Chicago plays down rumors of water privatisation

Mayor Richard Daley said recently ‘nothing is off the table’ with regard to future privatisation deals, comments which some saw as a sign the city could be pursuing a long-term lease of its water utility. A spokesperson for the mayor denied there is any deal in the works.

Chicago is not considering privatising the city’s water utility, Lance Lewis, a spokesperson for Chicago Mayor Richard Daley told InfrastructureInvestor.

“We’re not in the process of leasing the city’s water system,” Lewis said, adding: “There are no plans to do it.”

Last month, Daley told the Chicago Tribune editorial board he had met with consultants who presented him with options for privatisation deals and said “nothing is off the table” with regard to future deals.

Chicago's water system:
next big idea?

The Tribune said Daley “did not discount the possibility of privatising the city's water system” – comments which have fueled speculation whether there is a deal in the works that would help the city balance its budget.

“I think the mayor was just talking in general terms,” Lewis said.

But others viewed his comments as a hint that a water privatisation deal could indeed be on the horizon. “The mayor is always looking for the next big idea,” said Gerald Roper, president of the Chicagoland Chamber of Commerce. “This one is a big idea . . . we’ll see where it goes but I think it’s the next big idea,” he added.

The city, which is struggling to close a $550 million deficit, has in the past relied on monetisations of its infrastructure assets as a way to raise cash to shore-up its budget for 2010. For example, this year the city used $150 million of the $1.16 billion it received for a 75 year lease of its parking meters to balance its fiscal year 2009 budget. 

“There's no consideration of entering into another asset lease for the purposes of balancing the [2010] budget,” Manuel Flores, alderman for they city's first ward, told InfrastructureInvestor.

Flores added that even if Chicago were considering a long-term lease of its water utility, other cities' challenges in implementing such deals would give him pause about supporting such a move. The Chicago Tribune has reported that several cities in Illinois are threatening to use eminent domain powers to seize water assets from private water utility Illinois American, which has been accused of over-charging customers for water provision. Their experiences, Flores said, point to “a real concern” and “history of problems” with water privatisations.

Milwaukee, a city to the North of Chicago in neighbouring Wisconsin, has considered leasing out its water utility. But after taking the initial step of soliciting advisory services, the city decided to take more time to examine other alternatives to raise money.

Milwaukee comptroller Wally Morics previously told InfrastructureInvestor that Chicago’s problems with the parking meter deal did not discourage Milwaukee in pursuing the deal, though it is an example the city will keep in mind as it crafts any potential deal.

A spokesperson for the Chicago budget office did not return a call for comment before press time.