Case Studies of Failed Water Privatizations

8/14/2019 Case Studies of Failed Water Privatizations

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Residents were fed up and organized Friends LinkedUp to Stop Sewer System Heist, advising the countyto FLUSSSH the sale. We want Shelby County tokeep the sewer system, said Roger Moraski, anorganizer in the group. What I dont want is toopen the paper one day and see that its been soldand our rates are going to triple.7

The county ended up selling the system toSouthwest Water for $8.5 million and sewer rates

began their steady climbing, increasing 8 percent ayear for 11 years. The base rate alone will skyrocketfrom $32.45 in 2005 to $76.64 in 2016.8

Bob Bruce, a community member, questioned thesale. Why are we selling the sewer system? heasked. It is a profitable plant. We can control ourown destiny if we own it. 9

County Commissioner Ted Crockett agreed and saidas much when he voted against the proposed sale.Ive always thought the sewer needed to turn aprofit, he said, and were starting to do that. Im afinancial person, and this is what I do. I dont thinkit makes sense to sell something that could make us

money.10

Unfortunately, they werent the only ones who knewthe system could yield good returns. Southwest

Water chairperson and CEO Anton Garnier said,This transaction marks an important expansion ofour utility footprint, a key element of our long-termstrategy for profitable growth.11

High rates, sewage spills in Corning, Calif.Population: 6,200Date of original privatization: 1990Contract: 12-year contract to operate, maintainand manage the wastewater system

Facing a cease and desist order from the stateof California because of inadequate wastewatertreatment, the city of Corning privatized its

wastewater treatment plant to Southwest Water in1990. The city extended the contract in 2003 foranother 12 years.12 Rate hikes followed.

In 2003, the city chamber of commerce protesteda proposed sewer rate hike that it said wouldadversely affect small businesses. The city had torework the rate increase.13

In 2004, a crowd packed a city council meeting toprotest massive rate increases. The city planned to

hike sewer rates 9 percent annually for five yearsand then 3 percent annually for another five years.14The city needed the hikes to balance books afterpursuing an expensive sewer expansion project rightas it lost its biggest sewer client, which made up 20percent of the systems revenue.15

After nearly 20 minutes of riotous protest, onecouncilmember said he had enough. This has to

be done, said councilmember Rex Roush, none ofus here are making dime [sic] on that plant and Imgetting pretty damn tired of getting called a liar bysome of the people out there.16

Roush might not have been telling the full truth inhis outburst. Someone could have been making apretty penny on the plant expansion Southwest

Water, the contract operator whose fee most likelyincreased to accommodate the larger plant. Theexpansion was enough that the additional capacityshould last 20 years, according to the public worksdirector.17

In 2008, Southwest Water got a 12 percent boost inits service fees from the city.18


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Widespread corruption in Los AngelesCounty, Calif.

Population: 300,000Date of original privatization: 1993Contract: 5-year, $25 million contract to design,build, operate and manage a water recycling plant

At least two West Basin Water District boardmembers know the spoils of privatization, but theirplundering didnt go unnoticed.

In 2004, a jury convicted R. Keith McDonald of 10federal felony counts for kickback and votes-for-cash schemes involving contractors for Carson Cityand the West Basin Water District.19 The chargessurrounding the water district mostly concerned a$30 million pipeline construction project for the

water recycling facilities.20 Prosecutors arguedthat he demanded $140,000 from Luster National,Inc., in exchange for his help getting the company

three construction management deals for the waterdistrict.21 McDonald was sentenced to 41 months inprison for mail fraud, money laundering, briberyand conspiracy to extort.22

The jury acquitted him of other charges alleging hetold United Water, which operates the district waterrecycling plant, to give him a $25,000 campaigncontribution as a reward for his approval of the5-year, $25-million contract.23,24

During the trial, McDonalds lawyer contended thatUnited Water made these allegations to federal and

local agencies as retaliation for his scrutiny of thecompanys performance. In letters to these agencies,he said, the company accused McDonald of slander

but never suggested he tried to extort money.25United Water did contribute $2,000 in McDonaldsrun for state assembly.26

Tyrone Smith, another water district board member,is also serving time for his role in another scheme.He allegedly extorted $25,000 from an investment

banker who stood to earn 10 times as much if hisfirm handled the refinancing of the water districtsdebt.27 He pleaded guilty in the extortion andmoney-laundering scheme.

McDonald and Smith are just two of the 12 people,including the former mayor, convicted andsentenced after a massive federal investigationinto South Bay political corruption.28 The entirescandal never would have occurred had the city

not contracted out two public services: garbagecollection and water.

A waste management firm and two water companiesallegedly hired city officials to broker deals with citycouncil members in exchange for awarding multi-million dollar contracts to the companies. Two low-level officials at the waste management firm werealso convicted and received probation.29,30

Privatization reduces public accountability and

breeds an environment ripe for corruption.


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Expensive, brown water in San JuanCapistrano, Calif.

Population: 34,000Date of original privatization: 2002Contract: 20-year, $20 million contract to design,build, finance and operate a water treatment plant

Troubles plagued San Juan Capistranos watertreatment plant, and residents ended up paying fartoo much for bad quality water.

When the city signed a 20-year, $20-millioncontract with Southwest Water to design, build andoperate a new desalination plant, the public worksdirector predicted that rates would rise.31

Sure enough, the first increase came almost exactlyone year after the city cemented the deal. SanJuan Capistrano residents saw their bills jump 5percent, even as the cost of getting water from the

Metropolitan Water District, the citys major watersource, fell by 5.9 percent.32

But 5 percent was nothing. The big hike came thefollowing year. In 2004, the city hiked rates 29percent, with half of that increase going to pay forSouthwest Waters expensive treatment plant.33

The end wasnt near. In 2007, water rates jumpedagain by 8 to 10 percent, with additional increases of8.5 percent a year expected for following six years.

About half of these hikes went to cover operatingcosts, which includes Southwest Waters fee to runthe plant. From 2003 to 2007, the average monthly

bill jumped from $38 to more than $65. 34,35

In 2004, councilmember David Swerdlin expressedhis disapproval of hikes. Every time we turnaround, well be looking at rate increases, he said.I am finding it harder and harder to support our

water department. And we need to take a hard lookat where we are going with water.36

The councilmembers concerns were well founded.Southwest Waters desalination project was 70 to 80percent more expensive than importing water fromthe Metropolitan Water District, as the city had beendoing.37

Whats more, despite the excessive cost, thetreatment plant was riddled with problems. The

first major glitch was low water output. A generalmanager of nearby water district speculated thatfaulty design work might be the culprit. Southwest

Water could have placed the six groundwater wellstoo close together, which can cause water to bedrawn down instead of up.38

Another issue was bad water quality. Thecommunity became discontented with discolored

water, described as orangish brown, pouring fromtheir home taps. Were paying for water, we oughtto be able to drink it, said one city resident. Imnot going to drink something that is yellow.39

The tea-colored water was the product of aninadequate filtration system at the new plant, which

was failing to remove enough iron and manganese.40

By November 2007, the city deemed the waterquality so bad that officials shut down the facilityand hired a consulting firm to test the water and

examine Southwest Waters operations.41

To correct the issues, the city required SouthwestWater to replace certain plant components andmake significant changes to the water treatmentprocess. Before, the plant filtered only a portion ofthe water, which caused not only discoloration butalso premature breakdown of expensive reverseosmosis membranes.42 Perhaps, Southwest Waterhad attempted to skimp on the constructioncosts to win the contract and pad its bottom line.Meanwhile, the city had to pick up the tab forpoor design and execution as residents enduredskyrocketing rates.

Eight months later, when the company completedthe construction upgrades, the water plantreopened, but not all the wells were in operation.The city had to shut down two of the six wells afterdiscovering they were contaminated with MTBE,43 a

banned fuel additive and possible carcinogen.44

Privatization has failed to live up to even the lowest

of expectations in San Juan Capistrano.


