by Nancy and Don Price
Ken Wagstaff, former Davis Mayor, claimed in his March 17 Op-Ed that opponents to Measure I are guilty of myth-making when we say that the “Davis/Woodland municipal system will be ‘privatized’ because it will hire an operator.”
Unfortunately, it would seem that Wagstaff and supporters of Measure I, including a clutch of elected officials, are either responsible for creating their own myths or don’t fully understand what privatization means.
Worldwide, “privatization” is understood to include outright ownership, long-term lease, or operation and management by a private for-profit corporation under contract to a municipal government to provide water services over a determined number of years. This is precisely what the Woodland Davis Clean Water Agency will do when the final contract is signed to design, build and operate the Woodland-Davis Project.
In other words, Measure I will allow a private operator to sell water to Davis residents and earn a profit in the process, turning a public good into a commodity subject to market forces.
Across this country and worldwide, this model of privatization, in particular of critical resources such as water, is completely discredited and resisted. Those who have experienced privatization have quickly become fed up with higher water rates used to pay corporate profits to investors and shareholders, and with reduced transparency, local democratic oversight and accountability.
The CA Public Utilities Commission that regulates privately owned utilities and services and rules on rate increases generally allows private providers at least an 8-10% profit so we can be sure that the contracted private operator of this project will earn at least this though you won’t see it disclosed in financial documents or spreadsheets. Moreover handing over control to a private corporation puts us at great risk of further price hikes beyond what is built into the current proposed rate increase which covers only five years. In fact, at any time, the corporate operator can make the case for a rate increase because “their” operating costs have gone up. This siphoning off of our and the city’s money to pay off corporate profits means less money for the common good such as parks, greenbelts, road maintenance, community facilities, and more.
It should not be lost on Davis voters that throughout the world, municipalities are fighting tooth-and-nail to recover public control over privatized water utilities. Even Paris, France – home of some of the world’s largest private water utilities – recently “liberated” their water services from private operation to establish public, democratic water management. The results in the first year: the city saved $46 million and rates fell by 8%.
And what about oversight? As I understand it, the length of private operation of the Project, whether for 15 or 20 years, is still undetermined. Yet, because there are only 4 votes on the Joint Powers Authority – two from Davis and Woodland each, either party could hold the other hostage on any matter by a single vote And every year that we contract out to a private operator is a year squandered in terms of building public capacity and expertise – making the possibility of bringing the water back under public control more difficult.
Why should Davis endorse privatization when the trend is toward re-municipalization to keep water services public and affordable? Please join me in voting NO on Measure I. We can meet our water needs for the next years without the Woodland-Davis Project. This will give us time to craft a more affordable, cost-effective, public and environmentally sustainable alternative to meet Davis’ water needs.
Nancy and Don Price are members of Yolo Ratepayers for Affordable Public Utility Services, and Don, a retired professor of Chinese history, taught a course on Chinese environmental history.
As far as any one knows, the Prices, along with John Munn, are the only members of the Yolo Ratepayers for Affordable Public Utility Services and have a lawsuit pending against the City of Davis.
Nancy and Don
[quote]This will give us time to craft a more affordable, cost-effective, public and environmentally sustainable alternative to meet Davis’ water needs.[/quote]
I do not know you two, so please consider these genuine questions.
1) How long have you lived in Davis ?
2) How long have you been aware of the issue of the need for a conjunctive use project ?
3) Have you previously been involved in any capacity in the ongoing discussion over the past 10 or so years ?
4) Since you seem to agree with the need for an alternative, what specific steps do you two personally plan to
take in designing your alternative program and how long do you estimate it would take you and your
group to have such a proposal ready to be considered ?
5) If your answer is that this should go back to the city for reconsideration, what reassurance would other citizens have that you would not simply mount a negative campaign against whatever new proposal was made
since a hallmark of the “NO” campaign seems to have been distrust of the city ?
Dear Medwoman,
You ask very important questions that will take me time and space to answer carefully and thoroughly. I have asked David Greenwald how to go about this since, it will require space to do justice to your request that I consider these “genuine” questions that clearly deserve “genuine” answers.
Thank you Nancy and Don Price for your thoughtful article. Yes I will join you in voting NO on Measure I.
