It’s rare, as Steve indicated that you would have the opportunity to speak at a conference and the morning paper, in essence, is the blue print for your speech. And so it is with our water privatization.

This unprecedented 20-year contract is both visionary and broadest in scope anywhere in the country, as Steve indicated. The rational for this change really was two fold. It is my belief that there will be two compelling issues for every city—there really will be more— but the number 1 and number 2 compelling issues for cities in this country over the next 10 years will be crime, always number 1, and number 2 will be infrastructure repair.

There are some estimates that 74% of all the bridges in this country are sub-standard or in need of major structural repair. In our northeastern cities the infrastructure is in dire-straights, in large part because it is old. Atlanta’s infrastructure is, in terms of our water and sewer system, about 100 years old, actually infancy compared with some of our northeastern cities in terms of the length of time that the infrastructure has been in place and not had a major overhaul. The one thing about infrastructure, you learn as a Mayor, is that nobody cares about infrastructure until it does not work. Nobody wants to hear about it, they don’t want to pay for it they certainly don’t want to talk about it but if the toilets don’t flush, if the tap water doesn’t run, if there are large craters in the streets, then the inevitable question is, "Why didn’t you deal with this sooner?"

It’s a capricious public that we all serve. Let me tell you why we think this unique effort with our water system has been so profound and why it portends great things for public/private partnerships and why I believe infrastructure repair really will be the compelling issue, second only to crime, as we go forward. In many ways it will be more compelling than the issue of crime because it will cost a lot more to resolve. The one thing that we know with crime is that there are number of dimensions to it, more police more recreation programs, more community policing, a lot of different components that can make a real difference. New York has led the way for cities around this country, but we have done great things ourselves. We are about to cut our homicide rate almost in half in 4 years. We are very proud of that. We have the lowest number of burglaries since 1969. Last year we had the lowest number of aggravated assaults since 1967. In 4 years we have cut the number of juvenile arrest in half. We have also doubled the number of young people we serve in our recreation program. So we believe that’s a real cause and effect. It’s not just more police (and you can’t build enough jails to stop the problems of crime in this country), it’s a combination of factors. But that doesn’t approach the cost of what is required to change, repair, maintain and rebuild our infrastructure.

This proposal that we have today will save us $400 million over the life of the contract and will allow us to use that $400 million to rebuild our water system. But it's only the beginning. It is only a fraction of the cost that is inevitably will be required. We are also working on a host of other initiatives with our combined sewer overflow systems, which by some estimates could cost either, depending on the experts, several hundred million dollars up to $2 billion. Our sewer system—we will embark upon the privatization of our sewer system as well, in many regards because of the same dynamics that led us to privatize the water system.

And even that’s not enough, there are still bridges and streets, with the $150 million bond referendum that we passed in 1994 we are now completing all the projects that we had outlined and that will only take us through about 30% of the project needs that we have in the city of Atlanta. We know with the passage of the new T-21 legislation that supersedes the ISTEA legislation… For the uninformed ISTEA is not the popular southern drink but the InterModal Surface Transportation Efficiency Act, which in essence put billions of dollars into allowing us to repair the nation’s infrastructure…. The succeeding bill, T-21, is vitally important, but even that’s not enough because we know that you cannot have enough to repair all the bridges, all the streets, all the storm water drain systems, all the parks, all the erosion problems that we have in this country without a massive infusion of dollars.

But how do we get where we are today in terms of this public/private partnership that we think is so visionary for the City of Atlanta?

Well, Atlanta’s greatest asset has been boldness, you know boldness has given us the Olympic Games and boldness led Dr. King to challenge, literally, the laws of segregation in this country. Boldness has made Atlanta a great city and we are really proud of it. Our airport, as an example, is the busiest airport in the entire world. 70 million passengers passed through our airport last year. It’s estimated that by the year 2015, assuming our expansion plans move forward, there will be 120 million passengers in and out of Hartsfield’s airport. It came about because Mayor Harstfield, in the 40s and 50s, understood how vitally important air traffic was, even when many of his comrades in other cities were still looking at rail and at streets, he saw air. And so our airport is the largest economic generator anywhere in the south. So it’s boldness that really makes a difference.

