The Public Works

How the Remunicipalization of Water Services Saves Money

&ACT 3HEET s $ECEMBER

Public Operation Averaged 21 Percent

Cheaper than Private Operation
Food & Water Watch reviewed 18 communities that
reclaimed
*
public management of water or sewer services
between 2007 and 2010, and found that public operation
vus un uveruge o one-th cheuper thun prvute operuton.
A municipality typically saves 21 cents on every dollar by
returnng ther vuter svstems to pubc hunds.
lor Soux Ctv, C'luon, letuumu und lured-Susun
Sewer District, the return to public operation came after
more thun tvo decudes o prvute operuton.
Improved Service at a Lower Cost
Public operation can simultaneously cut costs and improve
perormunce.
Cave Creek, Arizona, took over its water services in 2008,
deciding against renewing a management contract with
Amercun \uter. Durng u presentuton to the tovn counc
in November 2007, the towns utilities manager explained
thut the benets o pubc operuton ncuded ocu mun-
ugement, enhunced nuncu sustunubtv und mproved
customer servce. Mke Rgnev, the ussstunt uttes mun-
ager, then added a telling example of how local manage-
ment cun mprove servce.
L
ocal governments across the country have uncovered a smart way to reduce
costs and improve the performance of their water systems: They are exiting
management contracts with private water companies and bringing water services
under pubc contro. A number o ctes und tovns huve suved mons o
dollars by running their water utilities with public employees instead of private
contructors. lor these communtes, pubc operuton s u much better deu.
* Lbertv, Mo., vus the onv surveved ctv thut hud not vet returned ts svstem to pubc operuton bv November 20l0. ln August 20l0, the ctv's
pubc vorks drector sud he expected t to occur beore veur's end.
One of the major issues with
Arizona American has been
the call to an 800 number.
Somebody in some remote state
would answer the phone and
wouldnt know what was going
on in Cave Creek.
Mike Rigney, assistant utilities
manager of Cave Creek, Arizona
One of the major issues with Arizona American has been
the cu to un 800 number. Somebodv n some remote stute
would answer the phone and wouldnt know what was
gong on n Cuve Creek, Rgnev sud. v hundng the
system locally and by having it in real time and by having
constunt communcuton vth the ed peope, ve v
know exactly when the problems occur, what the status of
that repair is, and be able to communicate more effectively
vth customers to be ube to resove probems.
19
At end of the towns presentation, one councilmember
commented thut the tovn's ndngs vere the exuct op-
posite of what the private sector presented at the National
Congress o Ctes eurer thut month. 1he tovn punner
responded that cost-effectiveness was the primary reason
for the takeover and private enterprise involved additional
costs, ncudng prots und overheud.
20

lndeed, the tovn reported thut t pubcv run the vuter svs-
tem during 2009, eliminating an operating contract with a
private company and improving operations while reducing
operutng costs.
21

Evansville, Indiana, expected to save $14 million over
ve veurs vth pubc operuton. 1he ctv's uttv drector
planned to use the savings to repair equipment that was
not properly maintained under private management and to
mnmze vuter rute ncreuses.
22

We will be able to better control costs, direct staff more
effectively, and put a management team in place that
will allow the Utility to run the water and sewer systems
more ecentv thun u prvute compunv, Muvor lonuthun
\enzupe sud upon unnouncng the pubc tukeover. lt's
the Utilitys experience that private management has not
ued expectutons nor provded the necessurv eve o
ndustrv expertse.
23
Durham County, North Carolina, took over its wastewater
treutment punt n lebruurv 2009. Lnted \uter, vhch hud
operated the plant, terminated the contract after the county
documented various problems with its performance,
including inadequate preventative maintenance, and re-
quested thut t deveop u pun to resove these ssues.
A Nationwide Phenomenon: Saving Money with Public Operation
lrom 2007 Lo 2010, aL leasL 18 local aovernmenLs reLurned waLer and sewer svsLems Lo publlc hands Lo reduce cosLs. Map bv Marv CranL, lood & WaLer WaLch.
Lxpectng other prvute rms to huve smur probems, the
county board of commissioners unanimously voted to bring
the punt n-house. lubc operuton exceeded the countv's
expectutons. lt vus expected to mprove perormunce vth-
out ncreusng costs, und t uctuuv reduced costs.
