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A Flood of Woes PDF Print E-mail
Written by Erik Bojnansky, BT Senior Writer   
June 2019

North Miami Beach fields complaints over water charges, private contractor

IWater_1n the wake of numerous complaints over billing and a lawsuit, and with a looming deadline to apply for a low-interest federal infrastructure loan, North Miami Beach officials are analyzing how the city runs its water utility system.

That analysis could mean a return to quarterly billing, higher bills for water consumption, and a new relationship with a private company that is contracted to operate the water department for the next 13 years.

A northeast Miami-Dade municipality of 44,000 people, North Miami Beach has the second-largest water utility in Miami-Dade County. Its 170,000-plus customers aren’t just in NMB, but also in the cities of Miami Gardens, Aventura, Sunny Isles Beach, Golden Beach, and several unincorporated North Dade neighborhoods.

In recent months, NMB has been inundated with complaints after a private company hired to run the water utility, Jacobs Engineering Group, switched its billing system from quarterly to monthly. Single-family homeowners say their water bills have skyrocketed after being charged the minimum meter rate, which starts at $10.71, 12 times a year instead of just four times a year.

There have also been numerous incidents of customers being wrongly overcharged in billing ever since Jacobs started sending monthly bills in September 2018.

Miami-Dade County Commissioner Sally Heyman, an NMB resident whose district encompasses northeast Miami-Dade, says her constituents have been billed hundreds of dollars a month since Jacobs took over, with little to show for it. They aren’t happy. Neither is she.

“The only thing I’ve witnessed firsthand around here are brand-new utility trucks with the Jacobs name on it,” Heyman complains. “I’m not seeing a difference in my tap water. I’m seeing a more expensive bill.”

Water_2The City of Miami Gardens took it a step further. This past December, Miami Gardens filed a lawsuit to stop North Miami Beach from charging Miami Gardens residents and businesses a 25 percent surcharge for consumption. NMB officials have charged that 25 percent rate to areas outside the municipality, including Miami Gardens, for several years.

But Miami Gardens city attorney Sonja Dickens points out that NMB’s Norwood-Oeffler Water Treatment Plant is actually located in the City of Miami Gardens and pumps out water from “aquifers within Miami Gardens’ bounds.” Which was fine, until the city hired Jacobs to run its water plant.

“Florida statutes permit a ‘municipality within the state operating a water or sewer utility outside of the boundaries of such municipality’ to furnish water utilities to consumers outside its geographical bounds,” Dickens explains in an e-mail to the BT. “Since North Miami Beach no longer operates the water utility, the city filed the lawsuit.” The case is now in mediation.

A spokeswoman for Jacobs Engineering Group declined to comment to the BT. “While we appreciate your interest in Jacobs, we typically prefer to stay in our technical lane, retaining our focus on sustainability and technical services, and defer to the organizations we serve to respond to inquiries,” states Kerri Sparks, Jacobs’ senior public relations manager.

NMB city manager Esmond Scott says Jacobs has been very responsive to complaints over billing mishaps, which he blames on a switchover from an old “legacy” computer system into a new modern program. The company even sent out apologies, Scott notes.

During a special May 23 meeting, the North Miami Beach City Commission voted 4-2 to ask the administration to prepare legislation that will switch the bills back to quarterly for single-family homes.

Water_3The city is also reviewing its relationship with Jacobs. “A few months ago, we were tasked [by the North Miami Beach City Commission] to look at the whole contract, and that’s what we’re doing,” Scott tells the BT.

Bruce Lamberto, chairman of NMB’s Public Utilities Commission, a board appointed by the city commission to review water and sewer issues, thinks the city needs to renegotiate its contract. Since Jacobs took over operations in June 2017, Lamberto estimates that the company has collected $73 million from the city.

“The company makes $20 million a year for the operating contract, and they’re also billing us another $38 million for the work orders,” Lamberto explains.

Lamberto is also skeptical that the city needs to pass a bond issue. He believes that the water system’s infrastructure needs can be fixed using a “pay as you go system” from the revenue the utility collects, if the city negotiates a better contract with Jacobs.

But Janette Smith, the city’s interim assistant city manager, told the commission it will take more than 19 years to fix the $95 million in upgrades that are needed to replace the more critically aging water pipes and sewer lines throughout northeast Miami-Dade. Alex Handler, a principal of Bartle Wells Associates, the city’s water and sewer consultant, thinks it will take even longer, close to 30 years, to do the needed infrastructure improvements due to fluctuating labor and parts costs.

