FWW Takeover Examples Don’t Demonstrate Success

Last week, Food & Water Watch (FWW) posted a blog that attacked the record of Illinois American Water, which has provided Peoria, Illinois residents with safe and reliable water service for over a century.

In its blog, FWW champions the takeover of privately-owned water systems, arguing that, despite an exceptional record of service from Illinois American Water and over $150 million invested in the local water system over the last decade, Peoria should end its relationship with the private water utility.

Parroting its standard talking points, the FWW blog states that “cities that take back their water systems experience incredible economic benefits as a direct result.”  Unfortunately, when it came to the details, FWW fails to come up with any examples that actually support that point.

Take Missoula, Montana, which FWW points to as a great success. While Missoula was successful in taking over the privately-owned system in 2016, it came at a high cost for taxpayers. Takeover advocates originally argued that the system could be purchased for $43 million, yet the final cost surpassed $105 million. The city spent 20 times its budget for legal fees on the takeover, amounting to millions of dollars in cost overruns. After convincing the public that a takeover would lower costs, rates immediately increased 6% under government ownership.

FWW goes on to claim that Missoula will be able to invest $30 million in its water system over the next five years, without raising its rates. Given that every promise and prediction about Missoula, made by takeover advocates like FWW, have turned out so far to be inaccurate, why would anyone believe the claim that the city is going to magically invest $30 million without raising water rates?  Where does FWW believe that $30 million will come from?

Advocates argued that the system could be purchased for $43 million, yet the final settlement cost, passed onto taxpayers – including fees, expenses and interest – has exceeded $105 million and could surpass $140 million depending on the result of additional legal challenges.[i]

See our Missoula case study for more.

FWW also cites Cave Creek, Arizona, as another example of a successful takeover, stating that in 2008, “the city took back their water from American Water and saved an astonishing $1,335,017.”  What FWW ignores, however, is the well-documented fact that the publicly-controlled utility ran a $2.6 million deficit in its first year of operation, and subsequently doubled water rates and increased sewer rates 36% the very next year.[ii]

Once you take a look at the full story not told by FWW, it is clear that the takeover has not been a success for residents.

It appears FWW will stop at nothing to distort the record.  FWW is pushing a false narrative to dupe the residents of Peoria into spending hundreds of millions on a government takeover of a utility that has served them well for over a century.  We trust the citizens of Peoria will continue to support their local water company and base their decision on facts and experience, not falsehoods and fallacy.

[i] Missoulian, “Montana Supreme Court clears way for city’s Mountain Water purchase,” August 2, 2016; Missoula Independent, “Trickle-down effect; Missoula just won Mountain Water! Now, about those legal fees,” August 4, 2016; Presentation, “Water System Acquisition Financing,” 15 February 2017; City of Missoula and Mountain Water, “Settlement Agreement and Release of Certain Claims,” June 2017.
[ii] Arizona Republic, “Cave Creek to hold hearing on water-rate hike,” 6 January 2009; Arizona Republic, “Cave Creek sewer rates to go up,” 7 April 2009.
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