So Sell Kansas City's Water Department Already!


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© Jack Cashill
Published in Ingramsonline.com - June 2012

Neither business development nor the lure of home ownership will improve when water bills in Kansas City quad-ruple in the years ahead. So tell me again why privatization is a bad thing.

Somewhere in the world, I am sure, a government bureaucracy manages a utility more economically and efficiently than a private company could.

When you find that “somewhere,” you are in for a treat. For there, too, you will find unicorns, Bigfoot, pretty lasses singing “Brigadoon,” Elvis performing live, and light-rail lines that actually pay for themselves.

To be certain, that “somewhere” is not Kansas City, and that utility is not our Water Services Department. The news coming out of Water Services would suggest, in fact, that at least a few lesser Soviet republics, or whatever they are these days, have managed their water services better than we have.

I have no doubt that the folks downstairs at Water Services have worked hard and well over the years, but the folks upstairs, City Council included, have done little but kick the maintenance can down the road. And they are altogether keen on kicking it some more.

Under “news/updates” on the Water Service Web site, for instance, city residents learn that they will be charged “new rates” for their water usage and sewer services. “New” is a euphemism for a 14 percent increase. For the average homeowner, 14 percent translates to “nine dollars a month,” a figure meant to sound reasonable.

It is not. That nine dollars is merely the first slice in a thousand-cut bleed off of local savings accounts. As The Kansas City Star reports, residents “probably will experience double-digit sewer rate increases every year for at least 12 years.” These “new” rates are expected to cover the cost of a 25-year, federally mandated $2.5 billion (in 2006 dollars) overhaul of the city’s sewer system.

The capital costs for a water overhaul will prove nearly as daunting as the sewer costs. At this stage, the city’s nearly 3,000 crumbling, corroded miles of pipes may have more value as scrap iron. “As the system is aging, it’s experiencing failure,” said city manager Troy Schulte. “The bill is coming home.” What Schulte means is that the bill is coming to your home.

I’m happy not to be a swimming pool salesman, but as someone who showers nightly within the city limits, I am concerned. If $9 represents 14 percent of the previous average bill, the average bill would have been roughly $63 a month. Considering that I just paid a $67 bill for a month in which I was gone for a week and home alone otherwise, I think some low-balling is going on here.

Accepting the city’s numbers, the average bill going forward for 2012 will be about $72 a month, or $864 a year. Let us presume a 12 percent increase, compounded annually for the next dozen years, and see what that does to the bill.

By my calculations, 12 years from now, the average Kansas City resident will be spending more than $3,300—these are post-tax dollars—on water and sewer. Is anyone doing the math at City Hall? Tell a welfare mom that she now has to cough up nearly $300 a month just to drink and flush and see how that conversation goes. Hell, I would rather be a swimming pool salesman than her bill collector.

These perpetually “new” costs, refreshed annually, will do more than impoverish homeowners and depress housing values. They will dry up the city’s self-image. Water more expensive than soda will take the fountains out of play and force the city to redo its brand. A graphic of a withered lawn will not have the same appeal.

And yet miraculously, as ugly as our water situation is, we have a suitor, a dogged one at that, one who has been trying to take this Frankenstein’s Bride off our hands for more than a year. Just as astonishingly, the city has been playing hard to get. “The sale of assets is not under consideration,” Mayor Sly James said nearly a year ago and has been repeating pretty much ever since.

The suitor is Missouri American Water, a subsidiary of the New Jersey-based American Water. I understand, the prefix “New Jersey-based” may not evoke images of sparkling streams cascading through virgin forests, but the company has been around for 125 years and has won all kinds of awards for clean, safe, good-tasting water. Still, even if its service were sluggish and its water uninspired, who’d notice?

American Water execs have been wooing the locals for more than a year. They have met with City Council members, the mayor, business leaders, concerned clergy, union leaders, the Water Department management, county executives, Chamber honchos, engineering and construction people—just about every person of note in Kansas City not living in his parents’ basement.

Like all good suitors, American Water execs have listened more than they have talked, and they’ve had an earful about Water Service everywhere they’ve gone. Low-income assistance funds? Depleted. Instability at the top? Revolving door. Union unrest? As always. Pension pressures? Mounting. Customer service? An oxymoron. Water main breaks? Setting records. Fire hydrants? Even the kids can’t get them to work.

American Water’s got the dough. The company is willing to absorb the $2.5 billion in sewer costs, the estimated $1 billion in water costs, and to give the city a few hundred million up front as sort of a signing bonus. For 20 years, American Water would own and manage the system, and then Kansas City would get first rights to buy it back.

So how does the council respond? By asking voters to approve a $500 million loan for the Water Services Department. Without the loan, the can-kickers at the City Council tell us that bills could go up 25 percent next year. Better to pass the costs down to the grandkids. They can’t vote in the next election.

If asked, Mayor James answers that the American Water deal is too good to be true. C’mon, Mayor, we’re not talking about life on Mars here or the age of the universe. If you have questions, take them up to St. Joseph. That city has been working with American Water for more than a century.

Kansas City as the nation’s entrepreneurial capital? A good initiative from the Chamber—but the City Council obviously did not receive that memo.

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