Private Partners, Public Good

Schenectady N.Y., is familiar with innovation. After all, it is where Thomas Edison started the company that would become General Electric and it is also the former home of the American Locomotive Works ? the combination of which led to the city?s moniker: the City that Lights and Hauls the World.

It is no surprise then that Schenectady has adopted an innovative approach to managing its wastewater treatment plant. In the 1990s, the city was experiencing problems with its newly installed composting facility ? specifically odor complaints from nearby residents. After attempts to remedy the situation failed to produce the desired results, the City turned to a different model: a public-private partnership (PPP).

Public-private partnerships are not new in the United States ? they have been in use for more than 200 years according to the National Council for Public-Private Partnerships ? but they are very much in the minority in the water/wastewater sector. Fears of job losses or loss of control over the water and sewer systems fuels skepticism over entering into PPPs, but with proper planning and the right partner, they can produce results that yield savings and efficiencies.

Since entering into its partnership with Veolia Water in 1991, Schenectady has rectified the problems that plagued its composting facility and found a true partner that continues to produce residual effects. In fact, the original five-year agreement was been renewed twice ? once for five years and a second renewal for 10 years that expires in 2011.

Schenectady Mayor Brian Stratton says that the partnership between the City and Veolia has paid dividends. ?Our relationship with Veolia has been nothing but positive,? he said.

Trouble in the Air

The roots of the Schenectady-Veolia PPP can be traced to the construction of in-vessel composting system constructed in the 1980s. The system was built to replace a biosolids incinerator to ensure that the City met new emissions standards. When the new composting system went online, however, there were waves of odor complaints from nearby residents. Additionally, the wastewater treatment plant was operating inefficiently and mechanical problems and poor product quality plagued the composting system.

?We had people calling me at all hours or showing up at council meetings to complain about the odors,? said Stratton, who was a city council member when the PPP was in its early stages. ?They couldn?t have picnics, they couldn?t dry their laundry outside ? they couldn?t live. It was a huge issue.?

The City voluntarily shut down the plant to make repairs, but upon reopening, the odor complaints persisted. Given that the City had spent more than $7 million on the new composting system, it naturally wanted to see a return on its investment. There had to be a better way.

With City leadership facing few options, the idea of a PPP was discussed. ?Many of the council members and the mayor at that time were reluctant to turn over control of the wastewater treatment plant to a private operator, but they realized that they had run out of options,? Stratton said. ?But Veolia had the technology, expertise and wherewithal to solve the problem. Once they showed they were able to effectively deal with the odor control issue, the initial reluctance soon went away.?

The odor issues related to air scrubbers used in the composting system. Odor complaints were lodged from the well-organized Northend Neighborhood Association, which represented properties situated near the treatment plant. The association pushed hard for a solution, one of which included shutting the plant down.

However, the City issued a request for proposals regarding a partnership, which ultimately led to the selection of PSG (later purchased by U.S. Filter and then Veolia) as a private partner operator of the wastewater treatment plant.

?The first order of business of the partnership was determining how to obtain working capital needed for operational improvements and enhancements,? said Paul LaFond, deputy director of water and wastewater for the City of Schenectady. ?What the City did was award Veolia as part of its contract $1 million to do retrofits.?

Upon award of the contract, Veolia began a variety of improvements, including initiating a successful odor control program; implementing new and expanded odor collection and scrubbing systems; retrofitting and upgrading the reactor?s air-lance process aeration system; repairing aeration basin influent gates and aerators; constructing a finished compost product storage building; and establishing a finished compost
marketing and distribution program.

As an incentive for the private operator, the City in conjunction with the Northeast Neighborhood Association, polled residents regarding plant odors. Pending satisfactory results, a fee was released to the contractor following the survey.

?Veolia put their money where mouth was and worked very hard to meet the odor control incentive,? LaFond said. ?The result has been an odor-free neighborhood. In fact, that retainage has never been withheld from Day

Forming a Partnership

The scope of the public-private partnership involves Veolia?s operation, maintenance and management of Schenectady?s 18.5 million gallons per day wastewater treatment plant, seven pumping stations and a 15-dry-ton-per-day in-vessel composting system. But what makes the partnership unique is what Veolia has done beyond the terms of the contract.

