Leasing Shreveport’s aging water and sewer system to a private operator to run could bring immediate improvements – but residents could end up paying far more than the cost of construction.
Shreveport attorney Randy Keene is urging city officials to sit down with Suez Corp., an international water services company. Suez operates water and sewer systems in 83 cities, Keene said.
The company would operate Shreveport’s water and sewer system; take over billing and customer service; and make improvements required by a federal consent decree. Shreveport would still own the system.
Keene said Suez is willing to pay off $350 million in bonds Shreveport is using for upgrades and pay the city “hundreds of millions of dollars” on top of that.
Keene said Suez executives are willing to discuss their company and its work at the Aug. 8 City Council meeting. Keene said he approached the council as a private citizen and doesn’t represent Suez.
In return, Shreveport might have to guarantee a specific return on that investment over and above the actual cost of operating and improving the system. Water customers would ultimately pay for that guarantee.
That’s the case in Bayonne, N.J., where Suez took over the water system in a partnership with a Wall Street private equity firm, according to a New York Times article about privatized water systems.
The article found that water rates in Bayonne rose nearly 28 percent since the partnership started in 2012.
Shreveport also has been increasing water and sewer rates since 2013 to cover operating costs, repairs and improvements.
The last water increase of 2 percent came in 2016. The next – 6 percent – will take effect in 2020.
Sewer rates have increased every year since 2013 to cover the $350 million in improvements needed to help the city meet federal clean water standards. Sewer rates increased by 9 percent this year and will continue rising through 2022.
Keene told city council members they could still control of water and sewer charges through what amounts to a 40-year lease with Suez.
“Would this lower the water rate,” asked City Council member Jeff Everson.
“If it is a concession agreement, Shreveport would be in a position to lower rates once it gets itself out of that huge debt,” Keene said.
In 2016, Bossier City privatized its water and sewer system, hiring Manchac Consulting of South Louisiana to run the system.
Bossier is paying more than $1 million a year to the Baton Rouge-based company – but city officials estimated they would save $3.5 million through the deal, primarily by eliminating payroll costs.
Bossier City Council members recently extended the deal for another year.