Let me tell you why we felt privatization was our best option for our water system here. One of my favorite proverbs in the Bible is, "We live in cities we did not build." Now in essence that means that we have a responsibility to pass on to our children healthy communities that we give them the opportunity to prosper as we prospered ourselves. Whether it’s in the public or private sector, we still have the same awesome responsibility. Now this privatization of our water system is vitally important. No matter how much you see growth in a city, there’s one dynamic that really cannot grow without water. You can grow without land because you can simply build up rather than out. You can grow with bad zoning, no matter what it is, but water is the one indispensable factor that you must have in order to grow and that’s why our water system is so vitally important.

Now when I took office in 1994, two weeks after taking office we had an interesting confluence, we had the three largest water pipes that all come together in one place that cracked at one time. And this was two weeks before the Super Bowl came to Atlanta in 1994. And so, my water commissioner came and said, "I’ve got good news and bad news and the good news is that we’ve identified the water main break, we know where it is, and the bad news is that we’ll be out of water in 24 hours." I said, "you mean out of water as in we’ll be able to fix it and not have a problem?" She said "no it’ll take about three days to fix the pipes and we’ve only got about 24 hours worth of water in our reservoir, so you’ve got to go and tell the public they can’t shower and shave and none of the essentials that really allow us to go about our daily business."

Now we us that as a metaphor for how we needed to repair our infrastructure, and, in fact, that was the impetus for putting the bond referendum before the public as quickly as we did. It’s instructive, again, that through a succession of Mayors. Ivan Allen, who was a visionary Mayor in the 60s, the only white mayor to speak in Congress in favor of the civil rights legislation in the 60s, and that’s pretty remarkable. Ivan Allen, who had a great bi-racial coalition but could not get an infrastructure bond referendum passed. Sam Massell, the first Jewish Mayor, the Mayor who many believed brought neighborhoods together, could not get an infrastructure bond referendum passed. Maynard Jackson, a great visionary Mayor who actually headed up America’s promise that talks about building/re-building infrastructures, could not get a bond referendum passed. Andy Young, what more can you say, Andy Young the great civil rights leader, with Dr. King on the balcony, led the civil rights movement, first African-American Ambassador, actually the 2^nd after Ralph Bunche, in the United Nations, 1^st Congressman from from the south, could not get a infrastructure bond referendum passed. All that tells you is that people don’t want to vote for money to fix the infrastructure. So you’ve got to almost have your pipes break and have the public fear that they won’t have water in order to use it, in order to get the public educated and sufficiently alerted to how important this issue is.

As Steve indicated they thought we had not chance of passing this bond referendum and in fact it passed, winning every precinct in the City of Atlanta. So it just tells you that if you educate the public wisely, if you talk about the issues of infrastructure intelligently and if you have your water pipes break right before the election you have a chance of getting the public to buy into this.

Now you also ought to know, as I am sure many of you appreciate, that the Federal Government used to be a partner in helping to finance cities' infrastructure needs. There was a time when the Federal Government actually paid for 80% on an 80/20 partnership with cities in repairing the infrastructure. Today there is zero subsidy from the federal government. This is part of this remarkable trickle down effect that happened beginning in the early 70’s where much of the subsidy and much of the partnership from the Federal Government with cities were simply eliminated. And what it did was, it allowed those in Washington to say "well, we have cut our budget" but it simply meant on the local level we have to find more creative ways of financing these incredibly expensive projects.

And so the change in the tax regs, that Steve mentioned, happened in February of 1997, very little noticed change in the federal tax regs, which allowed cities to have long term privatization of their water and sewer systems from 5 years to 20 years. And it is that change which really allowed us to begin this process of saving $400 million and the reason that this is important is because we, in essence, get advance funding of our savings, at least that’s one of the options that we have, and that will be one of the options that many cities will consider, now every city is going to have to fix its water system, not just because they are old and crumbling but also because there are more stringent requirements from the EPA or from the State Environmental Protections Divisions across the country or simply because we serve more customers.

