The NEXT Thing to Watch in Trenton?

Thanks to a tip from a reader, this may be the next matter of public interest to watch here in Trenton: today, March 21, [UPDATE: the deadline is now April 12] is the deadline for the City to receive Proposals from interested companies for “Management Advisory Services for Trenton Water Works and Trenton Sewer Utility.”

tww1According to the General Purpose note at the beginning of the RFP, which can be found at this link to the City’s website (click on the “View Printable Documents” section), “The City of Trenton (’the City’) is soliciting sealed proposals through a fair and open process in accordance with N.J.S.A. 19:44A-20.4 et seq from professional qualified individuals or company (’Firm’) to assess the general operations of the Trenton Water Works and Sewer Utility, document the findings and recommendations for improvements, and assist the City in implementing the approved improvements.”

The RFP goes on to describe the scope of services to be provided by the successful bidder for the City’s contract. Some excerpts:

The City is seeking a firm to provide services to perform an assessment and prepare a study of the utility administration, planning, operations, maintenance, and capital programs. This study will also include a review of the customer service, billing and collection aspects for the Trenton Water Works. The study will include recommendations to address deficiencies and approaches to improve the administration, planning, operations, maintenance and programs. The City will review the study and recommendations and approve the recommendations that are determined to be feasible and/or consistent with the City’s objectives. The successful firm may be required to participate in meetings and conversations with TWW and / or City staff to discuss the recommendations, and possibly modify or adjust the same based upon further feedback from the City. Once accepted by the City, the firm is expected to assist the City with implementation. The firm will be able to assist the City to facilitate knowledge transfer and help the TWW/TSU establish the foundation for long term optimization and enhanced performance. These services will be known as Management Advisory Services…

Additionally, through this procurement, the City is also seeking a firm that has experience to identify, evaluate, and recommend improvements to the operations as described in this solicitation (the Study Phase). After the study phase has been completed, the firm will assist the TWW/TSU implement the approved recommendations (the Implementation Phase) that will result in operation enhancements that will reduce the overall cost of operations and/or enhance performance or compliance (the Implementation Phase)…

The Management Advisory Services will include supervisory-level staff or subject matter experts with the requisite qualifications and experience in their respective areas of responsibility including, for example, treatment plant operations, collection, distribution, customer service, and maintenance. These experts will assist in the identification and implementation of approved cost reductions and operational enhancements as described in the following paragraphs.

And, in language that – because of the City of Trenton’s past history in such matters – does not fill me with a sense of confidence:

It is not expected that the contracted services or staff will replace or supersede any existing or proposed TWW/TSU staff to achieve the long-term goals.

“It is not expected” that any staff from the successful company would replace any City employees.

But, you know, situations have a funny tendency to change once things get under way.

Hey, we all know that Trenton’s Water Works utility needs help. For years, it’s been understaffed and undercapitalized, even though it is a profitable enterprise serving not only residents and businesses in the City of Trenton but also thousands of customers throughout other townships in Mercer County. It’s been the source of serious management and labor problems over the years, as summarized in this 2013 Trenton Times article, and more lately questions have been raised about the safety of the system’s water supply. The system does need help, that is obvious.

The City has hired consultants in the past, for example in 2011 to assist in some major capital upgrades at the TWW filtration plant and the project to cover an open-air reservoir. Those experiences went well for the system.

This time, things feel different. For one thing,  reading through the City RFP suggests the City is anticipating a more comprehensive management consulting effort this time around. The City is looking for a company to look at all aspects of TWW and Sewer Utility operations, make recommendations and assist or oversee implementation of those recommendations. And, whereas “it is not expected” to involve replacement of city employees by the corporate contractor, it sure does sound like that eventuality is not being taken off the table.

For another thing there are recent experiences, some local, that suggest that such an outcome of (at least) partial privatization of water and sewer utility services is indeed a possibility, and that might not end up being such a great thing.

