Outsourcing Sandy Springs, Georgia

The New York Times has a profile of Sandy Springs, a city in the Atlanta suburbs that has almost completely privatized:

Cities have dabbled for years with privatization, but few have taken the idea as far as Sandy Springs. Since the day it incorporated, Dec. 1, 2005, it has handed off to private enterprise just about every service that can be evaluated through metrics and inked into a contract.

To grasp how unusual this is, consider what Sandy Springs does not have. It does not have a fleet of vehicles for road repair, or a yard where the fleet is parked. It does not have long-term debt. It has no pension obligations. It does not have a city hall, for that matter, if your idea of a city hall is a building owned by the city. Sandy Springs rents.

The town does have a conventional police force and fire department, in part because the insurance premiums for a private company providing those services were deemed prohibitively high. But its 911 dispatch center is operated by a private company, iXP, with headquarters in Cranbury, N.J.

How taxes play a role with Sandy Springs:

Sandy Springs residents still send roughly $190 million a year to Fulton County through property taxes, about half of which goes to schools, including those in Sandy Springs. But by incorporating, the town gets to keep $90 million in taxes a year to spend as it pleases.

On how the city initially handled delivery of services and keeping costs in line:

Initially, and for the first five and a half years of its life, Sandy Springs used just one company, CH2M Hill, based in Englewood, Colo., to handle every service it delivered. Mr. McDonough says CH2M saved the town millions compared with the cost of hiring a conventional public work force, but last year Sandy Springs sliced the work into pieces and solicited competitive bids.

When the competition was over, the town had spread duties to a handful of corporations and total annual outlays dropped by $7 million.

To dissuade companies from raising prices or reducing the quality of service, the town awarded contracts to a couple of losing bidders for every winner it hired. The contracts do not come with any pay or any work — unless the winning bidder that prevailed fails to deliver. It’s a bit like the Miss America pageant anointing the runner-up as the one who will fulfill the winner’s duties if, for some reason, Miss America cannot.

Very interesting. I wonder how many other cities will follow this privatization route, both here in Georgia and across the United States.

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