This Week In PrivatizationBy
You know the joke about the con man who tries to sell some sucker the Brooklyn Bridge? Of course you do. It’s an obvious con because everybody knows the Brooklyn Bridge is public property. Now listen up, pal, or the next joke may be on you.
Investors that failed to privatize Social Security under the Bush administration and who got badly burned in the crash of 2008 are looking to get their hands on public property at bargain prices. Even the Brooklyn Bridge is not out of the question.
Public private partnerships are a hot, new investment vehicle. PPPs are a way for getting public infrastructure — that you, your parents, and their parents’ parents paid for and maybe even built with their own hands — out of public hands and under the control of private investors who are more than happy to sell your own property back to you at a tidy profit. A turnpike here, an airport there, or your city’s water system.
Psst. Hey, bud. C’mere. I got this bridge in Manhattan…
And from the In-Box comes a posting from inthepublicinterest.org. This week in privatization, including one of Barry Summers’ favorites, the Macquarie Group. And lookee, they’re buying a bridge in Manhattan:
Update: Upcoming Privatization Issues. September 16, 2013
1) National: Aramark partners could cash in on $3 billion in IPO profits. Aramark, a leading food services privatizer in prisons and schools, is planning to go public in a share offering. The company has been accused of “cutting costs and boosting profits by skimping on meals.”
2) National: AFL-CIO passes a resolution at its annual convention to “support policies that end the privatization of correctional facilities and services” and for the “conversion of privately operated prisons to public operation.” The resolution states that “mass incarceration has also led to dangerous levels of inmate overcrowding in many of our jails and detention facilities, both public and private.”
3) National: Macquarie Group raises an initial $1.3 billion for a fund to invest in North American infrastructure projects. “Part of the money raised is expected to be invested in New York’s Goethals Bridge, which is being privatized by the Port Authority of New York and New Jersey. (…) Budget constraints are forcing public bodies in the US to attract more private capital into projects traditionally funded from government balance sheets.” Its MIP III fund is targeting about $2 billion. [Sub required]
4) National: USDA comes under fire for moving to privatize meat inspection in pork plants, while speeding up processing lines. Under an expanded pilot program, USDA safety inspectors would be replaced “with private inspectors employed by meat companies.” Jaydee Hanson, a senior policy analyst with the Center for Food Safety, “believes our society cannot trust food corporations to honestly inspect their own meat and poultry, adding, ‘the new ‘lite’ inspection program would cut the heart out of the federal verification program.’” [USDA Inspector General’s report on pork inspection failures]
5) National: Newly elected AFL-CIO executive vice president Tefere Gebre reflects on fighting privatization as head of the Orange County Labor Federation. “Orange County was anti-union. The John Birch Society was born here. This was a place for people to run away to from L.A. and to run away from people who didn’t look like them. But this isn’t your father’s O.C. anymore. Still, crazy stuff happens here—like Costa Mesa trying to privatize its fire department and police force. The unions filed a lawsuit. But people rose up against (privatization). They like their first responders. They don’t want a private ambulance coming in and trying to save money on gas.” [Sub required]
6) National: Education historian Diane Ravitch takes an in-depth look at school privatization in Salon. “Reformers don’t like to mention the word ‘privatization,’ although this is indeed the driving ideological force behind the movement. ‘Choice’ remains the preferred word, since it suggests that parents should be seen as consumers with the ability to exercise their freedom to leave one school and select another. The new movement for privatization has enabled school choice to transcend its tarnished history as an escape route for southern whites who sought to avoid court-ordered desegregation in the 1950s and 1960s. To advance the privatization agenda, it was necessary never to mention the P word and to keep repeating the C word.”
