Case study: Can Trump's private investment plan really rebuild America?

Case study: Can Trump's private investment plan really rebuild America?

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Four years ago, the pipes under Missoula, Montana, were leaking nearly 8,000 gallons of water a minute and, by the city’s tally, needed nearly $100 million in repairs. But Missoula couldn’t fix it: A private company owned the water system.

Missoula took the owners to court, using eminent domain laws to bring its fully privatized water system back under public control. Around the same time, 1,170 miles south, Rialto, California, was looking to private companies to help solve its own water infrastructure problems. It signed a 30-year concession agreement with investors, hoping to infuse its aging water system and local economy with outside cash — and created almost exactly the sort of public-private partnership President Donald Trump has encouraged cities and states to pursue under his new infrastructure plan.

While public-private partnerships have been used with varying degrees of success for transportation projects like toll roads and airports, the infrastructure proposal Trump released on Monday offers incentives for local officials to seek more outside money for a broader range of projects. But what happens when private investors hold the keys to critical infrastructure systems, like water? Do consumers reap the benefits of private sector expertise and efficiency, or suffer as investors profit?

“It can be a good deal,” Rialto Mayor Pro Tem Ed Scott told NBC News. But Missoula Mayor John Engen says he’d advise municipalities to “run like hell.”

As the White House looks to private companies to invest heavily in American infrastructure, this pair of cities offers a unique window into the perks and perils of private dollars in public infrastructure.

Missoula’s fight to go public

Montana’s second-largest city has unusually long experience with a private corporation being in charge of its infrastructure: The water authority had been fully privatized since at least the 1930s.

Engen said the city had long harbored concerns about the authority being privately owned, but those worries increased exponentially after Park Water, the family-run business that had managed Missoula’s system for decades, was sold to a global private equity firm, Carlyle Group, for $102 million in 2011.

Under Carlyle, rates rose and deferred maintenance piled up, the city later testified in court. Carlyle Group disputed the city’s claims, and testified that it was budgeting $4 million a year for repairs.




Image: Filling up a glass with water from kitchen tap