Thank you, Rusty49. And, please talk to your friends about this important vote. Ballots are due March 5, but there will also be a polling station set up at the Veterans’Memorial Center from 7:00 am to 8:00 pm on March 5.
Does anyone know why Yes on I is telling people this project is not “privatization” of our water supply?
One of their leaders told me that this weekend, but without any explanation.
Hmm. Well, I think our garbage service is contracted to an outside provider.
This is not a private owner; this is only a private operator of a facility owned by the two cities being served. Ken Wagstaff is correct. I think the authors of this article do not understand what privatization is, or else they are guilty of doing what a number of No on I people are doing… spreading false and inaccurate information.
For a contracted operator, you can just include all the performance criteria desired in the contract. Then you can terminate the contract for cause if the operator does not perform.
“Does anyone know why Yes on I is telling people this project is not “privatization” of our water supply?”
I think the answer is that there are two ways to look at the issue of privatization. One, which is the case here, where you hire a priviate company to run the operations of the plant. The other is where the private company would own the water supply plant and sell the water to the public.
The first thing is happening, the second is not. The city still owns the water, the public is not paying their bill to the private company, and the city owns the plant. That’s why the yes on I people are saying this is not privatization.
The key question for me is whether a private company can run the plant better than a public company like a SMUD-type organization.
[i]I think the answer is that there are two ways to look at the issue of privatization[/i]
Again, it is not privatization. It would be if we were sourcing out the financing and construction to a private company. But we are not. We are only talking about contracting with an company that can provide the human resources and expertise to operate the plant. It is a point of domain expertise and specialization. Cities the size of Davis and Woodland do no need the headaches of ramping up this domain expertise… including hiring and managing a new set of employees. It makes perfect rational sense to contract for this labor need.
The only risk here is that the cities screw up writing a contact that locks them into a less-than-adequate long-term relationship.
Nancy, You can answer many of medwomans questions immediately. No need to make her wait. Your argument to vote No gives assurance or a commitment to come up with another alternative plan. So…. How long have you been aware of the conjunctive use project, how have you been involved in coming up with the current plan (or if you haven’t, why not) and what is your plan for designing another project that will be acceptable for you and your group and how much time do you anticipate that you will need?
Please don’t just say that this information is coming and we should wait. We’ve been waiting for your lawyer’s responses for months now.
Ryan: Nancy has been in communication with me as to the best way to disseminate the information. I can vouch that she is sincere.
The “We’ve already gone over that/you should have been involved all along” answers are part of the reason there are so many folks voting against Prop I.
Well, keithvb, that makes no sense at all. They ignore the project until it is time to vote, and then use their non-involvement as a reason to vote NO?
What is happening here is that Mike Harrington and the Prices want us to believe that they can design a better project – one that has us hire only City employees to run, that doesn’t involve collaboration with any other City or any paid consultants or experts, or hiring any of the existing possible companies to build, but may involve us laying a pipeline across the causeway and buying water as a customer from West Sac.
If Nancy is truly sincere, then I look forward to hearing her answers.
Just saw “Urinetown” at the Davis Musical Theater. Highly recommended if you’re even thinking about voting “no” on Measure I.
“As far as any one knows, the Prices, along with John Munn, are the only members of the Yolo Ratepayers for Affordable Public Utility Services and have a lawsuit pending against the City of Davis.”
Nancy, who are the members of this group?
I assume Mr. and Mrs. Price would urge against Davis becoming a customer of West Sacramento. Our community would have absolutely no say in the operation or ownership of the West Sac facility.
An example of privatization would be California Water Service Company, which has owned the water system that provides much of the water to Dixon since Cal Water purchased it from PG&E in 1927. The Woodland-Davis project would be privately-contracted operation of a publicly owned system. The City of Davis will own the facility.
When a municipality contracts with a private corporation to manage and operate drinking water and wastewater/sewer services this IS considered privatization by all those who work on the issue of the human right to water in the global peoples water movement. When those contracts are either broken or terminated and the water services is re-municipalized or “taken public,” this is because it is returned to not-for-profit “public” operation. I gave the example of Paris, but I might have given hundreds of examples worldwide or here in the U.S. where privately operated, leased or owned water utility services have been taken back under public control. As the Paris example cited makes clear, public operation saved the city and rate-payers a great deal of money; for the city it meant money for needed city services. For Davis such savings would mean we could pay for the delayed and much needed road repairs.
