Sandy Springs, first in cityhood, changes how it does business

The Sandy Springs Performing Art Center, a part of City Springs, a $229 million arts-and-government complex represents the growing city’s downtown.

The Sandy Springs Performing Art Center, a part of City Springs, a $229 million arts-and-government complex represents the growing city’s downtown.

When voters created the city of Sandy Springs, a cornerstone of their yet-to-be-built city hall was this: We will run this government like a business.

For 14 years, leaders preached the power of the private sector, evangelizing the model to a slew of start-up cities.

But after years of outsourcing the bulk of its workforce, Sandy Springs decided this week to bring most of those workers in-house.

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This move means Sandy Springs is backing away from privatism, a guiding principle that made the first city in metro Atlanta’s cityhood movement unique when it formed in 2005. Traditional governments hire people to answer the phones and organize payroll. Sandy Springs has never been that way. In its first year, the city immediately earmarked nearly 40 percent of expected revenue for CH2M Hill, a contracting agency, to do that work.

Sandy Springs’ success inspired other communities to follow suit, sparking the cityhood movement in the metro area.

It was an appealing idea to taxpayers who felt fleeced by a county government that didn’t spend tax dollars as they wanted.

“We’re the poster child, we’re the pioneer, we’re it,” Sandy Springs Mayor Rusty Paul said of the outsourced system. “Our skeptics are going to say, ‘Yeah, we told you so.’ Our advocates are going to say, ‘Why?’”

‘It will fall apart’

Sandy Springs City Council voted Tuesday afternoon at a specially called meeting to offer full-time jobs to 183 contract employees instead of renewing $21 million in existing contracts with multiple companies. Those workers will administer transportation tax money, monitor the city’s finances and issue business licenses and building permits by the end of the year.

The city will now sign their checks instead of a contracting agency. In its presentation to council members, the city said this move could save $2.7 million in the next year. Over five years the savings would be more than $14 million.

“You’ve got to look at the bottom line every time you do these things,” Paul said.

Mayor of Sandy Springs Rusty Paul said the city will save money by bringing out-sourced employees in-house. EMILY HANEY / AJC FILE PHOTO

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But the city isn’t yet committed to changing course beyond a year.

“If it doesn’t make sense, we’ll go away from it until it makes sense again,” Paul said.

This is an about-face for Sandy Springs, which fought three decades to carve out a city in its image from Fulton County. Overnight on Dec. 1, 2005, Georgia’s sixth-largest city was miraculously born.

Its leader and new mayor was Eva Galambos, whose inaugural address, printed in The Atlanta Journal-Constitution, branded the city as purposefully different.

“There are many eyes upon us because we have had the courage to do something new,” she wrote. “We have harnessed the energy of the private sector to organize the major functions of city government instead of assembling our own bureaucracy.”

A 2005 file photo: Eva Galambos holds a flying pig because critics once said that Sandy Springs would be a city "when pigs fly."


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Why? She explained: “We are convinced that the competitive model is what has made America so successful. And we are here to demonstrate that this same competitive model will lead to an efficient and effective local government.”

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Johns Creek, Dunwoody, Milton and Chattahoochee Hills were among those that followed in Sandy Springs’ footsteps by contracting out many of their essential city services. But after a few years, many weaned themselves off such an intense level of privatism due to high costs and a lack of transparency.

Around 2009, the national push for privatization of government slowed. “The model must evolve to become more transparent or it will fall apart,” Johns Creek Mayor Mike Bodker said at the time.

Johns Creek Mayor Mike Bodker sits during a county meeting at the Fulton County Government Center, Monday, Dec. 14, 2015, in Atlanta. BRANDEN CAMP/SPECIAL

Credit: Branden Camp

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Credit: Branden Camp

Drawbacks to the fully privatized system of government became apparent. CH2M Hill fired Sandy Springs’ public works director without the city’s input or knowledge. In other cities, the contracts became too costly.

Cities also had trouble determining how taxpayer money was spent. One contracting agency cited proprietary information as a reason why it wouldn’t share a breakdown of expenditures. Johns Creek didn’t know how much it was spending on code enforcement and Milton had no idea what its costs were to process building permits.

‘We did it right’

Even with this week’s decision, Sandy Springs leaders aren’t quite ready to close the book on privatism. But their new direction looks a lot like good ol’ fashioned city government. For a year, Paul said, he’ll try this new way.

The city of 100,000 residents currently has just 17 employees who are not police officers or firefighters. From the city’s founding in 2005 until 2008, there were six full-time employees who didn’t work in police and fire; in 2018, the number was only up to 10.

Paul said the benefits the city got by negotiating contracts when the economy was weaker have largely fallen by the wayside.

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He pointed out that the city will still outsource a number of services, including the city attorney’s office, as well as security, street sweeping and ambulance services. A total of 27 contracts costing $11 million will remain. But of city hall employees, only 15 full-time workers will be outsourced at year’s end, as compared to more than 200 today.

So does council’s decision to hire workers mean the great experiment failed? Sandy Springs supporters say it isn’t the case.

A 2008 file photos of Oliver Porter, who has been called the "city father." The retired former top executive now living in Sandy Springs was behind that city's successful effort to incorporate. Phil Skinner / AJC

Credit: Phil Skinner

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Credit: Phil Skinner

“Times change, and they have to make a decision based on whatever today’s circumstances are,” said Oliver Porter, the architect of the Sandy Springs plan, who wrote two books on the topic. “… I think it’s been an overwhelming success.”

Bodker said this transition marks a huge change for Sandy Springs. He questioned whether Paul could succeed in reversing the decision quickly when the market changed and the city wanted to lay off employees to bring a new company in.

“Once you get rid of it, it’s likely not coming back,” Bodker said. “You need to consider it a final decision.”

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Tochie Blad, a Sandy Springs-area resident since 1997 and community activist, agrees.

She said went to city hall Tuesday expecting to watch a budget hearing. She was shocked when she realized what was happening.

“They changed our premise for creating a city government in a short, perfunctory meeting,” Blad said.

Paul said he fully expects the cost and efficiency of contracting out services to make sense again, whenever there’s a shift in the business cycle. When that happens, and prices drop, he expects the city to go right back to the private sector.

“We still believe strongly in the model,” he said. “I think it proves we did it right.”

But changing a government’s fundamental structure year to year does not make sense, said Evan McKenzie, an expert on privatism and head of the political science department at University of Illinois at Chicago.

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He said fans of privatism are often passionate about the idea.

“It’s almost like a religious belief: that government is inefficient and that the private sector does things better,” McKenzie said.

Regardless of the model, good management is the biggest factor in a government’s success, said Eric Zeemering, an associate professor of public administration and policy at the University of Georgia. He researched the transition away from privatized government and said that the changes don’t usually matter to taxpayers.

“Residents of a community are often most concerned with service quality and not concerned with the detail of who specifically provides the service,” Zeemering said.

What this means

The city of Sandy Springs was founded on the principle that city government is best run as a business.

So they hired outside vendors to handle most city services, from finance to human resources.

Now there are more than 200 employees who service the city but work for a contractor. Once Sandy Springs brings 183 employees in-house by year’s end — a marked changed in the way the city does business — there will be only 15 full-time contract employees.