Council: Privatize utilities
Scores protest, vow referendum

By Cheryl Miller
Record Staff Writer
Published Thursday, February 20, 2003

Propelled by a slim council majority, Stockton on Wednesday joined a small but growing number of American cities that contract with private companies to run their water utilities, a move that angered city utility workers and prompted opponents to promise a voter referendum.

Mayor Gary Podesto, Vice Mayor Gloria Nomura, Councilman Gary Giovanetti and Councilwoman Leslie Baranco Martin voted to approve a $600 million contract that charges international conglomerate OMI-Thames with running Stockton's water, wastewater and stormwater utilities for the next 20 years.

"This is not and must not be a decision of the heart," said Podesto, who has shepherded the city's privatization debate throughout his two terms in office.

"It must be a decision of the mind, one where thoughtful considerations have been given to details and a Plan B exists," he said. "And a Plan B does exist in the form of a $1 million convenience clause" that allows the city a way out of the contract.

Councilmen Richard Nickerson, Steve Bestolarides and Larry Ruhstaller voted against the contract after pleading unsuccessfully with their colleagues to tie approval of the operations deal to a public vote.

"There are those that believe we are to make tough decisions," Ruhstaller said. "But there comes a time when people become so involved in an issue they deserve to be heard at the ballot box. If this is a good contract for the city of Stockton, as I believe it to be, we ought to be able to take this message to the electorate."

While ending six years of debate that led to the construction of the 900-page contract, Wednesday's vote will likely only shift the battleground over privatization in Stockton.

The Concerned Citizens Coalition of Stockton, an anti-privatization group, has already prepared to challenge the council's decision through a voter referendum. Co-chairwoman Sylvia Kothe was working to obtain a certified copy of the contract resolution moments after the council approved it. "We plan to be out Saturday morning circulating petitions," she said.

Environmental groups have also questioned the legality of the city's decision not to conduct an environmental review of sewer-system upgrades proposed in the contract.

The city has also yet to reach agreements with the labor unions that represent more than 100 water-utility workers. City administrators said a severance package is the only obstacle to a deal. But the mayor suggested Wednesday night that the city might have to declare an impasse in negotiations.

"That is of great concern to me that the mayor raised the specter of an impasse," said Dean Cofer, a lead negotiator for Operating Engineers Local 3, which represents 85 utilities employees. Cofer said union members will help circulate referendum petitions this weekend.

The council's vote effectively nixes any impact a privatization initiative on the March 4 ballot might have had on the contract. Measure F would require voter approval of any utilities-privatization contract greater than $5 million.

But the measure, if adopted by voters, would apply only to contracts signed after the election. The council's decision beat the election by 13 days.

"It's a defiance of democracy for you to move forward," former Stockton Mayor Barbara Fass said. "You're telling us we're irrelevant, that we're dumb, that we can't understand this."

The vote followed a tense afternoon of protests. Labor-union members and other contract opponents crowded the steps and sidewalks in front of City Hall, carrying signs and a giant puppet topped with a picture of Podesto and chanting "Let Us Vote!" as council members arrived for the meeting.

Police officers on foot, on horseback and on bicycles kept watch over the gathering from the parking lot and inside City Hall. During one brief stretch, officers required those entering City Hall, a building with public access during business hours, to show identification.

"We saw in Chicago that it only takes one act to cause havoc so we thought we'd be safe," the mayor said of the heavy police presence, refering to the recent stampede at a Chicago nightclub that killed 21 people.

During the council meeting, dozens of municipal utility workers, clad in their orange work shirts, ringed the council's chamber and packed two floors of City Hall.

OMI President Don Evans acknowledged the emotion that surrounded the contract decision but said customers should be assured that the contract is sound.

"We've got partners with expertise," he said. "We know what we're doing. We've offered a comprehensive contract with performance guarantees and we're committed to offering good pay and good benefits to employees. Those three things -- expertise, commitment and performance guarantees -- we believe will reassure residents.

* To reach reporter Cheryl Miller, phone 546-8252 or e-mail