Towns sell their public water systems — and come to regret it

Source: Elizabeth Douglass, The Washington Post, July 8, 2017

Neglected water infrastructure is a national plague. By one estimate, U.S. water systems need to invest $1 trillion over the next 20 years. Meanwhile, federal funding for water infrastructure has fallen 74 percent in real terms since 1977, and low-interest government loans have not filled the gap. … The prospect of offloading these headaches to for-profit water companies — and fattening city budgets in the process — is enticing to elected officials who worry that rate hikes could cost them their jobs. Once a system has been sold, private operators, not public officials, take the blame for higher rates. But privatization will not magically relieve Americans of the financial burden of upgrading their water infrastructure. … One of the biggest inducements for water deals is the “fair market value” legislation that has been passed in six states — Indiana, California, Illinois, Missouri, New Jersey and Pennsylvania — and is being considered by others.  …

… Even as more cities consider selling their water infrastructure, others are trying to wrest control of their systems back from private operators, usually because of complaints about poor service or rate hikes. Since private owners are rarely willing to surrender these lucrative investments, cities usually end up pursuing eminent domain in court. That means proving that city ownership is in the public’s interest and then paying a price determined by the court. Those prices can be exorbitant. …