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High rates in Crystal River, Fla.Population: 4,528Date of original privatization: 1991Contract: 10-year, $3 million contract to operate,maintain and manage the water and sewersystems

In 1991, this Gulf Coast community handed overits water and sewer systems to U.S. Filter, now asubsidiary of French multinational Veolia.

A few years later, the first large rate hike came. In1995 water and sewer rates jumped by 22 percent,

bringing the average monthly bill from $45 to $56.45Businesses complained about the hefty increase, sothe city council ordered a survey of their water andsewer records to determine whether they are beingassessed the proper rates. No one wants to see anyrates increase or any costs go up, said city managerRoger Krieger. But unfortunately, sewer and water

is a business.46

The mayor spoke out against the high rates anda revised rate structure that he considered wouldunfairly burden local restaurant owners. Whatshappening here is at the expense of the little fellow,mayor Curtis Rich said. Is this going to help our

work to entice businesses into Crystal River?47

After I delved into this thing, I found it a bitshocking, to say the least, said Rich. I just dontknow that its fair. Not only small businesses,

but also residents on fixed incomes would feel theimpact of high rates.48

Despite the hikes, the system still needed repairs.Groundwater was leaking into the sewer systemand driving up the cost of wastewater treatment.49In October 2004, Veolia treated 12 million gallonsmore wastewater than drinking water. That is, theutility sent out 23.3 million gallons of drinking

water to the city and got back 35.6 million gallonsof wastewater.50 City-hired consultants said that

groundwater was infiltrating the sewer systemthrough cracks in the pipes. Veolia needed toevaluate and fix old pipes.51

Cost overruns were also a common occurrencefor Veolia. In 2007, the city paid an additional $9million on top of the contract fee. But thats nothing.In 2006, adjustments to the contract set the city

back a whopping $52 million.52

An Embarrassing, Cautionary Tale in TampaBay, Fla.

Population: 2,400,000Date of original privatization: 1999

Contract: 30-year, $120 million contract to build,operate and manage a desalination plant

Once hailed as the project that would shatter pricebarriers for saltwater conversion plants worldwide,Tampa Bays desalination facility was a messy failurethat crushed any dreams of cheap desalted water.

It didnt begin badly. Unlike many privatizations,Tampa Bays desalination project actually had sev-eral bidders, and the utility got to choose amongfour different proposals. With these options in itshands, in 1999, Tampa Bay Water projected that theplant would be built in three years for $98 to $129million.53 How wrong they were.

At the end of 2007, four years behind schedule andnearly $80 million over the original budget, the na-tions largest seawater desalination plant finally be-gan supplying drinking water to 2.4 million peoplein the Tampa Bay region.54

In 1999, Tampa Bay gave Posiedon Resources a30-year, $120 million contract to manage the con-struction and operation of the new plant. PosiedonResources said they could build the plant for $79million, but necessary upgrades doubled the costs,driving the final bill up to $158 million.55

Within a year, the original engineer declared bank-ruptcy and dropped out of the project, so in 2001,Posiedon Resources hired Covanta to finish the job,

but a pattern of failure unfolded. A year later in2002, Covanta too was in bankruptcy reorganiza-tion.56 With a low credit rating, the company wasunable to secure a surety bond and the financingcosts were sky high.

Tampa Bay Water, a public utility, could get much

lower interest rates, so in 2002 it bought out Posie-don Resources for nearly $9 million and assumedownership over the project. The takeover savedmoney on financing, but it failed to resolve the prob-lems with Covanta.57

The plant opened in March 2003, and within twomonths, it was failing performance tests.58 Sedi-ment and biota clogged the expensive reverse os-


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mosis filters. The plant needed a prefiltering systemto remove the larger particles before water passesthrough the salt-removing members.59

Desalting water is three to four times more expensivethan treating groundwater. In order to sell the idea

to a skeptical public, the company skimped costs andended up with a facility that did not work.60 TampaBay sued the original engineering companies for thefaulty design that cut too many corners. In 2007,they settled the suit for $7.9 million, most of which

went to pay Tampa Bay Waters legal fees. Only $1million remained to go toward repairs.61

In 2004, Tampa Bay Water awarded a $29 contractto American Water-Pridesa to remedy, operate andmanage the desalination plant.62,63 The companypredicted the plant would be operational by October

2006.64 In December 2007, after missing at least tworepair deadlines,65 American Water finally completedall required tests and the plant was ready to go.66

But the plant still has never reached full capacity. Itproduces only 21 million gallons a day not the 25million that it should.67 The plant also is a heavy pol-luter. During its first four months of full operation,Tampa Bay received three violations for flushing toomuch waste down the sewer pipeline.68

Five years late, 16 percent under capacity, 44 per-cent over budget, the desalination project is finallyup and going, but only after the public utility boughtout the private manager. Water costs are 62 percentmore than original projections.69

The Veolia-managed surface water treatment plantin Tampa also suffered embarrassing problems, al-though not as severe as the desalination plant.70

Water Lost and Repair Costs inEdwardsville, Ill.

Population: 24,073Date of original privatization: 1987Contract: 15-year, $34 million contract to operate,maintain and manage the water and sewer systems

In 2002, Edwardsville granted a 15-year, $34million contract to U.S. Filter, a subsidiary of

French multinational Veolia. The company hadbeen operating and maintaining the citys water andsewer system for the previous decade.71

Two weeks after signing the contract, the city lostaround a quarter of a million gallons of water whentwo water lines broke. These were the fourth andfifth breaks in the past two months. After the major

water loss, Veolia placed the city under conservationorders.72 Veolia is responsible for pipe maintenance,line replacement and major projects. Any costs thatexceed the contract value are supposed to be thecompanys risk,73 but it looks like the city sufferedfor this one.

From the summer of 2002 to the summer of 2003,the city experienced three water main breaks thatforced businesses to close sometimes for dayson end. By fall 2003, fears of another massive

break prompted the city to dig into its pocketsto pay for the replacement of a 100-year-old castiron water pipe. City workers did the work andthe city officials picked up the tab,74 even though

Veolia was supposed to be responsible for capitalimprovements.

In 2005, a computer malfunction at the Veolia-operated plant left most of Edwardsville without

water for hours. The company apparently did nothave backup mechanisms or checks on the system.

As a result, households across the city had to boiltheir water before drinking, cooking or brushingtheir teeth. The city administrator had to meet

with Veolia officials to determine the reason forthe failure and what backup measures could haveprevented it. Were going to get with these guys tosee what could have been done, should have beendone, said Ben Dickmann, the city administrator.75

Half a year later, in 2005, the city had to hike itswater rates after draining its reserve funds to payfor capital projects over the course of the Veoliacontract.76


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Legal Battles, Sinkholes and a FederalInvestigation in Gary, Ind.

Population: 180,000Date of original privatization: 1998Contract: 10-year, $95 million contract to operate,maintain and manage the wastewater system

Without discussion or input from the audience, theGary Sanitary District board voted to privatize its

wastewater system during a 1998 meeting. At theend of the meeting, a dozen people who watched thedecision unfold stood up to voice their dissent.77 Noone in the crowd spoke out in favor of the proposal.78

The board granted the contract to a consortium ledby United Water,79 which has since bought out theother partners.80 Upon winning the deal, the cor-poration agreed to cut $2 million from the annualoperating budget without eliminating jobs.81 Thispromise didnt hold water.

