BGA PUBLIC EYE: Looking to expand, water bizzes give big to pols
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By Julie Patel
Two companies looking to expand their dominance of the business of privatizing municipal water systems have given Illinois politicians a total of about $400,000 in contributions in recent years, campaign-finance records show.
Since 2010, the contributions from Pennsylvania-based Aqua America and New Jersey-based American Water have gone to Democratic and Republican legislators alike, as well as to local officials, records show. House Speaker Michael Madigan, D-Chicago, got $12,500. Senate Minority Leader Christine Radogno, R-Lemont, got $17,500.
Publicly owned water systems remain the norm in Illinois, with fewer than 10 percent of water customers statewide on systems served by private companies.
Aqua America and American Water — which successfully pushed for a state law, passed in 2013, to make it easier to acquire a water system and raise rates — want a bigger share of that business. They’re aiming to get more governments — struggling with aging infrastructure and declining revenue — to turn to private business to run their municipal water systems.
They face opposition from some municipal officials who say privatization can lead to problems, including big rate increases. They point out that when a private company takes over a water system, decisions about rate increases are decided by a state utilities regulator, not local officials.
“Initially, it seems like a great deal for the community,” says Bolingbrook Mayor Roger Claar. “The reality is [these communities] get rate increases like they never imagined.”
Along with Homer Glen, Lemont, Romeoville and Woodridge, Bolingbrook is suing American Water and its affiliate American Lake Water to take control of a company-owned pipeline providing Lake Michigan water to northern Will County. The 2014 lawsuit says residents of those communities have seen a “substantial increase in water rates over the past decade.”
The city of Chicago considered privatization proposals but isn’t pursuing them, according to a spokeswoman for Mayor Rahm Emanuel. The city has raised rates in recent years to help pay for improvements in its water and sewer systems.
“This is not a new idea and has surfaced as an option several times over the last few decades,” City Hall spokeswoman Shannon Breymaier says. “This administration has been presented with various options related to the possible privatization of the water and sewer system, but there are no plans to move forward with these possibilities at this time.”
Since March 2015, four downstate communities — Chenoa, Monticello, Mount Vernon and O’Fallon — have backed off plans to sell or lease their water operations.
And in Arthur, which is near Champaign and has about 2,300 residents, voters rejected a nonbinding measure on the March 15 ballot to sell the village public water and sewer system. Arthur hasn’t ruled out privatization, though nearly 80 percent of voters were against that, according to Matthew Bernius, Arthur’s village president.
In January, Arthur selected the Illinois affiliate of Aqua America to buy its water operations if the village goes ahead with a sale, which officials estimated would bring in $5.6 million. Prior to the March election, the company helped organize a campaign to promote a sale that included producing a promotional video for Arthur officials and providing them with strategic advice.
A company spokeswoman says it’s “customary” to reimburse municipalities for some costs related to a purchase.
Aqua America officials wouldn’t comment about political contributions.
An American Water representative says her company “needs to have a voice in the hall of government” and supports candidates who “share our commitment to investing in Illinois’ aging infrastructure.”
Since 2010, seven municipal water or wastewater systems in Illinois were sold or are in the process of being sold to Aqua America or American Water subsidiaries.
The largest of those systems — serving about 44,000 people — is in Cook County, mostly unincorporated areas near Glenview. Others are downstate in Jersey, Kankakee, LaSalle and Livingston counties.
Consumer rates rose at three of the seven systems after the sales. That includes a nearly 70 percent increase in average monthly sewer bills in an area that includes a mobile home park of 1,300 people in unincorporated Bourbonnais. Aqua America, which bought the system in 2012, says the increase was needed in part to pay for $1.1 million in improvements.
Rachael Shelton, a retiree who’s a longtime resident of that area, says the rate increase has hurt her and her husband. She says that, to save on water and sewer bills, she now waits for dirty clothes to pile high before doing laundry and only sparingly flushes her toilet.
“It gets frustrating,” Shelton says. “My husband and I are on fixed incomes. Our money is tight.”
Julie Patel is a Better Government Association investigator.