Study: City should not privatize water service


A. Lee Graham

Despite spending $328,622 on a study that found no reason why Fort Worth should privatize water service, city officials consider the expenditure worthwhile. “Clearly what this shows is we’ve got a very good water department. There are additional opportunities for revenue streams,” said District 2 Councilman Sal Espino, responding to findings of a task force evaluating possible advantages to privatizing the city’s water department.

Seven months after the committee formed, its chairman presented findings at the pre-council portion of the Oct. 22 regular City Council meeting. “The city should continue public operation of the utility,” said Bob Pence, president of Freese and Nichols and chairman of the nine-person committee that studied private sector water department oversight as part of a citywide effort to trim costs and seek ways to make all municipal departments more efficient. Results of the water service review found that service rates likely would rise and operational costs would increase for the city and Tarrant Regional Water District while leaving the council with less power in directing economic development.

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“We were looking for whether the savings would be there,” Pence said of potential cost advantages of taking things private. They weren’t, the task force found. The task force studied five alternatives for water department operation. Selling the utility, the first option, would see the city lose what many consider an essential tool for directing economic development while permanently losing control of the department. Running the department as a lease concession, the second option, would see a private partner enter into a contract spanning at least 20 years in which the partner would take over utility operations. A third option would involve shorter-term contracts in which a partner would take over water department operations, with the city paying for that service yet retaining rate control. A fourth option would allow the city to outsource some functions that could be handled more cost-effectively by the private sector. The final option would see a private partner design, build or operate new water department infrastructure while potentially financing the project.

Of the 12 companies submitting city-solicited requests for information regarding those options, seven provided details on the lease-concession approach. But that option would require higher water rates, according to task force findings that described the approach as a loan repaid by water rates. It would see the council lost control of rates. Pence said he was impressed by the city’s existing water service oversight. Despite recommending against privatization – a recommendation the council will formally consider in November following a public hearing at the Nov. 12 regular council meeting – the committee suggested other ways to potentially cut costs. Those include automated meter reading and new revenue streams. Council members thanked Pence and applauded the study.

“Anytime that you force an outside agency to reflect on and cause the agency you’re looking at to reflect on what they’re doing, you’re going to see improvements,” said Mayor Pro Tem W.B. “Zim” Zimmerman. “This is an operation that’s been well served.” Mayor Betsy Price said such evaluations are worthwhile. “I really think that you simply have to continue to get departments to look at themselves to work with other departments to break down those silos. Sometimes you find those ugly warts in your own department and figure out how to get, get them healed,” Price said.