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From a Ducky Naybob, excerpts from The Perils Of Privatization... found in The American Prospect.
International finance institutions, funded by the United States and other developed nations,
provide loans to developing nations on the condition that they privatize services and charge steep user fees.
Indeed, the very institutions that are charged with alleviating poverty, like the World Bank,
are implementing policies that force people who make $1 or $2 a day to choose among food, housing, or water.
From a Ducky Naybob... excerpt from Global Policy Forum:
In the battle for a sustainable water future, a far-reaching revolt is needed to reclaim citizenship and redefine how we interact with our environment...
otherwise, these twenty-first century water wars could be merely a last stand against an inevitable corporatized future.
The spiraling collapse of the financial system may only intensify the quest for private investments in what is now the public sector.
Billions in private assets are now parked in "infrastructure funds" waiting for the crisis to mature and the right public assets to buy on the cheap.
An excerpt brought to our attention by a Naybob whose temperance is that of a waterfowl or of a "Ducky" nature...
The Water Barons...Based on past experience in other countries, though, privatizing water carries risks.
The water giants not only will raise rates to cover costs, critics say, but will use monopolies over water systems and rights to manipulate the system.
Critics fear that these companies will not be held accountable, so jobs will be lost, quality will wane and the poor will lose service.
"Why does somebody need to make money on your water?" said Dick Hierstein, city manager of Pekin, Ill., which decided to buy back its water system from American Water Works.
"Does somebody need to make money off the air you breathe? It is as simple as that."
More of our highlights from a News-Press forum on the subject of Water utilities in Cape Coral…
The reserve covenants (on the $310 Million in water bonds) are in violation, triggering bond rating downgrades, thus raising the yield & payments.
The city will be hard pressed to find any financing to roll over the debt, especially after California defaults in July.
More of our highlights from a News-Press forum on the subject of Water utilities in Cape Coral…
"This is essential for economic development. New business won't come if we don't go through with this. " Pure misinformation.
"Yes this is a city wide concern - half of the city has either already paid or is paying now."
Pure misdirection. If all the lilliputians are BLINDLY jumping off a cliff, do you follow without question?
"This is not a contractor issue from what I can see. This is an administration/council issue problem." Disinformation, from genesis, it is both.
"If you follow the money so well please explain how you know it should have been a $100MM project? Just curious."
Vs inhouse city labor or city mgmt with local contractors, historically, MWH (or Money Wasted Hourly)...
and their subs markups are in most cases 4-5X; but always a MINIMUM of 3X. So, $100 Million is a generous est.
And NO, unlike Watergates DT, I will not meet you in a dimly lit parking structure to discuss particulars.
Stay thirsty & curious my friends, it may serve you well.
More of our highlights from a News-Press forum on the subject of Water utilities in Cape Coral…
The city should be allowed to move forward ONLY IF:
1. MWH is removed and a FULL audit of their past malfeasances is conducted.
2. The project must involve a majority of city mgmt & local labor; creating a durable economic base.
3. NO infrastructure assets are sold/leased to service ANY debt.
4. In the future, surplus water revenues should be reserved for water projects, instead of being pis*ed away on deficit ridden fire & police payrolls.
Water & Sewer IS the cities only cash cow and ASSET. Wake up, read the budget, do the math.
More of our highlights from a News-Press forum on the subject of Water utilities in Cape Coral…
You have limited options with population 150K; only 51K actually pay a water bill in the Cape; in an area that you could fit BOTH Boston AND San Francisco.
6200 in SW at $25K = $155 Million; 55000 in North at $7K = $385 Million. Lets see now, thats $540 Million we can borrow against and take from Peter to pay Paul.
Paul being the $310 Million in bond money already spent on water infrastructure, that comprises 80% of existing city indebtedness.
Bottom line: MWH did a Bernie and MADEOFF with $310 Million for what should have been $100 Million worth of work.
Already done: raise rates & expand the base.
Orders: get rid of MWH & corrupt guvmint lackeys; keep the work inhouse; create local jobs; use local contractors; under NO circumstance sell infrastructure assets.
Some of our highlights from a News-Press forum on the subject of Water utilities in Cape Coral…
Yes (the council) were sold by staff, but the staff are hardly inept as previously mentioned.
The first order of business should be to get rid of MWH...
cast out these seven year locusts so they can move on to drain their next victim bloodless.
But you (the public) should pay no heed to the man behind the curtain and keep your eyes on the prize.
A plan has been afoot to place the city into an unsupportable debt service level...
thus forcing either bankruptcy or the sale of the most precious and valuable asset the PUBLIC has.
That being, the long term rights to YOUR PUBLIC WATER treatment, collection, distribution & reclamation systems.
PAY CLOSER ATTENTION, you are being polarized for the benefit of the few and the rich.
Stop being victims and take control of your destiny. Remember, its all about the money, so follow the money.
Background
Cape Coral is a national leader in providing high quality drinking water and monitoring water quality.
Since 2006, the Cape Coral Public Works Utilities Division has invested over $170 million in its treatment, reclamation and distribution systems to ensure this quality is maintained.
