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Many communities that have issue with older infrastructure may suffer from loss of economic opportunities (Flint, Detroit, Cleveland).  This compounds the problem with local capacity for maintenance and report of infrastructure. Many of these issues result from the lack of funding due to the unwillingness of local officials to raise water rates and address hidden infrastructure. Others may feel limited due to the loss of economic activity – Rust Belt cities and the northeast are older; inner cities may be more impacted.  Different areas of the country will have different needs and maybe different magnitudes of need.  Rural communities may not have funding to replace infrastructure.  The first community that abandoned their system was rural.  Newer communities with newer pipe will have far less needs today, but few are taking steps to avoid the infrastructure pitfalls that have hit older communities.  Ultimately these conditions make for a huge backlog of deferred infrastructure investments, mostly in pipe and service lines beneath roads. The only good news is that by correcting the piping, much of the roadway base issues could also be resolved concurrently.

A concurrent problem in the communities hardest hit with infrastructure issues is often that there is pool of skilled labor, but said labor may not be skilled in areas to address their own infrastructure problems.  Likewise youths may be challenged to find work local. The solution to both issues may be similar to that posed by the CETA programs in the late 1970s. In those programs local and state governments were given funds to hire staff to be trained for certain jobs, with the intention that these trained workers would become part of a permanent, expanded workforce.  A similar solution today as a part of an infrastructure bill could be to provide local and state governments for funding for personnel to be trained to perform such work.  The workers could receive training on safety, OSHA issues, and equipment from a local community college or university that would be paid for by the infrastructure bill.  These same people would then be hired by local governments to perform rehabilitation and replacement work, fully funded initially by the federal government s but with an anticipated transition period where by 10 years out, the workforce could be demonstrated to have been expended as a result of the program.

Note that hiring by local governments is a key.  Private sector hiring tends to be job specific and the jobs disappear when the activity moves or ceases.  Hence finding the private sector likely leads only to a temporary increase in labor development.  Local government hiring would more likely increase permanent employment.  The local agencies would need to be given an incentive to encourage this since far too many elected officials see government employment as a negative thing.  This is partly why we have the infrastructure quagmire today.  That attitude needs to change.

The private sector will want their share, and privatization is a confounding issue because people get laid off through privatization and indications are that the middle class gets hurt by privatization (lower wages for the same job).  But the public sector does not manufacture pipe, equipment like backhoes and rollers and other materials would be paid to private vendors in accordance with local and state bid rules.  That would move monies for capital to private vendors.  For large projects the work rules could be applied to contractors much like the ARRA funding requirements – shovel ready and US materials and newly trained staff making up a portion of the work force.  That would meet the tenets of local jobs, fixing local problems with federal dollars for a period of time, perhaps as a mix of grants and low interest loans.

At least 20 years of infrastructure needs exist.  Hence the longer term program could be sustained.  A funding mechanism is in place via state revolving fund programs for a portion of the effort, much like the water, sewer and stormwater funds were channeled through the SRF programs under the ARRA program.  WIFIA and other programs could be used as a dispersal agent, so new bureaucracies would not need to be created.   A prior pattern for implementation is in place and would just need to be “dusted” off an updated.  Bi-partisan support enacted these program in the past and it would seem this would be good for all.

The potential for concern would be raised by private utilities (power, cable, telephone and private water and sewer utilities) which would be effectively shut out of funding, but they are private entities and they have the ability to raise funds on the private equity market.  Capitalism will work well for these organizations, but it does not for most local public works infrastructure systems.  That is why they are public, not private.  Some local governments would resist the requirement to expand the workforce – but that is their choice – a requirement to participate is not implied just as it is not with SRF funds.  Local business communities would likely drive the effort to be involved.

So now we wait and see if anything happens……

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The Flint saga continues.  The latest is that they continue to use Detroit water, but will convert to the new Lake Huron supply in 2018. The argument now is who’s water plant will be used. The County is building a plant.   John Young notes that the Mayor of Flint wants to use their own plant.  I think we know how that worked out last time. All the non-elected officials overseeing the City say buy from Genessee County.  Should be interesting to see how that plays out.