One year later in 1999, the company was trying tobuy out the plants 119 workers, offering them lumpsum payments in exchange for their resignation.This was part of the companys plan to downsize the

workforce. Its a standard business practice, onethat we have done at other places, said the com-munications manager for the corporation.82 United

Water wanted to eliminate 62 jobs.83

The city council fought the privatization bid fromthe beginning. Within one month of the boards de-cision, various city council members had filed threeseparate lawsuits challenging the proposed privati-zation,84 although judges dismissed all of the suits.85

Councilmember Gardest Gillespie accused themayor and the attorney for the sanitary district ofhaving racially discriminatory and other illegal rea-sons for wanting to privatize the operation. Along

with two fellow council members and other parties,Gillespie sued the mayor and sanitary district boardto stop the deal. The suit alleged that the privati-

zation was part of an ongoing scheme to replaceAfrican-American managers, professionals and con-tractors with persons of European ancestry.86

Despite the legal battle, the sanitary board gave itsfinal approval of the $95 million, 10-year contractto United Water, which paid the city a $10 millionfranchise fee.87

A week later, more than 100 community members,including six city council members, the former may-or and a state representative, rallied on the steps ofcity hall to voice their opposition to the privatiza-tion. No private company should control the accessof the community, said one resident. We demanda public referendum and be allowed to vote on thematter.88

Nevertheless, the water board stood firm in its sup-port of the privatization, although perhaps it wouldsoon wish it had listened to the chants of the protes-tors. To cut costs, United Water may have just cutcorners.

In 2003, a main break created a sinkhole the size ofa small car that devoured a large segment of an al-ley. Water poured up. Basements flooded. It wasntthe first sinkhole in that location, but the watercompany had failed to correct the problem. When

they did fix it, something went wrong again, saidone resident whose basement was more than kneedeep in water.89

The same year, another resident noticed a large holein the road behind her home. A sewer line breakcaused it and United Water was responsible forrepairing it, but for months on end it remained un-touched. Ive talked to different ones [departments]from the city, said the resident, but no ones comeout. She was not alone. Heavy rains caused morethan a dozen such cave-ins in just the first half of2003.90

During a heavy rainstorm in 2006, stormwatertainted with raw or partially treated sewage flooded

basements, ditches and streets. After heavy rainsoverwhelmed the storm and sewer system, United

Water released massive amounts of wastewater, po-tentially elevating levels of pathogenic bacteria. Butresidents were not alerted to the potential danger.The company had failed to notify city officials inGary and two nearby cities about releases. United

Water also did not test the bacteria levels in the areawaterways after the event.91

Overflowing sewers and flooding are all too com-mon in Gary. One neighborhood flooded three timesin four months over the winter of 2007, promptingone 14-year resident to declare, This summer weremoving. If I can last that long.92


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United Water was supposed to manage the system,but the sanitary district had to take action and hire aseparate consulting firm to try to repair the floodingproblem.93 Work the corporation actually did turnedout to be a waste of money. It paid to have severalsewers cleaned only to watch them crumble after-

wards. There were more than 80 cave-ins between2003 and 2007. Each broken line was an emergen-cy, often prompting road closures.94

In 2007, federal investigators began scrutinizing theGary Sanitary District at the request of the JusticeDepartment with the Environmental Protection

Agency. By 2008, they had turned their attention toUnited Waters operations. FBI and EPA investiga-tors interviewed sanitary district officials about pos-sible irregularities in reports on wastewater cominginto the treatment plant that resulted in $400,000 inextra charges for residents in surroundings towns.95

Attorneys representing the suburban areas contest-ed the figures, saying the towns produced 30 per-cent more wastewater at the same time Garys pro-duction dropped by more than 15 percent. United

Water officials admitted that meters at the plant hadbeen malfunctioning for over a year, and agreed toreduce the bills for the towns. Only after this pres-sure did the company decide to replace the brokenmeters, which were at least 20 years old and difficultto recalibrate.96

Meanwhile, rates jumped an astonishing 85 percentin 2008, and federal investigators continue to lookinto all aspects of the sewer systems operations.97

Sewage Overflows and Possible Scandal inIndianapolis, Ind.

Population: 800,000Date of original privatization: 1993Contract: 20-year, $560 million contract tooperate, maintain and manage the wastewatersystem

Indianapolis first privatized its wastewater system in1993 when it awarded a 5-year, $72 million contractto United Water, which is now a subsidiary of Frenchgiant Suez. The company promised to save $68million over the contract term by downsizing the

workforce by more than a third from 328 to 206.98

Despite cutting back the workforce, by the end ofits first term, the company had only realized $46million only two-thirds of its promised savings.Nevertheless, the city extended the contract foranother 10 years in 1998.99

While cost savings may sound great, they mighthave come at the expense of the environment.

Without proper improvements and maintenance,the sewers had 60 overflows a year, spillingsewage-laden water onto city streets and intoarea waterways. It was so bad that by 2006 theEnvironmental Protection Agency had to intervene.Under an EPA consent order, the city agreed tomake $1.86 billion worth of improvements, paya $1.1 million penalty and spend $2 million onsupplemental environmental projects.100

Even though United Water was in charge of thesystems operation, maintenance and management,the city still was ultimately responsible forenvironmental compliance.

With such a bad environmental record, why wouldthe city extend the contract yet again in 2007?Perhaps it could have had something to do with the

business relationships that the city council presidenthad with the company.

According to the citys attorney, council presidentMonroe Gray should have had to disclose the

work his construction company had done forUnited Water. In the summer of 2006, the mayorscompany got two jobs worth $56,000 and sixnonbid jobs for another $10,000.101


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The following year, Gray voted to extend UnitedWaters $28 million a year contract for up to 20years. He claims there was no conflict of interestsince he had no on-going business, but certaincity and county officials disagreed and demandedthat he step down as council president. Graydeliberately twisted and manipulated council rulesfor his personal gain, said Tom John, MonroeCounty chairperson. He is using the power of hisoffice to avoid having to answer for his misdeeds.102

Gray is under two investigations concerning allegedmisconduct. While the county prosecutor declinedto expand on the nature of his ongoing inquest,a separate city council investigation focused onsix potential problem areas, including possible

violations of conflict-of-interest laws by failing todisclose his companys dealings with United Water.The city council committee recommended that theprosecutors office look into the matter.103

Paying a lot for Bad Service in Gulfport,Miss.

Population: 72,000Date of original privatization: 1999Contract: 7-year, $42 million contract to operate,maintain and manage the water and sewersystems

When Gulfport privatized its public worksoperations, it received only two bids Optech andEco Resources, both of which are now subsidiariesof Southwest Water Company.104

In 1999, the city signed a $2 million-a-year contractwith Optech to handle water and sewer operationsand services, including billing and collection.105

Although the company promised to save half amillion dollars on the citys $7 million annual

budget,106 the privatization ended up costingthe city. Private operation was 68 percent more

expensive than public operation. In 1998, the yearbefore the privatization, the city spent $5.6 millionto do the same tasks that it paid Southwest Water$9.4 million to do in 2002.107

Meanwhile, the company was failing to collectenough delinquent bills, which set the city backanother $1.7 million.108 Water and sewer fees werethe citys biggest source of revenue, so uncollected

bills were a serious concern.

The city told the company to be more aggressivenot only in collecting late payments but also inresponding to service problems. A single watermain break left one subdivision without water foreight hours, and several residents said they receivedno warning about water quality risks posed bycontamination during the repair work.109 Sewage

backups were also a problem.110

Despite these concerns, in 2001, the city extendedits contract with Southwest Water for fourmore years and $22.9 million,111 increasing the

management fee to allow the company to add 26employees to the workforce and improve service.112

Additional staff would also come in handy, since thecity planned to acquire a neighboring communitys

water system.

