Is This What Trump Will Do to Our Water Systems?

Source: Peter Hart, Food and Water Watch, February 3, 2017

According to just-leaked documents, Donald Trump’s team has pulled together a national priority list of 50 major infrastructure projects that taxpayers could subsidize through a Wall Street giveaway. On his list are two corporate water supply projects: Poseidon’s expensive, energy-intensive desalination plant and Cadiz’s water bank – both set to privatize water resources and profit from droughts in California. … For a taste of the problems that Trump’s plans could cause, consider the case of Rockland County, New York. In Rockland County, the local arm of French multinational Suez is billing residents and businesses millions of dollars for a desalination plant it never built. Two weeks ago, the state government agency that exists to help consumers mostly blessed this ratepayer rip-off. … Private water companies like Suez have left a trail of broken promises and botched service in cities around the country, from Camden, New Jersey to Atlanta to Gary, Indiana. Cost overruns and safety problems have plagued communities where the companies have been active. …

Related:

Trump Attacks the Safety of Our Drinking Water
Source: Mary Grant, Food and Water Watch, January 25, 2017

The Trump administration has declared war on the environment and the safety of our drinking water. His team put together an aggressive action plan for the EPA, stripping away public protections and critical resources. … While gutting these vital water funding programs, Trump’s team is also advancing a proposal to let Wall Street take over our public infrastructure. Trump’s policy advisors have outlined a scheme to give massive tax breaks to Wall Street firms that take over infrastructure projects. It would give Wall Street a tax credit of $0.82 for every $1 of equity invested into a project.  This privatization scam will benefit only Wall Street. Widespread privatization of water systems would lead to large rate hikes, loss of local control, loss of transparency and accountability, loss of jobs and deterioration of customer service quality. Water bills would skyrocket to allow Wall Street to profit, leading to unaffordable bills and more water shutoffs. … Trump’s plans amount to a massive windfall for Wall Street, and combined with his proposed cuts, they endanger our public water systems. … On Tuesday, Senate Democrats released their own blueprint to rebuild our country’s infrastructure, calling for $110 billion to update our water and sewer systems. Their blueprint recognizes that communities need real direct assistance and that privatization is the wrong way forward: “Our Blueprint will invest directly in communities because Democrats know that we can’t fix a problem of this magnitude simply by tolling more highways or privatizing water and sewer system that profit on ratepayers.” …

In American Towns, Private Profits From Public Works
Source: DANIELLE IVORY, BEN PROTESS and GRIFF PALMER, New York Times, December 24, 2016

Nicole Adamczyk’s drinking water used to slosh through a snarl of pipes dating from the Coolidge administration — a rusty, rickety symbol of the nation’s failing infrastructure. So, in 2012, this blue-collar port city cut a deal with a Wall Street investment firm to manage its municipal waterworks. Four years later, many of those crusty brown pipes have been replaced by shiny cobalt-blue ones, reflecting a broader infrastructure overhaul in Bayonne. But Ms. Adamczyk’s water and sewer bill has jumped so much that she is thinking about moving out of town. “My reaction was, ‘Oh, so I guess I’m screwed now?’” said Ms. Adamczyk, an accountant and mother of two who received a quarterly bill for almost $500 this year. She’s not alone: Another resident’s bill jumped 5 percent, despite the household’s having used 11 percent less water.

