Citizens to sound off at series of hearings

Thursday June 19, 2003

By Martha Carr
Staff writer

Want to sound off on the Sewerage & Water Board's proposed privatization plan? You'll soon have a chance.

The water board on Wednesday released a draft of its new, expanded privatization contract for public review. During the next 60 days, the board will hold five meetings to let citizens comment on the plan, and will place the document on its Web site and in public libraries, officials said. Meeting dates have not yet been set.

The massive document, which runs almost 1,000 pages, will serve as a road map for bidders interested in running the city's water and sewer
systems, as well as other departments, for the next 20 years.

Approval of the draft came after the board, with virtually no discussion, voted to include a long list of changes suggested by members, who offered the changes in April, saying the draft failed to adequately address critical issues such as contract compliance and penalties for violating disadvantaged business enterprise goals. Several members also accused
the consultants who drafted the plan of copying much of the document's contents from a previous privatization proposal issued under Mayor Marc Morial last year. Bids based on that proposal were rejected by a 6-5 vote last October.

Board member Tommie Vassel said that although the draft has changed very little from the one presented by the board's consultants two months ago, he's confident that any worrisome provisions will be addressed before a final version is approved.

"I view this currently as a draft," Vassel said. "Even the concerns by individual board members that were included in the draft have to be approved by the full board. When we get the final comments back, we'll decide what is going to go and what is going to stay."

Vassel also said that board members who traveled to Atlanta last month to learn about that city's disputed privatization contract with United Water plan to use the 60-day comment period to suggest changes that could help the water board avoid similar problems.

Not everyone was as confident about the board's decision to forgo debate before releasing the draft contract. Watchdog groups that have been monitoring the privatization saga for almost four years said the document includes several conflicting provisions, including a section that requires the
private operator to hire employees for departments the water board will control, then says the board would have the right to hire or fire its own employees. "Why wasn't there at least some discussion on it?" asked Ann Lundelius Pettit of the League of Women Voters. "What they really need to discuss is whether we should proceed."

The board's consultants also warned of provisions that might scare off potential bidders, such as holding a private operator in default of the roughly $1.5 billion contract after one violation of disadvantaged business enterprise participation goals. No action was taken on any of their suggestions.

Also on Wednesday, the water board voted to defer consideration of a baseline cost analysis prepared by the accounting firm of Deloitte & Touche. The analysis was commissioned to help the board get a handle on what it costs to provide the services it is seeking to privatize.

Mayor Ray Nagin, who serves as the board's president, asked for the deferral, saying he had not had a chance to review the report or analyze the $75 million figure derived by the consultants.

The board did vote, however, to pay its consultants $325,000 to cover the cost of the baseline analysis and any other work needed to prepare the final bid document. Consultants in the future are forbidden from performing any work that is not pre-approved by the board. They must also present the board with a budget of what it will cost to finish the process.

The board's privatization consultants include the law firm of Sullivan & Worcester, the engineering firm of Camp Dresser & McKee and the accounting firm of Deloitte & Touche. Before Wednesday, the board had authorized $250,000 for the process, which was revived under Nagin.

A handful of members said they assumed that amount would cover the entire process.

"I voted for the $250,000 thinking that was going to give us the ability to put a product on the street," Councilman Marlin Gusman said. "I think we have to question where we are going and how much it is going to cost. If not, we are being fiscally imprudent."

Henry Dillon voted against the measure. Councilman Oliver Thomas was absent.

Consultants also told the board that they took out a provision in the draft that would have required a private operator to repay taxpayers the full cost of preparing the bids. Now, taxpayers will foot the entire bill, which could run over $5 million.

That money will continue to come out of the board's emergency funds, said Marcia St. Martin, acting executive director of the water board.

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Martha Carr may be reached at mcarr@timespicayune.com or
at (504) 826-3306.