Around the State
More small towns outsource city services
With their finances pinched, many small towns are outsourcing their services to private firms.
When residents of Weston in Broward County need to apply for a building permit, they don’t head for an office in Weston’s city hall.
Weston, an 18-year-old, 27-square-mile suburban enclave of 65,000 sandwiched between the Everglades and Interstate 75, has outsourced almost all of its city services to private companies and operates with only nine municipal employees. Building permits — along with the city’s planning, zoning, code enforcement, public works and portions of its parks and recreation department — are administered by a private company, Calvin, Giordano & Associates, based in Fort Lauderdale.
Privatizing city services isn’t new, but as other costconscious small cities have imitated Weston’s business plan and outsourced more services, a cottage industry of service providers has emerged to meet the demand.
Calvin, Giordano — now the dominant government service provider in south Florida — is among the firms that started providing engineering or other services on a contract basis but now operate whole departments. The company takes in $5.2 million annually from Weston alone and provides services to 10 other cities in south Florida, including Pembroke Pines, West Park and Sunny Isles. About half of the firm’s annual $25 million revenue now comes from providing city services, says CGA President Dennis Giordano.
In just the last five years, the firm has grown from 150 employees to about 310 and has opened offices in West Palm Beach, Homestead, Clearwater, Jacksonville, Port St. Lucie and suburban Atlanta.
CGA began in Fort Lauderdale in 1937 as a two-person surveying firm called M.E. Berry. In 1980, the firm hired John Calvin as an engineer. In 1987, Giordano joined the firm and bought out the last remaining Berry. “At that time there were 28 or 35 people,” Giordano says.
Over time, the firm added landscape architecture, traffic engineering and highway design to a menu of services provided to both private companies and municipal clients. By the mid-1990s, CGA was working with Weston.
From the beginning, Weston attempted a level of outsourcing never before seen in Florida. “A lot of people were looking for us to fail within that first year,” says Weston City Manager John Flint. Weston started with only three city employees; over time, it brought department heads, like a parks and public works director, in-house.
The main benefit that firms like his offer, Giordano says, is the ability to be more nimble. Without unions and civil service considerations, “personnel issues are very easy to deal with,” he says. “We are able to move people around and discipline people immediately on the spot.”
Another advantage: Purchasing equipment doesn’t require a formal bidding process, Giordano says. In addition, CGA can use part-time employees and cross-trains them to work in various departments — enabling the city to maintain service levels during peak seasons like occupational license renewal periods without hiring more full-time workers.
Flint says the savings result in lower taxes. Weston residents pay $2 for every $1,000 valuation, among the lowest tax rates in the county. Sunrise, a more traditionally run suburban municipality in Broward, charges more than $6 for every $1,000 valuation.
CGA expects its move into Georgia will let it compete for business from suburban cities outside Atlanta that have adopted the Weston model in recent years. Along with Georgia- based JAT Consulting, CGA has secured a contract with Dunwoody, a suburban Atlanta town incorporated in 2008. Kimberly Greer, assistant to the city manager of Dunwoody, says the decision to outsource most city services was driven by city officials wanting to avoid “debt burdens from pension programs and legacy programs” and “underperforming employees.” JAT and CGA are being paid $4.9 million to handle the town’s finance and administration.
Cities that outsource say they track their contractors’ performance. Dunwoody monitors how many calls are received and promptly answered, for example, and looks at the number of invoices and the percentage paid in 30 calendar days, as well as the timeliness of payroll processing, financial reports and how quickly licenses are received and issued. Weston tracks the number of community events CGA puts on under budget. For another vendor, Municipal Technologies, which manages the city’s website, public information and information technology, Weston requires a 15% increase in website visits.
But Doug Martin, a lobbyist for the American Federation of State, County and Municipal Employees, says that “for workers, it’s almost always a losing proposition.” Private contractors hold down costs by offering fewer benefits, he says — most notably the defined-benefit retirement plans that have become a thing of the past in the private sector but still characterize many municipal employment contracts.
CGA offers a 401(k) definedcontribution plan.
Martin argues that cost cutting reduces the quality of service and leads to higher employee turnover and less of a commitment to municipal service as a career. CGA declined to provide salary and benefits information but did say that “public sector costs are twice the cost of the private sector” and that CGA provides its services by reducing costs by 30 to 40%.