In August 1997, the City of Buffalo and AmericanAnglian Environmental Technologies (a subsidiary of American Water Works) signed a five-year, full service contract to operate the city’s water treatment facilities, including the 160 million gallons per day plant, pumping stations, storage facilities, 785-mile transmission and distribution system, as well as provide customer, billing and collection services for both water and sewer for 320,000 people.
Like many cities, Buffalo faced the challenge operating and maintaining an aging system that was becoming increasingly more expensive. By 1997, the City projected the cost of running the system was $14.4 million annually, or $71 million over the next five years.
The decision to seek a public/private partnership for the water system was met with strong opposition from the leaders of the four unions representing 180 Water Board employees. The opposition was intensified by news that at least two of the firms in the bid process intended to include layoffs in efforts to reduce the workforce by up to 30 percent.
Despite this opposition, the city administration estimated that forming a partnership could reduce rates by as much as 10 percent, saving the City between $3.9 and $4.25 million annually.
Upon completing the bidding process, the City of Buffalo selected AmericanAnglian as its private partner. AmericanAnglian proposed annual fees producing an immediate savings of $4.4 million per year. This saving was so significant that the City was not only able to avert a planned 12% rate increase, but it was able to reduce existing water rates by 8%. In effect this was the equivalent of a 20% rate savings, or more than double the city’s original projection.
AmericanAnglian proposed that all existing employees be retained by the City and be managed by AmericanAnglian. The agreement included no reduction in the employee’s current benefits or civil service status.
Following the initial 8% rate reduction, rates have remained unchanged through 1999 and no increase is projected in the foreseeable future. In 1999, a new agreement was reached between the City and AFSCME Local 264. The members of this local who come under management of AmericanAnglian actually received pay increases greater than members who are managed by the City.
AmericanAnglian is also making investments to help turn around depressed areas of the city. Within seven months of signing the partnership agreement, AmericanAnglian announced that it would construct its new Northern Customer Service Center and Regional Headquarters, a 10,000 square-foot facility, in an economic development zone within the city. The building was developed by a minority-owned business and completed in late 1997. To ensure the continued economic development of this area of the city, AmericanAnglian in January 1999 founded the Exchange Street Business Association.
For more information, please contact:
J. James Barr
J. Thomas Cochran, Executive Director
1620 Eye Street, NW, Washington, DC 20006
Telephone (202) 293-7330, FAX (202) 293-2352