A lengthily article appeared in the New York Times entitled “In American Towns, Private Profits From Public Works” which starts with the situation of Bayonne, NJ which sold its waterworks but then goes on to deal with the issue in general of public / private partnerships.
The article bears especially relevance to residents of the greater Lancaster City area because sooner or latter ‘kicking the can down the road’ will no longer be adequate for dealing with the antiquated and poorly functioning combined sanitary sewer and storm water system and massive investment will be required, perhaps beyond the capacity to be financed by the city, and certainly greater than the experience and competence on the City level to carry out a complex project involving perhaps a hundred million dollars.
NEW YORK TIMES: …Of course, there’s a reason many communities look for private partners to begin with: Their water systems are in poor shape. Budget shortfalls and political mismanagement can represent a real threat to both infrastructure and citizens. For evidence, look no further than the crisis in Flint, Mich., where the drinking water became tainted with lead.
“Keeping rates down may sound like the ultimate righteous good for ratepayers, but the truth is, not if you’re failing to provide basic care and maintenance,” said Megan Matson, a partner at Table Rock Capital, the boutique private equity firm that invested in Rialto’s water and sewer system. She added that it helps for deals to “provide more obvious public benefits,” noting that her firm partnered with Ullico, the nation’s only labor-owned insurance and investment company.
Proponents of the public-private partnerships, citing recent studies in Canada and Europe, argue that private businesses operate more efficiently than governments do and that this translates into cost savings for citizens. And private equity firms, lacking technical expertise in how to manage infrastructure, often team up with private water companies…