Our water systems, and our sewer systems, were built in a time of horse and buggy days. Now there is nobody in here who has an automobile that would hitch up a horse to pull it to work, but in essence that’s what they are asking our water and sewer systems to do. We now have to serve populations that have quadrupled exponentially, where we have paved over much of the ground space that would absorb the rain, and yet we now still have to use those same systems to serve the population that does not appreciate why there is storm water flooding in their streets, or why there is not the provision of water and sewer without massive infusions of dollars.

We had, as an example, a breakdown, in one of our sewer plants—it was built in 1932— in order to (this is far to technical) but the point of the matter is they used large screens to filter what’s known as the overflow, combined sewer overflow. When in many of our cities you go through the parks in our cities— this is not unique to Atlanta, it’s all across the country—there are large concrete culverts through many of the parks in America. And these large concrete culverts—interestingly enough many of us, when we were kids, played in these culverts thinking they were a nice place to go and mess around in the water— it turns out are horribly polluted. It's where all of the overflow that goes over our sewer system, when we have a massive rain, cascades through these concrete culverts. In fact, in some areas, when there is massive flooding, there are children who die because they play in and around these concrete culverts and they literally are washed away in them. Well, there've been corrections, luckily, by the Environmental Protection Agency to require us to change all of that. That’s just another indication of some of the older technology that now must be repaired and rebuilt at massive cost, so this privatization of our water system was vital because we needed to get the savings in order to rebuild our water system.

So, let's look at where we are and what this public/private partnership taught us. Well, the first thing— there are seven lessons we believe we learned from this privatization, seven key lessons. We’ve done research, we’ve had seven law firms, we’ve had a number of consultants. Our consultants, by the way, have been extraordinary and they have helped to navigate us through a very difficult process. We’ve had oversight panels, both citizen oversight panels as well as technical oversight panels, dozens of public meeting that have been held, criticisms issued and noted. This has been the most open and detailed process in the 17 years that I’ve been in City Government.

So lesson 1: be bold, think big, you know as a lawyer they will tell you that a small case takes up just as much time as a big case and so it is with the water privatization. You’ve got to be innovative, you’ve got to be prepared to face challenges and the criticism that will inevitably come when you propose something as massive as this. Now as Steve told you, I’m no fan of privatization. I do not believe that privatization is the answer for all of the ills of government but what I do understand is that when you have a separate enterprise fund for a water and sewer system, as most cities have, there’s only one way of getting the money to fix the system and that is to raise the rates. And, in fact, even with this water privatization, we will still have to raise the rates. But as opposed to raising the rates 82% we would only have to raise the rates on a blended rate of about 8% over the next four years. So there are massive savings that are involved here.

What we were also able to do here is to look at the approach and find ways of muting the criticism from those that inevitably are commentators on every aspect of human life. I want to tell you this parenthetically, we ought to ask newspaper editorial staffs to find ways of curing all of the problems of society, because it’s the only group of people that know everything about everything and tell you everyday. It’s fairly fascinating that a group of people that have no other identifiable skills are able to tell the public why and how everything should occur. They are experts on everything from water systems to crime to poverty to education. So I think you have to understand that when you embark upon this process of being bold that you are going to face criticism, no matter how it happens and I want to tell you this, the 2^nd lesson.

So the 1^st lesson is to be bold because the little incremental changes are going to get you just as much criticism as the broad bold changes so why not go for everything and take the criticism as it comes. Second, make the process open, now on making the process open, let me tell you what we have done. We’ve held 13 public hearings. We’ve researched, produced and made public literally thousands of pages of documents. I appointed a 9-member independent privatization task force in August of ’97. We held a privatization showcase for city employees, union members and officials. I personally went to all of the workforce that will be affected and talked to them about this privatization effort. We brought in other cities like Indianapolis and Houston and Charlotte and vendors to share information about what they had done—the event, by the way, was completely financed by the vendors. Now even with all that—we also, by the way, allowed for the first time, reporters to actually sit in on the presentation process. Now I will tell you that that is a mistake, and to whatever degree that we now assess what we did and we tell you "do not do this" as you are going forward, that is a mistake. The mistake that we made was that while we made the process as open as possible, you can never, ever satisfy the press!

