COMMENTARY – The WAC did on Thursday what it had previously managed to avoid – a heavily-divided vote. It may not be the most core issue, but DBO, and the question of public versus private is perhaps one of the top three secondary issues in the question on water.
The 5-3 contested vote went down along expected lines with Alf Brandt, Jerry Adler, Elaine Roberts Musser, Jim West and David Purkey voting in the motion to recommend DBO. Mark Siegler, Bill Kopper and Michael Bartolic were in dissent.
According to industry experts, the Design-Build-Operate process forces the contracting entity to consider the plant’s long-term efficiencies and cost-savings. It locks the contracting entity into costs that it must plan for during a period of 15 to 20 years.
At the previous WAC Meeting, Ed Schroeder argued that the most important part is making sure that the contract is done correctly because he said “that’s where all the cost savings and the control are going to be coming from.”
Industry experts and some research indicates that the DBO process streamlines the process, contains the liability, and ensures a higher-quality and more cost-effective price.
However, many in the community have argued against the private operation of our water supply.
As Nancy Price argued in an op-ed, “Our policy makers seem to think privatization will achieve efficiency and economies. Nothing could be further from the truth.”
Ms. Price wrote: “Recent statements by various City Council members and other interested parties would have us believe that if a private, for-profit company operates and manages the new water project, as long as there is public oversight this is not ‘privatization.’ “
Most research suggests that the long-term contractual nature is the huge advantage because it forces the DBO firm to plan costs and quality to insure profitability long term.
However, others are concerned about locking in a private entity for that period of time, fearing that problems may arise that the city would ultimately be force to deal with.
To accommodate those concerns, one possibility might be to have an initial short-term agreement with an option of extending it.
The possibility would exist that the JPA could simply vote at some point to end the private operation.
However, on Thursday, I think Mark Siegler made the critical point when he argued that, given Woodland’s staunch support of the DBO, given the majority vote requirement, it is highly improbable that, barring major problems, the JPA would ever revert to public operation.
One possible way around that point would be to allow unilateral ending of the private operation. In other words, if one city became opposed to a private operation, they could end it without the necessary consent of the other party. That may be a simple solution, but it might not be palatable to Woodland.
The focus of this column, however, is the bigger picture.
As we noted last week, Davis’ choices on this project are slipping away. We believe that the city of Davis and its voters are largely locked into their choice at this point which means with or without the vote on DBO, we were going to go to Woodland and the JPA project was already going to be DBO.
That said, the bigger issue at this point is electoral. As I write this, there is a fairly decent chance that the initiative scheduled for next March will not pass.
Even if the WAC and the council manage to fix the rate structure, the rate hikes alone are going to cause enough people to balk. But if enough of the policy makers are on board with this move, then there will not be enough of a campaign to create the discontent necessary to defeat this.
Unfortunately, I do not see that scenario occurring. Because West Sacramento is not a serious option, and because some believe there are less than above-the-board reasons for West Sacramento not being seriously considered, a move to Woodland will trigger opposition and opposition will trigger the defeat of the ballot measure.
The DBO vote is quite pivotal to this. There are a certain number of residents who are not going to support a private operation of their public water supply – and with good reason.
The divided nature of this vote may or may not prove important. A more politically nuanced position might have been to have recommended that the staff create analysis for and against the DBO without taking a position. That would have dropped the ball back into the lap of council, and council was more likely to come up with a consensus decision on this volatile issue.
As I mentioned before, there are certainly some additional ways to frame the DBO issue that help to preserve Davis’ autonomy and ability to get out of a bad situation.
From a personal standpoint, I think there are two problems going forward with the private operation – even if it appears to save money up front. First, the firms we are relying on to run the operations have mixed records. Second, it’s a public utility. Six years ago we all supported the move from private power to public power. I would hate to have to do the same with water in ten years.
Finally, there is emerging a cluster of issues including rates, public-private, and overall quantity of need that could be enough to defeat an initiative. Had the process moved forward along mainly consensus lines, we could at least defend the ultimate outcome by claiming that a group of citizens discussed the matter and decisively and collectively decided that this was the best option.
There are two critical examples of this. The first was the unanimous decision to go to conjunctive use. What that means is that the city can claim that everyone agrees we have to rely on some amount of surface water. That was not a foregone conclusion before, but the unanimous nature of the vote takes that issue off the table.
