Citizens will vote if Atlantic City dissolves their city water utility

Atlantic City, New Jersey citizens are currently fighting to prevent the privatization of the municipal water utility. The state formally took control of the city’s Municipal Utility Authority (MUA) this past November when it acquired the city's finances and has been pushing for a privatization of the system ever since. In a move driven by petitions counting over 2,400 signatures and a massive lobbying effort from interest groups, the city council approved an ordinance on July 11th that gives Atlantic City residents the right to vote on any decision by the City to dissolve the MUA in favor of privatization.

The MUA is reported to be worth $100 million. Selling the MUA would bring in much-needed revenue for Atlantic City; however, residents and local officials are concerned about a shift in management to a private company. NAACP President Cornell William Brooks expressed concern that water rates may become unaffordable for low-income families if a private company operates the utility.

Residents’ concern about rate hikes are not unfounded. Bayonne, New Jersey, a town of about 65,000 residents, recently sold their municipal water system to a private firm and residents have seen an increase in water rates. Some of the increase is used to improve the pipes in an aged system; some of the increase is designated for private returns to equity holders . Contracts can call for guaranteed revenue numbers and when the sheer value of the water and services does not meet that margin, higher bills can fix that gap. The New York Times reports that water rates have risen close to 28 percent since the water system was privatized and many residents are looking to move out of the city. Officials for the private companies however, state that the price hikes cover much needed maintenance from a system that has been neglected. The same article identifies other cities which have privatized their water systems and experienced significant raises in water rates, such as Missoula, Montana, who in the process of regaining public control over their utility.

Jean-Louis Chaussade, chief executive of Suez, one of the private partners in Bayonne, has recently stated that he believes water will be valued higher than oil in the future. This leads to larger questions of equity versus public interest. Will a private company dealing in water with a financial interest ever acknowledge a human right to water? As Atlantic City deals with its current financial turmoil, it is a step in the right direction to see a city listening to its residents and allowing them a stake in their future water security.