485 Hillside Ave. | Holyoke, MA 01040

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Carolyn Toll Oppenheim
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Jeremy Smith
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Holyoke Citizens for Open Government Asks State Inspector General
To Investigate Holyoke’s Sewer Privatization Process
For “Waste, Fraud and/or Abuse”and Misuse of State “Special Legislation,”
And Misuse of EPA Mandate to Clean CT River
Also cites cases of Lynn and Lee, MA

Holyoke, MA—(Thursday, May 12) Holyoke Citizens for Open Government (HCOG) called on the Mass. Inspector General’s office to “ review of the process of privatizing the Holyoke Wastewater Treatment Plant for vulnerability to waste, fraud and/or abuse.” The citizens group asked for a halt in the privatization process with Aquarion Water Company of Connecticut for a design-build-operate contract for the city’s wastewater treatment plant pending an investigation.

The HCOG letter cites the “Special Legislation” enacted by Mass. State Legislature (General court) in 2001 has been misused and misrepresented by the Mayor and other city officials, in Holyoke as well as Lynn and Lee MA.  It also charges the Mayor with using the unfounded Environmental Protection Agency (EPA) mandate to clean up the Connecticut River as a “stick” to push privatization.

HCOG charges Holyoke city officials with pushing for privatization and intentionally misleading the city council and the public. City officials failed to explain that the Special Legislation exempts the city from seeking competitive bids and from other construction laws preserving a democratic procurement process. This legislation, that permits a one-bid, 20-year design-build-operate contract between the city and a private company, allows cities to privatize city-run operations without the normally required cost comparison for city run operations, was used in Lynn, Taunton, and Lee.

“It makes a mockery of democracy,” said Carolyn Toll Oppenheim, another HCOG founder.

“We want the IG’s office to stop this process before it gets as bad as what happened in Lynn, when they had already signed the contract and then had to pay penalties for getting out,” said Jeremy Smith, a co-founder of the HCOG group.  The Inspector General’s 2001 report Privatization of Wastewater Facilities in Lynn, MA outlines the problems the state inspector’s office found in the one-bid contract between the city of Lynn and U.S. Filter (now Veolia Water Co.) for a design-build-operate project.

The letter notes that the former mayors of Taunton and Lynn, MA --whose cities signed contracts with U.S. Filter water company (now Veolia) -- both now work for Veolia. The town moderator of Lee, MA, was an employee for Veolia while his town was considering a contract with that company and attended public meeting discussing the contract. [Lee finally rejected the private contract and voted for a town-run operation.] HCOG is concerned about what these examples might mean for Holyoke.

Former Mayor Sara Hathaway of Pittsfield has been quoted in the press that she was “courted” for water privatization by former Taunton Mayor Richard Johnson while she was mayor, but could never get accurate figures on how it would save her city money. She said MA mayors were invited to gatherings sponsored by Veolia in Boston.

Holyoke Mayor Sullivan’s testimony before Congress on behalf of the water industry and “public private partnerships” can be heard in streaming audio on the US Conference of Mayors’ website – in a section called ‘Meet the Mayors’-- sponsored by Veolia, a French multi-national water company.

“For many years one of the strongest advocates for sewer privatization has been Acting DPW head Bill Fuqua,” said Suzanne Jean, of HCOG.  “He has not provided citizens, or the city, with supporting analysis as to why public operation of our wastewater treatment plant is no longer viable.  When Mayor Sullivan was asked why there was no city run option, he said that the DPW had the opportunity to submit a bid but chose not to. When Mr. Fuqua was asked the same question, he said that the employees had an option to submit a bid, but chose not to. Mr. Fuqua is in charge of both the DPW and the wastewater treatment plant employees, and therefore has great influence over their actions.  And Mr. Fuqua has a demonstrated bias towards privatization.  As a result, the appropriate exploration of any option other than privatization was rendered impossible.”

The HCOG letter cites examples in the Holyoke process  of lack of transparency and dismissal of citizens’ concerns, legal confusion, and appearance of conflict of interest and lack of protection of the public interest. The contract has been sold to the public as a cost saving measure, yet the figures on savings are constantly changing, HCOG writes.  Currently the estimated savings run between 3.4 and 5%, far less than the promised 20-30% touted by the Mayor in seeking the Special Legislation that eliminated any public bid requirement.

The disputed savings are also well below the 10% savings recommended as the lowest per cent savings for privatization,  by the Association of Metropolitan Sewerage Agencies (AMSA), a national professional organization of sewer plant directors, that offers professional guidelines for DPW heads on weighing the merits of private contracts versus city operations.  HCOG supplied AMSA guidelines to city officials and was dismayed that Mr. Fuqua refused to consider AMSA guidelines for considering the privatization process and for reviewing a private contract.

HCOG also notes its concern that Fuqua will be the sole contract administrator overseeing the 20-year $176 million contract, when guidelines recommend hiring one or two full time independent administrators to supervise the contract.  There is no item in the proposed Aquarion budget for an independent city engineer required by the Special Legislation to be hired to review the design documents and oversee contruction.

HCOG concludes: “After almost six months of trying to open up this process for citizen involvement, to get answers to our questions, we are concerned that the confusing and ever-changing answers we are given on financial figures and on the law, creates –at the very least—an appearance of mismanagement (that could lead to waste and abuse) and possible conflict of interest (that would indicate fraud).

The State Inspector General welcomes individuals to contact its office with information regarding fraud, waste and abuse in government.  It is an agency serving the office of the Governor, the State Auditor and the Attorney General.