Feb 17, 2011
“For years, there has been talk of privatizing all or parts of Chicago’s water system, including the Jardine and South filtration plants, city pumping stations, water billing functions or just the sewer system,” according to Fran Spielman in Monday’s Sun Times.
She’s reporting on a Civic Federation report to the next mayor on the city’s finances. It reiterates the group’s call to “pursue alternative service delivery to reduce costs” and institute protections for revenues from asset leases.
A new report from Food and Water Watch lists Chicago among cities where water privatization is under active consideration.
The number of communities considering water privatization is up dramatically due to widespread budget crises, particularly among larger cities concentrated in the Rust Belt, according to the report.
Privatization is “not a smart way to balance budgets,” the group says. While the public pays higher rates, cities often get less than full value for their assets, and the long-term costs of the lump-sum lease payments are significantly higher than the cost of municipal revenue bond financing.
In addition, it can undermine public pensions by transferring employees to the private sector, leaving fewer workers paying into public plans.
In fact, a number of communities are buying back privately-owned water systems in order to save money, according to the report. Evansville, Indiana, is one; the city expects to save $14.5 million over the next five years after bringing water services in-house.
Food and Water Watch opposes all forms of privatization, including sale or lease of water systems as well as operation and management contracts with private companies, said organizer Emily Carroll. “They have many of the same problems,” she said. “Staffing is cut drastically in order to cut costs and boost profits” and “there simply isn’t enough staff to maintain water systems.”
Water main ruptures increase and water quality is jeopardized, she said.
Carroll points to Indianapolis, hailed by the water industry as a success story for privatization. Under private operation since 2002 there have been boil warnings, lawsuits charging overbilling, and state and federal investigations of environmental violations.
In community meetings in Chicago, she said, “almost everyone we talk to is completely outraged at the idea. If there’s one thing they don’t think should be privatized, it’s water.”
According to the group’s report, public opposition has derailed many attempts at water privatization.
Another coalition, spearheaded by Illinois PIRG, continues to push for a taxpayer protection ordinance that would require independent evaluation and public hearings on major long-term leases. Last year 19 aldermen signed the coalition’s pledge for transparency and accountability in asset-lease deals.
“What we got from the parking meter deal was malfunctioning meters, rates that quadrupled overnight (and continue to climb), and the possibility that we are out about a billion dollars in lost revenue,” said Celeste Meiffren of Illinois PIRG. “Can you imagine if this happened with our municipal water system?”
Note: We’ve migrated our October 2009 report from the old website – it’s here – it discusses reports that Chicago is considering a lease deal and reviews the work of groups in cities around the region grappling with the issue – as well as Public Citizen’s report on a Chicago-based water company charging “a global track record of corruption.”
See also last April’s Newstip on local nonprofits’ views on privatization and local communities’ experience with American Water Company.