Moreover, the WAC did not make the conclusive decision to go to Woodland. Their consensus decision allows the city to continue to explore options. Joe Krovoza and Brett Lee are assigned to talk with West Sacramento about that alternative while Rochelle Swanson and Dan Wolk are working with Woodland on cost-sharing issues.
This is the first major decision that was decided on a divided vote – and a tightly-divided vote. Does that matter? We think it does.
From our perspective, it means that there was no consensus on the best approach. We cannot argue that the WAC weighed the facts and conclusively determined, anything because in the end reasonable people came to different conclusions.
This was a tough decision, but in this case I think they made the wrong call.
—David M. Greenwald reporting
The notion of a transnational corporation running my local water supply leaves me with a deep sense of distrust. Adding DBO to the other political challenges of the JPA option will contribute significantly to an organized opposition, for better or worse.
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David
Just a question for clarification of your position.
Do you mean you think that they made the wrong call in advocating for DBO ? Do you mean you think they made the wrong call in presenting a divided position ? Or both ?
This issue is going to be a highly contentious issue, if they could not arrive at a consensus position they should have punted it to the council.
[quote] if they could not arrive at a consensus position they should have punted it to the council. [/quote]Personally, I disagree. The WAC was charged with doing the homework that the CC had no time to do, given other issues, and offering their considered ADVICE to the CC and to the community as a whole.They have done this. The CC HAS ALWAYS been charged with affirmation, modification, and/or rejection of any of WAC’s recommendations.
I laid out a way they could have come up with that advice without a specific recommendation.
David Greenwald said . . .
[i]”From our perspective it means that there was no consensus on the best approach. We cannot argue that the WAC weighed the facts and conclusively determined anything because in the end reasonable people came to different conclusions.
This was a tough decision, but in this case I think they made the wrong call.”[/i]
If citizens and/or rate payers watch the video of Thursday’s meeting at [url]http://city-council.cityofdavis.org/on-going-committees/water-advisory-committee/agenda—september-27-2012[/url] they will see a very clear reason for the lack of consensus. Mark, Bill and Michael expressed their feelings that absent some concrete data providing an apples-to-apples detailed comparison of an actual DBO vs. an actual public operation site, the outcome of the comparison arguments is 1) subjective, and 2) dominated by two equally committed sides that believe in their model. In that case they all felt that their belief that public employees are more closely tied to the community wins their vote.
Lets look at the situation Mark, Bill and Michael faced in more detail. Why isn’t there objective data to fuel a direct comparison of DBO and public operation? The answer to that question is actually rather simple . . . no two water treatment plants are sufficiently alike to satisfy the apples-to-apples comparison we desire using two different plants. The only way that the kind of detailed apples-to-apples comparison Mark, Bill and Michael desire can happen is if a specific plant being run by a DBO operator) undertakes such a study of public vs. private using their own single plant.
Absent that kind of direct comparison, the decision-makers on the WAC (I was a non-voting alternate on Thursday night) had to fall back on their gut feel to make their decision. For Mark, Bill and Michael the decision was philosophical. For the other five voting members the decision was driven by the risk management and extended warranty features provided by the DBO process that aren’t provided in a publicly run scenario.
You ask for consensus David, but given the above, I really don’t see any basis for consensus in this situation. What would your basis for consensus be given the substantial differences between the two positions. Do you think Mark, Bill and Michael should value risk management and extended warranty more? Do you think the other five WAC members should value risk management and extended warranty less? Do you think Mark, Bill and Michael should trust public employees less? Do you think the other five WAC members should trust employees more? What is the basis for consensus in this situation?
One other question arises. What would be accomplished if the WAC kicked the can down the road to the Council on this issue? Said another way, how would Council making this decision make the March election any “cleaner”?
And as a final question, it appears that a logical conclusion based on your article is that the City should begin the process of terminating its contract with Davis Waste Removal as soon as possible. Is something that you advocate?
David M. Greenwald said . . .
[i]”I laid out a way they could have come up with that advice without a specific recommendation.”[/i]
That would have been kicking the can down the road to the Council. See my question above.
“it appears that a logical conclusion based on your article is that the City should begin the process of terminating its contract with Davis Waste Removal as soon as possible. Is something that you advocate?”
It may well be.
“Why isn’t there objective data to fuel a direct comparison of DBO and public operation? “
I think some of this is not going to be resolved with objective data anyway. It is a matter of worldview and philosophy. As we spoke earlier this week, there is also the lack of longitudinal data here.
