New city can’t afford contracted services

One of Fulton County’s breakaway cities trying privatized government services has decided the experiment cost too much.

The Chattahoochee Hills City Council voted Tuesday night to cancel its contract with CH2M Hill, the Colorado-based company that provides most services, except for public safety, to the South Fulton municipality.

CH2M Hill has similar contracts with the larger North Fulton towns of Sandy Springs, Johns Creek and Milton. Leaders of those towns said they have no plans to cancel their contracts.

“It will have absolutely no effect,” Sandy Springs Mayor Eva Galambos said of the Chattahoochee Hills decision. “We have a good relationship, and we feel we are getting good services.”

However, the towns are seeking more financial transparency from CH2M Hill and want contract changes to help cut costs.

Chattahoochee Hills Mayor Bill Hayes said the town likes CH2M Hill’s work, but the slumping economy made the relationship too expensive for the town of 2,500 people who live on 33,000 acres. He said the city has a annual budget of about $1.5 million and pays about $500,000 a year to CH2M Hill.

“It wasn’t anything they’ve done,” Hayes said Wednesday. “We just can’t afford them anymore.”

Herb Washington, CH2M Hill’s director of operations for municipal services, said he didn’t think contracts with other cities were endangered.

“It was purely a financial situation,” Washington said. “It had nothing to do with our performance. They couldn’t afford to pay our contract.”

Sandy Springs, Johns Creek and Milton started the privatization trend earlier this decade, fighting to become municipalities partly because residents were dissatisfied with Fulton County government services.

Chattahoochee Hills followed suit and incorporated Dec. 1, 2007. CH2M Hill manages services such as public works, recreation and planning and zoning.

“We couldn’t have started the city without [CH2M Hill],” Hayes said.

But the decision to end the relationship, effective Dec. 1, was made because the city’s revenues dropped sharply, with property tax collections only 78 percent of the previous year, Hayes said.

Chattahoochee Hills’ government operation is tiny compared with those of other North Fulton cities. Sandy Springs has 149 dedicated CH2M Hill employees; Johns Creek, 108; and Milton, 38.

Chattahoochee Hills has only one dedicated CH2M Hill employee, the town clerk. The rest of the work is done by people on the city payroll or shared CH2M Hill employees. The city will have to hire two or three new people, the mayor said.

While the other cities continue with CH2M Hill, they want to know how much it costs to provide services.

“We’re asking for more information and slightly more transparency,” Milton City Manager Chris Lagerbloom said.

Johns Creek Mayor Mike Bodker said, “By and large, it’s been a great relationship,” but he wants more flexibility. For instance, the city recently served notice that it wants CH2M Hill to stop running the city human relations department. The city or another private company could take over that job, he said.

“I think private-public partnerships work, but they evolve,” Bodker said.