Weekly Privatization Report 7-10-2017

1) National: As big banks and their advisers step up their efforts to gobble up income-generating public assets and services, RBC Capital Markets and HR&A Advisors (a real estate deals advisory firm) have produced a new how-to report. Fiscal pressure on government is the key. “As governments struggle to find more money,” The Bond Buyer reports, “discussion has been growing about ways in which municipalities can leverage specific public assets to create revenue streams that will allow them to reduce costs while delivering better services. The report focused on using the expertise of the private sector in ways that benefit the public, and provided local governments a best practices guide on ways to do that.” [Sub required]. As the saying goes in the privatization industry, “desperate government is our best customer.” [Report: “Unlocking Value from Public Assets”; see also ITPI’s resources on outsourcing and PFAW’s report on “Predatory Privatization”]

2) National: The National Education Association adopts a policy statement on charter schools. “NEA stands for our students wherever they are educated. Relegating students and communities to unaccountable privately managed schools that do not comply with the basic safeguards and standards detailed above has created separate systems of charters that are inherently unequal. To counter the threat to public education of such charters, NEA supports both communities organizing for quality public education and educators working together to improve charter schools.” The statement also supports organizing efforts in charter schools: “NEA believes that all educators deserve the right to collective voice and representation, and that an organized workforce is a better guardian of quality standards for students and educators alike. For that reason, state affiliates that seek to organize charter schools may continue to seek NEA’s assistance in those organizing efforts.”

3) National/California: Another hunger strike breaks out at the Adelanto ICE detention center, which is owned and operated by GEO Group, by people demanding medical care and release pending their immigration court dates. “Early last year, GEO Group stopped providing its own medical care and subcontracted with Correct Care Solutions, keeping on many of the same staff. ICE’s own investigators found problems at the facility, including health care delays, poor record keeping and failures to properly report sexual assaults.” On Friday, supporters of the hunger strikers assembled outside of an ICE office in San Bernardino. “UC Riverside Ethnic Studies Professor Alfonso Gonzales, who attempted to speak to the hunger strikers earlier this week, claims he was provided misinformation by officials and denied access to the asylum-seekers. Gonzales believes the hunger strikes should be taken within the context of ‘anti-democratic’ immigration policies.”

4) National: After twenty years, the federal government’s pilot program for airport privatization has failed to take off. “In addition to Westchester’s airport, two are in the midst of the privatization process—St. Louis Lambert International Airport in Missouri, and Hendry County Airglades Airport in Clewiston, Fla. Since 1996, only two airports have completed the program. One of those, Stewart International Airport, in Newburgh, N.Y., dropped out in 2007 after its private operator, U.K.-based National Express Group PLC, decided to leave the airport business and sold Stewart to the Port Authority of New York and New Jersey. (…) The U.S. Government Accountability Office [2014] audit found that four airports have withdrawn from the program citing the financial stability of their private partners.” [Sub required]

5) National: Just as public input into land use planning is showing promising results, Trump moves to end it. “Attendees asked questions, gave their opinions, filled out comment cards and drew on maps of the monument, giving the agencies first-hand information about usage, geography and important sites. Instead of traditional planning, in which the BLM worked from their own priorities and information, Sand to Snow and Mojave Trails management involved the public from the beginning.” But “a possible positive outlook is that ‘nothing will stop the BLM from applying the planning 2.0 principles,’ [Phil Hanceford, director of the Wilderness Society’s BLM Action Center] says. ‘They still have the authority to provide greater transparency.’”

6) National/New York: P3s for whom? Transportation Secretary Elaine Chao said last Wednesday that a $537.5 million low-interest federal TIFIA loan to the New York State’s Empire State Development Corporation would cover Empire State Development’s contribution to the ‘public-private partnership’ project for converting the old James A. Farley Post Office Building in Manhattan into a state-of-the-art train station. But here’s an interesting factoid: “The private partners, which include Vornado Realty Trust, the Related Companies, and Skanska USA, will invest $630 million in the project in exchange for a 99-year concession to develop 850,000 square feet of commercial space in the property, including offices and retail operations. (…) New York developer Steven Roth of Vornado Realty is a member of President Trump’s infrastructure council and a longtime Trump associate. Vornado is a partner with the Trump Organization in a Manhattan high-rise and one in San Francisco. Vornado is one of the four contenders for a proposed P3 swap of the FBI headquarters in downtown Washington, D.C., in exchange for the construction of a larger and more secure FBI building outside the city. A coalition of community groups demonstrated last week on the steps of the Farley Building to protest Cuomo’s P3 approach to the project. The renovation effort will do nothing to resolve New York’s infrastructure problems, said Charles Khan of the Strong Economy for All Coalition.” [Sub required]

7) National: National campgrounds may be privatized by Trump. The National Park Hospitality Association is pushing the drive.

