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THE fifth estate: Dead in the Water
North America> Printer Version
Broadcast
March 31, 2004
NORTH AMERICA: FIXING THE AGING INFRASTRUCTURE IN ATLANTA, GEORGIA AND MONCTON, NB
North American cities are facing the daunting task of repairing or replacing century-old pipes and valves that make up our water and wastewater systems. The problem lies is finding the financial capital and the political will to pay for neglected water systems. Taxpayers tend to take the flowing taps and flushing toilets for granted. And politicians may not be willing to risk votes by raising water and sewer rates.
In the United States, recent studies estimate that it will take between $150 billion and $1 trillion over the next three decades to upgrade that country’s water systems.
In Canada, the figure lies at $90 billion over the next 20 years.
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THE ATLANTA EXPERIMENT
The Chattahoochee River is where Atlanta gets her
drinking water, and discharges her wastewater. In the summer of 1998,
then mayor Bill Campbell signed a Federal Consent Decree in order to settle
a lawsuit brought against Atlanta by people concerned with the constant
polluting of the Chattahoochee.
These concerned groups- both upstream and downstream from one of the fastest
growing cities in North America- were joined by state and federal environmental
protection agencies. (Read more
about the environmental lawsuit against Atlanta)
REPLACING ATLANTA'S WATER SYSTEM
Then Mayor Campbell committed Atlanta to find a way to comply with the
regulated amount of bacteria Atlanta could discharge. In other words,
he committed Atlanta to finding billions of dollars to replace and upgrade
pipes and treatments plants.
Privatizing the water system could defray the millions of
dollars Atlanta was paying in environmental fines, and could only help
in the future investment to improve the pipes. Clair Muller is Chair of
the Utilities Committee and has been a councilmember in the City’s
north end for 14 years.
Clair Muller: We knew
that that was going to be a huge, huge bill and that was why I think the
administration at the time started looking at privatizing the water.
UNITED WATER WINS THE WATER CONTRACT
Later that year, Atlanta requested proposals from private water companies
to operate and maintain their water system. United Water Services Atlanta
(a joint venture between United Water Resources of New Jersey and the
French giant Suez) came in with the lowest offer. Their bid would save
Atlanta $20 million dollars a year. United Water was granted a twenty-year
contract to operate and maintain the water system that serves over a million
people.
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Joseph Reid: This was post-Olympics which means that it was actually a city that was known world wide now. And it would be a great opportunity for any company to showcase what privatization could do in a city like Atlanta. And this is more or less the Mecca of the south, the capital of the south if you consider it that. So if you could privatize Atlanta, you could go then after Detroit, you know, New York, some of the other cities, other major cities.
By August 2002, the privatization showcase had gone awry.
Atlanta was now controlled by a new mayor- Shirley Franklin. She presented
United Water and the public with a detailed report that showed United
Water was in default of the contract. (see a letter
from the City's water commissioner to United Water outlining her concerns
)
The City claimed that United Water was not meeting the most basic requirements:
That staffing levels were too low; That they had defaulted on a multitude
of maintenance obligations That United Water violated state and federal
safe drinking water laws. (see attached letter
about violation of drinking water laws)
COMPLAINTS ABOUT UNITED WATER
Councilmember Clair Muller began getting complaints from her constituents
almost immediately into the new contract.
Clair Muller: We noticed
a huge increase in customer complaints – everything ranging from
the inability to get water service for a new house to having a meter changed
if it was faulty. But more specifically: leaks. We were in a period of
drought just about the entire time that United Water ran our system. And
citizens just were infuriated by trickling or gushing water that would
be running down the street because it seemed like such a waste. We were
under water restrictions and yet the water was leaking from the pipes.
Greg Johnson, a resident of Atlanta, noticed a leak in front
of his house on the street. There was a small river of water flowing down
the street during a time when the city was restricting the use of water
to residents. When he called United Water to have the problem fixed no
action was taken for months.
(see a letter of complaint written by Johnson
to United Water)
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A hundred people were ready to move into their high-rise
condominiums in the Museum Tower in downtown Atlanta. Developer Satish
Lathi discovered there was no water for a sprinkler system. He had to
put in a new water line and estimates that he lost nearly $1.5 million.
(read Lathi's interview with the fifth estate
)
Following the August 2002 report, United Water was placed on a 90-day probation period. By all accounts, United Water did make serious improvements in areas like meter installations, and billing. But it was not enough for the contract to continue.
THE END TO PRIVATE WATER IN ATLANTA
United Water ran Atlanta’s water system for four years. The final
straw came in January 2003 when the City released an audit that showed
United Water had failed to save the city $20 million a year.
Clair Muller: We
were told that they could save us twenty million a year and they only
saved us ten. Not only did they only save us ten, but the customer service
really dropped dramatically.
In a press statement issued jointly with the City, United Water’s
Chairman at the time Michael Chesser said: "United
Water is proud to have made significant improvements to the city's water
system including the virtual elimination of an enormous and unexpected
backlog."
At the same press conference, a city official said: "We
have a contract that doesn't work; it simply doesn't work…the residents
of Atlanta cannot get good water under the contract, and United Water
cannot make money under the contract."
Suez, the French company that owns United Water declined to be interviewed
by the fifth estate.
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Atlanta’s infrastructure faces serious challenges
in the future. One of the fastest growing metropolitan areas in North
America, with a population of more than 4 million, the greater Atlanta
region is growing at an average rate of 80,000 people a year.