“That would have been kicking the can down the road to the Council. “
The council is better equipped to arrive at a consensus on this issue. And ultimately that’s their call anyway.
[quote]I laid out a way they could have come up with that advice without a specific recommendation. [/quote]Yes you laid it out. I happen to disagree. I am glad the WAC cho path they did. Am I allowed to state my opinion?
Do you wish to demand “consensus” when there is a community vote? Only a plurality vote will be needed. If the measure presented to the community gets a 5/8ths vote or approval, it is operative (until certain individuals file a lawsuit because they didn’t get their way).
I thought that the WAC was chosen to represent a cross-section of the community.
You’re missing the context of my comment though. The argument here is that the lack of consensus will harm this at the electoral level. Matt may be correct that that is unavoidable. But the context of my comment isn’t that I demand consensus at any stage, it is merely that I evaluate the outcome of not achieving that consensus at the electoral stage.
After reading the Enterprise story, David Purkey’s “swing vote” appeared to be for a strange reason, to delineate the differences from W Sac and JPA. Can someone elaborate?
It seems it has come down to members’ votes being pretty predictable after this arduous journey. No one seemed swayed from their apparent initial stand. Am I wrong Matt?
I agree, this will divide the community and support a no vote. BUT that is premature given we don’t know the rates, so I apologize for that statement!
[quote]The argument here is that the lack of consensus will harm this at the electoral level. Matt may be correct that that is unavoidable.[/quote]
Ok… if the CC approved placing a measure on the ballot by a 5-0, or even a 4-1 vote, and it is substantially the same as the WAC recommendation(s), would this not be a sign of consensus to the voters? If WAC had punted on any/all of their recommendations and the CC passed a measure by a 5-0, 4-1, or 3-2 vote, would that seem to be “consensus”?
I personally believe that if both WAC end up recommending the same basic recommendation, I believe that citizens seeing a proposal approved by two, arguably independent, bodies would lead to a majority vote by the community.
Instead what we see is a strong opposing side. There is a big issue for some people as to whether this should be run by a private company.
BTW, weren’t their 9 voting members of the WAC? Who (if anyone) didn’t vote, who was it? Why did they not vote? Could have been a 5-4 vote (leading to your idea that they should have “punted”, or 6-3, which would constitute a “super-majority”, which would seriously undermine your proposal
There are ten. It appears that one of Joe’s regulars and one of his alternates were not there. It appears the same for Dan.
Let’s see how it will play out. Then we can see who had the “right read” on the matter.
We are going to have an election with the usual outspoken voices taking the usual positions; the anti-growth and don’t want to pay conservatives on one side and the pro-growth (smart growth in Davis speak) pro-labor traditional Democrats on the other.
Mr Toad… with all due respect, you speak of the two ends of the ‘bell curve’. It will be decided by the majority of voters who lie between the first standard deviations in the middle… as a certain columnist would say, “you can take that to the bank”.
David Greenwald said . . .
“It is a matter of worldview and philosophy. As we spoke earlier this week, there is also the lack of longitudinal data here. The council is better equipped to arrive at a consensus on this issue. And ultimately that’s their call anyway.”
Isn’t the Council going to have to wrestle with the same worldview conundrum? I really don’t see how the five of them are going to be dealing with anything differently than the 11 WAC members were dealing with last night.
And ultimately it is the responsibility of the WAC to give the Council a recommendation . . . isn’t it?
“….and the pro-growth (smart growth in Davis speak) pro-labor traditional Democrats on the other.”
The opposition to this surface water project will cut across the traditional political Davis definitions( much like the Covell Village Measure X election that handily went down in defeat). The “pro-labor traditional Democrats”, for example, will reject the privatization of our Municipal water supply as the privatized “steamlining efficiencies” are always carried on the backs of labor in order to suck off profits for the investors.
So,,,let me get this straight. The contract details are critical to whether to go with DBO but the WAC approves the DBO WITHOUT this critical information. Again, the deja-vu of the last public referendum(Measure X)when deadlines were offered up to demand a decision from the Planning Commission rather than giving them the time/information that they felt were critical to their recommendation decision. In that case, the Planning Commission stood strong for the voter’s demand for transparency /information and rejected the deadline/intimidation strategy.
SODA said . . .
[i]”After reading the Enterprise story, David Purkey’s “swing vote” appeared to be for a strange reason, to delineate the differences from W Sac and JPA. Can someone elaborate?
