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Welcome to Special
Reports
Welcome to the November 28, 2006, edition of Special
Reports, American City & County's targeted e-mail newsletter.
This issue tells the story of a city that incorporated a year ago and
hired a single contractor to operate and manage all services, except
fire, police and 911. The results of that unique experiment in local
government were featured in the November issue, and the following is the
"editor's cut," with more information than was published in the print
edition.
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Sandy Springs:
The Big Experiment
By Lynn Peisner
Sandy Springs, Ga., became a new city a year ago and
tested the idea that outsourcing most services would pay off. Did
it?
On June 22, 2005, leaders of Atlanta's Sandy Springs community had a
seemingly insurmountable task before them. Sandy Springs would be
incorporated within the year, marking the end of a 30-year struggle
between residents and Fulton County, but it had fewer than six months to
implement the kind of government residents had been demanding for
decades.
By December, volunteers and leaders with very little political
experience would create one of the first "contract cities" in the United
States, hiring one company to operate and manage all city services
except fire, police and 911. The five-year contract costs the city an
average of $27 million per year for the first two years, and by many
accounts has delivered on promises of more responsive government.
Sandy Springs leaders say they have created a new model for 21st century
municipal government, and at least one dozen other communities in the
Atlanta metro area have been inspired to follow their footsteps and hire
private contractors to run their cities. "I think everybody across the
country, from the federal level down to state and local, are seeing that
resources are becoming harder and harder to come by, and you have to
start doing things differently," says Sandy Springs City Manager John
McDonough. "You can't just keep raising people's taxes. That was not a
model Sandy Springs wanted. They wanted fiscal restraint and
accountability, and that's what this model has provided them."
How it all began
The push for cityhood began in 1975 when the Committee for Sandy Springs
was formed as a defensive measure against Atlanta, which was trying to
annex the area. Eventually, the committee's efforts toward independence
became more directed to Fulton County.
With 2005 census estimates at 915,623, Fulton is the most populous
county in Georgia. Long and thin, the county includes Atlanta in the
middle, many lower-income communities to the south and higher-income
areas to the north, including Sandy Springs, with a population just shy
of 90,000 and a median household income of $77,800. For decades, an
adversarial relationship with Fulton County brewed in Sandy Springs,
where residents were extremely vocal about their dissatisfaction with
the county's handling of planning and zoning, traffic, and public safety
issues.
Residents were particularly outraged about what they believed was an
unfair distribution of tax dollars, where Sandy Springs residents paid
two taxes to the county: a general fund tax and a special service
district levy. General fund revenue went toward courts, libraries,
health and welfare services and an Atlanta hospital system -- all uses
residents did not object to, understanding it was their duty as citizens
to help fund areas with fewer resources. However, the special service
tax paid for betterment projects, such as parks, in South Fulton that
Sandy Springs residents would never see nor benefit from. "We felt we
were being exploited," says Eva Galambos, Sandy Springs mayor and former
chair of the Committee for Sandy Springs. "Sandy Springs was a cash cow
[for Fulton County]."
But there were few people in power listening to the complaints. "We had
seven county commissioners, two elected countywide," Galambos says. "One
was elected in a district in which we had the majority of votes, but he
didn't live in the district. So the most local representation we had was
one man, who didn't even live here, representing 160,000 constituents."
With most of the money and leadership focused on Atlanta and the south
end of the county, Sandy Springs residents say they were ignored. "The
litany of issues this community [had with Fulton County] can go on and
on," says Sandy Springs City Councilman and former Georgia State Senator
Rusty Paul. "Traffic lights were going on and off at random. When we
took over traffic controls from the county, we found deficiencies in 70
percent of our traffic lights. When we got the list of alcohol licenses,
over 80 percent of them had some significant deficiency -- lack of
fingerprints, lack of criminal background checks. We had brothels
operating here because police were not enforcing the law. We just
Googled all the escort services in Sandy Springs and found more than 80
operating in the city."