As it continues to grow and expand its infrastructure, Atlanta is also
charged with finding three billion dollars over the next decade to overhaul
its entire wastewater system to comply with environmental laws and upgrades
and replacements to the pipes.
DIRTY WATER IN MONCTON, NB
In the late 1990s Moncton began experiencing boil water advisories, some
of which lasted several weeks. The city had a rudimentary water treatment
plant that only treated the incoming water with chlorine. The outcome
was dirty, yellow water with sediment.
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Brian Murphy: Our publicist will tell you: look, it was the colour of brown tea. It was the colour of poop, it was awful, it was undrinkable. Our filters would clog up, hot water heaters would have to be replaced every three years. It was deplorable. The spring water companies may have enjoyed it because, as the ‘90s grew on, we started having more boil orders and they almost became, I hate to say it, but people became almost used to boiling water or buying water.
A NEW WATER TREATMENT PLANT WITH PRIVATE
MONEY
The city was considering private enterprise before Murphy was elected.
In 1995, the city issued tenders to build a new treatment plant. USFilter
Canada won the bid. They paid for and built a modern filtration plant
for $23 million dollars, and delivered the project on time in October
of 1999.
Under city estimations, the plants would have cost $32 million
to build. And city officials didn’t know where this money would
come from.
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This arrangement between a government and a private operator is known as a public-private partnership. (Read more about public-private partnerships)
It became a model of how the public and private sectors could work together. (more about the plant)
Water costs have increased in Moncton, and there has also been a huge leap in the quality of the water.
THE WALKERTON CRISIS
In the spring of 2000, the drinking water of Walkerton, Ontario was contaminated
with e-coli bacteria. Seven people died and more than two thousand fell
ill. The government of Ontario commissioned an inquiry to look into what
exactly happened in Walkerton, and how to ensure that a similar tragedy
doesn't happen again.
Mayor Murphy was invited to discuss the benefits of his
city’s public-private partnership as a way to get clean drinking
water to the people. (read Murphy's presentation
)
REPLACING THE PIPES
With the success of his water treatment plant, Mayor Murphy was ready
to move to the water delivery system. Some of the pipes were 122 years
old, but most were between 30-70 years old.
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City engineers estimated that it would take $70 million to repair and replace pipes under the city over the next 20 years. Moncton did not have this kind of money to spend.
USFilter approached Moncton with a proposal to do the job
with private capital. In 2001, the city started confidential negotiations
with USFilter.
(put up doc: see Ross or Les)
For Murphy, it was logical to consider a deal with USFilter.
Brian Murphy: You would
want to have the same operator of the treatment plant and of the system.
Makes some sense. If they delivered these savings on the construction
and operation of the water treatment plant, and they have a track record
after time, which I feel now they do, then maybe they can do it in the
distribution system.
OPPOSITION TO THE DEAL
Not everyone on city council agreed with the Mayor’s assessment.
Councilor Brian Hicks spoke up. He was opposed to USFilter getting the
job without a competitive bidding process involving other candidates.
Brian Hicks: Week after week, I was the only one asking questions and people were looking at me like I had three heads. But they were just so basic, they were just so simple, they were just dealing with the transparency.
Through further persistence, councilor Hicks found out that
the $70 million was an estimate and that they didn’t actually know
the definitive figure.
Brian Hicks: City staff
have used that seventy million dollar figure as the definitive figure
and just when I started asking questions, then it became ball park and
then at the end of the day we found out, you know we really didn’t
know as a City how much it would cost if we did that work ourselves.
As Hicks continued his opposition, the province of New Brunswick weighed in. The deal did not meet the requirements under New Brunswick’s Public Purchasing Act. Murphy would need to follow a tendered process to follow the letter of the law.
This was a set-back for Mayor Murphy, but he and his advisors
were still determined to get the deal with USFilter through.
In February 2002, USFilter wrote two letters to the city accusing Hicks
of being in conflict of interest, and demanding that he be removed from
any further deliberations. (read one of the
letters )
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After all the protestations by Hicks and other councilors, Moncton commissioned a private engineering firm - Dillon Consulting- to do an extensive analysis of the Moncton infrastructure. Whereas the previous report was an estimate, the Dillon report got down and dirty, actually digging up sample pipes and figuring out the worth of the system.
Instead of $70 million, the Dillon report determined that the job could be done for $48 million.
Brian Hicks: I guess the scary part is what if USFilter had come in and said: we can do your work for $60 million? Everybody would have put their hands up and said: isn’t this wonderful, we just saved $10 million. The other thing that the Dillon Report surprised me on was how strongly that they recommended that the city stay with a water distribution system that was not only owned by the city, but operated by the city.
For Mayor Murphy, he sees this outcome differently:
Brian Murphy: Who do
I blame for that? Well, I blame myself for being slow on it. I should
have been quicker on it. And I blame the intervention of people who really,
their only interest is gad flying about at cocktail parties in Rosedale
or protecting their job at the union offices on upper Yonge Street. I
mean really that and the usual political crowd who will make an issue
out of something. So there’s enough blame to go around as to why
the system isn’t working the way it should.
the fifth estate: DEAD
IN THE WATER
Broadcast on the
fifth estate Wednesday, March 31 2004
on CBC-TV at 8PM
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