Meanwhile Midwest regional EPA officials appear are being criticized for failing to deal with the problem in a timely fashion.  EPA delayed their emergency declaration for 7 months, but EPA says the state action prevented EPA from acting.  This is exactly what the states asked for when they persuaded Reagan to delegate authority from EPA to the states.  Then the finger pointing starts when state officials do not react quickly because the state legislature cut their budget and no one is asking about that like they did in Walkerton in 2001.  It could have been predicted especially when too many states have legislatures that want to starve the bureaucracy.  But they forget why the bureaucracy was there to begin with – because something bad happened and government reacted to it by passing laws and creating oversight.  Delete the oversight and bad things happen.  It is human nature.

That will play out, but there still is the problem of the people who made the decisions in the first place.  As the elected officials in the class I taught this summer noted, it was a political decision to save money that created this problem to start with, not an operation issue.  The operational issue came up after the elected officials decided to start up a 50 year old plant that had not been run more than 18 months in 50 years, and after improvements were quickly made to the plant, but never tested.  Not sure how the engineers (sorry) let that happen, but why is it that no elected officials have been scrutinized for their bad decisions?  It makes us all look bad and sends a poor message to the residents of the country, not just Flint.


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“Or is running a local government like s business killing it?”

I had an interesting conversation at a conference recently.  The people I was talking to were advanced in their careers and the discussion moved toward the outlook on management in public settings. Once upon a time, most public works and utility managers were civil engineers, but often they were criticized because they were focused on the engineering aspects as opposed to the people aspects of the community.  Their focus was public health and making sure things operated correctly.  Most did whatever was needed to accomplish that.

This led to schools of public administration, which actually started educating some of those same engineers about management of large public organizations, organizational theory, human resource, accounting and planning  I did all that myself at UNC-Chapel Hill.  The goal was to understand finances, people, community outreach, the need to engage citizens and as well as public service.  The outcomes were providing good service.  That however tends to cost a little more than operations although there are opportunities to be a bit entrepreneurial.

So back to the people in the conversation.  They noted that sometime in the 1980s or early 1990s the MPAs were being replaced by MBAs as politicians were focusing on operating “like a business.”  Looking at the MBAs out there, the comment was that business schools do not focus on service, but profits to shareholders, and the training is to cut unproductive pieces that detract from the bottom line.   Hence investments do not get made if the payback is not immediate.  Service is not a priority unless it helps the bottom line.  In a monopoly (like a local government), there are no other option, so service becomes a lessor priority.

So it brought up an interesting, but unanswerable question for now: has the move to more business trained people in government created some of the ills we see?  The discussion included the following questions/observations (summarized here):

  1. Many water and sewer utilities are putting a lot of time and effort into customer service and outreach now after years of criticism for failing to communicate with customers. That appears symptomatic of the monopoly business model.
  2. Our investments in infrastructure decreased significantly after 1980, and many business people focus on payback – so if the investment does not payback quickly, they do not pursue them. How does that impact infrastructure investments which rarely pay back quickly (Note that I have heard this argument from several utility directors with business backgrounds in very recent years, so the comments are not unfounded).  It does beg the questions of whether the business focus compounds our current infrastructure problems.
  3. Likewise maintenance often gets cut as budgets are matched to revenues as opposed to revenues matched to costs, another business principle. Run to failure is a business model, not a public sector model. Utilities can increase rates and we note that phones, cable television, and computer access have all increased in costs at a far faster rate that water and sewer utilities.

Interestingly though was the one business piece that was missing:  Marketing the value of the product (which is different than customer service).  Marketing water seems foreign to the business manager in the public sector.  The question arising there is whether that is a political pressure as opposed to a forgotten part of the education.