It seems it has come down to members’ votes being pretty predictable after this arduous journey. No one seemed swayed from their apparent initial stand. Am I wrong Matt?
I agree, this will divide the community and support a no vote. BUT that is premature given we don’t know the rates, so I apologize for that statement!”[/i]
SODA, David was very open in his comments that if West Sac is willing to work with Davis and the numbers can be worked out, that a West Sac alternative is his preferred alternative . . . and that one of the compelling reasons he feels that way is that West Sac is publicly operated. David went on to say that having two alternatives, one publicly operated in West Sac and the other privately operated in Woodland would outline the ultimate WAC decision between West Sac and Woodland in very clear terms . . . and he found that decision dynamic compelling.
With the above said, one of the key points for me when I heard David was that in a sense David was taking a position that would allow him to have his cake and eat it too. Earlier in the meeting’s deliberations, Dennis Diemer explicitly said that the standard DBO contract allows the jurisdiction to cancel the contract with the DBO vendor at any time without having to provide cause. In effect a no-fault divorce provision. As preparation for Thursday’s meeting I sought out and spoke with Alex Chen, Senior Water Quality Engineer for the Seattle Public Utilities who is in charge of Utility Systems Management, Water Quality and Treatment. Alex confirmed that Dennis’ description of the contract terms matched precisely the terms of Seattle’s two different DBO contracts, one of which is 8 years old and the other is 11 years old. So Davis and Woodland would have the ability to convert the plant to public operation at any time.
So by his vote David Purkey was getting the decision dynamic he desired, but with the added feature of being able to actually achieve public operation in either alternative. In my opinion David is a very wise man.
David M. Greenwald said . . .
[i]”Instead what we see is a strong opposing side. [b]There is a big issue for some people[/b] as to whether this should be run by a private company.”[/i]
Very true David, but is it an issue that can be resolved? I’m not sure that it can be. As you pointed out it is a worldview issue, and are people really going to change their worldview as a result of this specific decision in this specific project?
davisite2 said . . .
[i]”So,,,let me get this straight. The contract details are critical to whether to go with DBO but the WAC approves the DBO WITHOUT this critical information. Again, the deja-vu of the last public referendum(Measure X) when deadlines were offered up to demand a decision from the Planning Commission rather than giving them the time/information that they felt were critical to their recommendation decision. In that case, the Planning Commission stood strong for the voter’s demand for transparency /information and rejected the deadline/intimidation strategy.”[/i]
Intriguing observation davisite. I wasn’t involved in Davis issues back when the events leading up to the Measure X vote were playing out, so I don’t know what the Planning Commission had or didn’t have, but I do have a sense of what the WAC has and doesn’t have. In this case there is a DBO RFP drafted with specific terms required of the three bidders. If an individual bidder chooses to say, “I can’t live with those terms” I’m pretty sure that that firm’s chances of winning the contract would be diminished substantially (if not eliminated). It would take a combined effort of all three bidding firms saying the same “I can’t live with those terms” responses to put the RFP requirements in jeopardy. How likely is such a tripartite event? I would argue that it is miniscule because all three of the finalist firms have bid on both of the Seattle plants, the San Diego plant and the Santa Fe plant. Their legal, design, construction and operational teams are all very familiar with the language that Jerry Gilbert and the JPA have drawn up in the RFP, and if that language was at all problematic, they would have squawked a long time ago.
So, while I like your comparison, I think it points out the differences between this situation and the Measure X situation just as much as it points out the similarities.
Without water you can’t have growth that is the connection to no on X. However without water you can’t have life.
“It would take a combined effort of all three bidding firms saying the same “I can’t live with those terms” responses to put the RFP requirements in jeopardy.”
A commitment to the DBO process before the contract has been finalized will remove a major leverage feature with any of the builders/operators(I thought that 2 of the 3 potential candidates have been largely sidelined because of a history of false reporting of water quality and other negative issues)
Matt… Have the explanatory facts that you offer here on the Vanguard been argued in the official WAC record? If not,it raises an interesting question, why not.
“….because all three of the finalist firms have bid on both of the Seattle plants, the San Diego plant and the Santa Fe plant.”
Just to clarify, these three finalist firms have put in bids but have not yet been agreed to by those cities? Perhaps the price that these firms are demanding to agree to the contract termination terms may or may not be acceptable to those cities mentioned but would be prohibitive to a city like Davis.
davisite, for the most part they have. My conversation with Alex Chen from Seattle took place yesterday, so it is the one piece that has not been.