Every year since 1989, state legislators representing the largely
Republican area of Sandy Springs introduced a bill in the Georgia
General Assembly to hold a referendum that would allow residents to vote
on incorporation. Fearing the loss of a significant revenue stream, the
Democratic opposition continuously blocked the efforts. But when
Republicans gained control of both the House and Senate of the General
Assembly in 2004 -- the first time in more than 100 years -- the
Assembly and Gov. Sonny Perdue approved a bill authorizing a referendum.
The vote was held on June 21, 2005, an off year for elections, yet more
than one-third of Sandy Springs' registered voters cast their ballots.
Residents outside the community were not permitted to vote.
In addition to the lure of sovereignty from what many considered a
negligent landlord, voters were reassured that their taxes would not go
up as a result of incorporation. Three separate viability studies
confirmed Sandy Springs could financially sustain itself by keeping at
home certain taxes previously paid to the county, such as property taxes
and local option sales tax. Ninety-four percent of the voters moved in
favor of incorporation. The mayor and city council members were elected
Nov. 8.
What to do about a government?
Although the Committee for Sandy Springs had appointed a charter
commission to draft a plan for the proposed city that would accompany
each pass at a bill in the Assembly, Sandy Springs was not exactly ready
to launch a government. Legislative efforts to pass the charter bill had
consumed the committee over the years. "I've likened it to the old joke
about the dog catching the train," says Oliver Porter, a retired AT&T
executive, former Sandy Springs Interim City Manager and chairman of the
Governor's Commission on Sandy Springs. "About eight years ago, I began
to ask the question, 'What kind of city are we going to have if we get
it?' Everybody said, 'We don't know yet.' People weren't willing to
spend a tremendous amount of time on something that might not happen for
years. Then, suddenly it appeared we had caught the train, and now we
had no plan for how to implement."
Porter called for volunteers to form 14 citizen task forces, tackling
areas such as administration, public works and transportation, and parks
and recreation, and charged them with determining how each department
should be structured and operated. From recommending budgets to zoning
processes, the interim leaders put about 150 local volunteers at the
helm of government-making.
Privatization was already part of the strategy. An earlier visit to
Weston, Fla., a planned community west of Fort Lauderdale, had piqued
Porter's interest. Conceived by a developer, Weston incorporated when
its population reached 40,000 and used private companies and contracts
with local governments for many of its services. Porter was impressed
with the city employees' commitment to customer service and management's
ability to operate efficiently with a small staff. Given the Sandy
Springs timetable, Porter figured a similar arrangement would work in
Georgia, and signing private contracts would be faster than constructing
a government from scratch. Intrigued by the idea, Porter asked one of
the task forces to compare costs of contracting versus new-government
startup. He estimates Sandy Springs saved $20 million by going with
private contracts.
The Governor's Commission issued two separate requests for proposals
(RFPs) on June 29, 2005, on behalf of the future city. One, known as the
"Administrative" RFP, included community service, financial, motor
vehicle and staffing service needs. The other, known as the "Technical"
RFP, included public works, transportation, streets, inspections,
permitting and code enforcement. Although 41 companies showed up to a
pre-bid conference, in the end, three companies bid on the technical
contract, and one on the administrative contract.
For the bidders, taking up with Sandy Springs was a risky proposal. The
mayor and city council had not been elected yet, and the Governor's
Commission, which had issued the RFPs, did not have authority to sign
any contracts, spend any city funds or acquire debt. Sandy Springs was
asking its bidders to start up a government without payment or a formal
commitment. "Believe me, this wasn't even like we'll do this on a
handshake or a wink or a nod," Porter says. "We absolutely made it clear
there was no guarantee that they would ever be paid."
