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Contracting out street maintenance could provide big savings for cash-strapped Lodi


Monday, August 10, 2009 6:04 AM PDT

Comments (24 comment(s))

Lodi can be referred to as a full-service city. Our city provides public safety, electricity, water, wastewater, street maintenance, public transportation, parks and recreation and a library. This may sound normal, but it isn't.

There are cities in California that do not have their own fire departments. Many others have no public transportation and some have no libraries. As you know, most do not provide electricity via a city-owned electric utility.

My question today is, should Lodi continue to provide street maintenance using an internal streets and drainage division, or should this work be done using private contractors?

I raise this issue because of the recent discussions about the state "borrowing" the gas tax from cities and counties, and because a financially stable city, Citrus Heights, uses contractors for their street maintenance.

If you missed it, the city manager is rather certain that the state is going to "borrow" Lodi's share of the gas tax. If that were to happen, Lodi would be without $1.06 million of a $3.1 million budget. This means less for maintenance. If that is the case, should Lodi continue to employ people on an ongoing basis for street maintenance?

With that question on the table, can Lodi save money by using contractors, and would it be just as efficient?

When I spoke to the city manager of Citrus Heights, he told me that one of the first decisions he made when he went to work in Citrus Heights, shortly after Citrus Heights became a city, was to use contractors for street maintenance. He believes that this is a substantial savings primarily because of the savings in equipment, not to mention the costs of salaries and benefits. He also said that the system works very well, since many contractors are available because of the volume of work.

Regarding the costs of equipment and the potential savings, if you look at Lodi's vehicle and equipment list, the streets division has 88 items. All of these things need a place to be stored, and they need maintenance. Most of all, not all 88 get used every day, so our investment in equipment sits idle until needed. Is that a good use of our money? I don't think so.

Undoubtedly some will ask, what about an emergency?

Well, what happens when your sewer line backs up? You call someone to fix it and that is when you pay for it, but those emergencies are rare. Lodi would do the same thing, and something tells me that if Lodi were using contractors regularly, they could and would respond regardless of the hour.

What about the quality of the work? Well, can you tell me that the quality is that much better now? If the contractors wanted to keep working, they would do a good job. And if they didn't, they wouldn't get paid.

Would this contracting for services be unique for Lodi? No.

Lodi has a parks staff that maintains and manages Lodi's parks. But who manages the Veterans' Plaza, a park in my mind, and the landscaping at city hall? A contractor.

Who manages the median landscaping on Cherokee Lane and Lower Sacramento Road? You got it — a contractor.

Now, I'm not saying this would be easy. It would be a transition to another system and many people would lose their jobs, but Lodi must find ways to save money while maintaining services, and I think this is worth investigating.

On another note, I recently saw a news story about the California controller holding unclaimed funds, and how some of these funds are for cities and counties. Well, I went to the Web site and searched "city of Lodi." Sure enough, the California controller's office has three amounts that it is holding as unclaimed funds for us. Now the amount is small, at $713.15 — but money is money.

John Johnson, CFA, is a Lodi-based business appraiser. Contact him at john@johnejohnson.com or 369-1451.

Reader Feedback

ameriCAN wrote on Aug 14, 2009 6:35 PM:

" lodidian: I believe the city could save a lot of money by contracting work such as street sweeping and repainting if these kinds of things are done and paid for only as needed.

You obviously speak out of ignorance as these jobs are done daily per law requirements of storm water permits and traffic safty. And yes for less money than a contractor, and it has been proven. "

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lodidian wrote on Aug 14, 2009 4:38 PM:

" It seems to me this issue is about the advantages of paying variable costs vs. fixed costs.
I believe the city could save a lot of money by contracting work such as street sweeping and repainting if these kinds of things are done and paid for only as needed. The cost of these kinds of activities would become variable costs vs fixed costs. "

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2much wrote on Aug 14, 2009 2:56 PM:

" John is brilliant. Nobody ever thought of contracting out. Except Tracy that did that with street sweeping only to do it in house again, and then contracted it out, then did it in house, I think it’s contracted out currently. Nothing wrong with that. Oh, then there is Stockton; they sold their water department, a brilliant idea. Except they had to buy it back wasting millions of dollars and having to fix their water infrastructure that wasn't maintained properly. There are more, but you get the idea. Exactly how does this save money? You spend a fixed amount of money on street repairs, whether done in house or by a contactor. Contractors usually operate on a profit margin, the good ones do anyway. And I’m sure you checked out how much a square foot paving repairs costs to make sure a contractor does it cheaper right? If your objective is to get rid of employees, just say so. Maybe you’ll do them a favor if you get your way and they will have to work for Granite and make more money. "

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ameriCAN wrote on Aug 13, 2009 3:44 PM:

" Hey T&C are you to good to help out your Town and Pick it up.

