North Miami - NMB

Why private firms and the FBI are interested in North Miami Beach’s water utility

Retired water department employee Hupert Rose addresses other residents as they gather in front of City Hall on Thursday, March 30, 2017 to protest in advance of a North Miami Beach City Commission vote on Monday to outsource the city’s water supply to private corporations.
Retired water department employee Hupert Rose addresses other residents as they gather in front of City Hall on Thursday, March 30, 2017 to protest in advance of a North Miami Beach City Commission vote on Monday to outsource the city’s water supply to private corporations. pfarrell@miamiherald.com

A plan to outsource the management of Miami-Dade’s second-largest water utility is supposed to improve the maintenance and operation of a struggling billion-dollar asset serving nearly 200,000 people in the county’s northeast corridor.

But so far, the proposal has only brought the city of North Miami Beach a messy union dispute, a political spat with progressives and, apparently, a federal investigation.

Next week, city commissioners may authorize negotiations with CH2M Hill, one of the nation’s largest public works firms. The city is seeking to overhaul its waste water services and Norwood Water Treatment Plant in the wake of a consultant’s report that found its own managers have done a poor job.

But the vote won’t go down without a fight.

Blasting the effort as a money grab, the city’s AFSCME chapter has teamed up with the local Democratic Party and a deep-pocketed political action committee to rail against the city’s plan. The acrimony has grown so intense that the FBI began asking questions, according to City Attorney Jose Smith.

“Somebody made a complaint. They investigated. Nothing there,” said Smith, confirming a report by the Miami New Times.

Ask yourself if you want people making decisions on whether your water is clean to be most concerned with profits

Juan Cuba, Miami-Dade Democratic Party chairman

At the center of the dispute are the 180,000 people who rely on the Norwood plant at 19150 NW Eighth Ave. to pump clean water to their homes and businesses. Each day, the facility, expanded to its current capacity about a decade ago, draws up to 32 million gallons from the Biscayne and Floridan aquifers, filters and treats the fluid, and pumps the water through 550 miles of underground pipes.

The facility is regional, with most its accounts located outside North Miami Beach, in Golden Beach, Sunny Isles Beach, and parts of Aventura, Miami Gardens and unincorporated Miami-Dade. NMB Water also manages a waste water system.

The utility has received high marks in the recent past. In a water quality report for all of 2015, Mayor George Vallejo described NMB Water as a team of professionals working “around the clock to provide customers in northeastern Miami-Dade County with the best-tasting and highest-quality drinking water available.”

But now, it seems, all is not well.

They investigated. Nothing there

City Attorney Jose Smith on the FBI

According to The Eisenhardt Group, a consultant hired to look over the utility, the city has been lax on maintenance and planning. In a May review that cost the city $194,000, the firm reported that reactive maintenance had led to “significant risks” among NMB Water’s assets. The consultant recommended that the city hire a private firm to manage operations at an estimated savings of around 10 percent to the city.

“Suffice it to say, we have an obligation to act,” utilities director Jeff Thompson told council members one year ago before they voted 4 to 3 to seek qualifications from private firms. On Thursday, Thompson said in an interview that the city would retain ownership and rate control in any potential management agreement, and for the first time in 40 years completed a long-view analysis that found $210 million in capital needs over the next 15 years.

Coincidentally, the city issued a 48-hour boil water notice Thursday after a power outage caused pumps at the Norwood plant to shut off the previous afternoon for about 60 seconds, causing a drop in pressure. Thompson said the problem was pronounced when the plant’s backup system didn’t kick in.

“There are urgent needs at the water plant. And some of those needs came into play yesterday,” said Thompson, who stressed that the outsourcing proposal won’t be accompanied by spending cuts, as critics predict. “We don’t have nearly the resources that CH2M Hill has.”

There are urgent needs at the water plant

NMB Water Director Jeff Thompson

But critics contend that “privatizing” the management of the Norwood Plant would place the vital utility in the hands of a corporation interested more in its profit margins than health standards. During a press conference outside City Hall Thursday afternoon, a small group of protestors and AFSCME union members said North Miami Beach’s “Republican mayor” is putting profits before people.

CH2M Hill, protestors noted, manages Pembroke Pines’ water system, which was found recently by the Florida Department of Health to have unsafe levels of trihalomethane. (A CH2M Hill spokeswoman would only say “the facts are different from what’s been reported.” Pines, which paid a $2,500 fine, blamed the issue on an independent testing contractor.)

Additionally, an affiliate of the third-ranked Veolia Water North America-South, which would likely only get a shot at the contract should talks fall apart with CH2M and second-ranked U.S. Water/Wade Trim, was sued this summer by Michigan’s attorney general over its role in addressing the water quality in Flint, Michigan. Veolia has called the accusations “baseless.”

“Ask yourself if you want people making decisions on whether your water is clean to be most concerned with profits,” said Juan Cuba, chairman of the Miami-Dade Democratic Party. “That’s the method Flint, Michigan took.”

In an allegation city officials vehemently denied, Hupert Rose, a retired NMB Water employee, said that the city has ignored maintenance problems while warning of pressing needs.

“This was designed to privatize,” he said.

It’s unlikely the controversy will fade anytime soon, regardless of the outcome of Monday’s vote. For Our Future, a progressive political committee connected to billionaire environmentalist Tom Steyer’s NextGen Climate, says mailers will soon go out attacking Commissioner Anthony DeFillipo for his support of the outsourcing effort. In its political material, the committee calls the Eisenhardt Group’s study “questionable.”

Smith said the city’s elected officials were unable to comment this week due to an ongoing cone of silence surrounding the competitive solicitation. If commissioners vote in favor of negotiations, a final contract would still need to be hashed out and returned to the commission for its approval.

For updates on the city’s boil water notice, call 305-777-2525.

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