24
A Tool to Ease Budget Constraints
Cities and towns can help mitigate budget shortfalls by
cutting out the wasteful spending associated with private
vuter munugement contructs. 1oo oten ocu governments
enter into and renew deals with private operators without
properv compurng the costs. 1hev mght be surprsed
ut hov much extru thev're puvng or prvutzed servce.
1he scu pressure resutng rom the recent economc
dovnturn shoud nspre pubc ocus to reexumne the
ecucv und ecencv o contnung to contruct out vuter
und sever unctons.
With effective local oversight and public involvement, pub-
licly run water systems can achieve cost savings not pos-
sbe under prvute operuton. lubc contro emnutes the
prvute contructor's prot requrement us ve us the over-
head expenses associated with negotiating and monitoring
compcuted contructs. lus, nsteud o sphonng o unds
to private owners around the world as the leading water
companies do, publicly run utilities reinvest the funding
coected rom vuter bs nto ther communtes.
Responsbe pubc munugement cun hep protect vuter
resources and ensure safe, reliable and affordable water
servce or everv communtv member.
Cost Savings With Public Operation of Water and Sewer Systems: A Survey of
18 Local Governments
Location
Est. Residential
Population
Served
Years
Privatized
Last Private Operator
(Parent Company) Contract Type
Savings
(anticipated or
realized)
ddeord, Mune
1
21,383 1991-2009 CMl (CH2M H) Wastewater treatment plant $150,000 12%
Cuve Creek, Arz.
2
9,000
2007
a
-2008 American Water
Cuve Creek und Desert Hs vuter
systems
$1,335,017 29%
Durhum Countv, N.C.
3
8,000 1993-2009 United Water (Suez) Sewer system $850,460 35%
Lvunsve, lnd.
4
158,628
1992-2010 LMC (Amercun \uter) Sewer system
$2,737,522 21%
1997-2010 American Water Water system
lured-Susun Sever
Dstrct, Cu.
5
135,296 1976-2008 United Water (Suez) Wastewater treatment plant $963,539 13%
b
Curv, lnd.
6
180,000 1998-2010 United Water (Suez) Wastewater treatment plant $8,000,000 50%
Horn Luke, Mss.
7
15,545 1992-2008 Southwest Water
Sewer system
$240,000 36%
c
Water system
Houston, 1exus
8
2,700,000
1996-2007 American Water Southeast water treatment plant
$2,800,000 13%
2001-2008 M\H Constructors Northeust vuter purcuton punt
Lampasas, Texas
9
7,868 1995-2010 CMl (CH2M H)
Sewer system
$522,278 12%
Water distribution system
Leander, Texas
10
25,740 1991-2010 Southwest Water
Sewer system
$200,000 24%
Water distribution system
Lbertv, Mo.
11
30,000 1995-2010
d
CMl (CH2M H) Water treatment plant $249,647 16%
North Adums, Muss.
12
15,000 1992-2010 United Water (Suez) \uter truton punt $35,000 12%
C'luon, Mo.
13
25,002 1984-2009
Alliance
\uter Resources
Sewer system
$500,000 15%
Water system
letuumu, Cu.
14
58,142 1979-2008 Veolia Water recycling plant $1,578,648 17%
e
Soux Ctv, lovu
15
500,000 1982-2010 American Water Wastewater treatment plant $1,000,194 15%
Skuneutees, N.Y.
16
5,116 1993-2010 Severn Trent Wastewater treatment plant $30,000 26%
Surprse, Arz.
17
27,116 1997-2009 American Water Water system $5,000,000 20%
f
\ebb Ctv, Mo.
18
8,304 2006-2010 CMl (CH2M H) Center Creek wastewater treatment plant $44,000 20%
Average 21%
Notes
a
1he ctv purchused tvo prvutev ovned vuter svstems n 2006 und 2007, und then contructed out the operuton.
b
Suvngs vere bused on expected ncreused prvute prot eve o l5 percent: suvngs over 2008 contruct budget vere estmuted to be 4 percent. ln-
house operuton reduced totu expenses (excudng nterest und deprecuton) bv 7 percent n the scu veur 2008/2009.
c
Savings estimated to be between 36 percent and 55 percent ($360,000 a year)
d
Expected to end in 2010
e
Lstmuted suvngs over the rst three veurs
f
Suvngs over the rst ve veurs
Endnotes
l Ctv o ddeord. Specu Counc Meetng. luv 27, 2009: Ctv o
ddeord . Ctv Counc Meetng. Muv ll, 2009: Hunt, lonuthun.