I would love to hear some thoughts…

 


June was a tough month and looking back I realize I really didn’t post.  I was in Chicago, spent 2 weeks with middle schoolers, prepared my promotion package, god the doors completed on the house, etc. and suddenly it was the 4th of July.  Yikes time flies.  But it was interesting.  Here I want to talk a little about Chicago.

I went to Chicago to do a 3 day, 12 hour class with elected officials.  Most are board members for their local utility, but they went from a small South Carolina system to San Antonio and St. Paul.  A huge variety.  And we learned a lot.  Obviously the Flint crisis was on their minds.  But I thought the most interesting thing was that these folks understood what happened.  I asked what they thought the real issue was in Flint and the resounding answer was – politics.  Bad decision-making.  Poor preparation.  Notably, not lead service lines.  These people got it.  They read behind the headlines.  Of course these are the officials that wanted to learn more about their water and sewer systems, as opposed to the many that do not take the time to, but interesting nonetheless.

Another issue was talked about was finances.  I ask them to bring their budget, water use, pipelines, etc.  The goal is to do a quick comparison between systems and then discuss what it means (if anything).  I have started doing the exercise each year and we find the same thing – smaller systems cost more per thousand gallons to run than larger systems, so hence their rates must be higher or they are not doing repairs and replacements on a timely basis. This group got that as well and understood that comparisons of their system to others needed to be carefully vetted.  No two system are alike, but size, treatment, terrain can all affect costs to the customer.

We also talked about leadership.  I am applying for an AWWA project on leadership, but when asked, these folks had some great answers. They see leadership as a personal trait (inspiration, vision) as well as being driven by event (negotiating crisis or change), and having the ability to bring people along through the rough patches.  Leadership is an issue that needs more exploration, but I thought this was a good start to preface the larger survey I hope to do for AWWA’s members.

In the meantime, I learned a lot about the Chicago River bridges, enjoyed the planetarium, a Cubs night game, Millenium Park and a walk along the waterfront.  Very cool.


For those wondering what the big report was going yo say, interesting reading, and a lot like Walkerton – plenty of blame to go around.

https://www.michigan.gov/documents/snyder/FWATF_FINAL_REPORT_21March2016_517805_7.pdf

And some related articles:

http://www.fox2detroit.com/news/flint-water-crisis/112311306-story


Speaking of water supply problems, welcome to Flint, Michigan.  There have been a lot of coverage in the news about the troubles in Flint the last couple of months.  However if you read between the lines you see two issues – first this is not new – it is several years old, going back to when the City’s water plant came back on line in May 2014.  Second this was a political/financial issue not a public health issue.  In fact, the political/financial goals appear to have been so overwhelming, that the public health aspects were scarcely considered.  Let’s take a look at why.

Flint’s first water plant was constructed in 1917.  The source was the Flint River.  The second plant was constructed in 1952. Because of declining water quality in the Flint River, the city, in 1962, had plans to build a pipeline from Lake Huron to Flint, but a real estate scandal caused the city commission to abandon the pipeline project in 1964 and instead buy water from the City of Detroit (source:  Lake Huron).  Flint stopped treating its water in 1967, when a pipeline from Detroit was completed. The City was purchasing of almost 100 MGD.  Detroit declared bankruptcy.  The City of Flint was basically bankrupt.  Both had appointed receivers.  Both receivers were told to reduce costs (the finance/business decisions).  The City of Flint has purchased water for years from Detroit as opposed to using their Flint River water plant constructed in 1952.  The Flint WTP has been maintained as a backup to the DWSD system, operating approximately 20 days per year at 11 MGD.

The City of Flint joined the Karegnondi Water Authority (KWA) in 2010.  The KWA consists of a group of local communities that decided to support and fund construction of a raw water pipeline to Lake Huron. The KWA was to provide the City of Flint Water Treatment Plant with source water from Lake Huron. An engineer’s report noted that a Genesee County Drain Commissioner stated that one of the main reasons for pursuing the KWA supply was the reliability of the Detroit supply given the 2003 power blackout that left Flint without water for several days.  Another issue is that Flint no say in the rate increases issued to Flint by Detroit.  Detroit’s bankruptcy may also have been a factor given the likelihood of increased prices.  While discussion were ongoing for several years thereafter, the Detroit Free Press reported a 7-1 vote in favor of the KWA project by Flint’s elected officials in March, 2013.  The actual agreement date was April 2013. The cost of the pipeline was estimated to be $272 million, with Flint’s portion estimated at $81 million.