Public operation will only save money if the costs of personnel are comparable. What would be the impact on the city’s budget for employment if the water was managed publicly vs. privately? How do public employees compare with regard to salaries, benefits, and pensions? What are the long-term costs to the city of public vs. private management?
Ryan Kelly
I always figured it was never too late to find out what was going on.
Silly me.
Nancy Price has been involved in Anti-globalization issues for at least 10 years. What is odd is her determined opposition to this project on privatization grounds when having a private company design, build and run the system for fifteen years is hardly the same as the kind of thing that has been done in the third world that is clearly offensive. I think she deserves some credit because she has stood her ground at home. So often we see Davis expect better behavior by others than we practice at home. Our treatment of burrowing owls is a good example; we want others to protect them but fail to protect our own owls.
Having said this I disagree with Nancy on measure I. Davis is a first world, post industrial community with a world class university that rains wealth on the community like manna from heaven. Davis can afford better water than it currently has even if getting it violates Nancy’s anti-globalization romanticism.
The oddest thing of all is the Nancy Price and John Munn association. I never would have anticipated a coalition of Munn’s free market, anti-tax, free market capitalism with Price’s anti-globalization, anti-free trade, battle for Seattle radicalism. Politics makes the oddest of bedfellows.
Are you sure they are bedfellows on this topic?
Even so, it is not that hard to understand. We see the same with the general voting population in Davis. VG posters that are anti-tax, anti-government siding with the Yes on I group, and liberal environmentalists siding with the No on I group.
It seems that this Measure I battle has mended some political fences for a short time, while causing others to flap and crumble.
Perhaps I should have made my comment in the forms of a question:
Nancy, do you agree with other No on I spokespeople that we should peruse the West Sacramento option instead of the Woodland-Davis Clean Water Project, despite the fact that we would have no say in ownership or operation? Or do you believe the Woodland-Davis Clean Water Project to be superior to West Sac, in that we would have public ownership and at least a say in whether we move to public operation in the future?
Pursue, not peruse.
[i]When a municipality contracts with a private corporation to manage and operate drinking water and wastewater/sewer services this IS considered privatization by all those who work on the issue of the human right to water in the global peoples water movement.[/i]
Well they are foolish then.
Actually I think you are conflating two completely different scenarios and in the process you are losing quite of bit of credibility for what would otherwise be an honorable pursuit.
First and foremost, it is evident in this state and city that public-sector employees in EVERY discipline are paid significantly more in total compensation than are their private sector peers. So, if your goal is to save rate payers the risk of higher costs, how can you justify a demand for the operators of the system to be public sector employees on this basis? It does not make a bit of rational sense.
The key to successful outsourcing is careful vetting, a robust and comprehensive contract, and robust and careful contact management going forward. As long as you have those things, an independent for-profit service provider will likely do a better job at a lower cost.
The human right to global people’s water movement has to do with the ownership of the delivery infrastructure as that is a fundamental component of control of access to the natural resource. However, operators can be fired and replaced for failure to perform. You are disingenuous connecting the contracting of a third-party operator of the system to the potential ills of a third party owner of the system.
Toad and Frankly: you are correct: there is a political re-alignment that has happened, starting with the 2011 Water Rate Referendum.
More on this after March 5.
[quote]“…this IS considered privatization by all those who work on the issue of the human right to water in the global peoples water movement….”[/quote]I would have been surprised if this rationale’ for voting “no” on Measure I in Davis, CA, was at the top of anyone’s list–that is, until I reconsidered the message of Urinetown (now at the Davis Musical Theater).
I thought the play’s message had to do with conserving our water table, so I was ready to vote “yes.” Since the message also could be about the danger of megacorporations controlling a critical function, I became more ambivalent.
However, after researching the international people’s water movement, I’m back to supporting our project since it seems to fit:[quote]“Water For People brings together local entrepreneurs, civil society, governments, and communities to establish creative, collaborative solutions that allow people to build and maintain their own reliable safe water systems.”[/quote]
Michael wrote:
> Does anyone know why Yes on I is telling people
> this project is not “privatization” of our water supply?