When Gulfport took over the system of OrangeGrove in 2002, the residents were far from pleased.Many households saw their bills skyrocket,


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quadrupling to more than $200 a month. Theystormed city hall to confront the city council andmayor.113 The communitys rage inspired a lengthydebate in the city council, which eventually decidedto review disputed water bills on a case-by-case

basis.114

The council had considered but decided against forgiving the residents water bills and returningthem to the flat monthly fee for a period of timeto allow them to check their homes for leaks,and to allow the company to test the meters. Thelocal manager for Southwest Water contested thisproposal and claimed to not have enough staff tocheck the meters.115

The company still only had 20 staff members,116

even though the previous year the city had uppedits management fee to allow for 26 additionalemployees.117 Then when the company didnt have

enough employees to meet the citys needs, it hadthe gall to suggest that the city hire temporary

workers to do its job.118

During this time period (though not promptedby the billing dispute), an independent auditoradvised the city council to take a closer look at itscontract with Southwest Water. The accountingfirm said the city had no way to evaluate thecompanys performance. What were saying is that

yall need to get a committee together to evaluatethe cost-effectiveness of this privatization, said arepresentative of the accounting firm.119

Over the next year, Southwest Water finallyintensified its efforts to collect bills, but it did so byshutting off water to delinquent homes in a mannerthat one city council member said was unjust anddiscriminatory against lower income residents.There are customers with very large water bills thatstill have water, said councilmember Ella Holmes-Hines, and there are very poor people who havehad their water shut off. Thats it in a nutshell.120

Growing bills only compounded the problem. In2003, flat rates increased more than 22 percentfrom $53 to $65 a month. Residents complainedthat Southwest Water was rude to them when theycalled in service requests, which sometimes wentunanswered.121

In 2004, one couple learned that they had beenpaying for not only their water use, but also thatof five neighbors. Ed and Thess Ostavitz toldSouthwest Water that they had water bills that saidthey used several times more water than they should

be. Instead of looking into the matter, the companymerely dismissed their worries and claimed it wasprobably just a leak. As the bills piled up, the costgot particularly stressful for Thess Ostavitz after herhusband was deployed to Iraq and she was left tocare for three children and a grandchild.

When Ed Ostavitz came home, he discovered thesource of the problem the water used by hisneighbors all went through his meter. During agrievance meeting, he demanded that the companycorrect the problem. After more than two years ofignoring the Ostavitzs concerns, Southwest Waterfinally listened and corrected the problem.122

But this was not the end of bad service in Gulport. Abroken sewer lift station caused sewage to spill anda section of the countys beach to close in 2003.123Drainage pipes remained broken, spewing water andflooding yards. Southwest Water employees cameout to photograph the pipeline but later admittedthey did not know what the exact problem was.124

After all these issues, and after three years ofindependent auditors advising the city to do so, thecity finally decided to set performance benchmarksfor Southwest Water.125 The first report, in 2004,showed that the company was not meeting thesestandards, which the company manager thencondemned as unreasonable and unrealistic.The company failed to complete too many servicerequests and the completed work was often poorlydone.126

In 2005, the city had 309 unanswered servicerequests, more than 1,000 in 2006 and around 500in 2007. Despite the poor performance, the citydecided to extend the companys contract yet again

in 2007. It gave Southwest Water the 7-year, $42million deal in hopes that a greater performanceincentive would improve service.127 While it remainsto be seen, that goal seems like a long shot.


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High Rates and Environmental Problems inGreat Falls, Mont.

Population: 56,690Date of original privatization: 1977Contract: 10-year, $25.7 million contract tooperate, maintain and manage a sewer treatment

plant

U.S. Filter, now called Veolia, has operated GreatFalls wastewater treatment plant for three decades.In the last 10 years, mounting problems have cometo a head, with the city paying the price.

In 2000, the city faced a possible $10,000-a-dayfine after the wastewater plant dumped 500 gal-lons of wastewater into a creek in the second suchspill that year. The state Department of Health andEnvironmental Control gave the Veolia-operatedplant an unsatisfactory rating during an inspection

because of inoperable machinery and high chlorine

levels.128

The same year, the Environmental ProtectionAgency proposed a $134,000 fine for the city for al-legedly failing to adequately inspect and monitor thepretreatment of industrial wastewater.129 Veolia wasresponsible for the collection and analysis of indus-trial pretreatment samples.130

In 2005, EPA ordered the city to reduce the highlevels of hydrogen sulfide, commonly known assewer gas, in the citys wastewater system, citing

violations of pretreatment regulations. The nextyear, EPA went after the city again, this time requir-ing it to investigate, monitor and submit a remedia-tion plan for the sewer gas, which could pose bothacute and long-term risks to the health of wastewa-ter system employees.131

Sewer rates increased 2 percent in 2004, up to$15.42 a month, in part to help cover unknowncosts at wastewater treatment plant.132 A few yearsearlier, a man tore off his shirt during a city com-

mission hearing on water and sewer rate increases.The mayor remembers the message: You might as

well take the shirt off my back, too. In 2003, sewerrates jumped 8.1 percent. Over the ten-year periodfrom 1994 to 2003, the average annual sewer rateincrease was 4.2 percent more than the 3.1 per-cent average increase for water and the 2 percent forstormwater.133

In 2004, the city approved a 10-year, $25.7 millioncontract extension with Veolia.134 As part of the deal,the company gave the city $200,000 for economicdevelopment and offered a $200,000 loan.135 Veo-lia also submitted a preliminary study encouragingthe city to pursue a co-generation plant that wouldproduce its own energy to fuel the plant. Whilethe plant would cut back on the gas bill, Danbury,Conn., rejected a similar proposal after determiningthat the cost of the plant was too high and the pay-

back period too long to make it worthwhile. Not onlyis the construction expensive, but cogeneration alsoincreases labor costs.136

Nevertheless, the city responded favorably toVeolias proposal and hired the company to do a$60,000 study of the feasibility of upgrading the

wastewater plant to recycle gases from sewagedigesters and capture wind energy to power theplant.137

Unsurprisingly, Veolia found that the $2.45 millioncogeneration plant was feasible, saying it would payfor itself over the 20-year life of the bonds. The citycharged ahead with the project in 2005.138 Over thenext three years, Veolias monthly fees increasednearly 25 percent, from $181,300 in August 2005, to$212,571 plus a $12,500 monthly improvement feein August 2008.139,140


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Main Breaks and Boil-Water Alerts inHoboken, N.J.

Population: 35,000Date of original privatization: 1994Contract: 10-year contract to operate, maintainand manage the water system

Ever since United Water took over Hobokenswater system in 1994, 141 water outages, boil-onlyadvisories and water main breaks have plagued thecity.

When the company took over the operation andmanagement of the water system, it paid the cityan upfront fee of $5.5 million, which it planned torecover over the next decade by sending household

bills through the roof.142 The company was notexpecting to have to repair pipelines.

The first major water line breaks occurred within

a year and a half, causing other cities to rethinkpotential privatizations with the company.143 The

broken lines disrupted service throughout thecounty, and combined with lagging earnings, theyfrustrated and angered many of the companysshareholders. At a May 1996 meeting, onestockholder shouted, Im sick and tired of losingmoney.144

Just a few months later, a storm knocked out powerto the companys water treatment plant and morethan 200,000 New Jersey residents, including thosein Hoboken, had to boil their water for four days. A

working generator would have prevented this crisis,but the company had failed to repair its back-uppower source for more than a year.145 The residentshad to pay for the companys negligence.