7) California/Oregon/Washington: The West Coast Infrastructure Exchange, a collaboration between the three states and British Columbia, releases draft recommendations for project standards on infrastructure “public private partnerships.” The Exchange, which has invited public comment, “said it’s seeking input from a diverse range of stakeholders, including investors, local government project proponents, labor, advisors, and contractors.” [Sub required; Infrastructure Project Certification—Proposed Principles and Framework]
8) California: Gov. Brown signs legislation on prison overcrowding that would send thousands of prisoners to private and out-of-state prisons and county jails. A correctional staff union supported the legislation. It remains to be seen whether federal courts will approve of the plan. The Legislative Analyst’s Office has released a report saying the governor’s plan may not produce the desired results. [LAO report]
9) California: Newport Beach City Council votes 4-3 to proceed with outsourcing trash collection. “Nearly two dozen members of the public spoke at the meeting, most saying that they liked the existing trash collection services and that more time was needed for public discussion before making such a change.” Councilman Selich says “‘I’m opposed to the outsourcing, make no bones about it. I think we’re elected to represent the people who voted us into office.’ In eight years as a Council member, he said, no issue has stirred residents like outsourcing trash collection has. ‘Wherever I go,’ he said. ‘They’re all opposed to it.’”
10) Florida: Standard & Poor’s drops charter school’s bond rating to junk status. “The rating action reflects our view of the credit risks associated with the [Learning Gate Community School], particularly its very weak liquidity ratios, which we believe will remain low for at least the next two fiscal years given the school’s evolving trend of weakened operating performance.” [Sub required]
11) Florida: DOT seeks proposals from investors and developers to build a 33-mile private tolled expressway between Newport Richey and Zephyrhills. The state received an unsolicited proposal for the project from a recently-formed company, International Infrastructure Partners LLC, in June. [Sub required]
12) Florida: Pasco County officials delay decision on possibly privatizing the elderly nutrition program. Privatization plans are still on the table “for future years.”
13) Illinois: Judge orders Chicago to pay nearly $60 million in garage privatization case. Meanwhile, “garage operator Chicago Loop Parking LLC appears poised to walk away from the privatization deal. The company—a consortium of investors put together by Wall Street financial services giant Morgan Stanley—recently reported financial difficulties regarding the 2006 agreement in which it paid the city $563 million to operate the garages for 99 years. It’s now in talks to turn over the deal to a lender [Societe Generale], a source said.” The company defaulted on a payment in March.
14) Illinois: Crain’s Chicago Business claims that the aborted privatization of Midway Airport won’t affect the Chicago Infrastructure Trust. “The bigger question is whether the hangover from Chicago’s parking meter lease has chilled investors or created too much political pain to do anything but the most innocuous deals.” The Reason Foundation’s Robert Poole says “Chicago will now be seen as having increased political risk.” [Sub required]
15) Illinois: Crain’s Chicago Business editorial questions the transparency and financing models of imminent “public private partnership” deals in Chicago. “What makes private-investor deals superior to the municipal bond markets, the time-tested method of raising money for public projects? And what guarantees do we have that deals being hammered out behind closed doors are in the best interests of taxpayers?” Says of less ambitious energy efficiency and solar PPPs “we know the scope of these lower-stakes deals is somehow supposed to make us less nervous than the Midway-sized stuff but, in Chicago’s crony culture, it’s wise to pay attention to the little stuff, too.”
16) Indiana: Evansville resident takes aim at charter schools in Indiana. “While not every charter school in the state is failing, there are substantial issues surrounding their existence. (…) The real elephant in the room is children with learning disabilities, whose numbers are increasing annually.”
17) Kentucky: University of Kentucky moves to privatize its dining services; releases Request for Proposals. A community forum to discuss the issue (including the RFP) will be held this Wednesday.
18) Louisiana: Gov. Jindal begins to move toward privatizing Louisiana’s elderly and developmentally disabled healthcare system. “Advocates for the affected groups urge caution, saying the decisions will impact the lives of the sickest and most vulnerable consumers of healthcare.” A request for proposals could be ready by early 2014.