I see a little old lady that walks up and down Ham lane with a garbage bag picking up litter because she cares about her City.

With staff reductions and cut backs, and Street workers that have already been laid off maybe we might have to do it the american way and pitch in.

*-Don't Trash Lodi-* "

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wtf wrote on Aug 13, 2009 12:15 PM:

" Mmmmm....mmmm, good! How's this for a "nutritious" breakfast?

Credit Crunch

http://1.bp.blogspot.com/_nSTO-vZpSgc/STGRIaKEijI/AAAAAAAAD4s/b23Dx9qXETw/s1600-h/credit+crunch+cereal.png "

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T & C wrote on Aug 13, 2009 8:33 AM:

" Take a look at the alley entrance at the 100 Block of E. Oak St. folks! Tell me the garbage dumped at the curb has been "Noticed" by those responsible for keeping our streets clean? It has been there a long time. "

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SportsGuru wrote on Aug 12, 2009 3:33 PM:

" .
I sincerely hope the City Council does "better math" on the cost of street cleaning, than they did in trying to estimate costs of maintaining an artificial turf surface at the Grape Bowl.

In that article, they stated turf had a 20 year life - while most studies cite 10 to 15 years at best. So the city's cost estimates for maintenance of turf are very skewed.

Let's hope they haven't been using "Lodi City Council" math on this issue as well. "

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ameriCAN wrote on Aug 11, 2009 8:59 PM:

" lodidian cars should not be parked on the street on your sweeper day. You would be amazed at the amount of debris that sweeper picks up in a day, next time stop them and ask to see in the back. Or go by their yard and look how much they dump in a day. The sweeper is ran on CNG and was paid for with state grant money. If i had goo in front of my house i would clean it myself. How would a contractor sweep better when they all use the same machine. Maybe we should outsource/contract out all American jobs to save a penny now and pay for it later ask your boss *-Don't Trash Lodi-* "

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max stanfield wrote on Aug 11, 2009 6:30 PM:

" I dont have a dog in this dogfight, but lodidian has it right. All the street sweeper does is smear the goo around from the gutter to the pavement. Then it takes a few weeks and a few rains to clear the streets. This is definitely a waste of money. Good job diane. "

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G. Wiman wrote on Aug 11, 2009 7:45 AM:

" Note: the City workers also recieve benefits, I figured that is a well known and discussed item. I do not believe itr is more then 50% of the base hourly pay. My point being that while it may appear to be less expensive to contract all work out, it may not be. Sometimes work is contracted out because the City does not have the equipment, manpower or specialized training to perform the work. "

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G. Wiman wrote on Aug 11, 2009 7:42 AM:

" From the City Website: Street Maintenance worker 3 (superviser) pays from $20.20 to 24.55 per hour. State Department of industrial relations prevailing wage rate for: backhoe operator $32.38 per hour plus $21.22 for benefits. For laborer $28.89 per hour plus $14.26 per hour for benefits. This is what the City is legally required to pay contractors. The reason more items are contracted out by both the CIty and state is because they do not have the staff to perform the volume of work. "

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JustForKicks wrote on Aug 10, 2009 11:22 PM:

" Where did you see lots of equipment. It takes two men and one truck to do street painting. Now that the stop is repainted there is no way to tell if it needed it or not. So why go and look at it now. Stops, yields, speed limits, school zones, crosswalks are repainted regularly to keep the city out of law suits. Frequency of street sweeping is actually required through the city's storm water permit. Let that go and the city could be subject to fines. "

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lodidian wrote on Aug 10, 2009 9:47 PM:

" I watched in awe last week as a city crew of two men and lots of equipment, repainted the word STOP on our little street---Evert court.
Folks---drive by Evert court and check it out. This little court did not need the word stop repainted on the street.
I believe our city crews do a lot of things that do not need to be done in order to justify their existence. This is just one example.
Today, the street sweeper made a pass through Evert court. The street was cleaner before the street sweeper drove though and around two parked cars. This is another example of wasted resources. I hate to think of the cost of this monster and the cost to fuel it, to maintain it, and man it. This is crazy!
I say contract the street sweeper service or at least cut back on the routing schedule, and stop unnecessary street painting. "

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Gator wrote on Aug 10, 2009 8:19 PM:

" What’s wrong with having the city employees contribute a greater percentage of their benefit package say 60%.. Works for other companies’ Dogs Nailed it on the license fees. Also PG&E pays a huge property tax
on every square inch of their property and equipment. I have heard that
the only company that pays more are the railroads. Also in the works is
a little item about your health. The better you take care of yourself the
lower the premiums. Smokers and drinkers, overweight Etc are going
to pay through the nose… Robert Reich's Blog is worth a look. He
all but says Obama is in bed with the Big pharmaceutical companies and
as he says that is not a good thing… "