In December 1998, about 300,000 people in JerseyCity, Hoboken and Lyndhurst lost water service fora day after a construction company hit two watermains. The construction company said United

Water had failed to mark the piping, as required

by state law.146

In 2000, state regulator fined thecorporation $24,000 for failing to mark one pipelineand $2,000 for improperly marking another. In1999, a ruptured water line delayed a rail service

with 8,000 commuters on their way to work.147

Despite the problems, Hoboken extended itscontract with United Water for another 10 years,

through 2024. United Water paid the city a $2.7million upfront fee plus $300,000 for meter readingtechnology and promised to make $350,000 a yearin system improvements.148

Residents continued to experience problems.In 2002, another broken water line reduced

water pressure and potentially contaminateddrinking water in Hoboken. United Water told thecommunity to boil the water before consumption.149

A year later, thousands of Jersey City residentslost water, and all Hoboken residents had to boiltheir water after a pipeline burst. Fire hydrants hadinadequate water pressure, leaving the city in aprecarious situation, according to the Jersey CityFire Department director. Schools closed. A hospitallost water service. When the former Jersey Citymayor called United Water, a company employeetold him, Its a holiday and theres nobody here.150

In 2007 another pipeline ruptured, disruptingHobokens water service and flooding severalstreets.151 Widespread outages and low pressureaffected thousands of residents. With main breakssuch a common occurrence, United Water shouldhave been well prepared to deal with them, but thistime, the company had failed to adequately notifyits Hoboken customers. The company had not yetconnected the city to its alert system, leaving peopleill informed.152

In 2008, another pipeline broke, unleashing ageyser of water and flooding nearby cars. Severalresidents lost service for several hours and othershad low pressure and black water.153

Bursting pipelines surely lost a considerable amountof water, and officials became concerned that United

Water might be draining the county reservoir. Thecompany was drawing close to its state allotment,including 7 million gallons of surplus water thatcould be used for future deals. Jersey City gavethe company a poor performance rating in 2004

because of its excessive water withdrawals, poorservice and failure to repair leaks.154


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14/20

High Rates, Low Pressure, Poor Quality inBexar County, Texas

Population: 110,000Date of original privatization: 1998Contract: 10-year, $30 million contract to design,build and operate a water treatment plant

In 1998, Bexar Metropolitan Water District gaveUnited Water a 10-year, $30 million contract todesign, build, operate and manage a new surface

water treatment plant.166

Over the next several years, water rates grewsteadily. The water district hiked rates by anaverage of 35 percent in 2001, 4 percent in 2002and 5 percent in 2003. It needed the extra revenueto cover new costs associated with the watertreatment plant, among other expenses.167 In 2006,high demand was straining the treatment capacityof the facility, leaving several residents with low

pressure.168 As a drought stressed water supplies,the district board declared a crisis for the areaserved by United Waters treatment plant. Residents

worried that such low pressure would hinder theirability to fight fires.169

By 2004, the district needed to expand the plant toaccommodate population growth. Partly because ofthis project, it blew its budget by 24 percent, or $8.2million, that year, even though operating revenues

were 5.1 percent higher than expected.170

The water district had a contract with anothercorporation Canyon Lake Water Supply Corp. for a different treatment plant. This privatizationcaused another string of problems for the residentsin 2005. High levels of trihalomethane, a byproductof the plants treatment process, polluted the

water for more than a year. As a result, the waterdistrict had to shell out $200 home water filtrationsystems to every household in the Bulverde Hillssubdivision.171

Buy Back Cuts Costs in El Paso County, TexasPopulation: 16,000Date of original privatization: 1994Contract: 20-year, $22 million contract to operate,maintain and manage the water and sewersystems

In 1999, El Paso County Water Authority awardedSouthwest Waters Eco Resources a 20-year, $22million contract to operate and maintain its waterand sewer systems. As part of the deal, Southwest

Water would finance, build and operate a $6.7million water treatment plant, which would serveresidents in Horizon City, Texas.172 Through a build-own-transfer deal, the corporation owned andoperated the plant and received about $58,400 amonth in lease payments from the authority.

Several residents feared their water or tax ratesmight have to increase after five years because of

the deal. What if we cant buy the plant, asked oneresident, or its sold to us at a very high price? Idlike to see the part about no new taxes or new waterrates in writing.173

Horizons mayor even had reservations aboutthe new plant, calling the entire proposal processrushed. Why did it become an emergency all of asudden when weve known for several years that weneeded to do some serious long-term planning?Mayor Tom Ruiz asked. Im not sure we looked atall the viable options first.174

Fortunately, the water authority secured a $7.8million loan to purchase Southwest Waterstreatment plant by 2001. The authority said that apublic buyout would lower costs and forestall ratehikes.175


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Discrimination and high rates inGladewater, Texas

Population: 6,800Date of original privatization: 1996Contract: 10-year, $2.8 million contract to operate,maintain and manage the water and sewer systems

Since 1996, Veolia subsidiary U.S. Filter has beenoperating and managing Gladewaters entire public

works system, including the water and sewer utili-ties.176

In 2002, when Mayor John Paul Tallent was tempo-rarily acting as the city manager, he decided to usehis time to go out in the fields with Veolia and over-see their operations. He went with the corporationto ensure that water and sewer line services were ex-tended to African American neighborhoods, whichhe said were being neglected.177

With the mayors eyes on them, Veolia beganclearing ditches that had not been cleaned for 10to 15 years. Theyve been put on the back burner,Tallent said. Well, Im going to put these peopleon the front burner. Thats my No. 1 goal now to getthese streets in the black neighborhoods cleaned up.If you get them cleaned up, most people will takecare of it, but it is our responsibility to get themcleaned up.178

Tallent said that while the corporation was repairingthe leaks, the system, nevertheless, was experiencingnumerous line breaks.179 The same year, the cityraised water rates by 20 percent to $1.50 per 1,000gallons.180 For residents who lived outside the city,the increase was far steeper.

Clarksville City, a community of 800 that boughtwholesale water from Gladewater, balked at aproposed rate hike. When its water rates jumped by80 percent and its wastewater rates by 160 percent,Clarksville refused to pay them. So, Veolia shut offits water service, leaving the entire community highand dry. The Texas Commission for EnvironmentalQuality had to intervene and force the city to restore

water service to Clarksville.181 A long fight ensued.After more than a year of mediations and more than$200,000 in legal fees, the cities finally arrived at asolution. Clarksville agreed to a rate hike, but alsolaid out plans to build its own water and wastewater

treatment plans.182

By 2007, Gladewater had one of the highest waterrates in East Texas.183 Meanwhile, service wasquestionable. Veolia officials could not explain

why a water pump that was fewer than three yearsold would break. The city had to shell out another$4,300 to purchase a new pump.184


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Steadily Climbing Rates in Seattle, Wash.Population: 1,300,000Date of original privatization: 1997Contract: 25-year, $109 million contract to design,build and operate a water treatment plant

In 1997, Seattle awarded a water contract to PhilipsServices Corp., which later became a subsidiary of

Azurix, Enrons debacle of a water corporation that

American Water eventually bought. The companygot a 25-year contract to design, build and operate anew water treatment plant on the Tolt River.185

It wasnt long before suburban customers of theSeattle water utility were feeling the pinch. In thefall of 1997, Bothell City had to boost its rates tocover system maintenance costs and increasesin wholesale prices of water bought from Seattle.We are extremely sensitive to wholesale waterprices, said Lynn Guttman, Bothells public worksdirector.186

Then in 1998, the city announced that water rateswould double within a decade. Although the citysrates were already more than the national average,the cost of water was going to climb by 9 percenta year. Seattle raised rates not only for theirresidents, but also all for the 18 cities and waterdistricts that rely on Seattles water. Three-fourths

of King County residents got their water from thecity. These communities had to share the burdenas corporations built and operated two big-ticketprojects the water treatment plants.187

The Tolt treatment plant opened at the end of 2000.Originally slated to cost $68 million, the plantactually set the city back $76 million. As Azurixput the finishing touches on this project, the city

jumped into negotiations for its next one a watertreatment plant on the Cedar River.188

CH2M Hill won the $109 million contract, with $78million to build the plant and $31 million to operateand maintain it for 25 years.189 At the same timethat the corporation broke ground on the new plantin 2002, residents learned their bills would jump14.5 percent over the next two years, from $19.14 to$22.27 a month.190

The rate hikes didnt end there. In 2006, the mayorproposed raising rates by 4.1 percent a year for thenext three years,191 and two years later, the utilityproposed increasing water rates by 40 percent overthe next three years. By 2011, the typical familycould be paying a monthly water bill of $34.52 $10 dollars more than the $24.61 they paid in 2008.The utility said the increased revenue would coverdebt payments on the new treatment plants.192


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Sewage Spills in Milwaukee, Wis.Population: 1,100,000Date of original privatization: 1998Contract: 10-year, $391 million contract to operate,maintain and manage the sewer system.

