Privatization of Georgia cities morphs from Sandy Springs model


In the beginning, the gospel of privatization was as if etched in stone. It was handed down from Sandy Springs, the first new city, to generations of descendants: Dunwoody, Johns Creek, Brookhaven and Tucker.

The philosophy was simple: Any service the government could provide, the private sector could do better. Sandy Springs led the way in 2005, breaking away from Fulton County to incorporate. The new city hired companies to pave roads, provide court services and plan communities. Its success sparked a cityhood movement throughout metro Atlanta that continues to this day.

Sandy Springs is still an adherent of the outsourcing theory. But privatization has gradually given way to more traditional government in many of the nine cities that followed.

“It wasn’t all that it promised to be,” former Brookhaven Mayor Rebecca Chase Williams said of the privatization model. “It was quite a learning experience. On paper, it seems like it’s cheaper to outsource rather than having your own employees. We learned that wasn’t necessarily the case.”

While Brookhaven, founded in 2012, started in the Sandy Springs mold, the city brought once-outsourced programs in-house, including community planning, human resources and government technology systems. It still contracts for road paving, park maintenance, permitting and code enforcement.

Even those that have backed away from blind faith in privatization still see it as the best way to start a new city.

Mike Davis, the former mayor of Dunwoody, said it would have been “foolish” for the city to do anything but use outside services when it began operating in 2008. But after a few years, Davis said senior managers who got their paychecks from outside companies but were working on behalf of the city “were struggling with having two masters.” The city brought department directors in-house.

Workers struggled because “the boss wanted to maximize profit, and the city manager wanted additional service,” he said.

In Sandy Springs, faith in the model remains unshaken, though it has evolved.

The city initially handed the keys to City Hall to one company, CH2M, but in 2011 they parted ways. Sandy Springs officials saved about $7 million a year by dividing services among six contractors.

Those outside companies provide everything from court services to communications. The city has just nine employees, other than its 270 police officers and firefighters. Mayor Rusty Paul said the city’s system works because it is flexible. As the city needs to add staff or decrease it, it can quickly turn to its contractors to make the required changes.

Sandy Springs is able to offer monetary incentives to encourage good work, Paul said, and contracted employees can be less risk-averse and more entrepreneurial than traditional government workers. Yes, he knows the companies he’s contracting with are making a profit. It doesn’t sway him.

If they weren’t, he said, “our model wouldn’t work.” And the system works “unbelievably well.”

The famously bare-bones city is in the midst of building a $225 million project, a grandiose city hall and performing arts center that Paul hopes will “create a sense of place” for its disparate subdivisions. It’s a public-private partnership, and Sandy Springs has a contract to handle the additional responsibilities it’s creating.

“We don’t really want to learn how to do it,” he said. “That’s the beauty of this model. We don’t have to.”

Evan McKenzie, a professor of political science at the University of Illinois at Chicago, calls the deep devotion to outsourcing “privatism” — a sort of religious adherence to the belief that the private sector can always do better than the public sector. Using outside companies to run a city, McKenzie said, is not a panacea.

“It’s usually more cost-effective to deliver certain services through government,” he said. “The worst thing a municipality can do is drink the privatization Kool-Aid.”

Don’t tell that to Jason Lary, the mayor of the new city of Stonecrest. He plans to learn from other municipalities that outsource, and is contracting out city administration, planning and zoning, attorneys and building permitting. The Stonecrest City Council voted Monday to hire CH2M as its primary service provider.

“It’s much more efficient doing it this way,” Lary said. “When you’re starting out with limited services, it’s best to go with those people who have been doing this for some time.”

South Fulton is taking the opposite tack. Leaders there want to assume control of the services currently under the county’s umbrella and the employees who provide them. They are negotiating agreements with the county to transfer those departments to South Fulton. Mayor Bill Edwards said his city is an “anomaly” in recent memory.

“At this stage, we plan on doing it all in-house,” Edwards said. “We really haven’t had any need to outsource.”

New cities almost always rely on companies to help with their start-up so they can begin delivering services as quickly as possible, said Amy Henderson, spokeswoman for the Georgia Municipal Association. It would be too difficult for cities to quickly hire government employees, develop expertise and manage complex operations on their own.

“Unlike settlements that grew organically and then services were added as populations grew, with these cities they have a date specific when they had to be up and running,” Henderson said. “As time goes on and those cities get settled in, they may decide they don’t want to privatize anymore.”

McKenzie, the professor, said outsourcing can make sense on a case-by-case basis. But contracting out every municipal service can bankrupt a city, he said, particularly those that lack Sandy Springs’ wealth.

Oliver Porter, the founding father of outsourcing who literally wrote the book on it, “Creating the New City of Sandy Springs,” said the only thing he would change if he was starting a city now is to outsource more.

“The model has proven itself,” Porter said. “I don’t think there’s anyone who can legitimately question whether the cities have provided more efficient services and brought government closer to the people.”

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