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KC water customers’ pain is private sector’s gain
By YAEL T. ABOUHALKAHThe Kansas City Star
In recent months, Kansas City officials, business executives and some local lawyers have been talking behind closed doors about the future of the Water Services Department.
It might be sold.
It might be privately managed.
Its employees might still work for the city — or not.
Or a host of other actions with large ramifications for hundreds of thousands of customers could occur.
There’s a good reason the agency is a hot topic of discussion with Mayor Sly James, City Manager Troy Schulte, engineering firms such as Burns & McDonnell and Black & Veatch, and Missouri American Water.
When customers rip open a monthly water bill, they aren’t happy to see sewer and water rates marching higher.
But private companies see something far more positive when they look at the agency.
A cash cow.
Someone, after all, will build and manage the $2.5 billion in federally mandated sewer upgrades. Someone will fix the water lines and do other work that could cost customers an extra $1 billion or more.
The city also could choose one or more firms to help manage the department, leading to millions in revenue for the private sector.
As this important story plays out, city officials need to make sure any decision they reach does two things:
• Guarantees reasonable future sewer and water rates for customers.
• Improves customer service and maintenance of water lines, wastewater treatment plants and other infrastructure.
On Wednesday I interviewed officials who have been involved in different aspects of these discussions.
The upshot: Nothing is set in stone.
The city is working on a request for proposals that could seek firms to bid on managing the agency. A sale of the department is not now on the table, Schulte said.
The city manager properly said the city won’t get dragged into any quick decisions. Other cities have sold assets or let them be privately managed, only to rue the day when they lost control of rates.
The city has received a number of plans from the private sector to improve the department, Schulte said. But not all projected savings are realistic.
“We’re not seeing the long-term rate relief” from some of the ideas, he said.
Bill Downey, the city’s consultant on the future of the department, said he hoped to issue an interim report to city leaders in June.
He said he’s keeping an open mind and listening to all ideas.
There’s nothing wrong with that, especially if Downey can use these talks to improve the agency’s current operations.
Still, these confidential talks have spawned conspiracy theories.
One is that Downey is doing the bidding of Burns & McDonnell, which hired him as part of its contract with the city to manage the sewer upgrades.
Downey said his line of reporting is clear: It goes directly to City Hall.
Schulte agreed, while acknowledging that Black & Veatch and others were watching for any favoritism by Downey.
Greg Graves, Burns and McDonnell’s CEO, told me his company supports a “well-run city utility” as the ultimate outcome.
As for Downey, Graves said, “Bill’s his own guy,” who will issue an honest assessment of the department’s future.
City Hall should be looking at innovative ways to improve the agency, especially as it gets ready to ask voters to approve $500 million in sewer revenue bonds on Aug. 7.
The solutions might be found in Downey’s report.
Or they might come from Missouri American Water, an engineering company or a private equity firm that wants to plunk down a billion dollars to make a long, slow profit on building sewer tunnels.
Competition between the public and private sectors might lead to greatly enhanced water and sewer service, without large-scale rate shocks for customers.
At least Kansas Citians can dream, right?