North Miami Beach Moves Forward With Water-Privatization Deal Despite FBI Probe

North Miami Beach Moves Forward With Water-Privatization Deal Despite FBI Probe
Courtesy of AFSCME Florida
At the beginning of North Miami Beach's meeting last night about a plan to privatize its water system, City Manager Ana Garcia asked residents to trust the city based on the commission's track record.

That was an odd appeal, considering Mayor George Vallejo is the subject of an ongoing Miami-Dade County criminal probe and the FBI and Miami-Dade County Public Corruption unit had launched investigations into the water negotiations.

Despite all of those red flags, commissioners voted 4-2 last night to move forward with the plan after a testy meeting that lasted close to three hours. The FBI's probe, which City Attorney Jose Smith confirmed to New Times last week, was not even discussed.

The city also did not disclose that an affiliate of the leading company bidding for the project, global engineering firm CH2M Hill, has held a temporary contract to operate portions of the plant since October 17, 2016. The contract raises additional questions as to whether the city's bidding process has been fair. After all, CH2M would seem to have a significant leg up on its competitors because one of its companies is already operating inside the water plant.

"This vote is about transparency," Vallejo said from the dais last night.

The vote authorizes the city to begin negotiating a contract with CH2M, which is angling to take over the full operation of the city's water plant. The plant services nearly 200,000 people in North Miami-Dade, in towns including Miami Gardens, Aventura, and Sunny Isles Beach. The water plant serves the second-largest number of people in all of Miami-Dade County.

Once CH2M and the city hash out the terms of their contract, that document will be put up for another vote.

City officials claim the water plant is dilapidated and deteriorating and can be fixed cheaply only by an outside company. An independent audit the city released last year claimed the utility was a mess and should be privatized.

But multiple city workers took offense to the results of that audit at last night's meeting, claiming it was rushed through and hidden from city regulators before it was released.

One employee, a former member of the North Miami Beach Public Utilities Commission, accused the city commission of willfully neglecting the water plant and cutting services there to make the plant look bad. If the plant looked like a mess, he argued, it would be easier to persuade residents to privatize it. Several city workers, including former water plant employee and current union vice president Hubert Rose, stressed that the plant's water quality has been stellar for years and that problems hit the plant only because of government neglect.

In October, the city handed over temporary control of the plant to CH2M. In November, it sent out a "request for qualifications" and asked companies which thought they could handle the project to submit applications. Four companies applied: CH2M, U.S. Water, Veolia, and Suez. The city then had to choose the "top three": Suez, the largest provider of private water services in the nation, was eliminated.

Veolia was ranked number three despite the French company's ties to lead crises in Pittsburgh, Pennsylvania; and Flint, Michigan.

CH2M, meanwhile, is in charge of the Qatar 2022 FIFA World Cup construction project. Many activist groups, nongovernmental organizations, and independent reports have shown that migrant workers have been abused and exploited at the site. Amnesty International has called the construction site a "World Cup of Shame."

Last night's vote authorized the city to begin negotiations with CH2M, the top-ranked firm. If negotiations fail, the city is then authorized to negotiate with U.S. Water and then Veolia.

City officials claim privatization will make services cheaper and more streamlined in North Dade. But independent water watchdog groups, including Food and Water Watch, Public Citizen, and the Center for Public Integrity, have accused multiple private utility firms of raising rates on consumers and providing subpar services. Food and Water Watch says rates at privately owned utilities tend to be 60 percent more expensive than publicly owned ones. (North Miami Beach says it will retain ownership of the plant and will oversee any and all rate increases.)

Per the terms of the city's request for quotation, the private company is expected to take over full plant operations and take over the contracts of every employee at the utility. The American Federation of State, County and Municipal Employees (AFSCME), a union that represents the utility workers, says roughly 80 employees could be affected. The union warned last week that privatization deals tend to lead to benefit cutbacks and employee layoffs as the new company tries to cut costs. AFSCME does not have an active contract with the city, and union representatives warned last week that, without a contract, a private company could cut benefits and salaries from day one.

All of those concerns are only heightened by the fact that state and federal authorities have been openly probing North Miami Beach's conduct in the runup to the vote. But city officials pushed forward with the plan last night with next to zero discussion of the ongoing investigations.

Instead, city officials praised the fact that North Miami Beach received "four great applications" for the project. One official said from the dais that approving the plan somehow required the "courage" to challenge the political "status quo" in town.

"We are at another crossroads for the city on the rise," Garcia, the city manager, said. "Do not deny us the opportunity to be a premier city providing excellent services in a cost-effective manner."

But after lengthy presentations from CH2M, a representative from the private-water industry's trade group, and multiple city procurement officers, citizens at the meeting universally spoke out against the deal.

"It's concerning," one longtime resident said from the dais. "It's a sad day when public servants admit the public utility was allowed to decay and our water was put at risk." She chided the commission for calling a "special meeting" without properly alerting residents.
Another resident stood in front of the dais and scolded the entire set of lawmakers.

"The city manager says you’re going to have oversight," he said. But, he asked, how can the city provide oversight if it gives up all of its water employees?

Instead of answering the question, Mayor Vallejo had police forcibly remove the man from the room.

"I will not sit here and be insulted," Vallejo said as the man, who gave his name as Navarro, was escorted out.

Decorum only declined from there. Before the vote, Vallejo accused progressive activists opposing the plan of spreading lies to kill it. He compared For Our Future, the union-funded political action committee opposing the project, to Citizen's United, the conservative PAC funded by the Koch brothers.

The mayor then began lobbing insults at the crowd.

"Not a single one of you has ever put your name out to come and run for office and put yourself out there to sacrifice the time," Vallejo said. The crowd erupted in anger.

"Way to be an arrogant asshole!" someone yelled.
The commission then voted to approve the project's next step anyway.
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Jerry Iannelli is a former staff writer for Miami New Times from 2015 to March 2020. He graduated with honors from Temple University. He then earned a master's degree in journalism from Columbia University.