Sandy Springs Continues to Prove that Privatization Works

Yesterday’s New York Times profiled the city government of Sandy Springs, Georgia, which incorporated nearly seven years ago under a model where the vast majority of non-safety services are provided through public-private partnerships (PPPs) with private sector service providers. Here’s a snippet from the beginning:

If your image of a city hall involves a venerable building, some Roman pillars and lots of public employees, the version offered by this Atlanta suburb of 94,000 residents is a bit of a shocker.

The entire operation is housed in a generic, one-story industrial park, along with a restaurant and a gym. And though the place has a large staff, none are on the public payroll. O.K., seven are, including the city manager. But unless you chance into one of them, the people you meet here work for private companies through a variety of contracts.

Applying for a business license? Speak to a woman with Severn Trent, a multinational company based in Coventry, England. Want to build a new deck on your house? Chat with an employee of Collaborative Consulting, based in Burlington, Mass. Need a word with people who oversee trash collection? That would be the URS Corporation, based in San Francisco. […]

With public employee unions under attack in states like Wisconsin, and with cities across the country looking to trim budgets, behold a town built almost entirely on a series of public-private partnerships — a system that leaders around here refer to, simply, as “the model.”

Cities have dabbled for years with privatization, but few have taken the idea as far as Sandy Springs. Since the day it incorporated, Dec. 1, 2005, it has handed off to private enterprise just about every service that can be evaluated through metrics and inked into a contract.

To grasp how unusual this is, consider what Sandy Springs does not have. It does not have a fleet of vehicles for road repair, or a yard where the fleet is parked. It does not have long-term debt. It has no pension obligations. It does not have a city hall, for that matter, if your idea of a city hall is a building owned by the city. Sandy Springs rents.

Overall, the NYT gave the topic a fair treatment, IMO, as they noted the biggest takeaways from Sandy Springs’ bold contract experiment:

  • Because it started from scratch and avoided the defined benefit pension quicksand from the beginning, the city has no long term liabilities, neither debt nor unfunded liabilities for pensions and retiree health benefits (unlike many of their peers).
  • Services are greatly improved from the beginning level, and citizens (over 90% of whom voted for the original incorporation) generally remain very pleased with their lean-but-not-so-mean government.
  • Despite claims that Sandy Springs “abandoned” Fulton County, the city still sends nearly $200 million in annual property tax revenue to the County today. What Sandy Springs was really after with incorporation was more local control over their own destiny, particularly with regard to service delivery and land use decision making.

There were a few spots in the article where more context might have been useful, however. First, the article noted that, “The town does have a conventional police force and fire department, in part because the insurance premiums for a private company providing those services were deemed prohibitively high.” However, it’s my understanding that a far bigger factor was the provision in Georgia’s state constitution requiring cities to use public employees for police and fire services. In Sandy Springs’ case, the new city started by contracting those services out to Fulton County, until the city later created its own (public sector) police force. So when the NYT notes that Sandy Springs has less than 10 city employees on its payroll, they are referring to the non-public-safety side of operations.

Also, the article suggests that other cities would have a difficult time replicating the “Sandy Springs model,” but for the wrong reason. The article suggests that its wealth gives Sandy Springs an advantage over other cities, but I don’t follow the logic. Sandy Springs is staying lean and mean through smart contracting, which is something that cities of all levels of affluence can task their professionals with undertaking if they are so motivated. The real reason that it would be hard for “traditional” cities to adopt the Sandy Springs model is simply because it’s hard to unwind government bureaucracies once they’re started and special interests—including public employee unions that aim for self-preservation—have become entrenched. These are things that help to calcify governments, which Sandy Springs was able to avoid by starting from a blank sheet of paper (and by not getting caught in pension, benefits and debt traps).

Sandy Springs continues to demonstrate how far PPPs can go in government. Private contractors provide nearly all of the non-safety services and systems that citizens interact with on a daily basis, and citizens in Sandy Springs have been well-served and appear to be pleased overall with their local government. For “traditional” cities, the takeaway should be: there are FAR more opportunities to explore PPPs than are currently being considered. Some cities get bogged down in piecemeal political battles over outsourcing one or two services—solid waste, vehicle fleet maintenance, library operations, etc.—when Sandy Springs demonstrates that cities can be thinking much bigger, on the scale of entire departments, agencies, programs, etc. My recent interview with Carrollton, Texas City Manager Leonard Martin offers a perspective on what it takes to create a culture of competition in city government from a “traditional” city perspective, with many themes discussed that are relevant to the Sandy Springs/contracting discussion.

For more on Sandy Springs, see founding father Oliver Porter’s 2009 article telling the story of incorporating Sandy Springs and establishing the public-private partnership service delivery model, as well as offering thoughts on lessons applicable to other cities. Porter starts the article with a thought experiment:

Imagine starting a new city of over 90,000 people with only two employees. We did it. Imagine improved employee attitude, less cost, more responsive government, decreased long-term liabilities and happier citizens. We did it.

Read the whole thing here for an insider’s take on how the Sandy Springs story went down and why it matters to other cities. And my colleagues at produced a video on the Sandy Springs story in 2010, available below:

Reason Foundation has been covering Sandy Springs since before its incorporation, so there’s plenty more. Our Annual Privatization Report has included an annual update on Sandy Springs and its contract city emulators in Georgia for several years now. The most recent two are available here and here, and older archives are available here.