This is an interesting story, when we were going through this evaluation process the newspaper threatened to sue us if we did not allow them into the actual bidding process and the evaluation process, and if we did not actually publish the first round of scores. And over my vehement objections my staff prevailed upon me to open this process and allow the media to have all of it, and we did just that. After we completed our process, but before the vote, yesterday, the newspapers consulted what they believed to be the preeminent expert on privatization process, and you know what his main objection to the way Atlanta had conducted our bid process was? That we let the newspaper in on the actual evaluation panel and that we released the first ranking of scores. That was their no. 1 criticism of what we did. Now what does that tell you? That the newspaper, actually threatened to sue us and it was that which the expert identified as the main problem in our process. And the reason it was the main problem was because, of course, the company that was ranked no.1 in the first rating then became the target of all the criticism from both the newspaper and, of course, all the other companies that did not win. So, as opposed to really refining the process, although that did work from the first step to the second, as we knew that it would, it simply obscured what we were seeking to do and so I would urge you, no matter how open the process is, and it should be very open, there is nothing that you can do that will ultimately satisfy the press. So, you might as well do it the way you think its the best and just take the criticism as it comes because you cannot, cannot avoid the criticism no matter how much you open the process up.

3^rd lesson: make the process fair and competitive. The evaluation of the bidders has to be comprehensive and it must stand the test of scrutiny. All the proponents must be given equal access to the information; the process must be designed to minimize anyone having undue influence on the outcome. This is vitally important. On our evaluation panel we had 47 people who were part of our evaluation team. Now the reason that's important is because even assuming that you could influence one or two, you can’t influence 47 different people, maybe in some socialist countries you can but not in Atlanta or not in most cities. 47 people is really a lot of people to have as an evaluation team, but I think that at least tells you that we tried to broaden it so that no one part of it would be subject to any undo influence. Now, based on the city statutory evaluation criterion and the required scoring systems, individual teams were assembled to review each aspect of the proposal and the entire process was monitored independently by the consulting team, so you must make the process fair and competitive.

Lesson 4: ensure absolute integrity and professionalism in the process. Now our process was conducted, we believe, with the highest degree of integrity. Since the beginning we were advised by a team of respected consultants. Of course, as Steve mentioned, we hired the team of Brown and Caldwell, PriceWaterhouse Coopers and Harrington, George and Dunn, the engineers and accountants and consultants. They oversaw the process from beginning to end. So we knew early on what our benchmarks and our boundaries really were. In addition we hired another team to look over the first team, that was Camp, Dresser and McKee. They were a team to provide oversight and advice. Now you may ask why so many layers of oversight? Well it’s again, to respond to the criticism about the process. We hired independent experts and lawyers and consultants and then we hired consultants to look over what the consultants were doing and then we appointed the outside independent team to review what all of them were doing and even then we were criticized. But that’s why you have to go back to #1, be bold, because you’re not going to do this without criticism. Now we also hired a number of outstanding law firms and that was, again, very important, because there are a number of legal issues that are associated with a privatization of this magnitude. Now, we paid over $2 million to make certain that our citizens had the best technical, legal, financial advise available in the world and it worked.

Lesson 5: get the best value for the city and the ratepayers. Now with regard to this timing is everything. It’s one of my favorite sayings, "Timing is everything." We selected United Water not only on the cost considerations but a value index which looked at factors such as experience of the company, track record on customer service, the commitment and level of minority participation, which we believe in fervently in the City of Atlanta, and the companies willingness to invest in our inner city by taking advantage of our Empowerment Zone designations. This last one is something that we think is fascinating because it’s not just that we have a great company, although the companies that bid were terrific companies, by the way, and we could not loose no matter who we selected because they were all very good companies, they all do this business around the world. But there were 2 factors, or 3 factors that really made this proposal the winning one. First and foremost was cost. The reason that we believe we got enormous savings is because Atlanta is the first one to embark upon a privatization of its water system with this magnitude and as I indicated, every city is going to do this, so if I were… (Tape change.)

…Whether you like privatization or hate it you cannot avoid the inevitable saving that will come as a result of the change in the treasury regs and the huge dollars that are necessary to pay for these infrastructure improvements, but they also were two things that were important as well. Remember we have a 2 step bidding process. We were criticized for that also by, the way, the 2 step bidding process. The company that ultimately won changed their minority participation from 35%—from 15% to 35%— from the first round to the second round. Now that’s important for us in Atlanta. I don’t know where you live or what you feel about it or how you believe it’s important, but in Atlanta we believe it’s vitally important and we live by it. We think that’s why we got the Olympics, because Atlanta is diverse and because we have a commitment to diversity. And the company more than doubled their minority participation from the first round to the second round, but thirdly they had a very innovative commitment on public policy.

