The city of North Miami Beach will pay an engineering firm $190 million over the next decade to manage a regional water utility that senior administrators and Mayor George Vallejo say has been so poorly run that the city can no longer responsibly manage the asset itself.
Commissioners voted 4-2 Tuesday during a meeting filled with shouting, jeering and temper tantrums to hire CH2M Hill Engineers to oversee its waste water system and the Norwood Water Treatment Plant, which serves nearly 200,000 people in northeast Miami-Dade. The firm will be tasked with running day-to-day operations, staffing the utility with former city employees and working with the city to conduct repairs and make upgrades.
The city will still own the utility and maintain control over rates. Administrators, asserting that they’re no longer capable of managing a billion-dollar asset, want CH2M Hill to rehire and train its staff, and take on a long-term operation and maintenance plan while saving the city more than $56 million over the life of the contract.
CH2M has been consulting for the city since 2014. But City Manager Ana Garcia warned Tuesday that without dramatic change NMB Water would deteriorate further until becoming a health and safety hazard for its users. Failing to approve the contract, Garcia said, “puts all our employees and more than 180,000 water clients at risk.”
The decision — made following a five-hour hearing — was controversial.
Federal investigators have poked around the outsourcing agreement, although City Attorney Jose Smith said Tuesday that a probe was closed in February. Progressive groups at odds with the city’s Republican mayor have accused him of privatizing the city’s resources and placing profits over people. Union employees worried that they’d lose either their jobs or their benefits under the contract, which purports to save the city $2.4 million annually in labor costs starting in year two.
“You seem to be the Godfather of privatization,” activist Mubarak Kazan said to Vallejo at the start of Tuesday’s meeting, later arguing that if the plant has been so poorly managed then Vallejo, mayor since 2011, should resign.
But administrators contend that CH2M Hill, which has been helping to manage the utility since October, is better situated given its breadth of knowledge and expertise to train employees, repair the facility and conduct upgrades. They said outsourcing is the best option for the public, and said keeping the utility in the same hands would be reckless.
“Every time you do something bold and significant, you’re always going to have people afraid of change,” said Vallejo. “The buck stops here with the six of us who are here right now.”