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Public Citizen Urges U.S. Mayors to Oppose Water Privatization in Their Cities

June 13, 2005

Public Citizen Urges U.S. Mayors to Oppose Water Privatization in Their Cities

As Annual Conference Takes Place in Chicago, Consumer Group Urges Public Support of Water to be Priority in Coming Year

WASHINGTON, D.C. – As the U.S. Conference of Mayors (USCM) gathers in Chicago for its annual meeting, Public Citizen today urged the organization to strengthen its commitment to protecting municipal water systems with public oversight and accountability, and not to hand control of the systems to private water companies. 

In a letter sent to more than 40 mayors serving in the conference leadership, Public Citizen urged support for proposals to establish federal trust funds to finance water and wastewater infrastructure, such as the safe water trust fund that was recently proposed to the U.S. House of Representatives. “Enthusiastic support from the USCM could do much to assure safe and clean water service in homes, businesses, schools and hospitals nationwide,” the letter said.

The group also sent the mayors a report it issued today detailing the many examples of failed water privatization efforts around the country.

With many cities struggling to get the necessary funding to maintain and upgrade existing water infrastructure, private water companies are eyeing mayors as a new business target. They are lobbying the USCM’s water arm, the Urban Water Council, to convince it that privatized water would be a cost-efficient solution to local budget crises. And it appears to be working. Instead of enthusiastically supporting the establishment of federal trust funds to address the nation’s massive clean and safe water infrastructure needs, the USCM reserves its strongest support for a corporate-backed proposal to lift the cap on private activity bonds, a tax-free financing option, effectively encouraging privatization through cheap financing for corporations at the expense of U.S. taxpayers.

“These private water providers are taking advantage of local officials who are desperate to keep their water systems up and running,” said Wenonah Hauter, director of Public Citizen’s Water for All campaign. “But these companies exist to make money off our water systems, not to help mayors or consumers with clean and affordable water.”

In the report, Waves of Regret: What Some Cities Have Learned and Other Cities Should Know About Water Privatization Fiascos in the United States, Public Citizen details the pitfalls of privatization in jurisdictions throughout the United States and its territories, including not only better-known examples such as Atlanta, Stockton, New Orleans and Puerto Rico, but in more than a dozen other cities from coast to coast. The report also analyzes national privatization trends, developments and policies in the context of corporate strategies and track records.

Private water companies view federal financial assistance for water and wastewater infrastructure as a “subsidy” that gives cities an unfair competitive advantage over private water companies. They oppose increased federal funding for water and wastewater systems, in the hope that the more financially troubled a city’s system, the more receptive city leaders will be to ceding control over that system to a private operator. But privatized water systems often result in higher rate increases for consumers, backlogged maintenance and repair requests, poor customer service and a loss of local oversight and control.

“So-called public-private partnerships don’t exist on an equal playing field. We’ve seen too many examples of private companies making money and giving the city nothing in return,” said Hauter.   “Privatization of such an essential public resource is doomed to fail because water is not a commodity.”  

To read Public Citizen’s letter to the conference, click here.

To read Public Citizen’s report, click here.

For more information about Public Citizen’s Water for All campaign, click here.