?If you look at the contract it is a basic O&M contract, but Veolia has gone way beyond the contract; they have become a partner,? LaFond said. ?Typically when the city gives out contracts, whether it is paving or water or sewer work, there is an RFP that goes out, bids come in you award it to the lowest responsible bidder. They do the work that is described in the scope and that?s the end of it. Veolia has a contract like that, but they have grown it into a partnership. We work together on everything.?

?Management of the assets is one of the key components we can bring to the table as a private partner,? said Veolia?s Farzin Kiani. ?With our global expertise we are able to identify capital needs within the system and present them to the client. We are also able to assign criticality and help the client address the things that are most critical to the operation and safety of the facilities. ?

LaFond cites an example of capital improvements projects needed at the plant, which are beyond the scope of Veolia?s O&M contract. ?There are a number of recommendations that Veolia makes in the plant based on operational needs and in the spirit of cooperation they will ask us to purchase the parts or the equipment and they install it all as a partner, as part of their job. You don?t see change orders. Typically with a contract a change order is going to come across your desk with a cost associated with it. They have proved that they want to stay here as a partner.?

There is another example of a project in which bids were solicited for the cleaning of a 4-ft by 6-ft, 8,200-lf box culvert that conveyed sewage to the plant. The line was a vital link to the plant and had not been cleaned in years. In fact, it was conveying only 40 percent of its capacity, which led to surcharging upstream. When the lowest bidder came in at $1 million ? much higher than anticipated ? Veolia stepped forward with a plan. The company used in-house staff and rented equipment to remove 1,000 tons of silt and settlement from the line and restore upstream capacity ? resulting in savings of $600,000.

?Veolia stepped up to the plate and got it done for a fraction of the price,? LaFond said.

Veolia has furthered its ties to the City by going beyond investing in pipe and plant. Working closely with the City, Veolia has adopted a number of city parks. In May of 1994, Carrie Street Park was completely refurbished by Veolia employees and neighborhood residents. Veolia employees have continued to maintain the park as a safe and fun place for neighborhood residents to enjoy. Additionally, the partnership maintains the entrance of Central Park?s rose gardens, a popular site for wedding and prom pictures and one of the city?s most beautiful outdoor areas. Riverside Park, located in Schenectady?s historic stockade section, also has benefited from beautification efforts.

?They have been a great corporate citizen,? LaFond said.

Looking Forward

With the successful partnership with Veolia, PPPs are now an established tool in the toolbox for Schenectady. Yet, Stratton, who serves as Co-Chair of the Mayors Water Council, a task force of the U.S. Conference of Mayors, said they are only one piece of the puzzle. ?Partnerships are options for us, and I think they are something that cities have to look at more,? Stratton said. ?But I also think on a national level, Mayor and cities across the country are looking for a better partnership with the U.S. government. We need a greater commitment both in terms of funding and easing the regulatory policy to make it more affordable and achievable for us to be able to bring us into compliance and meet our water quality goals.?

Although the partnership has worked out well for the operation and maintenance of the wastewater treatment plant, other partnerships must be evaluated on a case-by-case basis. ?In the case of drinking water system, for example, we don?t have any apparent negative operational issues to support a PPP,? Stratton said. ?We are fortunate enough to be situated on the Great Flats Aquifer and our treatments costs are very low, so there is not a lot of potential savings there.?

Additionally, partnerships can be difficult based on the regional labor customs. In New York State, for example, the American Federation of State, County and Municipal Employees has a strong presence and a favorable pension plan. When operations are taken over by the private contractor, public employees may risk losing their pensions. ?The Northeast is very union-oriented, so it?s a hurdle for PPPs. But Veolia is a very union-oriented company and they have a union contract with the employees at the treatment plant in Schenectady,? LaFond said.

Typically in the New York and the Northeast, Stratton said, partnerships are reserved for cases in which few options remain. One particular area in which partnerships may be beneficial is bringing a source of funding or creating operational savings. ?The more financially strapped municipalities become, the more open they are going to be to partnerships,? he said.

