The North Miami Beach Utility Transition: Taking Back a Utility During a Pandemic

The City of North Miami Beach (City) Commission voted in August 2020 to terminate their operations contract for the maintenance and operation of North Miami Beach Water Utility (NMB Water), which serves over 180,000 customers, based on financial drivers, customer service, efficiencies, and overall will of the commission. Consultants, aware of the pandemic, shortage of water plant operators, and the magnitude of what was being required, estimated twelve to eighteen months to accomplish the commission's directive. The contract required a 6-month transition period to migrate the staffing and operations of the entire utility to the City, spanning all utility functions from customer service, water and wastewater operations and maintenance, engineering and utility services, compliance and laboratory, water treatment plant operations, warehouse, and maintenance. In a matter of just weeks, the City tasked tasked another Consultant to develop a transition plan (shown in Figure 1), identifying and managing transition risks (shown in Figure 2), and implementing the due diligence necessary to facilitate a seamless transition. The rapid transition demanded a compressed schedule with most weekly and other meetings being held virtually due to the ongoing impacts of the COVID-19 pandemic. A transition team made up of City and Carollo leaders was established to facilitate the migration of all utility services (Photo 1). This team determined that the transition would occur in three phases staged approximately one month apart. Initial planning activities included developing a transition schedule; establishing a risk mitigation plan to track and respond to risks that may occur during the transition; and creating an action log to track, coordinate, and prioritize activities. Establishing a plan framework that laid out the steps for a successful transition was the first collaborative activity completed by the transition team. This framework provided a common vision and critical path. After the framework was in place, the following steps were completed: 1.Establish a risk register and begin tracking risks so that they could be analyzed and acted upon if necessary. 2.Conduct facility inspections to determine the presence, inventory, condition, and readiness of all equipment, facilities, supplies, and systems needed for the phased transition. This activity was called due diligence, a prudent endeavor when transitioning a facility's operational control. These preliminary tasks helped the City and Carollo prioritize and segment the needed next steps to formulate a coordinated plan. The planning steps detailed tasks that would allow the team to meet milestones and steps needed to prepare for the three-phase transition. As tasks were completed and milestones were achieved, the plan changed to meet project needs, and the team reset and reprioritized the tasks and milestones. Table 1 shows the milestone dates for the transition. Figure 3 presents the major critical areas of consideration for the transition, while Figure 4 highlights other addressed areas. Phase I of the transition focused on customer service, billing, and meter readings. The customer service transition was seen by the City as a critical first step for re-establishing a direct connection with their customers, improving service, and rebuilding trust with their community. A successful phase transition without interruptions or failures was completed on November 16, 2020, 32 days after the NTP. Photo 2 shows the ribbon cutting event commemorating this milestone. Phase II of the transition targeted the Water Distribution and Wastewater Collection (W/WW) and the Utility Technical Services (UTS) departments, which provide support services to both internal and external customers for utility locations, inspections, and responses to water and wastewater pipeline breaks. These two 'outside-the-fence' departments were successfully transitioned without interruptions or failures on January 7, 2021, 84 days after the NTP. Phase III of the transition migrated all remaining departments, namely operations of the Norwood-Oeffler Water Treatment Plant (NWTP) and its laboratory, warehouse, and maintenance department. These departmental transitions came last because they included regulatory and operational compliance challenges that required additional time and planning. Critical objectives included protecting water quality and quantity to assure uninterrupted customer service, establishing a safe workplace, and complying with all regulatory requirements. This final transition phase was completed on February 4, 2021, 112 days after the NTP and 2 days before the six-month contractual limit. The transition of all utilities (i.e., power, natural gas, etc.) and building services (i.e., maintenance of buildings and grounds) to the City's Public Works department began in Phase I. During this phase, all utility payments were taken over by the City, along with the maintenance of buildings and grounds addressed in Phase I. Similar facility maintenance transitions took place during Phases II and III. All building and grounds maintenance were transitioned to the City by February 4, 2021. The wide scope of this utility transition and its compressed timeframe, especially during a global pandemic, brought significant challenges. Increased workloads were placed on City support staff, long lead times and delays impacted fleet and IT needs, and the tight regional labor market for qualified personnel accelerated the demanded turnaround time for filling critical positions. Still, the City and Carollo built a strong leadership, operations, and support team for this transition. Once communication protocols were established, the team's business relationship with the outgoing contractor was cordial and cooperative, and mutual professionalism and attention to detail encouraged the timely completion of all three transition phases. This was a monumental task with a compressed schedule, and a story of resilience, leadership, and the people who maintained operations and protection of public health during the 6-month transition duration as over 90 new employees were brought on board to provide water and wastewater service with continued level of service. This paper and presentation will provide the finance opportunities, challenges, and realizations to transitioning the operations from external contract to internal, as well as describe the herculean lift of obtaining, transitioning, and managing new assets and implementing knowledge transfer all while continuing the same level of service to NMB customers. The NMB Water staff, and supporting transition team comprised of NMB Water, City, and consultant staff, were considered the most significant asset. Increased workloads were placed on City support staff, long lead times and delays impacted fleet and IT needs, and the tight regional labor market for qualified personnel accelerated the demanded turnaround time for filling critical positions. The team met these challenges, and many more, and the transition was completed on February 4, 2021, 112 days after the NTP and 2 days before the six-month contractual limit. With financial savings as a primary driver for the transition to City management, a comparison of cost of operations before and after the transition will be presented, identifying functions where savings have been realized, and where more expenses have occurred. In addition, the execution process of this utility transition, as well as what findings and lessons learned to delivering this successful transition will be shared. Benefits and Significance: The story and sharing of this experience may benefit and apply to other water utility leaders and managers, as well as consultants who are supporting utilities, in understanding financial drivers, benefits and challenges in transitioning from contract managed to internal managed operations, as well as executing disruptive change in their organization management.