Pontiac, Mich. Emergency Manager chooses troubled water company to service city
The company with the contract to operate Pontiac’s water system has a record of service problems in other cities and is facing felony charges, but it’s unclear whether these issues were taken into account before closing the deal because the contract was issued by an Emergency Manager who is not accountable to local residents. In May, Emergency Manager Michael Stampfler signed an $8 million a year, five-year contract with United Water, a New Jersey-based subsidiary of the French water giant Suez Environement, for maintenance and management of the city’s water and sewer utilities
Jul 31, 2020105.6K Shares1.7M Views
The company with the contract to operate Pontiac’s water system has a record of service problems in other cities and is facing felony charges, but it’s unclear whether these issues were taken into account before closing the deal because the contract was issued by an Emergency Manager who is not accountable to local residents.
In May, Emergency Manager Michael Stampfler signed an $8 million a year, five-year contract with United Water, a New Jersey-based subsidiary of the French water giant Suez Environement, for maintenance and management of the city’s water and sewer utilities.
According to a press releaseput out by the company in July, the deal is expected to save the city of Pontiac approximately $2.8 million from its current annual operating budget.
“„The water distribution system provides an average of 7.8 million gallons per day to 21,000 homes and businesses while the city’s two wastewater treatment plants have the capability of treating 26 million gallons per day. United Water will also provide meter reading, billing and collections, and customer service for the 70,000 residents and businesses of the city.
Under Michigan’s recently-enacted Local Government and School District Fiscal Accountability Act. state-appointed Emergency Managers have broad new powers that include the ability to cancel labor contracts and overrule elected officials.
Pontiac Council member Kermit Williams said he learned that water operations had been privatized after the fact when Stampfler sent a memo to city officials.
“I didn’t see any bid go out,” he said, “and they usually advertise in the Oakland Press.”
Williams said that he believes that the state does not require Emergency Managers to go through a bidding process when contracting for professional services.
(According to the terms of the contractfor Detroit Public Schools Emergency Manager Roy Roberts, contracts for professional services worth more than $100,000 require 24 hour notice to the Treasury Dept.)
United Water spokesman Eugene Anderson said that he does not know whether the company’s selection involved a competitive bid process.
The lack of public oversight of the deal over the city’s water system has some local residents upset.
Shortly after the deal was announced, residents raised questions about United Water’s indictment on multiple felony charges related to tampering with environmental sampling at the Gary, Indiana wastewater treatment plant. Just months before the Pontiac deal federal prosecutors had charged United Water with violating the Clean Water Act by boosting disinfectant levels in the water just before sampling for E. coli.
Possible environmental crimes were not the only red flag.
At the time of the indictment Gary, Indiana had already ended its relationship with United Water after deciding that the system could be publicly run at half the cost.
According to research complied by the group Food and Water Watch, United Water cut staff in Gary and sewer lines collapsed due to lack of maintenance.
This type of service problem was not unique to Gary. Over the last decade the cities of Houston, Milwaukee, Atlanta and Camden, NJ all ended deals with United Water amid cost overruns, and maintenance and environmental problems.
The situation in Camden has special resonance for Pontiac because the contract with United Water was made not by elected officials, but by a state-appointed Chief Operating Officer with broad powers to rearrange the finances of the economically-troubled city.
In 2009 an audit by the New Jersey state comptroller found that Camden did not have an effective system of internal control over contract-related activities, that United Water had cost the city millions more than planned and that city-owned assets had been “left to rot.”
“Lack of water production monitoring by UW has caused the city to have an unaccounted for water loss percentage comparable to that of developing countries,” the comptroller’s office found. “Specifically, we found that water loss in the City averaged approximately 45 percent for the years 2004-2008.”
After this audit came out, Camden stopped payments to United Water and sued for $29 million but ultimately settled with the company and was forced to pay them $4 millionfor ending the contract early.
New Jersey Comptroller Matthew Boxer said that Camden’s experience with water privatization should be a lesson for all municipalities.
“If a municipality decides to outsource a basic service such as providing water, it needs to understand that its responsibilities do not end with the awarding of the contract,” Boxer said. “The city of Camden had an obligation to safeguard the public’s tax dollars and it failed to do so.”
Pontiac’s third Emergency Manager, Lou Schimmel, did not respond to requests for information about the city’s involvement with United Water.
This week Schimmel announced that a United Water employee has been given a contract to run the city’s entire public works department.
Rhyley Carney
Reviewer
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