The City of Detroit objected due to loss of revenues at a time when a receiver was trying to stabilize the city’s finances (in conjunction with the State Treasurer).  In February 2013, the engineering consulting firm of Tucker, Young, Jackson, Tull, Inc. (TYJT), at the request of the State Treasurer, performed an analysis of the water supply options being considered by the City of Flint.  The preliminary investigation evaluated the cost associated with the required improvements to the plant, plus the costs for annual operation and maintenance including labor, utilities, chemicals and residual management.  They indicated that the pipeline cost was likely low and Flint’s obligation could be $25 million higher and that there was less redundancy in the KWA pipeline than in Detroit’s system.  In 2013, the City of Detroit made a final offer to convince Flint to stay on Detroit water with certain concessions.  Flint declined the final Detroit offer. Immediately after Flint declined the offer, Detroit gave Flint notice that their long-standing water agreement would terminate in twelve months, meaning that Flint’s water agreement with Detroit would end in April 2014 but construction of KWA was not expected to be completed until the end of 2016.

It should be noted that between 2011 and 2015, Flint’s finances were controlled by a series of receivers/emergency managers appointed by the Governor.  Cutting costs was a major issue and clearly their directive from the Governor.  Cost are the major issue addressed in the online reports about the issue.  Public health was not.

An engineering firm was hired as the old Flint River plan underwent $7 million in renovations in 2014 to the filters to treat volumes of freshwater for the citizens.  The project was designed to take water from the Flint River for a period of time until a Lake Huron water pipeline was completed.  The City of Flint began using the Flint River as a water source in May of 2014 knowing that treatment would need to be closely watched since the Michigan Department of Environmental Quality in partnership with the U.S. Geological Survey, and the City of Flint Utilities Department conducted a source water assessment and determined the susceptibility of potential contamination as having a very high susceptibility to potential contaminant sources (take a look at this photo and see what you think).

FLint WTP

Flows were designed for 16 MGD. Lime softening, sand filters and disinfection were in place.  Everything sounded great.  But it was not. Immediately, in May and August of 2014, TTHM samples violated the drinking water standards.  This means two things – total organic carbon (TOC) in the water and additional chlorine being added to disinfect and probably reduce color caused by the TOC.  Softening does not remove TOC.  Filtration is not very effective either.  High concentration usually needs granular activated carbon, ion exchange or membranes.  The flint plant had none of these, so the carbon staying in the water.  To address the TTHM issue, chlorine appears to have been reduced as the TTHM issue was in compliance by the next sampling event in Nov 2014.  However, in the interim new violations included a total coliform and E. coli in August and September of 2014, and indication of inadequate disinfection.  That means boil your water and lots of public outcry.  The pH, salinity (salt) and other parameters were reported to be quite different than the Detroit water as well.  A variable river system with upstream agriculture, industry and a high potential for contamination, is not nearly as easy to treat as cold lake water.  These waters are very different as they City was to find.  What this appears to indicate is that the chemistry profile and sampling prior to conversion and startup does not appear to have been fully performed to identify the potential for this to occur or this would have been discovered.  This is now being suggested in the press.