Even as Wall Street deals like the one with Bayonne help financially desperate municipalities to make much-needed repairs, they can come with a hefty price tag — not just to pay for new pipes, but also to help the investors earn a nice return, a New York Times analysis has found. Often, these contracts guarantee a specific amount of revenue, The Times found, which can send water bills soaring. Water rates in Bayonne have risen nearly 28 percent since Kohlberg Kravis Roberts — one of Wall Street’s most storied private equity firms — teamed up with another company to manage the city’s water system, the Times analysis shows. City officials also promised residents a four-year rate freeze that never materialized. In one measure of residents’ distress, people are falling so far behind on their bills that the city is placing more liens against their homes, which can eventually lead to foreclosures. … President-elect Donald J. Trump has made the privatization of public works a centerpiece of his strategy to rebuild America’s airports, bridges, tunnels and roads. Members of his inner circle have sketched out a vision, including billions of dollars of tax credits for private investors willing to tackle big infrastructure projects. And Mr. Trump himself promised in his victory speech “to rebuild our infrastructure, which will become, by the way, second to none.” Private equity firms like K.K.R. have already presented themselves as a willing partner, and Bayonne provides an important case study. Its arrangement is one of a handful of deals across the country in the last few years in which private equity firms have managed public water systems. While these deals are a small corner of private equity’s sprawling interests, they represent the leading edge of the industry’s profound expansion into public services. …

… The Times analyzed three deals in which private equity firms have recently run a community’s water or sewer services through a long-term contract. In all three places — Bayonne, and two cities in California, Rialto and Santa Paula — rates rose more quickly than in comparable towns, which included both publicly and privately run water systems. In Santa Paula, where Alinda Capital Partners controlled the sewer plant, the city more than doubled the rates. A fourth municipality, Middletown, Pa., raised its rates before striking a deal. Now, some of these cities are trying to take back their water. Missoula, Mont., wrested away its water system, which had been owned by the Carlyle Group. Apple Valley, Calif., whose waterworks were also owned by Carlyle, has filed a similar lawsuit. Santa Paula bought its sewer plant from Alinda last year. …

Investing in America’s Public Water Systems — Making Public-private Partnerships Work
Source: Wharton School – University of Pennsylvania, Knowledge@Wharton, May 2015
[editor’s note: Suez Environnement – a private water company – is one of the sponsors behind this report. One of its subsidiaries is United Water]

From the summary:
The U.S. public water system needs a massive, long-deferred investment. Neither the public nor the private sector alone is up to the challenge, but a growing number of public-private partnerships suggest a solution.

U.S. Shifts to Strong Support for Public-private Infrastructure Deals
Source: Knowledge@Wharton, Public Policy, June 10, 2015

….As part of what the Canadian government calls, “the largest and longest infrastructure plan” in the nation’s history, Canada has committed $1.25 billion to a national portfolio of 20 public-private partnerships, seven of which involve water and wastewater infrastructure. But what is noteworthy about the Canadian program is not just the size or scope of its investment but the process it has put in place. …But whether or not the IRS changes its policy, or Congress agrees to any of the president’s new proposals, the bipartisan passage of WRRDA makes it clear the federal government will be stepping up its support for P3s for water and other infrastructure in the years ahead….

Making the Most of Public-private Partnerships
Source: Knowledge@Wharton, Public Policy, June 10, 2015

It may not be common knowledge, but private companies have been helping cities manage public water systems for some time. According to the National Environmental Services Center, a process known as design-bid-build is the traditional method employed by water utilities throughout the U.S. Under this process, a municipality hires an engineering firm to design a water project, puts the project out to bid and chooses a private contractor to build the plant. The local water authority may choose to run the plant itself or hire yet another private firm to operate and maintain it…..

A Tale of Two Public-private Partnership Cities
Source: Knowledge@Wharton, Public Policy, June 10, 2015

….It is indeed early in the relationship among United Water, KKR and the citizens of Bayonne. So far, the rate increase has been an issue locally, but few have complained about inferior service. United Water, for its part, reports fielding positive consumer comments about access to information from the smart water meters it has installed…. In 2013, Rialto entered into a 30-year, $300 million public-private partnership (P3) agreement with Veolia Environnement S.A.’s Veolia Water as the operator of the project. Ullico, a labor-owned insurance and investment company, was the lead finance partner, along with Table Rock Capital. An agreement with labor unions ensured that all existing employees would keep their jobs for at least 36 months. ….