Page 83 - Urban water supply handbook

IMPROVING URBAN WATER INFRASTRUCTURE THROUGH PUBLIC-PRIVATE PARTNERSHIPS

3.2 HISTORY, PLANNING, OUTSOURCING

to increased private sector involvement, including deteriorating water infrastruc-
tures, unfunded federal and state environmental mandates, costly capital improve-
ments, and the desire among many public officials to operate water facilities more
efficiently. Changes in federal rules during the Bush and Clinton administrations
also helped to facilitate more public-private partnerships for water and wastewater
services. These trends have combined to fuel growth in the number of cities enter-
ing into public-private partnerships to enhance daily operations and improve water
infrastructures.
This chapter explores the growth of water and wastewater public-private part-
nerships and examines the extent of partnerships in urban communities. We look
at some factors causing the growth in public-private partnerships and obstacles
that must often be overcome. Next is an examination of the process involved in
considering a public-private partnership, including legal, financial, economic, and
political concerns. Finally, we include a number of case studies from urban com-
munities that have successfully implemented water and wastewater public-private
partnerships.

3.1 BACKGROUND OF WATER AND
WASTEWATER PARTNERSHIPS

In the United States, most urban residents have long received their water from
public water utilities and had wastewater treated by local government agencies.
For example, private water utilities currently serve about 15 percent of the U.S.
population, although that figure is growing. In other parts of the world, private
firms have long provided water management services. In France, for example, pri-
vatization goes back to charters issued by Napoleon III.
The present-day structure of the water and wastewater industries had its gene-
sis in the early 1970s. Passage of the Clean Water Act and the Safe Drinking Water
Act led to increasingly stringent standards for municipal water and wastewater
treatment facilities. The need for new and upgraded treatment plants placed enor-
mous financial burdens on cities. In addition, the legislation provided funding for
the largest public works program in the nation since the construction of the inter-
state highway system in the 1950s. Thousands of water and wastewater treatment
plants were built with most of the cost (up to 75 percent) paid by the federal gov-
ernment.
While cities welcomed the federal assistance in constructing new facilities,
many small communities lacked properly trained personnel to operate the plants
and had difficulty attracting qualified staff. The regulatory burden led some
municipalities to hire private firms to operate their water and wastewater facilities.
Under operations and maintenance (O&M) contracts, cities retain ownership of
the treatment facilities and control rates while the private contractor has the

Downloaded from Digital Engineering Library @ McGraw-Hill (www.digitalengineeringlibrary.com)
Copyright © 2004 The McGraw-Hill Companies. All rights reserved.
Any use is subject to the Terms of Use as given at the website.