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Monday, March 23, 2009

World Water Week:  Cincinnati Planning a Step Towards Privatizing Our Water?

Posted by The Dean of Cincinnati

This is World Water Week, a global grassroots movement to discuss the availability of clean water across the planet.  So what better time to discuss policies locally that will affect our region’s access to clean water?  In this important guest column, Josh Krekeler showcases issues surrounding City Hall’s plans to sell our municipally owned water system to private interests at taxpayer expense.  Also be sure to visit the new website at Protect Our Water for more information.

In October 2007, Cincinnati City Manager Milton Dohoney began exploring the feasibility of transforming the Cincinnati Water Works (CWW) into the Greater Cincinnati Water District.  In a memo to the Mayor and City Council dated 10/1/07, Dohoney stated that “There is potential that the development of a Water District would have positive financial implications for the City of Cincinnati.  Given our financial challenges looking at other alternatives is clearly warranted.”  The working group that’s been conducting the feasibility study is expected to submit its report to City Council (through the City Manager) within the next six weeks.  While the details have not been finalized, the plan apparently is to sell CWW to the new Water District for between $300 million and $500 million, which would be paid to the City over several years.  This plan, and the relatively little publicity it’s received, raises some troubling questions.

- How would the Water District be accountable to the people of Cincinnati?  The Water District would be a separate public agency governed by an appointed board.  It would no longer be directly under the City administration.  If sufficient accountability and transparency are not guaranteed, there will be greater opportunities for corruption and decisions that do not serve the public interest.

- How would the transformation to a Water District guarantee perpetual local control of the water system?  A board that isn’t directly accountable to citizens would have much more latitude to pursue selling the water system to a private buyer some time in the future.  If they do – and there is no shortage of private water companies eager to take control of municipal systems – a corporate board in a different city or country would be setting local water policies with little input from the residents affected by those policies.

- How would the Water District generate the revenue to buy CWW from the City?  While the advocates of the Water District plan within CWW are anticipating that the new structure would allow them to buy infrastructure and water plants outside their current service area, it would almost certainly be necessary to raise water rates to generate the money needed for the purchase.  This is absolutely unacceptable.  The City Manager is, effectively, proposing to ask us to pay to buy something that we already own!

Rather than trusting, or simply hoping, that these questions will be resolved in the public’s favor, citizens should ask City Council to reject the proposal.  Please call or e-mail all City Councilmembers, tell them you’re concerned about the implications of the plan, and politely ask them not to recommend the creation of the Water District.  You may also wish to contact Mayor Mallory and City Manager Dohoney.  Fortunately, a citizens’ group called Protect Our Water has formed to educate the public and organize opposition to the plan.  Please visit their informative Web site at and spread the word about this questionable proposal to your friends and neighbors.

There is no good reason to sell Cincinnati Water Works.  CWW provides high-quality water at reasonable rates.  If a separate group is put in charge, service quality could decline, rates will almost definitely go up, and residents who have trouble paying their water bills could find themselves faced with indifferent bureaucratic obstacles to maintaining their access to water.  CWW is an efficient public system that pays for itself.  More importantly, water is a vital resource, and people should do what they can to make sure their water supplies stay in the control of their local governments.

Cincinnati City Council:
Jeff Berding – 352-3283, .(JavaScript must be enabled to view this email address)
Chris Bortz – 352-3255, .(JavaScript must be enabled to view this email address)
Laketa Cole – 352-3466, .(JavaScript must be enabled to view this email address)
David Crowley – 352-2453, .(JavaScript must be enabled to view this email address)
Leslie Ghiz – 352-3344, .(JavaScript must be enabled to view this email address)
Greg Harris – 352- 5304, .(JavaScript must be enabled to view this email address)
Chris Monzel – 352-3653, .(JavaScript must be enabled to view this email address)
Roxanne Qualls – 352-3604, .(JavaScript must be enabled to view this email address)
Cecil Thomas – 352-3499, .(JavaScript must be enabled to view this email address)

Mayor Mark Mallory
.(JavaScript must be enabled to view this email address)

City Manager Milton Dohoney
.(JavaScript must be enabled to view this email address)

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  1. .(JavaScript must be enabled to view this email address) says:

    This is one time when I agree with you.

    To be honest, this really is not privatizing.  It is probably more like a corporate favor.

    If they really wanted to privatize it would be done in stages.