Ten years of Suez operating its sewer system leftMilwaukee with a pile of environmental problems,and Veolia can only be expected to add to the heap.

Billions of gallons of raw and partially treatedsewage have poured into Lake Michigan and localstreams since United Water (owned by Suez) tookover the system in 1998. Many of the spills were

blamed on heavy rains, but others were the fault ofemployees and malfunctioning equipment.

In one incident alone, 1.5 billion gallons of rawsewage spilled in May 2004, marking the second-largest mishap since Milwaukees Deep Tunnel

system opened in 1993. City officials blamed therain, but the accident led state legislators to call foran investigation.193

The spill came one year after a city-appointedauditor raised questions about United Watersmanagement, including whether the companycut staff too drastically (from 300 to 209) and

whether it had a sufficient inventory of spareparts. A backlog of uncorrected problems hadalso accumulated some dating back more than a

year.194

This audit came one year after a state reviewfound United Water likely violated its contract

by shutting down pumps to cut costs a practicethat saved the company $515,000, but which alsocaused the dumping of more than 100 milliongallons of sewage.195 The city threatened to voidits contract with United Water if persistent andrepeated failures continued.196

The contract saved the city about $1 million more

per year than United Water promised,197

butat what environmental costs? On top of publicrelations headaches, Suez acknowledged it lostmoney on the deal198 a half-million dollars inenergy costs in May 2005 alone.199

After giving United Water at least 20 noticesof contract non-compliance, the city decidedagainst renewing its contract in 2007. Instead,

officials gave the deal to Veolia another Frenchmultinational and the only other company vyingfor it with the expectation of great cost savingsfrom Veolias no-profit bid.200, 201

Whether Veolia will better serve the city and meetenvironmental regulations remains to be seen,

but based on its record, including sewage spills inBurlingame and Richmond, Calif. Veolia seemslikely to continue in the noncompliant tradition ofits fellow French conglomerate.


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Endnotes

1 Discolored water no cause for health risk. Valley Times-News(Lanett, AL), Aug. 4, 2006.2 SDWIS Violation Report water quality violations for ChattahoocheeValley Water Supply Dist. (1998 - 2008), Office of Water, U.S.Environmental Protection Agency. Available at www.epa.gov/enviro/html/sdwis/sdwis_ov.html.3 Leech, Marie. Residents question sewer sale, fee increase.Birmingham News, Oct. 1, 2003.4 Leech, Marie. Groups advice on sewer sale: FLUSSSH it.Birmingham News, June 23, 2005.5 Wilstach, Nancy. Sewer rates to climb if Shelby takes offer.Birmingham News, Aug. 6, 2003.6 Leech, 2003, op. cit.7 Leech, 2005, op. cit.8 Wilstach, Nancy. Residents protest Shelby sewer sale.BirminghamNews, June 30, 2005.9 Ibid.10 Leech, 2003, op. cit.11 Southwest Water to acquire wastewater utility; transaction expandscompanys presence in Alabama.Business Wire, Sept. 20, 2005.12 McIntryre, Karen. Corning water cost increases.Red Bluff DailyNews, Feb. 28, 2008.13 Crow, C. Jerome. Corning passes audit, increases sewer fees for newbusinesses.Red Bluff Daily News, Dec. 2, 2003.14 Crow, C. Jerome. Corning residents protest rate hikes.Red BluffDaily News,April 19, 2004.15 Crow, C. Jerome. Corning Council to set public hearing on proposedfee increases.Red Bluff Daily News, Jan. 28, 2004.16 Crow, April 19, 2004, op. cit.17 MacEachern, Michelle. Corning gets $3.8 million loan to expandsewer plant. Chico Enterprise-Record (CA), Sept. 15, 2004.18 McIntryre, op. cit.19 Krasnowski, Matt. McDonald reports back to prison; appealdenied. Copley News Service,April 25, 2006.20 Rohrlich, Ted. 2 on water board accused of extortion; acongresswomans son is arrested in a case linked to Carson politicalscandal.Los Angeles Times, Aug. 1, 2003.21 Krasnowski, Matt. McDonald found guilty on 10 felony counts.Copley News Service, Oct. 21, 2004.22 Krasnowski,April 25, 2006, op. cit.23 Krasnowski, Oct. 21, 2004, op. cit.24 Rohrlich, op. cit.25 Krasnowski, Matt. Federal fraud trial for water official underway.Copley News Service, Oct. 6, 2004.26 Krasnowski, Matt. Hardeman gets one year, one day; last defendantin Carson corruption probe.Daily Breeze (Torrance, CA), Oct. 13,2004.27 Rohrlich, op. cit.28 Krasnowski, Feb. 13, 2006, op. cit.29 Krasnowski, April 25, 2006, op. cit.30 Krasnowski, Matt. McDonald gets 41 months after tearfully askingfor leniency. Copley News Service, Feb. 14, 2005.31 Tokarski, Kelly. San Juan Capistrano. Orange County Register,Sept. 5, 2002.32 Tokarski, Kelly. Prepare to pay more for water // water billsincrease by 5 percent. Orange County Register, Sept. 4, 2003.33 Perez, Erica. Water world City officials explain the reasons behind

an impending water rate hike. Capistrano Valley News: OrangeCounty Register weekly, May 13, 2004.34 Emery, Sean. Water plan calls for likely rate increase. CapistranoValley News: Orange County Register weekly, Feb. 22, 2007.35 Tokarski, 2003, op. cit.36 Ibid.37 CEO interview: A Garnier Southwest Water Company (SWWC).Wall Street Transcript, Nov. 15, 2004.38 Potter, Angela. A tale of two plants.Dana Point News: OrangeCounty Register weekly, Nov. 8, 2007.39 Emery, Sean. Residents push city to clear up water problems.Orange County Register, Feb. 2, 2008.

40 Potter, 2007, op. cit.41 Emery, op. cit.42 Citys groundwater recovery plant set to start running within 10days. City of San Juan Capistrano, July 28, 2008, available at www.sanjuancapistrano.org/index.aspx?recordid=790&page=29.43 Ibid.44 Emery, Sean and Jolly, Vik. Well with traces of MTBE shut down.Orange County Register, Jan. 26, 2008.45 Solov, Dean. City OKs water, sewer rate increase. Tampa Tribune,June 28, 1995.46 Solov, Dean. Council orders survey of water, sewer records. TampaTribune, July 20, 1995.