Ctv tukng over sevuge punt operutons. Sun Chronce. luv 30,
2009: Ctv o ddeord. Approved lY 20l0 Lxpendture udget.
Muv l9, 2009 ut 58: L.S. Census ureuu. 2009 lopuuton Lst-
mutes, Census 2000, l990 Census.
2 1ovn o Cuve Creek, Arzonu. Comprehensve Annuu lnuncu
Report lscu Yeur Lnded lune 30, 2009. lunuurv 22, 20l0 ut l8 und
33: 1ovn o Cuve Creek, Arzonu. Comprehensve Annuu lnuncu
Report lscu Yeur Lnded lune 30, 2008. December l2, 2008 ut l8
und 33: 1ovn o Cuve Creek, Arzonu. Reguur 1ovn Counc Meet-
ng. Mnutes. November l9, 2008 ut 2 to ll: Duckett, eth. Cuve
Creek sees suvngs on ts vuter operutons. 1he Arzonu Repubc.
November 25, 2008: 1ovn o Cuve Creek. \uter lnrustructure
lnunce Authortv o Arzonu. lroect lnunce Appcuton. (D\
023-2008). December l4, 2007 ut ll und l4: L.S. Lnvronmentu
lrotecton Agencv. Sue Drnkng \uter lnormuton Svstem, uc-
cessed November 22, 20l0: \uter Advsorv Commttee o the 1ovn
o Cuve Creek, Arzonu. Reguur Meetng. Mnutes. November l4,
2007 ut 6.
3 Durhum Countv, North Curonu. A Comprehensve Annuu lnun-
cu Report or Yeur Lnded lune 30, 2008. Cctober 3l, 2008 ut 40:
Durhum Countv, North Curonu. lY 2009-l0 Approved udget. luv
l, 2009 ut 287 to 288: Durhum Countv, North Curonu. 1he ourd
o Countv Commssoners Meetng Mnutes. lunuurv 5, 2009 ut 9 to
ll: Durhum Countv, North Curonu. 1he ourd o Countv Com-
mssoners Meetng Mnutes. lebruurv 9, l998 ut ll: L.S. Lnvron-
mentu lrotecton Agencv. Cce o \uter. 1runge \\1l. 2008
Ceun \utersheds Needs Survev. luctv luct Sheet. Muv 20l0.
4 Shuv, Dun. Lvunsve uttv ocus expect to see suvngs next
veur. Courer lress. Cctober ll, 20l0: Shuv, Dun. Lttv bourd
puts end to prvutzuton. 1he Courer lress. lunuurv l2, 20l0:
Lvunsve \uter und Sever Lttv, the Ctv o Lvunsve, lndunu.
Request or lroposus: Contruct Cperuton, Muntenunce, und
Munugement o the Lttv \uter Svstem und \ustevuter Svstem.
August l2, 2009 ut l-2, l-3, l-4 und l-5: L.S. Lnvronmentu lro-
tecton Agencv. Sue Drnkng \uter lnormuton Svstem, uccessed
November 22, 20l0.
5 \htev urchett und Assocutes. lor the lured-Susun Sever
Dstrct. Anuvss o the Lse o Contruct Cperutons, December
2007. December 3, 2007 ut 4, l7 und tube l: lured-Susun,
Cu. reverts on luv l. lubc \orks lnuncng, vo. 225. Murch
2008 ut l4 und l6: lured-Susun Sever Dstrct. Comprehensve
Annuu lnuncu Report or the Yeur Lnded lune 30, 2009. Cctober
26, 2009 ut , 6 und 50.
6 Sede, lon. Curv Sunturv Dstrct ends contruct vth Lnted \uter.
1he lost 1rbune. Murch 26, 20l0: Lnted \uter. |rochure|. Curv,
lndunu. November 2006.
