DeMaio Drags Privatization Plans Forward

This afternoon, the San Diego City Council Natural Resources and Culture Committee will discuss a proposal to privatize Miramar Landfill, which has been under public operation for the last five decades. It’s the next in a long line of attempts by a few City Council members — most notably Carl DeMaio — to punt city services into the outstretched hands of the private sector. (The last attempt, a ballot measure to speed privatization, missed its mark so dramatically that it ended up in the parking lot.)

DeMaio has claimed that outsourcing the landfill would save the city $15 million a year. A spokesperson for Mayor Sanders responded that he had “no idea where that number came from.”

Well, we’ve just received more proof that DeMaio’s privatization math is fuzzy. He has estimated that outsourcing city services — not just the landfill, but essential services including drinking water and sewage systems — would save San Diego $230 million.

Where did that number come from? Not this planet, apparently. In the most comprehensive survey to date of proposed and completed water privatization deals, Food & Water Watch announced on Monday that privatizing water and sewer services has actually put U.S. cities further in the hole.

Our researchers surveyed 200 cities that are considering or have privatized their water services in recent years. They found that a record number of cities are considering selling off these systems for a short-term shot of cash, but over the long term, they’re shooting themselves in the foot. In the ten largest cities that have privatized their water systems, consumers’ water rates increased by an average of 15 percent per year after privatization. In many cases, service quality declined at the same time.

Realizing their mistake, many communities have revolted. At least 18 cities across the country terminated contracts with private water companies in the last two years, usually because of poor service. (Private companies often cut costs by eliminating jobs and delaying maintenance, which leads to service problems and, sometimes, water quality issues.) Getting out of contracts can cost the city big-time in termination fees or legal bills, but it has proven to be better than sitting back and watching rates skyrocket for shoddy service. Incredibly, these cities found that the cost of operating the water system declined by an average of 21 percent once it came back under public management.

Two weeks ago, the City Council of San Jose decided not to privatize its water system — the city’s forth rejection of a private contract bid in the last two decades — after determining that it would be 30 percent more expensive to privatize than to keep the system in public hands. Perhaps San Diego’s council members should take a look at their numbers.

If the city is interested in keeping costs down while delivering better service to customers, this new report suggests that privatization is not the way to go. It doesn’t matter if it’s a landfill or the water we drink and bathe our kids in, some things simply should not be handed over to an unaccountable, unelected, profit-driven company — unless, of course, you prefer the view from the bottom of a deep fiscal hole.

Correction: The original version of this story incorrectly stated that the San Diego City Council would be considering the privatization of the Miramar Landfill instead of stating that the Natural Resources and Culture Committee will be discussing the possibility. We regret the error.

Elanor Starmer is the Western Region Director of Food & Water Watch. The organization’s new report, Trends in Water Privatization: The Post-Recession Economy and the Fight for Public Water in the United States is available here.