Novato Sanitary District board members Mike Di Giorgio, James Fritz and William Long (front to back) listen to presentations during the Novato Sanitary
Novato Sanitary District board members Mike Di Giorgio, James Fritz and William Long (front to back) listen to presentations during the Novato Sanitary District board meeting on July 20. (IJ photo/Robert Tong)
In front of a packed house that included two on-duty Novato police officers, the Novato Sanitary District board voted unanimously Monday night to proceed with plans to privatize the operations of its $90 million wastewater treatment plant.

While the meeting highlighted broad opposition to the proposal to turn over plant operations to Veolia Water North America, it stood in stark contrast to the board's acrimonious, messy meeting on the same subject a week earlier. The move gives the district the green light to begin contract negotiations with Veolia.

The board cited the $7.148 million the district says it would save by handing over the reins of the plant to Veolia, saying it was simply too significant to outweigh the opposition's concerns. Much of the criticism centered on the plan's long-term impact on the job security of the plant's nine current employees.

"We can do it the way that the relatives of the employees want us to do it," said board president Mike Di Giorgio, who noted the police presence was necessary because people "were literally afraid to get up to talk" at last week's meeting. "But it's going to cost the ratepayers $7.2 million more to do it that way. We have to consider all of the ratepayers."

The majority of the opponents to the privatization plan asked the board to slow down the process to allow the public to review the contract terms. Philip Tucker, project director for the California Healthy Communities Network, said the district was inviting a lawsuit by proceeding too quickly.

"You're setting in motion something you don't want, which is litigation that will stick this project in the mud for a long time," Tucker said. "All the public is asking for is more time for public review."

District counsel Kenton Alm countered by saying the district had gone beyond its legal obligations for public review, predicting that delaying the matter was unlikely to stave off litigation.

"Whatever you do, you may face litigation," he told the board.

Many disputed the projected savings that Veolia promised. The district said Veolia's operation of the plant for five years would cost $15.61 million, while it would cost the district's staff and two additional consultants $22.75 million to do so for the same period of time. The data was validated by two consulting firms, EMA Inc. of Gig Harbor, Wash., and HDR Engineering Inc. of San Francisco.

That savings largely comes from two areas: on-site staffing and the utility costs associated with the day-to-day management of the plant, namely electricity, natural gas, chemicals and vehicle fuel. Veolia would save the district $4.6 million in staffing costs, despite using the same number of employees, and $3.1 million in total utility costs.

The latter savings would stem from the bulk purchasing power Veolia enjoys from its management of 200 plants in the United States and nearly 20 in California. If the district operated the plant on its own, it would shave nearly $900,000 from Veolia's proposal, including contract management, insurance and performance bonds.

Former Novato City Councilman Dennis Fishwick suggested the district form a joint powers authority with other North Bay sanitary districts to achieve the same purchasing power that comes from bulk buying. Others said they simply didn't trust the savings Veolia has promised.

"This really seems like a boondoggle," said Novato resident Tom Pierce. "When you dance with the devil, you've got to pay the piper, and you're dancing with the devil."

David Keller, a former Petaluma City Councilman, said his city rejected privatizing its water treatment plant in 1999 because it determined that it was "poor fiscal and public policy." Without additional public review, "you cannot assure the ratepayer with any specificity that the benefit of the bargain is to the ratepayers," he said.

Many opponents said the board should delay its decision until more is known about the May raid by federal agents with the U.S. Environmental Protection Agency's criminal investigation unit on Novato Sanitary's offices. The raid was part of a criminal investigation into apparent environmental violations that occurred in 2006 and 2007.

"They don't come running into offices around the country unless the have good reason," Lynne Axelrod of Kentfield said.

The district did provide more clarity on the ongoing bank fraud investigation into the pilfering of more than $500,000 from two of the district's Bank of Marin accounts.

June Brown, the district's administrative services manager, said $514,000 was stolen from the district's accounts in mid-April, but that $432,000 of that sum has since been recovered. The money had been transferred to more than 40 individual accounts in the United States before 90 percent of it was then shipped to accounts in Moldova and Kazakhstan. Brown said the fraud was perpetrated by people outside the district.

"There's absolutely nothing to justify rumors of embezzlement or pilfering by anyone at the district," she said.


Read more Novato stories at the IJ's Novato section.

Contact Jim Welte via e-mail at jwelte@marinij.com