For better or worse 

At his Aug. 21 press conference, a room full of reporters awaited one thing: Mayor Steve Bach's explanation for his latest layoffs.

Six staffers — two in public works, four in planning — had taken the budget ax, and the city's public information office had refused comment. Mayoral Chief of Staff Laura Neumann was tasked with explanation.

"We wanted not to talk necessarily about eliminating six different people," she said. "...It was a part of a much bigger master plan."

Various department heads were then marched up to the podium. Most gave stale sermons on needing to "do more with less." But Helen Migchelbrink, head of public works for three months, spoke on a different, if equally worn, topic — privatization.

Bach's administration has already made headlines with the outsourcing of city pools (to say nothing of the potential lease of Memorial Health System). Now, Migchelbrink plans to privatize all city paving and surface-treatment operations, perform a second pilot program to determine if private snowplowing would save money, and put out a Request for Proposal to privatize the city and Colorado Springs Utilities fleet (vehicle maintenance) program by year's end.

"Our work will never be done," she said later, "as far as looking at better ways to do things."

On the surface, it all may seem bold, radical even. But Migchelbrink says she doesn't plan on jumping blindly into privatizing public works. In most cases, she plans a vigorous cost-benefit analysis before changes are made.

And for good reason. Studies and local government leaders say privatization is a tricky game involving long-term projections, a close look at the changing economies of the private and public sectors, and a willingness to relinquish direct control of basic services.

Some experts — notably Terry Harris, former El Paso County commissioner and county administrator — are blunt in their assessment of the true value of privatization. "Rarely," he tells the Indy, "does it work."

Paving: an easy yes

Even skeptics like Harris concede there are shades of gray in something as complex as privatizing.

Animal control, he says, is such an emotional issue that it would be a nightmare for a city government to handle it directly. Harris also believes paving should be outsourced, as does the current county administrator, Jeff Greene; in fact, the county long ago went in that direction.

Others contacted for this story feel similarly about paving, including City Council President Pro Tem Jan Martin. Says Migchelbrink: "I don't know of any city that does all its own paving."

The city of Colorado Springs (partnering with Pikes Peak Rural Transportation Authority) already outsources 80 percent of its paving jobs. Experts say it makes sense because paving is not an emergency service; there's plenty of market competition, so prices remain reasonable; and owning equipment and paying full-time staff are inefficient, because the need for paving is not steady.

Based on current costs, Migchelbrink estimates privatizing all city paving and surface treatments will save $150,000 in ongoing costs. She's eliminated eight vacant positions to accommodate the move, and plans to sell five pieces of aging equipment. All together, she guesses the equipment will net an additional $80,000 to $100,000.

With the ongoing savings, Migchelbrink plans to spend more money improving the city's alleys and gravel roads. By all accounts, it's a good deal.

But other changes being considered by the public works director, who previously worked for the city of Fort Collins, aren't as straightforward.

Plowing: drawbacks

In the winter of 2009-10, El Paso County decided to try private snowplowing. Cimarron Hills was chosen for the experiment, largely because it was easy for county vehicles to access should anything go wrong. An RFP was issued, a contractor was chosen, and the process began.

It was, says Greene, a nightmare. The snow hit, and the contractor couldn't keep up. To ensure access to homes and businesses, county workers had to plow. It ended up costing more than if the county had done all the work itself.

In hindsight, Greene sees plenty of reasons why the county should have kept plowing in-house. For starters, snowplows, unlike pavers, can be used year-round; when snow clears, plows are detached and the heavy-duty trucks haul dirt and gravel, making them a good overall investment. Second, private companies lack the higher level of "immunity" from lawsuits that governments enjoy, meaning that if that excess snow had caused an accident, a lot of money could have been at stake.

The larger issue, Greene says, was that the county no longer could dictate how workers dealt with an emergency situation that imperils citizens. As he puts it, "You've got to be able to have a certain amount of command and control."

Last winter, the city contracted snowplowing for a northern corner of the city, hoping to compare costs at season's end. But the lack of snow and limited area yielded unusable results. So this winter, the city will expand the area and try again.

Migchelbrink says snowplowing is a "larger issue" than paving and needs closer examination. But she says now's a good time to look at outsourcing, because the city's snowplows are aging.

Nick Kittle, the city's manager of administrative services and innovation, says if the city likes the pilot results and chooses to privatize, a long-term contract would likely be negotiated. The contract would attempt to address every situation, such as this year's freak June hailstorm that required snowplows to clean up.

Harris says those contracts are key, and often can be tough to get right. Any contract, for instance, must specify exactly when and how work would be done, and when equipment must be replaced.

The toughest part of any large-scale privatization, Harris says, is figuring how much something will cost in the long run. Even if private plowing saves now, it may cost more in 10 years. But if the city sells its plows and lays off its workers, it will be difficult to bring plowing in-house again.

And what if the work is unsatisfactory? Few companies likely have the capacity to plow an entire city, he notes.

"Once you start privatizing something like that, you never stop," Harris says. "You can't."

Fleet: tricky business

The details get even trickier when applied to fleet. The city currently shares its $16 million fleet operation with Utilities, with mechanics responsible for thousands of vehicles from police cars to high-tech trucks that detect natural gas leaks.

If fleet outsources, it would likely be to more than one company, as it's unlikely that a single business could provide all the services. But just because the city will accept RFPs for fleet doesn't mean that fleet will be privatized, Migchelbrink says. Her department plans to develop advanced comparison models before making any decision.

"It's more than just the money," Migchelbrink says. "You have to look at the service, the turnaround time."

Utilities spokesman Steve Berry sounds fairly lukewarm about the whole idea. "The maintenance of our fleet is critical to our reliability," he says. "But we're certainly open to anything that can save money and maintain that reliability."

Utilities might have other ideas for its fleet. In May, Mercury Associates, Inc., conducted a study and recommended that Utilities start its own fleet maintenance, separate from the city's. The study suggested that more than 60 percent of work be done in-house.

The consulting firm surveyed nine other private and public utilities. One had a completely outsourced fleet, one used its city's fleet services, and the others did their work in-house, but with speciality services like glasswork farmed out.

"The vast majority of best-in-class fleet maintenance organizations use outsourcing to enhance efficiencies and improve effectiveness," the study noted.

But again, the word was "enhance." For day-to-day work, in-house fleet was viewed as cheaper and more efficient.


Privatizing the City Aud

Friends of the Historic City Auditorium, the local citizens group, is expressing some alarm that Steve Bach's administration plans to issue a Request for Proposal for management of the historic building.


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