    In a manner similar to this:

    1.  First they would itemize our bills.
              Cost to purify.
          Pipe usage.
              Waste pipe usage.
              Cost to purify waste.
          Maintenance of supply lines.
          Maintenance of waste lines.
    2.  Then the city would make a decision on which to privatize first. 
          The easiest one to privatize would be maintenance and it could be done on a one-year renewable contract.  And the waste and supply contract could be separate contracts.  All bids public of course.
          The next easiest would be the plant operations.  You could allow companies to tap their plants into the system for a fee and a set contract based on volume.  If they do it cheaper, they produce a bigger margin.  If someone else figures out a way to do it cheaper then they could also tap in for a fee.  If the city plant can do it the cheapest, they continue to treat the waste and the supply and also collect on its contract.  If the city plant is obsolete then they shut down and still continue to collect on its contract.  All bids public of course.
          The last to privatize would be the pipes, supply and waste.  The city could regionalize the system to make sure there are many vendors and put them on renewable contracts based on value.  The pipes are the bottleneck, until there are competing systems for this, it should remain on a lease basis.  All bids public of course.  Until there are at least three sets of pipe systems, this part of the system would be difficult to privatize and still prevent a monopoly.  Of course the city could just go ahead and privatize it, along with everything else and if the companies don’t provide a system with affordability, then they would disappear along with the population within the city.  When you get to pipes (metaphorically speaking) you have to privatize the whole system, otherwise the private segments would suck the coffers dry.  When I say pipes, I mean roads, utilities, and transportation.

    When you start out with a “tragedy of the commons” it is quite difficult to reverse the process.

  2. Josh Krekeler says:

    That’s a scary scenario, Scott.  Thanks for laying out how it could happen.

    In the article, I wrote:

    How would the Water District generate the revenue to buy CWW from the City?  While the advocates of the Water District plan within CWW are anticipating that the new structure would allow them to buy infrastructure and water plants outside their current service area, it would almost certainly be necessary to raise water rates to generate the money needed for the purchase.

    The “purchase” at the end refers to the purchase of CWW, not the purchase of additional infrastructure and water plants.  Sorry if that was confusing.  The Water District could increase its revenue by expanding its service area, but that wouldn’t generate enough profit to pay the city.

  3. .(JavaScript must be enabled to view this email address) says:

    I forgot to add a few things.  If water, when no longer subsidized, becomes expensive it may be cost effective to drill your own well and treat your own water.  Also, while currently illegal, it would be worth investigating whether septic systems could accomplish the waste problem.  One additional thing that would be incentivised if water clean water became more expensive would be for people to collect their own run off.

    Having said all that, with the system currently in place, I think the market would show that the centralized supply and waste system would be the most bang for your buck and would probably end up being less expensive than it already is.

  4. .(JavaScript must be enabled to view this email address) says:

    Thanks for bringing this issue up.  I recently heard a story on NPR about towns that privatized their water and are now paying the price—when it is private, someone needs to make a profit. 

    Cost, quality, and the dignity of our workers are all important issues in this discussion.  Worldwide, the movement to privatize water is very disturbing.

  5. .(JavaScript must be enabled to view this email address) says:

    Thanks for the response, I guess I have a hard time thinking of the current plan as a “privatizing” plan.  It would seem to me that the only goal is to reduce transparency and when things go wrong the blame can be shifted.  There is still a monopoly and monopolies only exist as the result of regulation not inspite of regulation. 

    If they are going to do this, they should at least consider septic systems permissable.  It could introduce a whole other business model into the equation that would force prices down. 

    An entrepreneur could get a truck equiped with a pump system and a resevior system.  Istall systems for no up front costs and charge a monthly fee to clean out the waste tanks and refill the clean tank.  There are plenty of suppliers of clean water that will keep the cost down, and the waste could actually be recycled.  Currently the big problem is the waste.  Right now, it is all on one bill.  It should be separated and a septic system should be permissable.

    That is really the only way to insure market forces.  Less regulation = more competition.

  6. anon says:

    It’s all about side stepping the legal requirement that CWW be a nonprofit and increase their costs as well as get out of the mandate to provide free water services to fire houses, some county faciilities, a portion to schools, and all city fuildings,—and, that the rate charge those outside of the city can’t be less than what is charged to the city residents.

    This is all about increasing the profit margin at our expense.

  7. Anon says:

    Maybe privitazition is a good thing. When the people have suffered enough then they band together and take action. Here is an article about the peoples revolt in Bolivia. Maybe we don’t have to let it get this far before we take action.

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