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ameriCAN wrote on Aug 10, 2009 6:34 PM:

" Well dogs whos talking about parks? I thought this was about streets. Oh and how about you get up the nerve up and stop and ask one of them. maybe they are on their way to one of the many parks that way Emerson, Peterson, Katzakian, Glaves, Candy Cane or Lodi Lake hmmm. You know the yard is at Stockton & Elm stop by and see where your tax dollars go. "

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dogs4you wrote on Aug 10, 2009 6:21 PM:

" ameriCAN, booooo hoooo, the sky is not falling. While your resting and speaking of parks, perhaps you can tell me what the hell do the city employees that tend to Peterson Park do all day. I see them drive those little cushman utility scooters up and down Elm St. most everyday. One trip I can understand, but constantly, there must be a reason, you got one. "

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ameriCAN wrote on Aug 10, 2009 3:49 PM:

" I also can gurranty you will not find Granite or Stephens ect. to work for 16.00-20.00 an hour check the web-site

http://agency.governmentjobs.com/lodi/default.cfm?action=viewclassspec&ClassSpecID=52588&Agency=1164&ViewOnly=Yes

And remember you will have to keep some full time year round per state law to maintain street sweepers and storm system maintenance. also whats the cost to get a contractor out on emergency pay after midnight when every year this town floods with rain water or stop signs down or bad car wrecks trees down blocking streets on cars and house's. Don't forget you will have to give-up your leaf removal program also. "

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ameriCAN wrote on Aug 10, 2009 3:31 PM:

" This already is happing they have cut down street crews by 50% over past 10 years have not hired in over 8 years and contract out almost all new construction to contractors. All that is left is around 15 guys who pay a portion of there medical, retirement, pay taxes and have taken pay cuts to help out the city. They preform maintenance on streets, alleys, trees, sidewalks, storm systems, graffiti, signs, street paint crews. I think you dont understand that 88 pieces of equipment means 75% is small engine stuff like mowers, tampers, cement cutters ect. You will not have the customer service or care of the job like you get with a guy who lived and worked for this town for 20+ years and cares about it so much like a city employee does. "

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dogs4you wrote on Aug 10, 2009 1:53 PM:

" The town of Lodi, along with all city, state and federal vehicels carry an excempt licence plate. Think of how much of a savings this is to every vechile in the cities fleet of cars, trucks, especially the larger one`s used for Lodi Electric. On the other hand PG&E, AT&T, Comcast all have a sticker on their plate. Must be the difference between a little municipality and a big corporation.

If city workers should decide to strike, let `em and close the door. A perfect chance to let outside contractors do the work, as needed, allot of money could be saved. "

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Cogito wrote on Aug 10, 2009 1:44 PM:

" New2Cali, CalTrans used to do a lot more of the road construction work than they do now. They've found that hiring outside, union, contractors like Granite, and Teichert, actually saves them money. The city of Lodi wouldn't be any different. But Opus Dei brings up a great point. "

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Opus Dei wrote on Aug 10, 2009 1:31 PM:

" You don`t get it John, those employees are members of unions. They ain`t gonna roll over just because the state is broke! "

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max stanfield wrote on Aug 10, 2009 11:36 AM:

" I guess John's summation, "...I think this is worth investigating." is a good one and perhaps a careful review of all the pro's and con's, both short term and long term would be a good start. "

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new2cali wrote on Aug 10, 2009 9:00 AM:

" Reading this column, I begin to wonder if we think the whole idea through. Sure it sounds good that we, as a city, save money by hiring out a contractor to do the work. Lets think about the other side now. I am pretty sure that most of the lower paid employees would say that even though the medical benefits are good when you need them, there are probably not many that they still have because of negotiations this past year. So how much money would the city REALLY save from Streets benefits? What contractor would work for the amount that city employees work for? Lets be real about this. Then not only that but all the employees would end up on state funded assistance. This means it will be coming straight from our own pockets. I am sure that many would complain about this as well. Why dont high paid city employees take a decreased pay cut for a few months. I bet we could save about the same amount as putting our guys out on the streets. No pun intended. "

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Half Full wrote on Aug 10, 2009 7:50 AM:

" Week after week I look forward to John's column. He is usually thinking "outside the box" to help solve the City of Lodi's woes.

I do not always agree with John, but in this case of contracting out street maintenance I totally agree.

One word that jumped off the page to me was "BENEFITS." Use a Contractor and the City has a one-time cost. Continue with City Workers and we have ongoing costs in funding their health benefits and pension for years and years. "

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