Mark Paul's notes on a “Checklist” alternative to the “Decision Tree”

Attached are my thoughts on a Decision Tree. A few comments:

1. A number of the questions posed in the draft "Decision Tree" that are left to the community to decide as they move along to determine if they should privatize or continue public operations can and should be addressed and answered in the RFP process, not as a condition to deciding whether to privatize. I am reluctant to suggest that communities need to make all these determinations on their own before they go out to the market. For example, rather than ask the community to determine the condition of the facility, I always tell a community that if they put out an REP they will get back, free of charge (other than the cost of the RFP) operations and maintenance, capital improvement and asset management plans from the top companies in the business. I think that asking the community to undertake a system analysis plays into the hands of AMSA that suggest an internal assessment to "eliminate the competitive advantage". We need somehow to be suggesting right off the bat what the private sector can offer that cannot be offered by the public sector. Also why ask the community to determine whether the asset can generate revenue from sale or lease (or upfront concession payment), I suggest that that be included in the RFP. etc.
2. The decision tree must jump out and attract the interest of the reader right off the bat by, in my opinion, getting right to the benefits of soliciting private participation in water and wastewater services. As you will note from my suggested decision tree the focus is on the benefits. This may not neatly lend itself to a typical decision tree format. We may want to consider how AMSA handled the information by setting out the points and then a page reference to more detailed discussion.
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4. I have also attached a page from a presentation that was given by Steve Howard (Lehman) which is from a report by the National Regulatory Research Institute which researched the reasons that public officials consider privatization. We are all familiar with this. I believe this is what we should put in front of the decision makers right off the bat to attract interest.

4. I am available to work with you to consolidate the comments and put together a final draft product for review by the entire council.

Regards

Mark Paul

Decision Tree

Are you interested in:

Achieving more efficiency in the operation of your water and wastewater facilities?

Achieving lower costs in the operations of your water and wastewater facilities?

Achieving long term stable and predictable water and wastewater rates for your community?

Attracting commercial and industrial growth in your community?

Determining if more cost effective compliance can be achieved through enhanced operations and maintenance or capital upgrades to your facility?

Determining if capital improvements to your facility can be implemented in less time, more cost effectively and with less disputes?

In your facilities achieving an even higher level of compliance than currently without increasing costs?

Providing an enhanced working environment for your facilities employees including cross training, career development and job enhancement?

Transferring the risk of operations and permit compliance?

Achieving the most cost effective financing, both public and private, for any capital improvements?

Knowing the benefits of a single point of responsibility for the design, construction and operation of your

Consider a Public/Private Partnership (sale, lease or long term asset management agreement)

Are your water and wastewater facilities currently:

In need of capital upgrades, improvement or expansion?

Under an Administrative Consent Order mandating

compliance by a date certain or in the near future

which you are concerned you will meet on time?

Out of compliance with permit requirements?

Threatening the health and welfare of your community?

In need of capital upgrades, improvements or expansion but cannot get public approval for bonding, have exceeded your bonding capacity or want to preserve that capacity for other public uses?

(for every question a page reference for a complete response)

Have you considered a Public/Private Partnership but are
concerned about:

Impact on your facilities’ employees?

Losing control over your facility?

Your facilities being maintained

properly over the long term?

Entering into a long term agreement

with a private company?

Performance and compliance being worse,

rather than better?

Whether your local or state laws allow

public/private partnerships?

Achieving federal or state approvals?

The type of security you can get to assure performance?

Public Acceptance?

Loss of control over rates?

Being held "hostage" by the private partner?
Compelling performance over time?

(note: this above list would attempt to highlight and anticipate the most common concerns of public officials entering into these long term agreements and provide explanations. There are probably more than listed here)

Do you know that:

Your water or wastewater facility can generate revenue to your community from a sale, lease, or long term service agreement,

As a result of recent tax law changes, you can get the benefits of a public/private partnership without selling or leasing your facilities

Private financing, as well as private equity, may be available to finance the cost of capital upgrades and expansion.

Savings generated from more efficient operations and maintenance can be capitalized
to provide much needed capital for upgrades and improvements.

You can get a guaranteed capital improvement and long term capital repair and replacement program.

A number of communities, both large and small, are enjoying the benefits of public/private partnerships

There is a big difference in terms of benefits to your community between short term

operations and maintenance agreements and tong term public/private partnerships?

(For each issue, above, a page reference would be provided with in-depth explanation of the issue.)

Do you want to Get started?

(These may not be as articulately stated as possible. Some of the points we may want to restate differently. There certainly are additional points to be made Also there is redundancy, Although it may not be bad to restate the same question in different ways and reference the same page for the follow-up discussion, particularly on the more important issue. Basically, this is die type of format I would use. The point is to get the attention of the decision maker with questions or benefits that are meaningful in his or her particular situation and then encourage them to read on to learn more details The text will give us an opportunity to discuss how public/private partnerships can provide these benefits, to set out the results of research that has been done by others, include case studies, quotes from officials that have gone through the process and to address how the most common concerns art addressed as well as how to get started. including sample language, RFPs etc. depending on how ambitious we want to get). This is our chance to set the record straight.