USFilter again wooing Pittsfield, MA

By Jack Dew

Berkshire Eagle Staff

Wednesday, April 02, 2003 -

PITTSFIELD -- A company that had lobbied the city to take over its water and sewer system and run it for a profit has resurfaced and begun quietly distributing information about its services to Mayor Sara Hathaway and the members of the City Council.

The company, USFilter, was seen as one of the driving forces behind a push by former Mayor Gerald S. Doyle Jr. to privatize the city's water system during the waning days of his final term in office. That effort raised some questions among city leaders, particularly when information surfaced that a controversial insurance broker, Edward Caveney, had been hired by USFilter and appeared to have been involved in the company's bid for the city's business.

Now, USFilter has hired as a consultant local businessman Robert J. "Smitty" Smith, owner of Samel's Deli in Pittsfield and The Brewery, a downtown bar and restaurant. Smith has since met with Hathaway and this week delivered a packet of information to the 11 city councilors about the company.

Smith, who was a political ally of Doyle's and is a former Pittsfield police officer, said privatization may be a more palatable issue for the city in light of the budget constraints hitting the state and forcing communities to reduce spending. "With all the recent cuts, there is an opportunity here and we think the city can save some serious money," he said.

In a letter sent to Hathaway and the councilors, Smith touts the benefits of a "public/private partnership" for water and waste-water systems, and predicts the city would save "over a million dollars a year" and benefit from "new patented equipment that could help solve our water quality issues" in some of the city's neighborhoods.

The message has been greeted with skepticism by Hathaway, city officials and councilors, many of whom said they felt the claims of dramatic savings at no cost to the city or to ratepayers were exaggerated.

"I have met with Mr. Smith and others who have wanted to put forth proposals for privatizing water and sewer, and I'm not sold on it," Hathaway said. "How would we save this money? Why would the private sector, which is looking to make a profit, provide this service to the public for less, in a water and sewer system that already has low rates? How could they maintain the capital budget or increase it? ... They have never provided me with the numbers, I think this current package doesn't have any more specifics than what I have heard in the past."

There is little urgency in city government to dramatically restructure the water and sewer system because it is already self-sustaining, funded like any other utility company to which customers pay bills in exchange for a service. Those payments cover the cost of operating the city's water treatment plant and the upkeep of the system.

Any cost savings from privatization would not go toward Pittsfield's overall budget, but rather to the enterprise funds that cover the costs of the system, and officials fear that a private company seeking to make a profit would only drive up the rates paid by city residents at no benefit to the city.

Councilor at large Gerald M. Lee yesterday joined the chorus of people skeptical of the plan. "There is only one community in the state whose rates are lower than ours. We are very, very competitive in that regard. ... I suppose if our water and sewer system were in trouble, we would have to look to these private companies. But I'm not sure that we are in trouble."

Still, Lee said it may be worthwhile as "an academic exercise" to go through the process of hearing what the private companies have to say. "But I would hate to mortgage the future of the city by signing up with some company that we would no longer have control over," he added.

Other communities in the Berkshires have been more willing to privatize. North Adams has contracted with U.S. Water, a rival of USFilter, to run its filtration plant. The town of Lee and the Hoosac Water Quality District in North County are both soliciting bids from private companies for their systems.

When Doyle began pushing privatization in October 2001, then- Commissioner of Public Works William L. Forestell was against the proposal. His successor, Bruce Collingwood, said yesterday that he is not inclined to support it, either.

"I think we are capable of managing our own system and providing a quality service for both water and sewer," he said. "If a private entity wants to come in, their goal is to make money, where our goal is to provide a quality service."

Doyle's efforts in 2001 were hampered somewhat by the apparent connection of the broker, Caveney, who had been linked to some of the huge losses from the city's employee health insurance plan.

In 1999, Caveney was the city's broker for a stop-loss insurance policy designed to help the city pay medical bills if some of its employees required very expensive medical care.

Though he was paid $407,919 by the city, he failed to make the monthly payments to the company that carried the stop-loss policy, and the plan was canceled after three months. As a result, the city lost $628,000. Caveney later repaid that money.

In October 2001, Doyle denied that Caveney had been connected to the water privatization effort. USFilter, however, acknowledged that Caveney had a contract with the company from late 1999 until March 2000, but would not discuss what services the contract specified.