The City of New Brunswick had a rather unhappy experience with a 15-month contract in 2014 and 2015 with New Jersey American Water (remember them?) to manage their water utility. During that time, according to reporting by Charlie Kratovil of the local “New Brunswick Today,” customers were hit with rising rates and problems with water safety. Kratovil reported, “under American Water’s management, the utility failed to properly treat the water on eleven different days,” and “Just months after approving the 1-year deal with American Water, the City Council voted to increase the rates 5% each year over the next three years.” After only 15 months, New Brunswick decided not to renew its deal with American Water. According to Kartovil, “The decision marks a big win for water rights activists and local community organizations that opposed any renewal of the privatization deal, which is set to expire on September 30 [2015].”

A little further afield, in Pittsburgh, PA, the three-year management contract between that city’s Water and Sewer Authority, and Veolia Water North America – Northeast, is now the subject of lawsuits and charges that Veolia allowed the lead levels of Pittsburgh’s water supply to drastically rise during its watch. According to reporting on the local website,

Among the issues alleged in the announcement [of the lawsuit] — but not included in the formal filing with the [American] Arbitration Association — PWSA said Veolia was responsible for the botched rollout of automated water meters, inaccurate water bills and a 14-month change in chemicals for corrosion and lead control that violated PWSA’s operating permit from the state…

“Veolia met its obligations and fulfilled the requirements of our contract in a fully transparent manner,” the company stated. “We stand behind the work performed on behalf of PWSA and strongly urge PWSA to stop trying to blame others for their failures and fulfill their obligations under the contract with Veolia.”

Water samples in 2013 showed lead levels had climbed to 14.7 parts per billion, just below a federal Environmental Protection Agency warning threshold.

Seventeen of 100 homes tested this spring, after Veolia’s contract expired, had lead levels exceeding the 15 parts per billion limit. PWSA was receiving more lead test requests than usual from customers in the wake of the Flint, Mich., water crisis.

“Veolia’s not responsible for the lead issue PWSA has — these lead issues are the result of the fact we have 75- to 100-year-old infrastructure,” Thomson said. “But we do believe they didn’t aggressively work on these issues when they were running the authority for three and a half years.”

Last year, PWSA customers filed a class-action lawsuit in the Allegheny County Court over water meter upgrades that resulted in inaccurate bills, increased administrative fees and improper shutoffs.

That lawsuit was put on hold in June pending settlement negotiations.

And thirdly, in 2015 the playing field in New Jersey was radically shifted with passage of the “Water Infrastructure Protection Act,” which now allows municipally-owned water systems such as Trenton’s to be more easily privatized and sold – without a public vote to do so – should certain “emergency” conditions be met.

Now, the existence of this Request for Proposals from the City  – by itself – does not suggest that Trenton is being set up for an experience similar to what New Brunswick and Pittsburgh went through. This RFP, and the resulting contract,.doesn’t necessarily mean that any new company is going to come in and layoff City employees. The process unfolding also may not lead to the privatization and sale of the Trenton Water Works and Trenton Sewer Utility,

But all of these things COULD happen.

We know this City and this Administration has had a world of difficulty managing the RFP process that led to the clusterfuck of last year’s City Swimming Pools contract.

We know that the City’s new Director of Public Works Merkle Cherry, who among his other duties supervises TWW and the Sewer Works, has no Public Works experience in his career, and will naturally be more disposed to listen to the advice of outside consultants than someone with more relevant experience.

We know that NJ American Water (likely to be one of the companies to submit a proposal today) has been lusting over TWW assets for years, and tried unsuccessfully to buy the suburban assets of the city system back in 2010.

We know that Veolia may be another likely bidder for the city’s contract. Since 2001, Veolia contracted with the then-City-owned Trenton Marriott Hotel to provide heated and chilled water. Since extended, Veolia’s contract now runs until the year 2032. This deal has been heavily criticized for its cost and terms unfavorable to the owners of the hotel, and has been cited as being one of the reasons that the hotel cannot be profitably operated. With that previous track record in Trenton,  I’d expect Veolia to want to make more money here, and to tender a proposal.

And finally, we know that the State of New Jersey has now made it much easier for a struggling city such as Trenton to sell its water utility to private companies such as American Water or Veolia without a public vote such as the one that killed the 2010 proposed sale to American Water.

So yeah, to repeat myself, the existence of this RFP process doesn’t mean bad things will happen to Trenton’s city-owned utilities. But from what we do know and from our own experience, this is definitely the next thing for the public to watch – very closely – in Trenton.

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