In addition the Utilities Division has invested another $140 million in the new Kismet North RO plant which is 85% complete.
The Cape Coral Water Works treats water with a multiple-step process to protect public health. The U.S. Environmental Protection Agency has endorsed Cape Coral’s drinking water as among the highest quality in the nation.
The Cape Coral Water Works collection & distribution systems, treatment & reclamation plants are owned by the City of Cape Coral and provides drinking water to residents and businesses in Cape Coral and neighboring communities.
Problem
There is an effort underway to privatize the Cape Coral Works, an effort which is moving quickly and quietly.
The idea was first broached publicly by several councilmen in late 2008, after discussions with several business executives.
Water privatization is being undertaken in response to $35 million in budget shortfalls in Cape Coral.
The idea is to arrange a very-long-term lease of all the water operations, with the city retaining ownership; a 99-year lease has been suggested.
A one-time payment of $500 to $600 million for the lease would be set aside in an endowment to generate about $30 million annually to help fund city operations.
It is assumed that water rates will go up after privatization; the rate is currently at market rate. $30 million annually in lease revenue would substitute for additional property taxes, fees, or state or federal revenue.
If the City was to move forward, the city Council would authorize an RFP to find an “Advisor Team” to oversee and guide the bidding and contracting process.
Multiple firms would submit proposals by a deadline. The Advisor would then move as quickly as possible to prepare an RFP for the actual privatization.
In other cities where this process has occurred, advisors are paid with a combination of fee for service and “success” fees upon completion of a final contract which is an incentive for advisors to push for privatization.
Impact Analysis
This proposal does not bode well for the Cape Coral area. There are a number of serious issues at stake—costs, water quality, economic development and accountability.
There are several major companies in the world with the capacity to bid for the Cape Coral contract; three of which are Suez Environment, Veolia Environnement and RWE.
The first two are French multinational corporations with global operations related to water and waste management.
The third is a German firm which in April 2009 announced its intent to sell its water operations, including American Water which operates in the U.S.
Suez Environment owns United Water, which obtained a contract to manage the Milwaukee Metropolitan Sewerage District (MMSD) in 1998.
MMSD became the largest publicly owned wastewater system under private operating contract in the US. In 2008, at the expiration of the contract, United Water was replaced by Veolia on a 10-year contract.
Among other things, United Water was issued 20 notices of contract non-compliance during its tenure running MMSD.
Both United Water and Veolia have had serious problems in other cities across the United States. Veolia has managed water systems in New Orleans and Indianapolis as well as smaller communities in Massachusetts and Texas.
The drinking water in Indianapolis is rated second worst in the nation and received a failing grade from Men’s Health magazine. Residents took Veolia to court claiming the company overcharged 250,000 customers.
This privatization proposal emerged in the midst of enthusiastic discussions about the extraordinary importance of maintaining lake & river water as a resource for generations to come.
Handing control over a completely renovated water system to a multinational corporation whose only obligation is to stockholder profits would remove this valuable resource from public control.
Accountability and transparency are especially important priorities for governmental operations at all levels. Water is a fundamental necessity for families and businesses.
Unlike petroleum or electricity, there are absolutely no alternatives to water as an essential element for life and commerce.
Decisions about the operations and management of this basic resource should be made deliberately and with substantial public oversight.
The Cape Coral area—the entire state of Florida—has a huge stake in water as a pivot point for economic recovery and growth. We cannot let this slip through our fingers into the hands of companies with no stake in local growth.
Steps to take
There are four main goals:
1. Bring this issue into the public view—this should not be a secret process decided quickly behind closed doors. It is crucial to develop a coalition that can spread the word.
2. Slow down the process. There are some local leaders who want the Advisor hired in late summer, then brought in to move as fast as possible toward final privatization.
3. Develop and distribute information to community members and leaders about the water privatization issue, the corporations involved and alternate ways to address the budget shortfall at the city level.
4. Maintain public control and oversight of Cape Coral’s water works.
Most bottled waters are nothing more than tap water run through an additional RO process...
then marked up 500 to 4000% to the uninformed consumer... To cut budget deficits, perhaps Cape Coral could bottle its own water and sell it at a profit?
Excerpts from Merced Sun Star
The Safeway Inc.'s water bottling plant in Merced -- one of the top five commercial/industrial water users in the city...
which bottles Safeway's in-house purified and spring water brand Refreshe -- uses roughly 50,000 gallons a day, five days a week, for its bottling operation.
The plant, which provides most "Refreshe" water to Safeway stores in the state, filters city water, puts it in bottles and sells it as purified water.
In Safeway's case they pay more than $1,000 a month for more than a million gallons of water.
The retail cost for that much purified bottled water at Safeway is just under $3 million.
The city pumps about 21 million gallons of water a day, and Safeway uses 50,000, that works out to be 0.238 percent of the total gallons pumped.
But the plant doesn't only use water. It also produces waste.
The plant's purification process discharges roughly 52,000 pounds of salts a year into the city's wastewater system, according to their permit.