The people pushing it want to keep the word “privatization” hidden since unions will try to kill any project that has that word connected to it (even if it makes their heavy construction union buddies that will make millions mad)…
Nancy wrote:
> Across this country and worldwide, this model
> of privatization, in particular of critical
> resources such as water, is completely discredited
> and resisted.
Can you give us the names of specific water systems (in the US) where the private operator has been “completely discredited and resisted”?
> Those who have experienced privatization have
> quickly become fed up with higher water rates
> used to pay corporate profits to investors and
> shareholders, and with reduced transparency,
> local democratic oversight and accountability.
Again can you give any examples (including letting us know how “quickly”) where people became “fed up” with privatization.
> The CA Public Utilities Commission that regulates
> privately owned utilities and services and rules
> on rate increases generally allows private providers
> at least an 8-10% profit so we can be sure that the
> contracted private operator of this project will
> earn at least this though you won’t see it disclosed
> in financial documents or spreadsheets.
Are you accusing companies regulated by the CPUC of making “secrete profits” (in violation of the law)?
All private water companies are not evil, I’ve been involved off and on over the years with the private water company (that people in the system actually voted to KEEP when they had the chance to merge with the public system a few years ago) that supplies water to our cabin. You can click the link below and see just about all the financial information and this is not a big evil corporation that is sucking money from the working class to give it to corporate fat cats:
http://www.svmwc.com
Nancy, you’ve cited one example of private to public transition in an OECD country. How may have transitioned in the other direction?
-Michael Bisch
Frankly said:
[quote]Again, it is not privatization. It would be if we were sourcing out the financing and construction to a private company. But we are not. We are only talking about contracting with an company that can provide the human resources and expertise to operate the plant. It is a point of domain expertise and specialization. Cities the size of Davis and Woodland do no need the headaches of ramping up this domain expertise… including hiring and managing a new set of employees. It makes perfect rational sense to contract for this labor need. [/quote]
So by this line of reasoning if the state decided to bid out all of UCD to the Apollo Corp. (parent company that owns Univeristy of Phoenix) it would not be considered privatization as long as the state still owned the land and buildings?
It’s been a long, long time since my project finance days, but back in the day, we would have labeled the Woodland/Davis project a public/private partnership.
Oh shit, according to Wikipedia,they still do:
“Public–private partnership (PPP) describes a government service or private business venture which is funded and operated through a partnership of government and one or more private sector companies. These schemes are sometimes referred to as PPP, P3 or P3.
PPP involves a contract between a public sector authority and a private party, in which the private party provides a public service or project and assumes substantial financial, technical and operational risk in the project.”
-Michael Bisch
RK: “As far as any one knows, the Prices, along with John Munn, are the only members of the Yolo Ratepayers for Affordable Public Utility Services and have a lawsuit pending against the City of Davis.”
JS: “Nancy, who are the members of this group?”
David, were you ever able to determine who belongs to YRAPUS? Since you first used Michael’s news release to start writing about this matter, you’ve never let us know who is behind this “movement.”
Despite being asked a dozen times in the Vanguard about the organization’s membership and purposes, Michael has refused to disclose. Munn refused to reveal anything when requested as well. And, Nancy doesn’t seem anxious to answer the question today, although you’ve vouched for her sincerity and suggested that you’ve advised her on a good way to be responsive via the Vanguard. I do hope she’s more forthcoming than her colleagues have been.
Now that it’s become obvious that its purpose is purely political so far, shouldn’t the public know who is pushing the agenda in a city election? Also, someone recently posted a comment hinting that a “group” reported donating to the “no” campaign goes by a name that hides the identity of donors; was that charge verified?
For a gang that decries city accounting and disclosures so much, the leaders of the “no” operation barely disclose anything of substance. Just how long should i give them the benefit of the doubt?
wesley506 said . . .