The change in water quality and treatment created other water quality challenges that have resulted in water quality violations. Like most older northern cities, the water distribution system in almost 100 years old. As with many other municipalities at the time, all of the service lines from the cast iron water mains (with lead joints) to end users homes were constructed with lead goosenecks and copper lines.  Utilities have addressed this with additive to prevent corrosion.  In the early 1990s water systems were required to comply with the federal lead and copper rule.  The concept was that on the first draw of water in the morning, the lead concentration should not exceed 0.015 mg/L and copper should not exceed 1.3 mg/L.  Depending on the size of the utility, sampling was to be undertaken twice and a random set of hoses, with the number of samples dependent on the size of the system.  The sampling was required to be performed twice, six months apart (note routine sampling has occurred since then to insure compliance).  Residents were instructed on how to take the samples, and results submitted to regulatory agencies.  If the system came up “hot” for either compound, the utility was required to make adjustments to the treatment process.  Ideally water leaving the plant would have a slightly negative Langlier saturation index (LSI) and would tend to slightly deposit on pipes.  Coupon tests could be conducted to demonstrate this actually occurred.  As they age, the pipes develop a scale that helps prevent leaching. Most utilities tested various products.  Detroit clearly did this and there were no problems.  Flint did not.

The utility I was at was a perfect 100% non-detects the first time were tested.  We had a few detections of lead and copper in samples the second time which really bothered me since the system was newer and we had limited lead in the lines.  I investigated this and found that the polyphosphate had been changed because the County purchasing department found a cheaper product.  I forced them to buy the old stuff, re-ran the tests and was again perfect.  We instructed our purchasing department that saving a few bucks did not protect the public health, but the polyphosphate product did.  Business and cost savings does not trump public health!  Different waters are different, so you have to test and then stay with what works.

Now fast forward to Flint.  They did not do this testing.  The Flint River water was different that Detroit’s.  Salinity, TOC, pH and overall quality differed.  Accommodations were not made to address the problem and the state found no polyphosphates were added to protect the coatings.  Veolia reported that the operations needed changes and operators needed training.  Facilities were needed to address quality concerns (including granular activated carbon filter media).  As a result the City appears to have sent corrosive water into the piping system, which dissolved the scale that had developed over the years, exposing raw metal, and created the leaching issue. Volunteer teams led by Virginia Tech researchers reported found that at least a quarter of Flint households have levels of lead above the federal level of 15 ppb, and as high as 13,200 ppb.  Aging cast-iron pipe compounded the situation, leading to aesthetic issues including taste, odor and discoloration that result from aggressive water (brown water). Once the City started receiving violations, public interest and scrutiny of the drinking water system intensified.

The City Commission reportedly asked the receiver to switch back to Detroit water, but that request was initially rebuffed and the damage to pipes continued.  Finally in October 2015, the water supply was switched back to Detroit and the City started adding additional zinc orthophosphate in December 2015 to facilitate the buildup of the phosphate scale eroded from the pipes by the Flint River water. But that means the pipes were stable, then destabilized, now destabilized again by the switch back.  It will now take some time for the scale to rebuild and to lower lead levels, leaving the residents of Flint at risk because of a business/finance/political decision that had not consideration of public health impacts.  And what is the ultimate fate of the KWA pipeline?

Just when things were starting to look up (?), in January 2016, a hospital in Flint reported that low levels of Legionnaires’ disease bacteria were discovered in the water system and that 10 people have died and another 77 to 85 affected.  From the water system?  A disinfection problem?  Still TOC in the water?  The lawsuits have begun but where does the problem lie?  Let’s look at Walkerton Ontario for guidance in the aftermath of their 2000 incident.

First it is clear that public health was not the primary driver for the decisions.  Treating water is not as simple as cost managers think.  You need to understand what water quality, piping quality and stabilization you have and address the potential issues with new water sources.  Membrane systems are very familiar with these challenges.  Cost cannot be the driver.  The Safe Drinking Water Act does not say cost is a consideration you use to make decisions.  Public health is.  So the initial decision-making appears to have been flawed. Cost was a Walkerton issue – cost cannot be the limiting factor when public health is at risk.

