In an article earlier this week, The Wall Street Journal takes a deeper dive into the future of water infrastructure investment in our country and the role of public private partnership in innovative financing options for municipalities. The article entitled “Private Equity Tries on the Hard Hat”, focuses on how municipalities across the country are struggling to continue providing essential services to their residents and invest in key utility infrastructure, while managing their debt.
In its piece, The Wall Street Journal focuses on United Water’s SOLUTION℠ Model, in which the company has partnered with KKR’s to manage water and wastewater system operations in the City of Bayonne, NJ. As a part of this joint venture, we acquired a 40-year water and wastewater concession from the Bayonne Municipal Utilities Authority (BMUA). Under the contract, BMUA continues to maintain control of rates charged to customers, the ownership of the water and wastewater system and oversee compliance adherence and customer service performances. Our initial payment of $150 million to the BMUA will be used to eliminate the BMUA’s existing debt and improve its finances. The deal has also contributed to an improved credit rating for the city for the first time in five years.
The Wall Street Journal story says that according to experts, “deal making is accelerating as more cities have struggled with lower property-tax revenue and deepening debt and pension obligations since the housing bubble burst”. Moreover, water industry leader believe that access to sustainable capital investment programs that utilize both public and private resources will play a key role in allowing municipalities to meet their infrastructure needs and manage the cost of water infrastructure renewal and replacement projects.
*Source: The Wall Street Journal