We have an Empowerment Zone. If you don’t know about Empowerment Zones, it’s six cities were designated by the Federal Government, by the Clinton/Gore administration to receive an Empowerment Zone designation. This gives you $250 million for your poorest of citizens, $100 million for grants, $150 million for tax credits. It’s Atlanta, Cleveland, Baltimore, Philadelphia and New York, I think those are the 6 cities, there may be… and Detroit, right of course Detroit. (In fact Detroit, thank you, Detroit has had the most success because of their partnership with the auto industry.)

So the commitment from the company was to put 20% of their employees into the Empowerment Zone, to live in the Empowerment Zone. They will have 20% of their employees living in the Empowerment Zone. They will have their national headquarters in the Empowerment Zone—by the way, you draw boundaries for the Empowerment Zone, its 50,000 of our poorest residents, that’s what is a requirement. It must be a demographically drawn group of your poorest citizens, so 20% of their employees will live in the Empowerment Zone. Their national headquarters will be in the Empowerment Zone. They are giving a $1 million research grant to one of our African-American colleges, Clark Atlanta University, for the establishment of a water institute. They are providing $1,000 stipends for those who have purchased homes in the Empowerment Zone, $500 rental subsidies for those who are going into the Empowerment Zone, $100,000 a year in entrepreneurial funds for the development of small businesses in the Empowerment Zone, as well as the adoption of a school and the mentoring of kids in the Empowerment Zone. Now this is a pretty remarkable public policy initiative that comes about when you’re privatizing your water system and getting a $400 million savings as well—so get the best value for your city and your rate payers.

If I were you going back to your individual cities, I would look at how far along you are on the issue of privatizing your water system because I happen to believe you can combine the efficiencies and the cost savings with other good social good public policy objectives when companies are bidding. Harder to do if you don’t having something like the Empowerment Zone, but you certainly can be very creative with the companies that are bidding and I think that’s important as well.

Lesson 6: make certain the contract protects the city's interest. Now our contract provides for management that specifies clear outcomes and expectations, it provides for 24 hour, 7 day a week access and oversight by the City of Atlanta. Should the contractor fail to meet the deadlines, the company, not the city, will pay the fines. The contract requires prior city approval of all improvements proposed by the contractor and we can terminate at any time without cause on fair terms to both parties. So that’s where the good lawyers come in.

Last, 7: trust the process. If you followed lessons 1-6 then you have a fair, open honest process—a good system is in place—but the most important lesson I can share with you is that you must trust the process and stay with it because there will be bumps and bruises along the way.

Now, ahead of us lies the privatization of our sewer system as well. We expect that process to be a little easier only because we’ve done it the first time.

I believe we will continue to look for other opportunities for public/private partnerships.

Atlanta really is famous for these public/private partnerships. That’s how the Olympic games were put on, with public/private partnership. And not only did the city not spend a dime, but we literally were given, through this public/private partnership, hundreds of millions of dollars in new facilities…the Olympic stadium…Georgia Tech got new, a new swimming facility. We, the City, put in 37 works of public art. We used the Olympic games as a catalyst to really transform our city.

So, we have learned that rebuilding our city is much like two wings of a bird. It’s the public and the private sector working together in harmony to lift the bird and allow it to fly. And of course, metaphorically, our symbol is the Phoenix bird. Some of you know General Sherman, the first one who practiced urban renewal, came through Atlanta and on the grounds of the Carter Center, if you have an opportunity to go to the Carter Presidential Center it actually sits at the highest point in our city. General Sherman camped out there and watched Atlanta burn, that was in 1865. So the rebuilding of Atlanta really has been fairly new and we believe that this new partnership with United Water and the privatization of our water system really will allow Atlanta to move progressively into the 21^st century.

I thank you for the opportunity of being her. I look forward to many additional opportunities to talk to you about where we go from here. Thank you.