Delivering Municipal Services Using a Nonprofit Provider: City of Central, LA

A Case Study of a Partnership

Overview

Central is Louisiana’s 12th largest incorporated city and its newest.  Located in the East Baton Rouge Parish about 10 miles from downtown Baton Rouge, Central became an independent municipality in April 2005 after 63 percent of voters supported incorporation.  It has 27,500 residents living in a 66-square-mile area with 275 miles of roadway and is part of the Baton Rouge Metropolitan Statistical Area.  The city has a full-time elected mayor, a five-member city council, two full-time staff (a chief administrative officer and administrative assistant), and two contract employees who work on an as-needed basis (finance director and city attorney).  Central has an annual operating budget of $6 million and reserves of $8 million.

Since its incorporation, Central has contracted out most city services, first through an intergovernmental agreement with East Baton Rouge Parish (2005-2008), followed by a public-private contract with a large for-profit corporation (2008-2011).  In July 2011, Central entered into an agreement with the Institute for Building Technology and Safety (IBTS) to deliver municipal services through June 30, 2016, after a competitive bid process.

IBTS is a national, nonprofit, 501(c)(3) organization committed to helping governments at all levels provide quality services, reduce risk, enhance public safety, improve quality of life, and build stronger communities.  Its work is guided by a five-member Board of Directors made up of state and local officials nominated by the Council of State Governments (CSG), International City/County Management Association (ICMA), National Association of Counties (NACo), National Governors Association Center for Best Practices (NGA Center), and National League of Cities (NLC). IBTS has an average annual operating budget of $18 million and 125 employees.

IBTS’s response to the city’s request for proposals (RFP) emphasized collaboration, transparency, efficiency, contract flexibility, service over profit, and exceptional value to the city as the foundations for its approach to service delivery.

After nearly two years of working together, city officials, residents, and the IBTS team have built a strong partnership that is successfully delivering municipal services.  This case study summarizes the process that led to the partnership and highlights success factors that may be transferable to other municipalities considering alternative service delivery models.

The Central Approach

With fairly limited revenue-raising capacity, Central’s founding leaders assumed from the start that they would rely on alternatives to hiring a traditional, full-time staff to deliver most municipal services.  The city’s primary sources of revenue are a two-percent sales tax, auto sales tax, and charges for some services.  According to city leaders, the decision to incorporate provided a real opportunity to build the city that residents wanted from the ground up.

After six years of experience, first with an intergovernmental agreement with East Baton Rouge Parish and then a public-private partnership, the city decided to examine what had worked well in its service delivery models and what changes it wanted to make rather than automatically extending the contract of its then-service provider.  A 21-member panel of citizens carried out a detailed, line-by-line review of the existing city services contract.  The city’s six-year learning curve combined with the detailed contract review led to the decision to issue a competitive request for proposals in 2011.

The city’s RFP broadened the scope of services and offered several options for bidding on portions of the service package in order to consider contracting with more than one provider. Because it did not receive separate proposals for all portions of the partial service options, Central officials only considered the four proposals for carrying out the full range of requested services.

Law enforcement is still handled primarily by the East Baton Rouge Parish Sheriff’s office, although Central has a small city police department with an elected police chief and volunteer officers.  Residents also pay fees to East Baton Rouge Parish for sewer and waste collection services.

From the city’s perspective, the evolving experiment with contracted services has been successful.  Central’s first and only mayor, Shelton “Mac” Watts, said the approach has helped the city grow its reserves while delivering efficient, cost-effective, and reliable services.  The contract with IBTS, he said, has produced a strong partnership and led to significant improvements in service delivery—including the introduction of online permitting which was a desired service identified by the

contract review panel.  In addition, Mayor Watts said the partnership with IBTS is “seamless” to the public.
“Most citizens don’t know who delivers the municipal services,” Mayor Watts said.  “They pay attention to whether the pothole is filled, how quickly they get a response when they call, and whether they get what they need when they visit the Municipal Services Center.”

So far, Mayor Watts said, the citizens are very satisfied.

The IBTS Approach

As a nonprofit organization, IBTS built its response to the Central RFP around its commitment to public service, experience delivering many of the services Central needed to other municipalities, and service-over-profit philosophy.  In addition, IBTS already had deep roots in Louisiana with contracts serving more than 20 jurisdictions and two fully-staffed branch offices in the state.

