is not Earth Tech's first success in Michigan. The company also manages a water/wastewater treatment plant in Alpena, where it has saved the city over $3 million.

Nationwide, privatization of water facilities grew by 6% in 1997, according to a survey published in the June 1998 issue of Public Works Financing magazine.

Privatization Watch, a publication of the Los Angeles-based Reason Public Policy Institute, estimated that in 1997 nearly 200 new municipalities and industrial clients issued Requests for Proposals (RFPs) to private firms for the purposes of operating and maintaining public water/wastewater facilities. Over half (110) of the 200 RFPs were for the management of water systems exceeding one million gallons per day and approximately 55 resulted in successful deals between municipalities and private industry, Privatization Watch reported.

Every year, more municipalities take the bold step of moving away from day-to-day operation of various government assets and services and, in some instances, they sell entire systems to investor-owned utilities.

As municipalities discover the cost savings and service improvements that typically result from successful privatization, citizens and officials will benefit from more and bolder privatization initiatives from local government.