8) National: A new short video from the American Federation of Government Employees (AFGE) illustrates how Americans suffer when the government hands over our public services to for-profit corporations. “Government’s job is to serve the public. Business’ job is to make a profit.”

9) National: Public Works Financing’s annual water issue is out, and they report that last year’s private water industry market is down 5.5% over 2015. The municipal contract operations sector was flat. Of the 105 contracts up for renewal, four reverted to a municipality (down from seven in 2015), indicating that the water remunicipalization movement now spreading across the globe has yet to take off here (but see Food and Water Watch’s water municipalization guide). The main companies by market share are Veolia (35%), Suez (27%), CH2M (16%), American Water (12%), and Severn Trent (10%). PWF says that American Water “reported no new business in 2016.” The private water market has learned the marketing language of ‘public-private partnerships’ though—the word “P3” is sprinkled 31 times through the 32-page issue, “partnership” 41 times. ThePerformance Infrastructure Review Committee, a pro-P3 industry group promoted by PWF, makes a number of recommendations, including “partnering incentive” grants from the feds, a waiver of EPA fines and liability for water systems that agree to outsource or merge with a larger system, access to the clean water state revolving fund for private companies, more federal credit, and liberalization of the Private Activity Bond rules. [Public Works Financing, June 2017; sub required].

10) National: Following a Trump executive order, the Treasury Department issued a notice on Friday that it plans to overhaul or repeal proposed political subdivision rules that would tighten up public interest requirements. “Under longstanding federal law and rules, an entity is a political subdivision that can issue tax-exempt bonds if it has the ability to exercise a substantial amount of at least one of three sovereign powers – taxation, eminent domain and policing. But Treasury and the IRS, which became concerned that some political subdivisions were controlled by private developers, proposed adding two more requirements to that definition. They said a political subdivision must also be governmentally controlled and serve a governmental purpose ‘with no more than an incidental private benefit.’” [Sub required]

11) National: Controversy has broken out in the charter school movement, with a top adviser of the organization that promotes tighter charter school authorizing standards complaining that he is being unfairly accused of aiming to stifle charter schools with burdensome rules and bureaucracy by opponents of the standards. Nelson Smith, a senior advisor to the National Association of Charter School Authorizers, writes, “it bothers Eden, CER’s Jeanne Allen, and others that fourteen states have adopted these standards in statute, either directly or by reference—not to mention that state-based organizations such as the Florida Association of Charter School Authorizers have tailored our standards to their own states’ landscapes. For all the critics’ fulminations, they’ve yet to say just what is so objectionable about these professional standards, which offer individual authorizers myriad ways to meet them.”

12) Arizona: Arizona State University has outsourced its $600 million long-term investment pool to BlackRock, which is pushing Trump’s infrastructure initiative and supporting “a new form of federally subsidized bonds.” [Sub required]. BlackRock has also pushed P3 tax breaks.

13) ArizonaTomorrow the Center for Biological Diversity is holding a Public Lands Defense Workshop in Tempe. “Earlier this year the Center for Biological Diversity released Public Lands Enemies, a report identifying the 15 federal lawmakers most responsible for driving efforts to seize, destroy and privatize our public lands. Your senator Jeff Flake landed at number eight on that list. (…) To support this work the Center has partnered with the Arizona Sustainability Alliance to provide a public lands defense workshop, free of charge. Participants will learn about the public lands seizure movement and receive training on how to fight back.”