While bottled water sells itself as better than tap water, it contributes to pollution and has been found in some cases to be less healthy than tap water.
Many of the bottles end up in landfills and in some cases contain industrial chemicals and bacteria above state and industry standards.
According to the Sierra Club, nine out of 10 plastic water bottles end up as garbage or litter.
Very often, people in power are prepared to let themselves become prisoners of ideology.
With privatization, a persuasive case is made for ending public ownership or operation.
This, however, is usually a case in which little critical spirit is exercised with respect to intellectual assumptions.
It is also a case which too often lacks realistic analysis of how privatization would actually work under specific circumstances.
The idea behind privatization is that profit seeking companies make new investments, rehabilitating the system to attract more customers.
What usually happens is quite easily foreseeable.
The companies go after short term profits, which the current business consensus - making quarterly shareholder return management's priority - enjoins them to do.
Long term investment can tie up a company's profits for a generation. That is why governmental funding has always been essential to infrastructure projects.
A neglected reality is that if an enterprise cannot function efficiently when profits are not demanded from it...
introducing the profit requirement makes reform harder, not easier.
The profit motive may incite management to work harder, but it doesn't make management smarter or more effective.
Another neglected reality is that more often than not, non-financial management determines the success of an enterprise.
There can be excellent management in public enterprises. There can be disastrous management in private ones.
An oft made mistake in municipal management is choosing management teams heavy in financial specialists rather than composed of the people really needed:
Managers experienced in specific municipal enterprises, that are able to grasp and remedy the cities fundamental deficiencies.
Private or "investor-owned" water utilities account for about 15% of total water sales and revenues.
Many investor-owned utilities operate multiple water systems. The decision to privatize is complex and can involve significant trade-offs.
The interest in privatization is linked to the mounting pressures on water utilities in terms of replacing the aging infrastructure, complying with stringent regulations, and meeting needs associated with growth.
Recently, the city of Milwaukee, WI put the brakes on a public water privatization program.
With increasing pressure on the city budget, the city council had raised the idea of leasing the Water Works for 75 to 99 years...
in exchange for a one-time payment of $550 million to $600 million.
That cash could be invested to create an endowment that would generate $30 million a year...
which the council figured would stave off annual debates on slashing services or raising taxes. Sounds good?
Some issues that were raised in Milwaukee's case, and would be raised in Cape Coral's case:
Would you want to give the rights and control over your most valuable resource to foreign interests?
All the major water companies that would be bidding for the contract were foreign companies.
Could the city afford to lose Federal, State & County shared revenues?
With the one time right's payment generating money the chances were good that the state legislature would reduce the city's funding from the state shared revenue.
The end result would be that the city would be no better off financially, and would have lost control of its water.
Could the city budget be balanced with the $35 million per year return on the $500 million?
The city assumed that if they invested the rights fee at a conservative 7% interest that they could make $35 million a year.
In the current market there are no "long" portfolios earning 7% and if the market were to turn south again...
there is a possibility that the portfolio could generate negative returns and eroding the city's asset.
To promote profit, won't the private company make a large investment in the city's water infrastructure?
One of the biggest reason municipalities have for selling of their infrastructure assets is deferred maintenance and the high cost of repair or upgrades.
Both city's have recently spent hundreds of millions of dollars to upgrade their capacity and keep their water systems state of the art.
Could the privateers sell off the city's water supply to those willing to pay a higher price?
There is huge profit to be made in selling water from a water rich region to a water poor region. And remember, privatization IS about being FOR PROFIT.
While regional water compacts CAN prevent pumping water to customers beyond the watershed, it doesn't prevent the bottling and sale of that same water.
Would a private company care about water conservation?
Fresh water isn't a commodity, its a resource and basic human right that should be protected.
Today people are thinking about and acting to protect their water sources.
From a FOR PROFIT standpoint: The more you use, the more you waste, the more money they make.
There is a movement in Cape Coral, Fl. to privatize the public water system.
Does this movement reflect true public sentiment? Or is it based in Demagoguery?
This blog site is dedicated to informing the citizens of Cape Coral about how privatization would NOT be in their best interests.
From Cape Coral Watchdogs written by self professed mayoral candidate John Sullivan:
If our administration can’t deliver the same services at the same price as other communities in Florida by taking these projects in-house and/or by getting rid
of manager at risk (MWH Montgomery Watson Harza)...
then the utilities need to be privatized in order to curb the financial destruction brought on by these projects as they exist today.
If the city refuses to take these (water system expansion) projects in-house, then there is only one other alternative and that is to privatize the utilities.
The cost of the utilities is breaking the backs of the residents financially and this is going to affect the economy in Cape Coral for many years to come.
From Cape Coral Minutemen written by John Sullivan.
There is one other alternative, that would be to sell the utilities and pay down the debt and privatize it. It would be regulated and we would have experts running it.
We don't appear to be able to run this ourselves without the prospect of huge rate increases each year.
We need to get the utilities out of the hands of the city because it is too expensive and will only make it unaffordable to stay in Cape Coral.
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