Privatization of Municipal Waste Water Treatment
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Having privatized garbage removal, paper recycling, jail operations and even firefighting, many cities are turning over waste-water plants to private contractors.
- Wilmington, Delaware, is about to sign a 20-year lease for private management of its waste-water treatment facilities.
- Jersey City and Hoboken, New Jersey; Toledo, Ohio; and Freeport, Texas, as well as others, have indicated an interest in turning some or all of their water operations to private companies.
- City officials say the potential benefits are economic -- faced with stricter municipal budgets and increasingly stiff environmental regulations, they are turning to the private sector for operating expertise and capital to invest in aging facilities.
- According to the U.S. Conference of Mayors, water and sewer services are the single largest expenditure local governments face -- totaling $43.5 billion a year nationally.
And the costs are likely to increase as treatment plants built or improved 20 or more years ago with $53 billion in federal grants are rendered obsolete as the Environmental Protection Agency imposes more stringent water pollution rules.
- There are some 6,000 waste-water treatment plants around the nation.
- The EPA estimates it will cost at least $100 billion in the next decade to meet the new standards.
- However, Congress is cutting back grant money; only $1.35 billion will be available to states in 1997.
As a guide to waste-water privatization, many cities are looking at how solid-waste privatization was handled.
- During the 1980s many cities and towns hired private companies to build and often own waste-to-energy plants -- which now generate $20 billion in business each year.
- After Indianapolis turned over its two waste-water plants to a private group in 1994, the company slashed a proposed budget of $30.1 million to $17.6 million in he first year of operation.
- Over the five-year term of the contract, Indianapolis expects to save $65 million.
Private contractors reduce expenses through typical corporate strategies: shrinking bureaucratically-bloated workforces, subcontracting nonessential services, and cutting inventories.
Source: John Holusha, "In Latest Cost-Cutting Trend, Cities Turn to Private Sector for Waste-Water Treatment," New York Times, May 5, 1996.
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