And time is of the essence, Handler stressed to the city commission. The city needs to submit an application by July or it will lose the chance to obtain a low-interest loan from the federal government to finance half of the $95 million in improvements. Right now the feds are favorable to giving NMB the loan, but that could change in the future if the city opts not to pursue it.

“It’s always competitive,” Handler told the city commission.

Right now NMB residents pay between $26.28 and $55.62 a month, including the meter rates, depending on water consumption. The bill is higher for Eastern Shores and Highland Village residents connected to the county’s sewer system. (Most NMB single-family homes still use septic tanks.) Those homeowners have to pay between $46.70 and $100.10 a month.

For NMB water users outside of the city’s boundaries, the monthly bill can range anywhere from $32.85 to as high as $125 a month. Lamberto, the city’s Public Utilities Commissioner, notes that these rates are already 25-30 percent higher than those charged by the county’s largest water utility, the Miami-Dade Water and Sewer Department.

But to pay for the infrastructure improvements, NMB bills will likely go up even more. With the aid of a federal low-interest loan, Bartle Wells Associates estimates that water bills will have to increase 4.5 percent per year between 2020 and 2024. Without the low-interest loan, the water bills will go up six percent each year between 2020 and 2022, then five percent per year in 2023 and 2024. Sewer rates, meanwhile, are recommended to go up six percent each year for the next five years.

Heyman, a former NMB city commissioner, tells the BT that North Miami Beach used to have one of the top-rated water utilities in the southeast United States. But that changed in recent years, when the city stopped investing funds into the infrastructure’s upkeep.

“The city diverted the money to other places,” she says.

For decades, the city’s own employees handled pipe breaks and operations at the Norwood-Oeffler Water Treatment Plant.

But in 2017, citing poor maintenance by the city, the Eisenhardt Group, a consultant, issued a report recommending that the city hire a private company to run its water department, claiming a ten percent savings for the city. NMB’s then mayor, George Vallejo, championed the water utilities privatization, in spite of protests from the AFSCME union.

In April of that year, the city picked Colorado-based CH2M Hill to run its water utility. Eight months later, Jacobs Engineering Group, a publicly traded company headquartered in Dallas, concluded its acquisition of CH2M Hill, which held a 15-year contract with the city.

And then the city went through a leadership change. By April 2018, Vallejo had resigned his mayor’s seat as part of a plea deal with the Miami-Dade State Attorney’s Office for campaign violations. Soon afterward, the city commission divorced itself from city manager Ana Garcia, who also pushed for the water department’s privatization, as well as then city attorney José Smith. Another elected official, Vice Mayor Frantz Pierre, was arrested for accepting and soliciting bribes from the owner of Dean’s Gold strip club in July of that year. (See “City in Chaos,” August 2018.)

In November 2018, Commissioner Michael Joseph was among a new crop of officials elected to the dais. It was Joseph who pushed for a review of Jacobs’ contract with the city, as well as a return to quarterly billing.

“I was against this deal for many reasons, but in particular, it did not do enough for our city and the city employees that were going to be displaced by the ‘restructuring’ under the deal,” Joseph states in an e-mail to the BT. “There were also other options aside from privatization that the city could have explored.”

During the May 23 meeting, Commissioner Fortuna Smukler was fuming when presented with the water department’s revenues and expenditures for the past seven years. Prior to Jacobs, Smukler calculated, the city was clearing an average of $18 million profit from the water utility. After Jacobs, that profit margin shrank to just $1 million.

“That’s just great,” Smukler muttered sarcastically. “I’m impressed with whoever thought this was a good idea in the first place. Geniuses.”

Jafeth Baez, NMB’s interim water director, claimed that profits shrank because the city was hardly making any infrastructure improvements prior to Jacobs being hired. “The city was saving money because we have no investment,” he told commissioners.

But Lamberto says a large chunk of that money went to Jacobs. During the May 23 meeting, Lamberto pointed to a Jacobs administrator. “He makes $222 an hour,” he tells the BT. “The guy next to him makes $124 an hour. We never had those expenses before.”

And those expenses will likely be analyzed when the city’s Public Utilities Commission takes a deep dive into the water department’s expenses and revenues from past years during its 6:00 p.m. June 12 meeting at NMB City Hall. The NMB City Commission will also likely talk about seeking bonds for further water improvements during its June 18 meeting.

As for Jacobs, city manager Scott assured the mayor and commissioners that he’s taking a hard look at the company’s operations. “We are holding Jacobs’ feet to the fire,” he said.

 

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