14) Indiana: Lawmakers hold a post mortem on what went wrong with the I-69 ‘public-private partnership,’ whose winning bidder went bankrupt, forcing taxpayers to step in and make good on the financing. “‘There are a lot of lessons here,’ said Senate Appropriations Committee Chairman Luke Kenley at the State Budget Committee hearing Thursday. The state failed to see that the company running the project didn’t have the financial capability to complete it, Kenley said. The state should consider the bidder’s credibility and past track record, not just the bid price, he said.”

15) IowaThe Des Moines Register is denouncing state authorities for keeping secret a consultant’s report on the financial demands of the three companies hired to run Iowa’s privatized $4 billion Medicaid program. “The companies argue that they need to be paid more money—a lot more money, in the millions—but DHS has been silent about exactly how much additional cash might flow from the state treasury into the coffers of these private entities. This is critical information not only because taxpayers will foot the bill for the additional payments, but because privatization was supposed to save money.”

16) Massachusetts: The City of Somerville is holding a “Public-Private Partnership Showcase” next week to promote private investment in public infrastructure and “economic development opportunities.”

17) Minneapolis: Public housing residents concerned that private financing of renovations will lead to the loss of their homes held a demonstration on Thursday to protest the plan. “We’re trying to save public housing,” Ladan Yusuf, a Defend Glendale organizer, said at the rally. “In e-mails, Defend Glendale organizers have said the guiding principles aim ‘to sell, lease and demolish all public housing properties so private developers can take over.’ MPHA Executive Director Greg Russ said that is not the case. The guiding principles are an early step to figure out how to preserve public housing units, he said, and they ensure any residents who are temporarily displaced during renovations will be able to return to their homes.”

18) New Jersey: Atlantic City citizens are looking to use the ballot initiative process to protect their water system from privatization. “Last year the state government took control of the financially distressed city, and it has since gone on a privatization binge of sorts, contracting out the town’s trash collection services to a private company. A group called AC Citizens Against the State Takeover is trying to prevent a similar fate befalling their water system, which provides good, affordable tap water to 40,000 locals. In the last month alone, the group has organized rallies, collected petition signatures, pressured public officials and threatened legal action. It is also working to use the ballot initiative process this November to ensure that residents have the opportunity to vote on any attempt to sell the water system. The agents of privatization are at Atlantic City’s door, and the people there are pushing back.”

19) New York: Bids are due this Friday for the deal to privatize Westchester County Airport. “The county’s local law that limits the number of passengers that can pass through the terminal at 240 per half-hour will remain in effect. Jonathan Wang, chairman of Citizens for a Responsible County Airport, notes the cap doesn’t apply to private planes and corporate jets, which make up about 80% of the airport’s operations. And the Westchester County Board of Legislators will now have a financial incentive to change the local law to raise the passenger cap to make more money once the airport is privatized, Mr. Wang said. The county and the private operator will ‘have a strong incentive to increase profits whether by increasing the number of operations at the airport or by cutting costs on things like security or environmental protection,’ said Mr. Wang, who lives in Purchase, N.Y. Some critics of the privatization plan say a new operator would be tougher to fire should it perform badly since the term of the lease could be up to 40 years. County officials say the lease agreement will allow them to terminate the contract for good cause.”

20) Ohio: The Middletown City Council member who suggested that the city not respond to emergency calls involving drug overdoses, or privatize the ambulance service, faces a deluge of outrage. “‘It costs $0.00 to be a decent human being,’ one post said.”

21) Pennsylvania: The Allegheny County Jail Health Justice Project will present a documentary, “No Bars to Healthcare,” tomorrow at the Homewood Branch of the Carnegie Library of Pittsburgh. The video documentary“focuses largely on Corizon Health, a Tennessee company that ran the jail’s infirmary from September 2013 through August 2015.” The documentary “acknowledges improvement since Corizon left the jail in 2015, but suggests that problems remain. The film’s closing moments note that the jail saw two deaths in April, including one suicide. There has since been another suicide, in June.”

22) Texas: First-year traffic and revenue forecasts were missed by the LBJ Texpress managed toll lanes ‘public private partnership’ in Dallas. Financing for the P3 included an $850 million federal TIFIA loan and $490 million from the Texas Department of Transportation. [Sub required]. Will taxpayers end up on the hook?

