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New Orleans private partnership drifting to irrelevance

Wednesday January 21, 2004

By Martha Carr
Staff writer

Mayor Ray Nagin first set his sights on February 2003. Then on July. Then on October.

Now, Nagin is saying little about whether a formal proposal seeking bids from private companies to run the New Orleans water and sewer systems will ever be issued by the city.

Many, including some Sewerage and Water Board members, are wondering whether the controversial privatization drive may finally be dead.

"Is there still an issue?" asked City Councilman Oliver Thomas, who serves on the water board. "Everybody in the community pretty much thinks this is over."

Certainly, signs seem to point to that conclusion.

The mayor has not initiated a single discussion on the issue since September, and there is no indication he plans to take it up at the board's meeting scheduled for today.

Amid his inaction, potential bidders and consultants rarely attend water board meetings. And there has been no word that Nagin's behind-closed-doors search for bidders has yielded any takers other than USFilter, which has for months said it is committed to vying for the job. The board voted in July to scrap the idea if only one company submitted a bid, and even USFilter has put its local consultants on hiatus while privatization hangs in limbo.

"I don't think anybody else is planning on bidding on it, and I don't know why they don't just come out and say so," said Ann Pettit, environmental chairwoman for the League of Women Voters. "The public would like to know what's going on."

Nagin, however, says the process he revived last year is still alive. In a brief written statement issued last week, the mayor said the topic has not been discussed because he is waiting for consultants to prepare a report that breaks out separately the costs of running the sewer and water systems.

The mayor asked Deloitte & Touche to prepare that report in September so he could determine whether dividing the 20-year, roughly $1.5 billion contract into smaller contracts might increase the chances of attracting more companies. Nagin did not say when he expected the report to be completed. But each month, the matter has been listed on the agenda, and deferred without discussion.

"Until we have those separate baselines, it is hard to gauge whether we will get enough bidders to make this a truly competitive process," the statement read.

Many say such a report should have been produced by now, and speculate that the mayor may be attempting to craft an alternative plan for reform at the agency before officially declaring the privatization drive a $5 million failed experiment. The city's first bid process ended abruptly in October 2002, after a coup by privatization opponents resulted in a 6-5 vote to reject all bids. Nagin restarted the process last January.

"I have a feeling the board may want to come up with an alternative plan for what to do to move forward before they declare it a null and void issue," said John Wilson, representative of an employee group that bid on the contract in 2002. "They don't want to just say it's dead and leave it at that."

Loss of momentum

It's no secret that Nagin has been driving the privatization train since he revived the issue, often surprising board members on meeting days with his latest decision about which direction the process should take. But, of late, the mayor has been silent on the matter, causing even some potential supporters of privatization on the board to lose enthusiasm.

"I really don't know that there is a need for us to consider privatization since the City Council passed rate increases, and there have been some efficiencies achieved at the Sewerage & Water Board," said board member Tommie Vassel, a Nagin appointee. "From a board perspective, I'm certainly willing to say it's a dead issue. I've got all these binders around me and I'm ready to shred these papers."

Board Vice President Sidney Evans, however, said he's not as anxious to force a decision.

"I have enough confidence in the mayor to suggest that when he has completed his due diligence he will bring it to our attention," Evans said. "I don't think he's delaying just to be delaying."

Out of the loop

Despite the confusion, one thing appears clear: frustration is growing over the mayor's inaction.

USFilter spokesman Scott Edwards said that, as of late, his company has been left out of the loop on the process that has dragged on since it was started by Councilman Eddie Sapir in 1999. In comparison, USFilter won a contract in the Tampa Bay, Fla., area that was initiated that same year, and has since built a plant which it has been operating for 18 months.

"That's in stark contrast to what is happening in New Orleans," Edwards said.

Watchdog groups also say they've been left in the dark, and are ready to put an end to a process they believe is fatally flawed. Instead, they say, the board should set itself to the task of making major reforms within the public agency.

"The troubling aspect of having this drag on is that it delays implementation of a complete re-engineering of the Sewerage & Water Board," said Janet Howard, president of the Bureau of Governmental Research. "We would all be better off if they would fish or cut bait."

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