The Milan News-Leader
A Heritage Newspaper
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City moves to privatize
Transferring parks, wastewater treatment could save $300,000
By Brian Cox, Staff Writer
PUBLISHED: March 1, 2007
Private firms will begin maintaining the city's parks and grounds and running its wastewater treatment plant after Milan City Council Monday night agreed to privatize the services in hopes of saving more than $300,000.
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The council chose not to privatize services falling under the purview of the Department of Public Works, however, after concluding that the DPW's proposed budget was less than or comparable to other proposals submitted by outside companies.
"I've never been a fan of privatization," said Council Trustee Mike Armitage, "but turning water and sewer treatment over to the private sector will bring us the savings we need."
Trustee Brett Moyer said he was not a supporter of privatization either, but the cost savings were clear.
"Fiscally, we're in a bind," he said, "and we will likely meet our budget the next couple years if things go as planned."
City Administrator Dan Bishop initially proposed considering privatizing some city services last November and was tasked by council to invite proposals.
"This is a large step forward," Bishop said of the move toward privatizing, adding that he sees more municipalities looking at privatization as a cost-savings move. "This was a big cornerstone of our efforts."
The landscaping services were awarded to the local company Heath Lawn and Landscaping with a bid of $106,000. Operations of the wastewater treatment plant were awarded to Wade Trim in Livonia at $723,600.
Only Mayor Owen Diaz voted against the awards, saying he opposed going with Wade Trim, whose bid was around $30,000 higher than Tetra Tech's, the engineering consulting firm that is overseeing the treatment plant's expansion.
"I think Wade Trim brings a bit of cross-check rather than having all our information come from one source," said Moyer in explaining his selection of a higher bidder.
The two-year contracts still must be submitted, reviewed by legal counsel, and approved by the council, Bishop said.
The estimated savings of $300,000 will help make a bond payment next year on the wastewater treatment plant of $952,000. Other revenues to make up the payment come from $273,000 out of the general fund, $179,000 carried over from this year's payment, and $250,000 from the recently increased water fees, Bishop said.
It doesn't get the city out of the bleak budget woods, however. Bishop is bracing for additional shortfalls in revenue, including the loss of $45,000 in cable franchise fees and up to $110,000 in state revenue sharing.
Pension fees are expected to cost the city another $35,000 and the darkest cloud on the horizon is a property tax appeal from Automotive Components Holdings LLC, the city's largest tax payer. If ACH is successful in appealing its property tax assessment before the state's tax tribunal, the city's budget could suffer a blow of more than $1 million.
City staff has started working in earnest on next year's budget, which Bishop said he expects to be "bare bones."
"There will be future cuts and future tightening," he said. "This is a long process. We're making forward progress, but the hard stuff is still coming."
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