23) International: A major crisis has erupted at the Arthur Gorrie Correctional Centre in Brisbane, Australia, after the GEO Group, the for-profit company that operates the high-security prison, locked out correctional officers involved in contract negotiations and locked down inmates. United Voice spokesman Damien Davie “said prison staff had called on the company to boost staff numbers to deal with overcrowding. ‘There’s currently one officer to between 36 and 40 (inmates), and sometimes as bad as one to 62. There should be two on the floor at all times.’ He said staff shortages had led to assaults on officers, prisoner violence, drugs in the prison going undetected and prisoner behavior not being properly addressed.” United Voice assistant secretary Sharron Caddie “said the prison operator was making ‘massive profits’ at the cost of staff and prisoner safety. ‘This prison is the most dangerous prison in Australia,’ she said.”

24) Think Tanks: As the annual convention of the American Legislative Exchange Council (ALEC) approaches (July 19-21 in Denver), Common Dreams’ Michele Swenson looks at the group’s “covert war on democracy.” Focusing in on state preemption laws, Swenson writes that “achieving corporate goals begins with targeting local government regulations that might impede corporate profits. Ostensibly to promote limited government, ALEC and its allies seek to privatize-for-profit public services, transferring the Public Commons to corporations, thus boosting the corporate bottom line at the expense of the people. Prime targets of privatization include Social Security, Medicare and Medicaid, public schools and state pensions.”

Nancy Maclean, author of a recently-published intellectual and political history of the funders and supporters of Koch-backed groups such as ALEC, says of state preemption
: “We are seeing this happen all around the country where these Koch-funded state policy network organizations and the American Legislative Exchange Council are working hand-in-glove to push what is called ‘preemption.’ They use the power over state governments to prevent localities from doing things like raising wages, enacting anti-discrimination ordinances, even passing plastic bag ordinances! It’s just a huge power grab.”

Legislative Issues

1) National: Is mandatory competitive sourcing on the way back? The early version of a key federal appropriations bill “is silent regarding the process of comparing federal employee jobs to contractor bids under OMB Circular A-76. That bill has been the vehicle for annual bans on that process since late in the Bush administration, but the White House asked to allow agencies to use it at their discretion. By not including the prohibition, the bill in effect would restore authority to conduct those studies, which over the years resulted in many thousands of federal jobs being contracted out.”

2) National: Republic Report’s David Halperin has produced a useful rundown of “Who’s Lobbying for For-Profit Colleges in the Trump-DeVos Era.” Halperin writes, “high-priced Washington lobbyists, Republicans and, to the extent they are needed, Democrats, are ready to answer the call. Senator Dick Durbin (D-IL) once said that the for-profit colleges ‘own every lobbyist in town,’ and it appears this industry still strives for that goal.”

3) National: Aircraft Owners and Pilots Association (AOPA) releases a video explaining how air traffic control privatization would harm general aviation. Economist Richard Wolff has also added his voice the ATC privatization debate. This week Republican Senator John Thune will hold a markup of Senate legislation on FAA reauthorization, which does not call for privatization, as the House bill does. Politico reports that “if the House and Senate can’t agree, one likely scenario is that lawmakers will simply extend the FAA’s current authorization while they hash things out. In past FAA renewals, that process has sometimes lasted years.”

4) California: The assembly-passed AB-263, designed to improve rights and working conditions for emergency medical services workers, is steadily advancing through the Senate too. Veteran anti-tax radical Lew Uhlersees it as an attack on privatized EMS companies.

5) Florida: The Ocala Star-Banner comes out in opposition to House Bill 7069—which it calls a “legislative monstrosity”—for trying to boost charter schools “at the expense of Florida’s public schools.” The paper says “there is little question this legislation—which was a priority of House Speaker Richard Corcoran, a unabashed booster of charter school—is as much about padding the bottom lines of for-profit charter school outfits as it is about providing a new option for parents and students to find quality education.”

6) Oregon: Lawmakers want $100 million in bonding authority to protect part of the Elliott State Forest from privatization. “Oregon legislators released their list Monday of projects to bond in the next two years. Money for the Elliott State Forest is the most controversial item. The 82,500-acre Southern Oregon forest is supposed to be used to raise money for education, but revenue from timber harvests has dropped in recent years. State leaders had planned to sell the forest to a private timber company and a partnering Native-American tribe. But environmentalists objected.”


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