Sunday, January 12, 2020

Egg Harbor City, NJ Call Missoula, MT

The Press of Atlantic City reported Egg Harbor City is seeking proposals to buy the city's water and sewer infrastructure:

Three companies are interested in purchasing the city water utility, city officials said. The city will soon receive requests for proposal, McGowan said. The companies are New Jersey American, Aqua and the Carlyle Group/VICO Infrastructure Co. partnership.

City Engineer Ryan McGowan.said there was a lack of historical investment and maintenance of the system, and a lack of financial ability for the utility system to meet current and future needs.

That would amount to a $40 million outlay or $2 million a year for 20 years. It would double your current utility budget.”
The council passed a resolution for a declaration of emergent conditions, paving the way for the sale without referendum.
Egg Harbor should call the City of Missoula, Montana to learn about their experience under The Carlyle Group's ownership of Mountain Water.  

Another Carlyle executive said the firm would lose $2.1 million in revenue that Mountain pays to its parent company in California every year if it sold the utility.

Carlyle did not put any additional capital into infrastructure in Missoula. "There was not a need to do so." 
Montana regulators sued Carlyle which flipped Mountain Water's parent without approval.  Egg Harbor City may want to dump their under-invested water utility, however the greed and leverage boys have a history of leaving damaging wakes. 

Vox offered this on the PEU model

But because of the debt companies end up owing creditors as part of a deal, they sometimes find themselves with such high interest payments that they can’t make the investments necessary to be competitive or even stay afloat. Plus, companies often take out additional loans to pay private equity investors dividends, and then they pay a fee if and when they are sold. If they can’t pay off the debt, the companies are on the hook, and their employees and customers are the ones to suffer the consequences.
Egg Harbor should explore Carlyle's cash mining ownership of ManorCare and Philadelphia Energy Solutions.  Carlyle drove both into bankruptcy. 

Carlyle recently dropped the Port of Corpus Christi as the developer of a new oil terminal on Harbor Island.  Carlyle executives gave no reason for ceasing to be exclusive developer for the project.

Egg Harbor should allow citizens to vote on the future of their water and sewer utility.  They will be footing the bills, either under city or private ownership.