Birmingham, AL votes Against Private Water Operations 

07/26/00
CHRIS SCRIBNER
News staff writer

The Birmingham City Council on Tuesday voted 6-2 to transfer the water system back to the Water Works Board after Mayor Bernard Kincaid called for a referendum to stop the deal.

Attorney General Bill Pryor was also reviewing the plan.

Kincaid, who requested a three-week delay for further study, said he would turn to a referendum to stop the deal because the council has the votes to override a veto.

"I'm pleading with the council," the mayor said. "I'd have to turn to a referendum and send the city into a tailspin."

The vote came during a heated night meeting at Sixth Avenue Baptist Church during which Council President William Bell twice stopped the proceedings to control the council and the crowd. Police removed one woman from the meeting during the vote as many of the 200-strong crowd hooted at the council.

Bell, Aldrich Gunn, Pat Alexander, LeRoy Bandy, Sandra Little and Don MacDermott voted for the deal. Jimmy Blake and Lee Wendell Loder opposed it.

The offer the council accepted includes $265 million in existing water system debt and school construction bonds the city will issue later this year, a cash payment of $206 million, and a $1 million annual franchise fee. It also calls for preservation of about 6,000 acres surrounding Lake Purdy and along the Cahaba River, important sources of the region's drinking water.

The Water Works will borrow the money against future revenue to make the one-time payment to the city, board officials said.

Pryor wrote the council in a Tuesday letter that his review need not stop the vote.

Board lawyers said they met Monday with lawyers in the attorney general's office to explain both the 1998 transfer and the current deal. In 1998 the city took control of the assets, with the board's approval, in order to sell them to a private company. Later that year, voters rejected the privatization idea.

Opponents speak

Blake blasted the deal Tuesday night, charging that the water board plan paid the city from assets the city already controls. He said the board wanted the transfer because of the lobbying of "lawyers, engineers and other special interests that wagged the tail of the dog."

Opponents of the board's offer said the city could receive more money from a different arrangement and could protect the watershed property regardless of who ran the water system.

Loder, who called for the administration to evaluate the proposal and make a counteroffer, said he would support Kincaid's referendum drive.

Officials from American Water Works, who have been promoting their own proposal to manage city water services for nearly two years, said they could guarantee Birmingham would receive $750 million over 10 years. Birmingham would still have to pay the water system and school construction debt, reducing the net income from the American Water proposal.

Still, Blake, an American Water backer, said the city would get at least $10 million more each year under the company's proposal and retain ownership of the assets.

But, the private management plan does not adequately address the water system's own capital needs, forcing the city to pay more each year than it received from American Water, according to Mike Vann, the general manager of the Water Works.

At a special meeting Tuesday, the water board passed a resolution affirming that it would not let a private company manage the system.

"We will not vote to privatize or have a private manager operate the Water Works," said Anthony Barnes, chairman of the five-member water board.

2000 The Birmingham News. Used with permission.