By Terry Catlin
(January 27) As a resident of Upland I am concerned about the poor fiscal health of the city and am interested in how the council will implement a “sustainable remediation plan’ to address both the internal and external factors that have adversely resulted in our current economic position.
While there are many recommendations that have been presented by the Fiscal Response Task Force to the city council for consideration, I want to specifically address the task force’s Measure 13, which relates to privatizing the management of the water & sewer assets.
Compared to the other measures that have been identified, this measure asserts to provide the potential for an infusion of a one-time payment of $5 million to $32 million with annual lease payments of $1.5 million to $2 million, the most revenue of any other measure. Because of these favorable numbers, it has certainly received some attention and is characterized as one of the top 5 measures to pursue. (As a side note, the source of information for the numbers and the scope defining the extent of the privatization was unavailable).
The task force in its letter to the council provided its finding, opinions and direction as to the path Upland must take. Further, the task force recommends that time is of the essence to implement the prescribed work-out plan. It is my hope that the sense of urgency to avoid financial collapse or asserted bankruptcy may carelessly overshadow the need for careful, transparent, thorough and thoughtful examination of proposed Measure 13, if not for some of the other measures as well.
Upland is rich in its water resources and its water portfolio is the envy of other municipalities. Not only is there a diverse water supply, there is good water quality.
Water service is unique in several respects, unlike the typical provision of goods and services. A sufficient, clean, and reliable supply of drinking water is necessary of life, requiring careful planning, infrastructure, and qualified operations, not only for sustaining life but also for fire service. Private water suppliers generally plan for return on their investment and not for the long-term public goals and interests. Private utilities are not necessarily more efficient than public utilities. There must be a careful scrutiny of assertions of proposed savings or revenue generation to avoid the use of inaccurate assumptions, or comparisons to privatizations that are incomparable. Private firms have the incentive to invest only so much as they will produce financial results for them during their period of private control, ignoring the necessary long-term forward planning to meet public demands and regulatory standards for generations to come.
Much of the privatization of public water supplies in the United States involves American subsidiaries of large multinational companies, primarily French & German corporations. Private water corporations have identified U.S. public water systems as profitable to own and operate. While there are successful public-private partnerships, there are also notable failures.
Privatization is not always the right answer and we must recognize that private partners are not charitable organizations. The role of private partners is not that of performing magic. I urge the council to explore all of the possible methods to leverage its water supply portfolio for its own financial benefit while maintaining control of our precious resource now and for generations to come.
Independent of whether or not there is privatization of the water & sewer assets, water rates will increase. I’d prefer to have local, public control or management of future rate increases.
Catlin is the president of the Inland Empire Utility Authority and the general manager of a treatment facility run by a joint powers agency consisting of the cities of Chino, Chino Hills, Ontario, Upland and the Monte Vista Water District.
By Terry Catlin