19) Louisiana: The state Legislative Fiscal Office has projected that proceeds from the privatization of LSU Hospitals will generate “substantially less” than the Jindal administration expects, “opening the possibility of cuts to higher education.” [Report]
20) Louisiana: Baton Rouge transit system interim director publishes open letter denouncing efforts by “the political class” to privatize the Capital Area Transit System. “The flamboyant solution is privatization. That means a private company comes in and provides a transit solution while making a profit. Presumably and unrealistically, this would be done without a tax or other subsidy. Will that work in Baton Rouge? The answer is No.” City Council member pushes back. [Open Letter]
21) Massachusetts: The Southborough school board is worried about a proposed charter school, questioning “the value of such schools” and their “budgetary impacts.” Neary Elementary Principal Linda Murdock says “they’re now becoming these cookie-cutter corporate things.”
22) Michigan: Detroit gets 10 bids on the privatization of its trash collection operations. The companies bidding are Midwestern Sanitation, Waste Management, Emterra Group, Republic Services, Kurtz Brothers, Resource Recovery Systems, Advanced Disposal, Unity Midwest Waste & Recycling, J Fons and Rizzo Services. The Public Works Department will review the sealed bids and make a recommendation in early October. Teamsters Local 214 has expressed concern about the jobs of 60 to 70 drivers.
23) Michigan: Department of Transportation reports that its efforts to determine how much interest there is in “public private partnerships” has generated 31 responses. MDOT received 12 letters of interest in bridge work, responding to its July 25 floating of two possible projects: Replacing the I-75 bridge decks over Fort Street and the Rouge River in Detroit; and Reconstructing bridges in four highway corridors: I-94, from I-96 to Conner Avenue in Detroit; I-75, from M-102 to M-59 in Oakland County; I-94, from Elm Road to US-127 in Jackson County; and I-94, from Euclid Avenue to US-31 in Berrien County. Interest was also expressed in freeway lighting, highway rest areas, and timber management.
24) New York: Broome County (Binghamton area) may privatize its transit system. Proposals received from private companies will be reviewed in the coming weeks. “The privatization discussion is also coming as negotiations begin with the Amalgamated Transit Union Local 1145, the Binghamton-based union representing transit workers. The collective bargaining agreement expires Dec. 31. ‘My biggest concern, (is) with the riding public,’ said Union President Pete Schiraldi. ‘Any time the county is providing a service and it’s taken over by a private company, it’s now looking for profits.’”
25) North Carolina: The Aspira Association, “a charter school operator at the heart of controversies in Chicago and Philadelphia,” files three letters of intent to open charter schools in Mecklenberg, Union, and Iredell counties. “North Carolina is no stranger to academic, ethical and financial problems associated with its public charter schools.”
26) Ohio: American Federation of Government Employees’ Council of Prison Locals denounces plan to privatize supervision of hospitalized prison inmates in Elkton community hospitals. “‘Correctional workers in the Bureau of Prisons are second to none,’ said AFGE Local 607 President Joseph Mayle, who represents workers at the Federal Correctional Institution in Elkton. ‘We know better than anyone the risks inmates pose to our communities. Replacing trained law enforcement officers with private contractors poses a clear danger to other hospitalized patients and the surrounding community.’” [Council of Prison Locals]
27) Ohio: Labor dispute heats up in the Stow-Munroe Falls City School District, which announced in June that it may outsource the jobs of its bus drivers to a private company. “The most recent challenge to negotiations has been back-to-back grievances filed by the district and the drivers’ union, the Classified Employee Association.” The association is represented by the Ohio Education Association.
28) Oregon: Northwest Grocery Association may get behind a 2014 ballot initiative to privatize state liquor operations. The NGA failed to convince lawmakers to privatize this year. “‘We like the system the way it is,’ [pilot store owner Steve Brown] said, adding that liquor prices in Washington jumped after privatization.”