In its proposal to the city, IBTS committed to:

  • Carry out a smooth and seamless transition without any disruption of city services
  • Promote local job growth and security
  • Ensure transparency of services
  • Deliver timely and cost-effective services
  • Create efficiencies in service delivery so that resources can be redirected to value-added services
  • Maintain close connections with all stakeholders to build trust and confidence

To confirm and quantify its “nonprofit difference,” IBTS pledged to return any excess income to the city or increase services to the city if its expenses, including a reasonable fee for the risks of the project, are less than the final fixed price.

Two years later, the IBTS team is meeting city expectations based on feedback from the mayor, regular reports to and discussions with the city council, and daily interactions with and feedback from citizens both in the Municipal Services Center and throughout the city.  The 25-member IBTS-Central team includes 17 full-time and eight part-time staff who work out of a centrally located, bright, welcoming service facility that opened for business on July 1, 2011, the day IBTS took over the service contract.

With delivering the best-possible service as its bottom line, IBTS has emphasized actions and strategies that reflect its nonprofit philosophy to establish a sustained, successful partnership.  “Comfort, confidence, and trust are essential in public service,” said IBTS Chief Executive Officer Ashok Goswami.

Three initial actions that have contributed to success so far in the relationship are:

A seamless transition.  IBTS viewed the transition as a 15-day relay race designed to ensure a smooth passing of the baton from one service provider to another.  Transition work began while contract negotiations were still underway and included:

  • Creating a team of headquarters staff to coordinate all aspects of the transition
  • Interviewing, hiring, orienting, and training staff to deliver services to Central residents
  • Finding a location for the new services center and completing all physical preparations before opening day
  • Developing initial operating procedures
  • Planning a welcoming ceremony to open the new service center on July 1, 2011

When the service center opened, the paint was dry, all furniture and equipment were in place, and the new Central team was ready to serve.  Citizens arrived at the services center on day one to do business with the city-and the IBTS team was ready.

Local presence.  From identifying partners to respond to the RFP through hiring staff to carry out the services, IBTS emphasized local presence and local connections.  Carrying out that goal included:

  •  finding a program director and subcontractors with solid professional reputations and significant experience in the state
  • hiring staff with municipal experience and good performance records beginning with people already working in Central under the previous contract

In particular, IBTS felt employees who had worked for the city under the previous contract were potentially great resources with valuable institutional knowledge and experience to contribute to a smooth transition.  All IBTS employees in Central have municipal experience either in Central under the previous contract or in the Baton Rouge area.

Executive involvement. While IBTS’s Chief Executive Officer and Chief Operating Officer have delegated day-to-day work to the Central team, they were directly involved in the transition process and remain connected to Central operations two years later. The Chief Operating Officer interviewed all staff who were considered for positions on the Central team and oversaw day-to-day operations for the first three months.  Today, he provides management oversight through regular interaction with the Program Director and involvement in any new policy issues or significant challenges.  The Chief Executive Officer has monthly conference calls with the Mayor to maintain a one-on-one dialogue, discuss the continuing partnership, and identify any challenges or emerging issues that could affect service delivery. “My focus is to help mitigate any obstacles to excellent service delivery and to identify potential problems before they become problems,” CEO Goswami said.

Both of IBTS’s executives visit Central periodically to reaffirm the headquarters commitment both to city leaders and to the Central staff.  IBTS staff in Central say they value the frequent contact with headquarters staff to maintain a connection with the overall IBTS focus as well as the Central mission.

The IBTS Board of Directors held its regularly scheduled quarterly meeting in Central in April 2013 to further reinforce the sustained organizational commitment to the service mission in Central.

Lessons Learned from the Central-IBTS Partnership

The Mayor’s Perspective

Mayor Watts identified four factors that have contributed to a successful partnership with IBTS during the first two years.  Those factors are:

A cost-effective contract.  From the city’s perspective, it is getting more and higher-quality services from IBTS at a lower cost than from the previous vendor. The potential of financial benefit to the city either in the form of revenue returned or additional services provided that was offered in the IBTS proposal remains an attractive possibility for broadening the scope of services if the opportunity arises.

A strong program director/project leader.  The success of a service-delivery partnership depends heavily on the skill of the program director/project leader.  Key project leader skills that Mayor Watts said have contributed to the Central success are

1)    a strong and diverse background in municipal services;

2)    the ability to deal effectively with the public and “tolerate” all citizen demands and expectations;

3)    a close and comfortable working relationship  with the mayor/top city leaders;

4)    strong communication skills;

5)    the ability to lead and motivate employees; and

6)    the capacity to get the job done within the parameters of the signed contract.

