Move to Privatize Water Advances

The city should continue to seek the most favorable deal to privatize its aging water system, a divided City Council decided Tuesday.

“I don’t think there’s any reason not to continue with this,” Mayor Charles V. Smith said. “It’s a textbook example of how privatization can save the taxpayers money.”

For the last several months, the city’s staff has been soliciting bids from private companies interested in leasing and operating the city’s water utility. The system, built mostly in the 1950s, is about $10 million in debt and needs about $20 million in repairs and improvements, city officials said.

Based on proposals from three qualified private companies, a lease is expected to freeze residents’ water rates for at least three years, provide a lump sum of about $20 million to pay off the system’s debt and establish a reserve fund, and give the city about $1 million in revenue for the next 15 years, City Manager Bill Smith said. As part of any contract, he said, the city’s 30 water system employees would be hired by the private company, which also would repair the system.

With Tuesday’s 3-2 vote, the council directed its staff to conduct a fourth and final round of bidding among the companies and hold a public study session on the issue. A final bid could be presented to the council for consideration later this month or in October, Smith said.

If the city decides not to lease the system, water rates would need to increase by about 25%, Smith said, which means the average residential bills would jump from $240 a year to about $300 a year.