The guidance from consultants or other water managers is unclear.  If the due diligence of engineers as to water quality impacts of the change in waters was not undertaken, the engineering appears to have been flawed.  If the engineer recommended, and has lots of documentation saying testing should be done, but also a file full of accompanying denials from the receivers, another flawed business decision that fails the public health test.  If not, I see a lawsuit coming against the consultants who failed in their duty to protect the public health, safety and welfare.

The politics is a problem.  A poor community must still get water and sewer service. Consultants that can deal with rate and fee issues should be engaged to address fairness and pricing burdens.  Was this done?  Or was cutting costs the only goal?  Unclear.  The politics was a Walkerton issue.

Was the water being treated properly?  Water quality testing would help identify this.  Clearly there were issues with operations.  Telling the state phosphates were used when they were not, appears to be an operations error.  Walkerton also had operations issues as well.  A major concern when public health is at risk.  Veolia came to a similar conclusion.

The state has received its share of blame in the press, but do they deserve it?  The question I have is what does the regulatory staff look like?  Has it been reduced as the state trims its budget?  Are there sufficient resources to insure oversight of water quality?  The lack of provincial resources to monitor water quality was an issue in Walkerton – lack of oversight compounded local issues.  That would then involve the Governor and Legislature.  Politics at work.  Likewise was there pressure applied to make certain decisions?  If so, politics before public heath – a deadly combination.

So many confounding problems, but what is clear is that Flint is an example of why public utilities should be operated with public health at the forefront, not cost or politics.  Neither cost of politics protect the public health.  While we all need finances to pay for our needs, in a utility, money supports the operations, not controls it.  We seems to have that backward. Private entities look sat controlling costs.  Public agencies should look at public service first; cost is down the list.   We need the operations folks to get the funds needed to protect the public health.  And then we need to get the politicians to work with the staff to achieve their needs, not limit resources to cut costs for political gain.  Ask the people in Flint.

So is Flint the next Walkerton?  Will there be a similar investigation by outside unconnected people?  Will the blame be parsed out?  Is there a reasonable plan for the future?  The answers to these questions would provide utilities with a lot of lessons learned and guidance going forward and maybe reset the way we operate our utilities.  Happy to be a part of it if so!


My cousin  once asked me what I thought about deciding on who to vote for for President might be best done when evaluating how well your 401K or investments did.  Kind of an amusing thought.  In that vein the decisions might be very different than they were.  Clearly your 401k did with with Clinton.  The economy was flat for George W. Bush, and the end of his term was the Great Recession.  Reagan’s first term was flat.  We all know about George H.W. Bush.  Interesting thoughts.  Not so good.  So what about the last 8 years?   But is raises a more interesting issue.  So don’t get me wrong, this blog is not intended to lobby for any candidate (and Obama can’t run), but it is interesting to look at the last 8 years.  They have been difficult.   The economy responded slowly.  Wages did not rebound quickly.  But in comparison to 2008 are we better off?

The question has relevance for utilities because if our customers are better off, that gives us more latitude to do the things we need – build reserves (so we have funds for the next recession), repair/replace infrastructure (because unlike fine wine, it is not improving with age), improve technology (the 1990s are long gone), etc., all things that politicians have suppressed to comport with the challenges faced by constituents who have been un- or under-employed since 2008.

Economist Paul Krugman makes an interesting case in a recent op-ed in the New York times:  (http://krugman.blogs.nytimes.com/2016/01/13/yes-he-did/?module=BlogPost-Title&version=Blog%20Main&contentCollection=Opinion&action=Click&pgtype=Blogs&region=Body).  Basically he summarizes the figure below which shows that unemployment is back to pre-2008 levels, and income is back to that point.  Some income increase would have been good, but this basically tracks with the Bush and Reagan years for income growth – flat.  So the question now is in comparison to 2008 are we worse off that we were?  And if not, can we convince leaders to move forward to meet our needs?  Can we start funding some of the infrastructure backlog?  Can we modernize?  Can we create “smarter networks?”  Can we adjust incomes to prevent more losses of good employees?  Can we improve/update equipment?  All issues we should contemplate in the coming budget.

Krugman Income percent

 

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