A shared commitment to public service.  IBTS’s nonprofit status and stated philosophy of service over profit have made a difference in the working relationship.  “IBTS’s primary focus is service to the citizens rather than making money,” Mayor Watts said.  “As a nonprofit, they want to break even and have demonstrated that they have a vested interest in delivering the best possible services to our city.”

A good working relationship with the top executives.  Both the IBTS Chief Executive Officer and Chief Operating Officer have stayed involved in the work in Central to ensure its continued success and to hear about any problems, challenges, or complaints early and directly. That sustained high-level connection, periodic visibility of the executives, and the comfort of knowing that the mayor can call the CEO anytime and get an immediate response have deepened the relationship.

IBTS’s Perspective

IBTS’s key success factors closely parallel the mayor’s perspective with a few operational additions.  Additional success factors include:

A well-crafted contract that ensures both accountability and flexibility.  The fixed-cost contract between the city and IBTS is the foundation for a successful relationship.  The contract defines service accountability and ensures that IBTS can do the expected work within the agreed-upon price.  At the same time, the contract must be flexible enough to accommodate changing or unexpected needs without requiring major revisions or change orders.  “The city needs to know that, within reason, we will be there,” said CEO Goswami.  “The contract must be viewed as an instrument of possibilities rather than a statement of operational boundaries and limitations.”

Empowered and cross-trained staff.  While the contract creates a framework for service, empowered and well-trained staff are responsible for implementing the framework. To maximize cost-effective services, IBTS created flexible jobs with some overlapping responsibilities and supports a multi-tasking, consensus-building approach. The orientation for the newly-hired Central team emphasized the IBTS commitment to high-quality service and responsiveness along with a clear understanding of operating procedures for all functions.  Central staff members also have considerable autonomy to carry out their jobs within established procedures and the commitment to responsiveness and high-quality service.  Several IBTS staff members in Central confirmed that they feel well-informed about the IBTS commitment to public service and well-connected to the mission.  “We know what’s going on, are informed about and involved in solving problems, and know what is expected of us,” one employee said.

Attention to events and needs that citizens relate to.  Filling potholes, responding to storms, and handling complaints quickly and efficiently increases residents’ confidence, trust, and comfort.  Public works services are important to a well-functioning municipality and highly visible to the citizens so they demand extra attention and responsiveness.  IBTS views the needs of citizens not as problems to be solved but as relationships to be built and sustained.

A focus on service improvement.  IBTS is committed to introducing changes that improve the citizen-government interface and provide more efficient and cost-effective services whenever possible.  For example, the new online permitting system introduced earlier this year lets customers apply and pay for permits online; provides easy access to plans and documentation online; speeds up inspections scheduling, status, and results; and contributes to a greener Central. The chart beginning on page 12 provides a summary of recent improvements in selected departments.  IBTS is also working with the city to redesign its website to improve access to important public information, provide more e-government services, and improve the city’s profile for economic development.  Since IBTS is committed to returning or reinvesting any cost savings in Central, its focus on improvement and more efficient service benefits the government and its citizens. “Our eyes are always on the quality of the service, not the bottom line,” said CEO Goswami.

Being a partner rather than a vendor.  IBTS has approached its work with Central as a committed partner working in the background to meet local needs and supporting the elected leadership’s vision for a successful city.  The approach emphasizes close connections, responsiveness, flexibility, and transparency in the partnership with Central.  IBTS’s smaller organizational size, in part, contributes to its ability to develop a close partnership with both high-quality staff on site and top-level attention.  “We are large enough to successfully deliver a comprehensive range of municipal services, but small enough to maintain a close relationship with key leaders in the cities we serve,” said IBTS Chief Operating Officer Shyam Choudhary.

A Model for Collaborative Service Delivery

While the service model in Central provides all city services for a newly-incorporated city, the guidelines, principles, and lessons that have contributed to a successful partnership for delivering services can be applied in other cities.  For example, IBTS uses the same nonprofit difference when delivering building department services, often working side-by-side with full-time city staff.  Its approach to delivering public service is always built on transparency, efficiency, contract flexibility, service over profit, and exceptional value to the municipality.