47 Behrendt, Barbara. Water rate changes would hit some hard.St.Petersburg Times, April 30, 1996.48 Ibid.49 Lesley, Elena. Sewage system will get more use.St. PetersburgTimes, Dec. 14, 2005.50 Vadarevu, Raghuram. Water disparity puzzles officials.St.Petersburg Times, Dec. 17, 2004.51 Lesley, Elena. Sewage system will get more use.St. PetersburgTimes, Dec. 14, 2005.52 Minutes of the Crystal River city council regular council meeting.Crystal River City Council, City of Crystal River, March 24, 2008.53 Tampa Bay desalinated water will be the cheapest in the world.Canada News Wire, Feb. 22, 1999.54 Anderson, Zac. Is there salvation in desalination?SarasotaHerald-Tribune, June 15, 2008.55 Ibid.56 Pittman, Craif. Desal plant builder insists it will complete theproject.St. Petersburg Ties, Jan. 29, 2002.57 Stockfisch, Jerome R. and Johnson, Neil. Obstacles swampdesalination plant. Tampa Tribune, Oct. 19, 2003.58 Ibid.59 Salinero, Mike. Desalination Plant Okd to join system. TampaTribune, Deb. 18, 2007.60 Anderson, Zac. Is there salvation in desalination?SarasotaHerald-Tribune, June 15, 2008.61 Salinero, op. cit.62 American Water-Pridesa secures contract to remedy and operatethe Tampa Bay Seawater Desalination Plant.Business Wire, Nov. 16,2006.63 Salinero, op. cit.64 American Water-Pridesa secures contract to remedy and operatethe Tampa Bay Seawater Desalination Plant, op. cit.65 Johnson, Neil. Desalination plant misses 2nd deadline for repairs.Tampa Tribune, Dec. 19, 2006.66 Salinero, op. cit.67 Pittman, Craig. 5 years late, 4M gallons short.St. PetersburgTimes, Jan. 26, 2008.68 Pittman, Craig. Desalination plant flushes too much waste.St.Petersburg Times, March 1, 2008.69 Desalination: doing it right Environmental, fiscal questionsremain unanswered.Daytona Beach News-Journal, June 8, 2008.70 Pittman, Craig. Reservoirs cracks a stubborn mystery.St.Petersburg Times, Aug. 19, 2008.71 Saxton, Jennifer Kapiolani. Edwardsville city council approveswater contract.Belleville News-Democrat(IL), Sept. 5, 2002.72 Gehling, Becky. City facing water woes. Edwardsville Intelligencer(IL), Sept. 17, 2002.73 Gehling, Becky. Council gets report from public works.Edwardsville Intelligencer (IL), April 3, 2003.74 Saxton, Jennifer Kapiolani. City fixes old water main pipe breakswould force businesses to close. Belleville News-Democrat (IL), Nov.19, 2003.75 Wilkinson, Krista. Computer blamed for citys water woes.Edwardsville Intelligencer (IL), Feb. 5, 2005.76 Davidson, Hilary. Officials say water rate hike necessary.Edwardsville Intelligencer (IL), Oct. 24, 2005.77 Caldwell, Lori. Sewage plant goes private.Post-Tribune (IN), Feb.11, 1998.78 Caldwell, Lori. City sewer spat spills into court.Post-Tribune (IN),


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March 2, 1998.79 Caldwell, Feb. 11, 1998, op. cit.80 Zorn, Tim. Name to change at Gary sewers.Post-Tribune (IN),Aug. 10, 2003.81 Caldwell, Feb. 11, 1998, op. cit.82 Caldwell, Lori. Workers offered bid for buyout.Post-Tribune (IN),June 3, 1999.83 Caldwell, March 2, 1998, op. cit.84 Caldwell, Lori. Privatize lawsuits adding up. Post-Tribune (IN),March 6, 1998.85 Caldwell, Lori. Councils lawsuit dismissed.Post-Tribune (IN),June 6, 1998.

86 Caldwell, Lori. Suit says privatizing is racial it claims privatizationof the Gary sanitary district is intended to replace black managers.Post-Tribune (IN), Feb. 26, 1998.87 Caldwell, Lori. Sanitary district bid okd. Post-Tribune (IN), April11, 1998.88 DeNeal, Lisa. Foes flap at city hall sewer rally. Post-Tribune (IN),April 19, 1998.89 Sarver, Scheffie. Sinkhole swamps homes in Gary.Post-Tribune(IN), July 28, 2003.90 Zorn, Tim. Filling in sewer sinkholes a big task for Gary.Post-Tribune (IN), Aug. 2, 2003.91 Grimm Andy. Sewage alert lacking during flood.Post-Tribune(IN), Sept. 24, 2006.92 Siedel, Jon. Glen Park neighborhood deluged by flooding again.Post-Tribune (IN), Jan. 6, 2007.93 Ibid.94 Siedel, Jon. Gary makes new push for sewer repair.Post-Tribune(IN), Feb. 10, 2008.95 Grimm Andy. Feds looking into Gary Sanitarys plant operations.Post-Tribune (IN), April 6, 2008.96 Ibid.97 Ibid.98 Mao, Phillippe. Water with a French touch.Forbes 154(6):212-213, Sept. 12, 1994.99 Soltis, Dan. United Water contract extended for Indianapolispartnership. Water Engineering & Management145(1):8, January1998.100 City of Indianapolis agrees to make $1.86 billion in improvementsto sewer system. US Fed News Service, Oct. 4, 2006.101 OShaughnessy, Brendan. Business woes plague councilpresident.Indianapolis Star, Jan. 28, 2007.102 OShaughnessy, Brendan. Republicans keep the heat on Gray.Indianapolis Star, Oct. 10, 2007.103 OShaughnessy, Brendan. Gray faces 2 investigations.Indianapolis Star,Aug. 3, 2008.104 Pender, Geoff. Privatization considered city hopes to unburdenbusy public works.Sun Herald (Biloxi, MS), Nov. 17, 1998.105 Pender, Geoff. City agrees to turn over water, sewer to company.Sun Herald (Biloxi, MS), Sept. 15, 1999.106 Pender, 1998, op. cit.107 Cummings, Mike. Optech deal questioned Gulfport told to checkcontracts cost-effectiveness. Sun Herald (Biloxi, MS), July 2, 2002.108 Ibid.109 Dockins, Metric. Gulfport wants to get utility collections flowing.Sun Herald (Biloxi, MS), Jan. 23, 2001.110 Wilemon, Tom. Sewage flow fouls. Sun Herald (Biloxi, MS), May20, 2001.111 Business digest- Southwest Water unit has pact renewed.Pasadena Star-News (CA), Oct. 5, 2001.112 Scallan, Melissa M. Gulfport approves new water-sewer contractwith optech.Sun Herald (Biloxi, MS), Sept. 28, 2001.113 Cummings, Mike. Boiling over high water bills, Orange Groveresidents are steamed. Sun Herald (Biloxi, MS), June 25, 2002.114 Cummings, Mike. Flat rate wont be reinstated water bills to bereviewed on case-by case basis. Sun Herald (Biloxi, MS), July 10,2002.115 Cummings, Mike. Optech: Not enough workers to check meters.Sun Herald (Biloxi, MS), June 26, 2002.116 Ibid.117 Scallan, op. cit.

118 Cummings, June 26, 2002, op. cit.119 Cummings, July 2, 2002, op. cit.120 Cummings, Mike. Gulfport adopts tough stance on late waterbills. Sun Herald (Biloxi, MS), Feb. 1, 2003.121 Cummings, Mike. Flat water fee unfair, customer says. SunHerald (Biloxi, MS), Nov. 1 , 2003.122 Dash, Tracy. Gulfport, Miss., couple tries to get reimbursement forwater bill overpayments. Sun Herald (Biloxi, MS), Nov. 1, 2004.123 Musgrave, Beth. Beach around Debuys closes.Sun Herald (BiloxiMS), May 13, 2003.124 Fitzgerald, Robin. Oak lane tired of backyard pool.Sun Herald(Biloxi, MS), July 1, 2003.

125 Cummings, Mike. Gulfport to grade Optech. Sun Herald (Biloxi,MS), Sept. 24, 2003.126 Cummings, Mike. Optech takes issue with memo. Sun Herald(Biloxi, MS), Feb. 4, 2004.127 Lafontaine, Ryan. Satisfaction with Gulfports Optech slipped in2006: City hopes new contract will spark improvement. Sun Herald(Biloxi, MS), March 10, 2007.128 Great Falls might be fined for sewage spill.Associated Press, Dec22, 2000.129 Puckett, Karl. City facing $134,000 EPA fine. Great FallsTribune, Dec. 28, 2000.130 Great falls, Mont., extends Veolia Waters wastewater partnershipfor ten more years.Business Wire, Sept. 27, 2004.131 EPA requires city of Great Falls to investigate sewer gas. US FedNews,April 4, 2006.132 Wilmot, Paula. City proposes water rate increase. Great Falls