[i]”So by this line of reasoning if the state decided to bid out all of UCD to the Apollo Corp. (parent company that owns Univeristy of Phoenix) it would not be considered privatization as long as the state still owned the land and buildings?”[/i]
No that would not be the same because in the Davis-Woodland situation the DBO operator will not be getting any revenue by selling any water. The two cities will continue to have the direct contractual relationship with their respective customers. They are simply making sure that the surface water infrastructure runs according to specifications.
The DBO contract will be only a “back office” agreement. To torture your metaphor, the teachers and classes would all be still run by UCD, not by Apollo and no tuition and fees would be paid to Apollo. The Sodexho Marriott contract or the late lamented US Bank contract would be closer parallels.
Just Saying: Mr. Harrington today decline to disclose any of the membership
Seems to me from all the comments about what is “privatization,” what are “public-private-partnerships or P3 arrangements” and the new model to counter the problems with P3s known as PUPs – “public-public partnerships,” when one public utility shares knowledge on operation and management with another, that we need a community conversation about the merits, fiscal issues, and problems of each model. Such an open conversation should have or could have taken place in 2002 when the options for a water plan were studied and the West Sacramento option was ranked above that for a Woodland-Davis project.
To answer one commentator above who noted the Paris switch from private back to public, that there must be many examples of public to private, I would say…yes, there are those examples: in a very large number of examples, after a number of years of increasing rates, documented poor service and other problems – regardless of contract specifications, citizens have demanded re-municipalization. These cases are well studied and documented and can be found in the U.S., in the EU countries, and in developing countries.
N=ancy
I have two questions about your privatization concerns:
1) Do you have any examples from with the United States that involve communities of similar size to Davis/
Woodland ? Like me, I am sure you are very busy, so if you do not have the names at your fingertips,
directing me to a source at which I would not have to sort through examples from other countries would
be helpful.
2) Can you distinguish how you view “privatization” as being different from “public-private” partnerships, if
you do make such a distinction ?
With regard to the issue of transparency in communications, public advocacy, and government.
I cannot help but feel our discussions are being hampered by a lack of transparency.
For those who wish to remain anonymous, we have forums such as the Vanguard where people are free to post their ideas without having to divulge their identity. In the past, some have considered this to be cowardly or in some other way inappropriate. I disagree. There are many reasons for wanting to post anonymously and I feel it is making an assumption about the motive. In these cases, there is a single individual who may have no more nefarious an intent than to present an idea that may have very controversial content without involving their family or other associates in the discussion that ensues. They may feel that it might have adverse consequences for their business or career.
I see a distinction however when one joins a group whose purpose is to directly affect public policy. In these circumstances, I feel strongly that the public has the right to know the membership of the advocacy group.
I realize that our Supreme Court has not agreed with me on this issue, however, stepping back from the
national realm to the local as Robb has advocated, is this really how we want to interact with each other in our
local community. If we want transparency in the running of our city and transparency from those who might in theory stand to gain from acceptance of this project, should we not want the same transparency from those who hope to affect public opinion so as to defeat the project ?
“…in a very large number of examples, after a number of years of increasing rates, documented poor service and other problems – regardless of contract specifications, citizens have demanded re-municipalization. These cases are well studied and documented and can be found in the U.S., in the EU countries, and in developing countries.”
Nancy, forgive my skepticism, but there have been so many apples to oranges comparisons made by the project opponents that I’m not willing to take your word for it. Can you direct us to a website that has tabulated all the US and EU re-municipalizations vs. privatizations and public/private partnerships that have occurred over the past 20 years? My own professional knowledge of this matter leads me to believe the actual statistics tell an entirely different tale than does your op ed. Unfortunately, my direct experience is dated by at least 10 years.
-Michael Bisch
[i]So by this line of reasoning if the state decided to bid out all of UCD to the Apollo Corp. (parent company that owns University of Phoenix) it would not be considered privatization as long as the state still owned the land and buildings?[/i]
There are three primary asset components to an enterprise: land, buildings and equipment. The owner of all three of those is the owner of the enterprise. If the owner outsources the human resource required to operate that plant and equipment, then it is not privatization. It is simply outsourcing.
It is not even a public-private partnership unless it is structured as so. I won’t get into partnership financial or legal definitions, but suffice it to say that it is a unique relationship.
In the case of the surface water system, the contracted operator would be significantly subordinate to both city-entities. The authority of the operator would be governed by contract, not partnership law or considerations.