The Englewood, Colo.-based engineering, construction and operations firm
CH2M HILL OMI bid on both RFPs and won the administrative RFP. During
contract negotiations, the company pointed out potential savings if it
was awarded both contracts. "We cut literally $2.3 million out of what
would have been the contract cost of doing two separate contracts,"
Porter says. "That was a very important savings, and it made me realize
how important it was to have very broad contracts rather than small
individual contracts."
The contract for all services began Dec. 1, 2005, and will be up for
renewal annually to ensure the company continues to uphold its level of
customer service. Performance guidelines are being built into the
contract and will be ready by the end of this year. When the contract
launched, the city's expectations of the company were "very subjective,"
Galambos says. "In our first contract, we just said, 'You will be
responsible for our traffic lights,'" she says. "We didn't even know how
many we had. In the future, it will be more quantitative."
City Manager John McDonough is meeting with each city department head
and the company's contract representatives to establish the new
guidelines. "The beauty of this process is that we review the contract
on an annual basis to identify opportunities for improvements, based on
the feedback from the council, the community, and our staff. We make
changes to improve how we provide services. It's a relatively simple
process," he says.
Sandy Springs still pays general fund taxes to Fulton County for items
such as libraries and health and human services. But Sandy Springs'
20-plus lines of income include taxes previously funneled to the county,
such as the special service district property taxes, estimated last year
at $23 million, and the local option sales tax, community development
revenues, business license taxes, hotel/motel taxes and alcohol taxes.
The city also picked up new lines of revenue, such as the franchise fees
residents see attached to their power or phone bills. Total revenue for
the city this year was more than $70 million. City leaders expect
revenue to increase next year from cleaning up lapsed business records
and adding property value from redevelopment.
According to the city council, residents could not be happier with the
service they have seen in the year since the city launched. A 24-7 call
center handles 6,000 calls per month, and McDonough says reaching a live
person whenever residents call is one of the biggest changes of the new
government.
Since the city started its police department in July 2006, calls are 40
percent higher than the council anticipated based on records it received
from Fulton County. But Paul says that is not because crime has risen.
"Now that people know the police will actually show up when you call
them, they're actually calling them," he says. "People used to think the
police wouldn't show up in time, so they wouldn't even bother calling."
What happens to the rest of the world?
Atlanta communities that shared Sandy Springs' desire for simpler, more
service-oriented government have followed the lead. A referendum held
July 18, 2006, ratified the charters of two other cities in North Fulton
County: Johns Creek and Milton. Both cities are negotiating contracts
with CH2M HILL OMI, and nearby Milton is constructing an
intergovernmental agreement to share some services and savings with
Sandy Springs.
At the north end of neighboring DeKalb County, which is also part of
Atlanta's metropolitan area, the community of Dunwoody is pushing for
secession. Dunwoody's bill for incorporation is expected to be
introduced to the Georgia General Assembly in 2007, following the
completion of a viability study.
The question remains how counties will manage once they are cut off from
millions of dollars of revenue. The opposition to forming Sandy Springs
had long held that South Fulton County and Atlanta would be ill-equipped
to provide even basic services if Sandy Springs became its own city.
Some Democratic leaders also feared taxes would have to double for
residents in the county's unincorporated areas to make up for the loss.
"Is Fulton going to function differently now [without Sandy Springs'
revenue]? I don't know," Paul says. "Fulton County could have headed
this off many years ago if anybody in the county had ever come out here
and said, 'Look, we understand you're upset. What do we need to do to
help rectify this problem?' I believe people in Sandy Springs would have
accepted higher taxes in return for just getting better quality of
services -- getting more police officers, faster response from the
fire department, getting potholes fixed. The people of Sandy Springs are
not inherently rebellious. They were just highly taxed and drastically
underserved."
Other communities can identify. "I really believe that government is
bloated at every level -- federal, state, local -- and that people
need to start looking for alternative ways of getting out of that
situation," Porter says. "I'm getting a lot of interest from across the
country, and I hope we've started a small revolution here."
Lynn Peisner is an Atlanta-based freelance writer.
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