29) Pennsylvania: Harrisburg receiver’s office says that the leasing of its parking facilities to for-profit entities “will not be like Chicago, where you sit back and say damn, we should have gotten more.” But Councilman Bruce Weber “worried about Harrisburg being stuck with a raw deal in the end. ‘We don’t have the deal, we have a term sheet of the deal,’ he said. ‘Terms can change.’” [Sub required] The city council has hired an independent consultant to review the recovery plan, especially the proposed “public private partnership” parking deal.
30) Pennsylvania: State auditor says the state’s failure to reimburse school districts for the funding they lose when students attend charter schools is hurting public schools. “The more money that we have to pay out for charter school expenses and cyber school expenses, we’re experiencing increased class sizes, less money to pay for textbooks and programs, less money to pay for staff,” says Frank Dalmas of the Sto-Rox School District.
31) Puerto Rico: A juvenile detention facility “public private partnership” project has been abandoned. The project was for 500 bed facility, and a recent consent decree holds that facilities should have no more than 120 beds. “The monitor raised certain concerns regarding potential compliance risks that the project would engender for the commonwealth,” the PPP authority said.
32) Texas: Troubled Houston high schools may be facing privatization. “The restart option was a hot topic among HISD trustees. If HISD chooses to ‘restart’ any of the campuses, that school would be converted or closed and re-opened under private management. Trustee Manuel Rodriguez criticized the privatization option, saying such a plan was equivalent to ‘abdicating our responsibility.’ Trustee Harvin Moore said there were pros and cons: ‘When we privatize a school, we are not abdicating our responsibility.’”
33) Texas: New website launched to bring transparency on the state’s public debt.
34) Virginia: Panel recommends that the University of Virginia “break many of its ties with the state government and operate more like a private school.” But the report has drawn criticism from the university community and state lawmakers. “Hunter R. Rawlings III, president of the Association of American Universities, has said public university leaders need to stop talking about privatization and instead push their state lawmakers to see higher education as a public good, not a private interest.” The Charlottesville Daily Progress points to chronic inadequate public funding for spurring the movement toward privatization. [Panel report]
35) International: “Public private partnership” projects make it to the Arctic.
36) Think Tanks: American Trucking Associations and NATSO reject Reason Foundation report calling for the tolling of interstate highways. This week, Moody’s released a report on non-interstate toll roads. The report said “the immediate outlook for the 42 US toll operations they review is negative. They see no overall traffic growth due to the weak economy and growing risks from debt ‘leverage.’ Medium and longer term they see a good future for tolling due to the lack of tax funding for free roads.”
37) Think Tanks: Brookings Institution releases report on private investment in global education. “The core thesis running throughout this report is that the private sector, who have most to gain (or lose) from weak education systems compounded by demographic shifts, should engage more fully in solving this education crisis through a combination of funding and capability.”
38) Think Tanks: Committee for a Responsible Federal Budget issues report calling for a “careful and deliberative” process on any reform of municipal bond tax exemption. CRFB is the parent organization of Pete Peterson’s Fix the Debt campaign.
1) Illinois: Chicago aldermen Roderick Sawyer, Brendan Reilly and Joe Moreno call for their Privatization Transparency and Accountability Ordinance to get a vote in the Chicago City Council. “The ordinance deserves a full hearing by the Chicago City Council, yet it has been stuck in committee without action for nearly a year.”
2) New Jersey: Sen. Raymond Lesniak (D-Union) seeks to change the law to allow a charter school to enroll teens fighting substance abuse. “In its first meeting since June, the Senate Education Committee heard testimony [last Thursday] on Lesniak’s bill and unanimously endorsed it for passage. Students and other advocates testified that there is a big need for such programs at the high school level.”
3) Pennsylvania: Charter schools “could provide another flashpoint“ when the state legislature reconvenes on September 23. “Two recent hot-button developments provide a backdrop: an 11-count indictment against Pennsylvania Cyber Charter School’s chief executive and his accountant; and a state auditor general’s report that accused the Chester Community Charter School, Pennsylvania’s biggest brick-and-mortar charter, of ‘significant noncompliance.’” [Sub required]