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Maintaining municipal services at an acceptable cost is the ultimate challenge facing all communities attempting to control tax levels.
For tiny Pleasant Ridge, an Oakland County bedroom community with an area of one-half square mile and a population of 2,700 (fewer people than on an aircraft carrier), this challenge is especially daunting, given the city’s limited tax base.
Although garbage pick-up services had been contracted out to a private company over fifteen years ago, other Department of Public Works (DPW) services continued to be supplied directly by the city. But due to budget constraints, the Department was continually shrinking, making it ever more difficult to purchase and maintain the equipment needed to provide services such as leaf pick up, snow removal on city sidewalks, and street sweeping.
DPW staffing presented constant challenges. During the peak vacation months of summer, the manpower need was often greater than the number of employees. During winter on the other hand, the number of employees often exceeded the number needed. Added to that were costs including maintenance of infrequently used equipment and compliance with environmental regulations governing storage of petroleum products. These costs, combined with Michigan’s limitation on property taxes, created a recipe for municipal disaster, unless the way public services were delivered could be changed drastically.
In the face of this challenge, the Pleasant Ridge City Commission and administration unanimously decided to explore the concept of privatizing DPW services.
The Commission decided it would not privatize unless the plan would be fair to all concerned: citizens, city employees, and the community as a whole. It was decided that no change in the delivery of DPW services would occur until the collective bargaining agreement with the DPW employees’ union expired. A consultant was hired to assist Pleasant Ridge in formulating a plan to review and implement privatization. Broad-based citizen involvement was solicited by contacting all commissions, local clubs, and committees.
The local DPW employees’ union, the neighboring city of Ferndale, and private firms were asked to submit formal bids to provide public services. A contract was awarded to City Municipal Services, Inc. (CMS), a private, for-profit company that bills itself as "[T]he Cost Effective Alternative For Municipalities." It specializes in public-private contracting in everything from rubbish collection to landscaping to data processing and building department inspections.
The CMS contract dictated that the private firm would take over all DPW duties including, but not limited to, leaf pick-up, snow removal, street salting, tree removal, and tree planting. The contract also guaranteed at least 15% savings compared to the previous Pleasant Ridge DPW budget of $396,000. Furthermore, an incentive was given to produce greater cost savings: Any savings over 30% results in a bonus equal to half the additional savings. In addition, CMS agreed to offer employment to all former DPW employees, subject to minimal qualification requirements. Lastly, CMS agreed to purchase all of the city’s DPW equipment, which they did for a one-time payment to the city of nearly $120,000.
The privatization experience has been overwhelmingly positive. Since the contract took effect on July 1, 1996 the city saved 22% compared to its previous DPW budget while services which had not been provided in years (such as street sweeping) were reinstated. The city of Pleasant Ridge now has access to equipment that it never could have afforded on its own, including a fleet of street-sweeping vehicles and sewer cleaning equipment.
The Commission decided it would not privatize unless the plan would be fair to all concerned: citizens, city employees, and the community as a whole.
The Pleasant Ridge five-year capital plan no longer needs to accommodate DPW equipment purchases and the city also no longer needs to store petroleum and other gasoline products involving environmental risk and expense.
The now-private DPW remains housed within Pleasant Ridge with an on-site supervisor provided by City Municipal Services. When extra manpower is needed, CMS provides it. Conversely, when only a skeleton crew is required, the city does not pay for unneeded employees. DPW personnel now work flexible hours as needed.
Citizens now view their privatized DPW as part of the community. CMS employees regularly attend and support various citywide events.
The City of Pleasant Ridge has maintained its citizens’ trust and avoided financial crisis. It is providing better services at lower cost, and helping ensure high quality, affordable service in the future through careful privatization.