This assertion from Ms. Prices is hogwash. It is twaddle meant to confuse those prone to confusion.
I wrote:
> Can you give us the names of specific water
> systems (in the US) where the private operator
> has been “completely discredited and resisted”?
Nancy wrote:
> in a very large number of examples, after a
> number of years of increasing rates, documented
> poor service and other problems – regardless of
> contract specifications, citizens have demanded
> re-municipalization.
Then medwoman wrote:
> Do you have any examples from with the United
> States that involve communities of similar
> size to Davis?
If there really were a “very large number” of examples, it seems like it should not be hard to name some of them…
Just like it would be important not to condemn ALL public run water systems if someone can name a couple bad ones, we should be careful not to condemn private run water systems just because someone comes up with a couple bad examples.
Private universities like University of Phoenix and ITT Tech are horrible (with < 10% of the people who enroll graduating in 5 years)and should be closed (or at least cut off from taxpayer funded loans) does not mean that we should close (or cut off from government loans) private schools like Harvard and Stanford who have >90% graduate within 5 years (and cost taxpayers almost nothing with very few government guaranteed loan defaults).
University of Phoenix and ITT Tech = the future of education delivery to replace the Harvards, Standfords and UCDs that only accept an elite few, cost $250,000 – 750,000 for a full undergraduate education and provide a marginal better quality product.
UofPhoenix serves a different student body. These are students that have to work for a living and are not blessed with wealthy parents and academic gifts.
But the 10% is not accurate. The graduation rates are:
[quote]University of Phoenix’s modified graduation rates for associate degrees reported in 2011 were 34 percent for those graduating within three years and 36 percent within four years,
At the master’s level, University of Phoenix’s modified graduation rate is 60 percent for students who graduate within three years and 64 percent within four years.[/quote]
UCD Graduation rates:
[quote]At UC Davis, four-year graduation rates climbed from 30 percent in 1994 to 52 percent for freshmen who entered college in 2006. The 2007 group finished slightly lower, at 51 percent.[/quote]
But interesting, the 2007 UCD numbers include the following:
[quote]37 percent for Hispanic students and 32 percent for black students.[/quote]
Or about the same as UofPhoenix.
There are plenty of examples of private providers kicking their public-sector peers’ asses. Do we want to talk about the US Postal Service, and UPS and FedEx?
Frankly wrote:
> UofPhoenix serves a different student body.
True it is a place that tricks the poor and uneducated in to signing up for loans to give them money in exchange for an (almost) worthless “education”…
> These are students that have to work for a
> living and are not blessed with wealthy parents
> and academic gifts.
And keep working for a long time to pay off the loans (that can’t be discharged in BK).
> But the 10% is not accurate.
The New York Times writes:
“A new report on graduation rates at for-profit colleges by a nonprofit research and advocacy group charges that such colleges deliver “little more than crippling debt,” citing federal data that suggests only 9 percent of the first-time, full-time bachelor’s degree students at the University of Phoenix, the nation’s largest for-profit college, graduate within six years.”
University of Phoenix is an evil soulless company that preys on the poor and uneducated and is worse than the worst payday loan store. Fortunately most for profit companies are not so evil and if we are lucky Davis will find a good one to run our water system.
SouthofDavis – I think you must work for the university, am I wrong?
The NYT article quotes an activist group that is backed by teacher unions. It is a lie. The numbers I provided are straight from the accreditation board.
For profit education service is going to win… it is just a matter of time. The traditional higher education industry has killed the business model with hyper cost inflation and opened up the door for new models to take away market share. Technology will make traditional over-paid, tweed-wearing, half-time teaching, too early retiring lecturer-style teachers as obsolete as the dinosaur.
But back to water… I agree that we can find a quality private, for-profit operator that beats what the city could do running the operation with over-paid public-sector labor.
Frankly said, [i]”The only risk here is that the cities screw up writing a contact that locks them into a less-than-adequate long-term relationship.”[/i]
So are they planning on having the same folks negotiate the contract for operation of a proposed DBO water plant who negotiated to have Davis rate payers paying 30% more per gallon of processed water than our “partners” in Woodland?