So what happens when a partnership looks like the best option? In the case of Schenectady, the City issued an RFP and set up a committee to examine the qualifications of the prospective partners. ?There are a lot of companies out there that are capable of delivering services, but you really have to do your homework,? LaFond said. ?With Veolia we got more than just a contractor, they have become a partner with the City in all senses.?

?What we have with Schenectady is truly the essence of what we strive for in a partnership,? Kiani said. ?There is trust on both sides of the aisle and we are doing the right job for the city.?

Jim Rush is editor of UIM.

Mayors Water Council: Navigating Difficult Waters

In addition to his work for the City of Schenectady, Mayor Brian Stratton is also active leading another group: the Mayors Water Council. As co-chair with Mayor Jennifer Hosterman of Pleasanton, Calif., Stratton helps mayors navigate difficult issues when it comes to managing sewer and water systems. In May, Stratton hosted a Mayors Water Council meeting in Schenectady in conjunction with General Electric?s Renewable Energy headquarters focusing on the water-energy nexus. A meeting is being planned in Pleasanton for Oct 14-15.

The primary purpose of The Mayors Water Council is to assist local governments in providing high-quality water resources in a cost-effective manner. The council provides a forum for local governments to share information on water technology, management methods, operational experience, and financing of infrastructure development. The council monitors and responds, as appropriate, to federal legislative, regulatory or policy proposals affecting the delivery of municipal water services. The council also provides a forum to assist local government in exploring competition and public-private partnership approaches, and alternative methods of financing water infrastructure development.

The Mayors Water Council officially commenced operations within the U.S. Conference of Mayors (USCM) on Aug. 1, 1995. The council began its first program year with an Aug. 4, 1994 forum held in Washington, D.C. At the forum, Toledo, Ohio, Mayor Carty Finkbeiner noted that the federal government will not be able to meet the future water development financing needs of cities. Therefore, local governments must seek public-private partnerships to finance future water development projects. Web:

Mayors Water Council Membership


Mayor Jennifer Hosterman,
City of Pleasanton, CA

Mayor Brian U. Stratton,
City of Schenectady, NY
2010 Mayor Membership

Mayor Robert L. Bowser
City of East Orange, NJ

Mayor Christopher Cabaldon
City of West Sacramento, CA

Mayor Joy F. Cooper
City of Hallandale Beach, FL

Mayor Richard M. Daley???? ?
City of Chicago, IL

Mayor John DeStefano??????? ?
City of New Haven, CT

Mayor James E. Doyle
City of Pawtucket, RI

Mayor Jennifer Hosterman?? ?
City of Pleasanton, CA (Co-chair)

Mayor Glenn Lewis?? ?
City of Moore, OK

Mayor Peter B. Lewis
City of Auburn, WA

Mayor Ron Littlefield ?
City of Chattanooga, TN

Mayor Brian Loughmiller????? ?
City of McKinney, TX

Mayor Timothy McDonough
City of Hope, NJ

Mayor Richard A. Moccia??? ?
City of Norwalk, CT

Mayor Larry Nelson?? ?
City of Waukesha, WI

Mayor Thomas O?Grady????? ?
City of North Olmstead, OH

Mayor Douglas H. Palmer???? ?
City of Trenton, NJ

Mayor Donald L. Plusquellic ?
City of Akron, OH

Mayor Laurel L. Prussing????? ?
City of Urbana, IL

Mayor Margie L. Rice ?
City of Westminster, CA

Mayor Jorge Santini??? ?
City of San Juan, PR

Mayor Brian Stratton? ?
City of Schenectady, NY (Co-chair)

Mayor Jim Suttle
City of Omaha, NE

Mayor Jill Techel??????? ?
City of Napa, CA

Mayor Elizabeth Tisdahl
City of Evanston, IL

Mayor Angel L. Malave Zayas
City of Cidra, PR
2010 Water Development Advisory Board Membership

Full Members

American Water, Inc.
United Water
Veolia Water North America
Associate Members
Black & Veatch
Hawkins Delafield & Wood
Pannone Lopes Deveraux & West

Affiliate Members

Camp Dresser & McKee, Inc.
Itron, Inc.
Limno Tech, Inc.
National Association of Clean Water Agencies
National Association of Water Companies
Plastics Pipe Institute

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