Experts tell Pittsburgh officials to be cautious about private offers for PWSA
Three water and sewer experts urged Pittsburgh City Council on Thursday to be cautious when considering privatization and public-private partnership proposals for the problem-plagued Pittsburgh Water and Sewer Authority.
Under either scenario, they said, customers would pay more over time than they would if PWSA improved the system on its own.
“When it comes right down to it there are only two ways that a private company can make a profit running a public service: raising prices or cutting costs,” said Bill Henry, a Baltimore city councilman. “Raising prices is raising the cost of water to your constituents, while cutting costs means either reducing worker pay and benefits or reducing services, the brunt of which usually falls on low-income and communities of color.”
Pittsburgh Mayor Bill Peduto and a majority of city council members have pledged opposition to any privatization offer, but are willing to consider partnership offers from the private sector as long as PWSA remains under public ownership. Peduto has said he would not consider any offer until PWSA completes long-range projections on what needs to be fixed and how much it would cost. The mayor has estimated it could cost up to $2 billion to replace the system’s 100-year-old pipes and pumps.
Councilwoman Erika Strassburger hosted a public meeting to gather information Thursday, and invited Henry and two other guests to talk about privatization and corporate partnerships. The other speakers were Donald Cohen, executive director of In the Public Interest, a research and public policy center based in Oakland, Calif.; and Mary Grant, an analyst at Food and Water Watch, a Washington, D.C.-based environmental group.
All three offered examples of how public deals with private companies have turned sour.
In 2008, Chicago turned over operations of its parking authority to a private company for an upfront payment of $1.15 billion. Pittsburgh City Council rejected a similar deal in 2010 that was proposed as a bailout for underfunded employee pension plans.
Parking rates in Chicago have since increased by 400 percent, triggering widespread public outrage, according to Henry
“These deals do not meet the needs of cities,” Grant said. “They take away control and hamper elected officials’ ability to address their constituents’ concerns. My advice for you is to focus on strengthening PWSA and to reject privatization as a financing strategy, to enhance city council oversight and public input in transparency and to explore building out PWSA as a regional provider.”
Henry said Baltimore and Pittsburgh share the same problems: century-old water and sewer infrastructure owned and operated by the city that’s been neglected for decades. Water main breaks and water quality issues are chronic problems, he said.
He said Baltimore council recently rejected an offer from a private company to run the system, deciding it wouldn’t benefit the city.
“In Baltimore, we have accepted the reality that water and sewer rates will just continue to rise at modest rates so we can continue to pay an ever-growing amount of debt service on the bonds that finance our infrastructure,” he said, noting that city water department’s debt totals about $2 billion.
Pittsburgh officials have voiced concerns about PWSA’s debt, which totals about $1 billion, but Cohen said most municipal water systems accumulate large amounts of debt. He stressed that government can borrow money at cheaper rates than private companies.
“I’ve heard a lot here that PWSA has so much debt that they can’t take on any more debt,” Cohen said. “That’s categorically false. The only source of money for infrastructure in the United States is us. There’s only one source: water fees, taxes. That’s it. If you’re going to use private money, you are going to pay more.”
Bob Bauder is a Tribune-Review staff writer. You can contact Bob at 412-765-2312, [email protected] or via Twitter @bobbauder.