Tribune, March 17, 2004.133 Wilmot, Paula. City considers hikes. Great Falls Tribune, April19, 2004.134 Great falls, Mont., extends Veolia Waters wastewater partnershipfor ten more years.Business Wire, Sept. 27, 2004.135 Downey, Mark. City commission approves waste contract. GreatFalls Tribune,Aug. 18, 2004.136 Wilmot, Paula. City pondering a self-sufficient treatment plant.Great Falls Tribune, March 15, 2004.137 Wilmot, April 19, 2004, op. cit.138 Wilmot, Paula. City decides to pursue co-generation project duringsewage processing. Great Falls Tribune,Aug. 4, 2005.139 Budget or contract claims in excess of $5000, Agenda 8, CityController, City Commission, City of Great Falls, Montana, Aug. 2,2005.140 Invoices or claims in excess of $5000, Agenda 8, Fiscal ServicesDirector, Commission Agenda Report, City of Great Falls, Montana,Aug. 19, 2008.141 Hendren, John. Hoboken approves water deal with utility. TheRecord (N.J.), May 20, 1994.142 Ibid.143 DeMarrais, Kevin G. Breaks put utilitys expansion in spotlight.The Record (N.J.), Feb. 8, 1996.144 DeMarrais, Kevin G. Frustration spills over at UWR meeting. TheRecord (N.J.), May 14, 1996.145 Petersen, Melody. After crisis, most water is safe to drink.NewYork Times,Aug. 28, 1996.146 Water main ruptures test N.J. law on digging. New York Times,Dec. 6, 1998.147 Rail service disrupted by water line break.New York Times,March 24, 1999.148 DeMarrais, Kevin G. United Water and Hoboken extend contract partnership to run until 2024. The Record (N.J.), July 17, 2001.149 Residents urged to boil water after main breaks in Jersey City.New York Times, Nov. 4, 2002.150 Conte, Michaelangelo. Keep on boiling Pressure restored aftermain break under river; boil advisory not lifted.Jersey Journal, Nov.12, 2003.151 Water disrupted in Jersey City and Hoboken.Associated Press,July 15, 2007.152 Pearson, Bernette. Water main breaks. Waterfront Journal (NJ),July 19, 2007153 Baldwin, Carly. Broken again! 20-ft geyser on Clinton St. JerseyJournal, Feb. 7, 2008.


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154 Frank, Al. Water woes for supplier to Jersey City, Hoboken.Jersey Journal,April 15, 2004.155 Bodine, Harry. Use the Willamette for drinking water, studyurges. The Oregonian, Nov. 15, 1994.156 Tsao, Emily. Wilsonville selects California firm for treatmentplant. The Oregonian, Dec. 23, 1999.157 Tsao, Emily. Water districts river proponent joins private firm.The Oregonian,Aug. 3, 1999.158 Tims, Dana. Wilsonville changes bid rules for plant. TheOregonian, Nov. 2, 1999.159 Hansen, Jim. Agency kills warnings on Willamette water. TheOregonian, Jan. 25, 2001.

160 Tims, Dana. Wilsonville prepares switch to river water. TheOregonian, March 21, 2002.161 This weeks question what do you think would be a fair water ratein your area? The Oregonian, June 21, 2001.162 Bella, Rick. Some no longer trust tap. The Oregonian, May 8,2003.163 Colby, Richard. Willamette water samplings fall short, auditorsays. The Oregonian, July 25, 2003.164 CET Environmental Services, Inc. subsidiary wins its first U.S.wastewater privatization contract.PR Newswire, March 4, 1998.165 Enforcement & Compliance History Online (ECHO) Water ICIS-NPDES, Geographic Location: Keystone, SD, Southwest WaterCompany,Environmental Protection Agency, accessed Sept. 23, 2008.Available at http://www.epa-echo.gov/echo/compliance_report_water_icp.html166 United Water to design, build and operate ultrafiltration water

treatment plant.PR Newswire, March 25, 1998.167 Needham, Jerry. Bexar Met water district is increasing rates.SanAntonio Express-News, April 29, 2003.168 Needham, Jerry. Drought forcing utility to pay.San AntonioExpress-News, July 25, 2006.169 Needham, Jerry. BexarMet areas get crisis label.San AntonioExpress-News, Oct. 25, 2006.170 Needham, Jerry. Bexar Met blew its budget by 24%. San AntonioExpress-News, Sept. 15, 2004.171 Pafford, Jeremy. BexarMet water customers get filtered.NewBraunfels Herald-Zeitung (TX), Dec. 20, 2005.172 El Paso Water Agency awards $22 million contract renewal andtreatment plant construction project to Southwest Water.BusinessWire, Nov. 17, 1999.173 Ramirez-Cadena, Cindy. Horizon City builds treatment plant.ElPaso Times, March 6, 2000.174 Ibid.175 Crowder, David. Loan will help assure water for Horizon Cityarea.El Paso Times, Nov. 17, 2001.176 Chamber of Commerce in Gladewater, Texas, selects USFilter2003 business of the year.Business Wire, May 6, 2003.177 Bostic, Patrina A. Local: Gladewater appoints interim citymanager.Longview News-Journal (TX), July 29, 2003.178 Bostic, Patrina A. Local: Gladewater looking at balanced citybudget.Longview News-Journal (TX), July 31, 2003.179 Bostic, Patrina A. Local: Gladewater city council rejects bid forremoving lake sediment.Longview News-Journal (TX), Oct. 18, 2002.180 Bostic, Patrina A. Local: Gladewater council votes to increase citysewer rate.Longview News-Journal (TX), Nov. 22, 2002.181 Draper, James. Local: Rate dispute leaves town high and dry.Longview News-Journal (TX), Oct. 25, 2002.182 Bostic, Patrina A. Local: Cities reach agreement on water.Longview News-Journal (TX), Jan. 14, 2004.183 Isaac, Jimmy. White Oak to see increases in water bills, taxes;budget OKd.Longview News-Journal (TX), Sept. 13, 2007.184 Ward, Angela. Gladewater passes 2 cent tax increase.LongviewNews-Journal (TX), Aug. 18, 2007.185 Philip Services Corp.: Water treatment facility contract is won byunit. Wall Street Journal, May 29, 1997.186 Beason, Tyrone. Bothell ponders water-rate increase city wouldpass along Seattles higher fees.Seattle Times, Sept. 22, 1997.187 Mcomber, J. Martin. Seattle water rate to double in decade mostresidents of King County will be affected.Seattle Times, July 8, 1998.

188 Higgins, Mark. Good to the last drop a new $76 milliontreatment plant means many area residents will get water.SeattleTimes, Dec. 23, 2000.189 Phuong, Cat Le. Work begins on second water treatment plant.Seattle Post Intelligencer, June 6, 2002.190 Modie, Neil. Seattle Water rate increase passed, but is trimmed abit.Seattle Post Intelligencer,Aug. 13, 2002.191 Increase in residential water rates proposed.Seattle PostIntelligencer, March 11, 2006.192 Chan, Sharon Pian. More demands on your dollar.Seattle Times,Aug. 2, 2008.193 Schultze, Steve and Rohde, Marie. Dumping of sewage second

largest ever.Milwaukee Journal Sentinel, May 20, 2004.194 Rohde, Marie. Review raises concerns about sewerage upkeep.Milwaukee Journal Sentinel, June 24, 2003.195 Schultze, Steve and Rohde, Marie. Sewage dumping policiesfaulted.Milwaukee Journal Sentinel, July 31, 2002.196 Rohde, Marie. Improper maintenance blamed in dumping.Milwaukee Journal Sentinel, Sept. 21, 2002.197 Rohde, Marie. United Water delivering savings in 10-yearcontract.Milwaukee Journal Sentinel, June 16, 2003.198 Ibid.199 Ryan, Sean. Milwaukee Metropolitan Sewerage District savesmoney by using private contractor.Milwaukee Daily Reporter, Aug.17, 2005.200 Behm, Don. MMSD wont renew deal with operator.MilwaukeeJournal Sentinel, Nov. 16, 2007.201 PWFs 12th Annual Water Outsourcing Report.Public Works

Financing, March 2008.

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Documents

Case Studies of Failed Water Privatizations