Pennsylvania towns and communities have the option of selling their water and sewer utilities to private companies, courtesy of a relatively new state law. Didn't state legislators research The Carlyle Group's history with public infrastructure? It includes:
There is also the case of Chicago public parking. Privatization raised prices such that parking in Chicago became the most expensive in the U.S. WTTW reported:
- Bribing municipal officials for a Synagro Technologies city sludge contract in Detroit, Michigan.
- Reneging on its promise to sell Mountain Water to the City of Missoula, Montana
- Abandoning its lead developer role for the Harbor Island expansion at the Port of Corpus Christi, Texas
The courts have called the deal “foolish, short-sighted or worse,” but, it turns out, it’s not illegal to strike a bad deal. With some 60 years left on its lease, Chicago Park Meters LLC has already made back its initial investment — and then some! An impressive return on investment for them, and a tough break for Chicagoans.
Towamencin Township is finding out about bad deals and unreliable bidders.
In May 2022 supervisors voted four-to-one to sell the township’s sewer plant and system to Florida-based NextEra for an agreed purchase price of $115.3 million.
Carlyle's latest public infrastructure joint venture VICO Partners bid on the sewage system but came in a distant fourth.
Within a year winner NextEra reneged on the deal:
Recently, NextEra made the township aware of its business decision to redirect efforts away from water and wastewater acquisitions and focus more on renewable energy projects. This decision, which was mainly due to the passage of the Inflation Reduction Act
Not only did NextEra abandon their $115 million deal, they played hardball in doing so:
NextEra told the township that if it did not agree to the deal, then NextEra would close the sale and then flip the system to PA American Water anyway.
Supervisor Rich Marino said NextEra would face a $10 million penalty if it did not complete the deal. “They expressed in no uncertain terms they were not going to be on the hook for $10 million,” he said..
Act Twelve "allows the doubling and tripling of rates" paid by citizens. It also exposes communities to less than ethical private corporations whose long term commitment is to only one thing, greed.
Our national government, Congress and the White House, have long been intertwined with private equity underwriters (PEU).
Politicians Red and Blue love PEU and increasingly, more are one. Local elected officials should not emulate this unseemly practice.
Update 8-2-24: Thoughtful Money's Adam Taggart referred to "crapification" imposed by private equity owners in an interview
with noted author Gretchen Morgenson. She provided a number of PEU
cases where owners won but employees, customers and nearly everyone else
lost.