7 uvne, \um C. Horn Luke endng vuter contruct. 1he Com-
mercu Appeu. September l7, 2008: Msssspp Deveopment unk
Specu Cbguton onds, Seres 2005 (Horn Luke, Msssspp \uter
und Sever Svstems lroect). Ccu Stutement. November 30, 2005
ut 2l: L.S. Lnvronmentu lrotecton Agencv. Sue Drnkng \uter
lnormuton Svstem, Cctober 25 20l0.
8 Houston vuter punt DC bos over. lubc \orks lnuncng,
vo. 225. Murch 2008 ut l2 und l4: Coev, lennu. Legu deuge
nundutes rst ctv vuter punt prvutzuton eort. Houston us-
ness lournal, vo. 33, ss. l4. August l5, 2002: L.S. Lnvronmentu
lrotecton Agencv. Sue Drnkng \uter lnormuton Svstem, Cctober
25 20l0.
9 Ctv o Lumpusus. 20l0 / 20ll lroposed udget. August 25, 20l0
ut 2 und 56: Stone, lucke. Lumpusus termnutes contruct vth vuter
svstem operutor. leen Duv Herud. luv 7, 20l0: L.S. Lnvron-
mentu lrotecton Agencv. Sue Drnkng \uter lnormuton Svstem,
Cctober 25 20l0.
l0 Ctv o Leunder. Annuu udget 20l0-20ll. lscu Yeur Cct. l,
20l0 ~ Sept. 30, 20ll. Adopted September l5, 20l0 ut v, l35
und l37: onhum, Heuther. Ctv to tuke over vuter, sever svstem.
Leunder Ledger. September l, 20l0: Leunder hres rm to munuge
vuter. Austn Amercun-Stutesmun. August l4, l99l: L.S. Lnvron-
mentu lrotecton Agencv. Sue Drnkng \uter lnormuton Svstem,
Cctober 25 20l0.
ll Smth, Donud et u. Muvor's 1usk lorce-Lttes. Lttv 1usk lorce
lnu Report. Muv l9, 20l0 ut 4 und exhbt v: orgeduen, Ange
Anuvu. Ctv to tuke over vuter punt. Lbertv 1rbune. August 5,
20l0: Ctv o Lbertv, Mssour. lnu Report. Roud lmpuct, \uter
und Sever Studv. September 5, 2006 ut 4: L.S. Lnvronmentu
lrotecton Agencv. Sue Drnkng \uter lnormuton Svstem, Cctober
25 20l0.
l2 Drohun, Cenn. Ctv tukes truton punt eud. North Adums 1run-
scrpt. September 2, 20l0: L.S. Lnvronmentu lrotecton Agencv.
Sue Drnkng \uter lnormuton Svstem, Cctober 25 20l0.
l3 Ctv o C'luon, Mssour. 20l0 Annuu udget. lunuurv 20l0 ut
260 und 265: Ctv o C'luon, Mssour, Depurtment o lnunce.
2008 Comprehensve Annuu lnuncu Report. lune 30, 2009 ut
58: Cumbru, Nuncv. C'luon, Mo., Cls hgher o 2 sever bds.
St. Lous lost-Dsputch. Cctober l4, 2006: L.S. Lnvronmentu
lrotecton Agencv. Sue Drnkng \uter lnormuton Svstem, Cctober
25 20l0.
l4 Ctv o letuumu, Cuornu. Agendu b. lresentuton: Dscusson
und lossbe Acton Regurdng lun or Cperuton und Muntenunce
o the Ls Creek \uter Recvcng luctv. November l9, 2007 ut
9 und l0: Ctv o letuumu, Cuornu. Reguur Ctv Counc/lCDC
Meetng. Mnutes. November l9, 2007 ut 3 to 4: letuumu upgrude
reverts to ctv ops. lubc \orks lnuncng, vo. 225. Murch 2008
ut l6 to l7: Cuornu Regonu \uter quutv Contro ourd, Sun
lruncsco uv Regon. \uter dschurge requrements or: Ctv o
letuumu, \uter louton Contro lunt, Sonomu Countv. (Crder
No. R2-2005-0058). (NlDLS lermt No. CA00378l0). Cctober l9
2005 ut l.
l5 Soux Ctv, lovu. Notce o meetng o the ctv counc o the Ctv
o Soux Ctv, lovu. Agendu lucket. August 2, 20l0 ut ucton tem
rl5: Resouton upprovng u Notce o 1ermnuton or Convenence
n connecton vth the \ustevuter 1reutment lunt ut l42 to l47:
Soux Ctv, lovu, Mnutes or the Counc Meetng on 8/2/20l0.
August 2, 20l0 ut 4: 1he Nutonu Counc or lubc lrvute lurtner-
shps. Veou \uter und Soux Ctv, lovu, vustevuter purtnershp.
2002. Avuube ut vvv.ncppp.org/cuses/souxctv.shtm, uccessed
Cctober l2, 20l0.
l6 Vuge o Skuneutees, Nev York. Reguur Meetng, Vuge ourd.
Mnutes. Murch 8, 20l0 ut 5 to 6: Vuge o Skuneutees, Nev York.
Reguur Meetng, Vuge ourd. Mnutes. Murch l5, 20l0 ut 3: V-
uge o Skuneutees, Nev York. Vuge udget or 20l0-20ll. Apr
26, 20l0 ut C-l: uker, Nuthun. lunt pusses stute exum. Sku-
neutees lournu. September 29, 20l0: L.S. Lnvronmentu lrotec-
ton Agencv, Cce o \uter. Skuneutees (V) \\1l. 2008 Ceun
\utersheds Needs Survev. luctv luct Sheet. Muv 20l0.
l7 Ctv o Surprse, Arzonu. Ctv tukng over vuter operutons.
Surprse lrogress, vo. 8, no. 3. Summer 2008 ut 8: Ctv o Surprse,
Arzonu. Reguur Ctv Counc Meetng Mnutes. Consderuton und
action to waive the procurement process and approve the Agree-
ment vth Amercun \uter Cperutons und Muntenunce, lnc. or
the operutons und muntenunce o the ctv's vuter svstem. Cctober
23, 2007 ut ltem r38: L.S. Lnvronmentu lrotecton Agencv. Sue
Drnkng \uter lnormuton Svstem, Cctober 25 20l0: Surprse,
Arzonu. Request or lroposu. \uter und \ustevuter Lttv Rute
Studv. (CCSl0-0l0). luv 2009 ut Scope o \ork, puge l.
l8 Younker, Lmv. \ebb Ctv eves suvngs n sevuge punt operu-
ton. 1he lopn Cobe. lunuurv l2, 20l0: Compettve Summurv:
Covernment Cutsourcng Nev Contructs Sgned n Cuendur 2006.
lubc \orks lnuncng, vo. 2l4. Murch 2007 ut 7: L.S. Lnvron-
mentu lrotecton Agencv, Cce o \uter. Center Creek \\1l.
2008 Ceun \utersheds Needs Survev. luctv luct Sheet. Muv
20l0.
l9 1ovn o Cuve Creek, Arzonu. Reguur 1ovn Counc Meetng. Mn-
utes. November l9, 2007 ut 3, 5, 7 und l0.
20 Ibid. ut 9.
2l 1ovn o Cuve Creek, Arzonu. Comprehensve Annuu lnuncu
Report lscu Yeur Lnded lune 30, 2009. lunuurv 22, 20l0 ut l8.
22 Shuv, Dun. Lvunsve uttv ocus expect to see suvngs next
veur. Courier Press. Cctober ll, 20l0.
23 Ctv o Lvunsve, lndunu. |lress reeuse|. Lttv to tuke over vuter
und sever munugement, move expected to suve mons. lunuurv 8,
20l0.
24 Durhum Countv, North Curonu. lY 2009-l0 Approved udget. luv
l, 2009 ut 287 to 288: Durhum Countv, North Curonu. 1he ourd
o Countv Commssoners Meetng Mnutes. lunuurv 5, 2009 ut 9 to
ll: Mken, Mutthev L. Countv to tuke over vustevuter treutment
punt operuton. The Herald-Sun. lebruurv l6, 2009.
For more information:
veb: vvv.oodundvutervutch.org
emu: novvutch.org
phone: (202) 683-2500 (DC) - (4l5) 293-9900 (CA)
Copyright December 2010 Food & Water Watch