URBANA – There's a reason Illinois American Water Co. doesn't want to sell its water system to the cities of Champaign and Urbana.
Why sell a monopoly that is a gold mine? asked Terry Kohlbuss, executive director of the Tri-County Regional Planning Commission for Peoria, Tazewell and Woodford counties.
Kohlbuss spoke Thursday during a noon forum at the Urbana City Building on "Ownership of the Water Supply," a talk sponsored by the League of Women Voters of Champaign County.
Kohlbuss compared Illinois American Water to "parasites."
"They really don't contribute anything, and they take a lot," he charged. "They're like a ball and chain around your ankle."
Kohlbuss was involved for several years in efforts by Peoria to purchase its water system from Illinois American Water. Those efforts ended last year when the Peoria City Council voted 6-5 against spending $220 million to buy Illinois American Water's local assets.
Peoria, in its 1889 franchise agreement, has a provision that gives it the option every five years to purchase the water system. The $220 million price was set by a three-member appraisal panel.
Even though he called the price tag "outrageous," Kohlbuss said he thinks Peoria council members made a mistake.
He said an economic study ordered by the city showed that it would have cleared $10 million per year over the 33-year life of the bonds that would have had to be issued to purchase the water system. That profit estimate is after debt service, maintenance, capital improvements and payments in lieu of property taxes are subtracted.
Public ownership of the water system is simply more efficient, he said.
That's because governments don't have to pay state and federal income taxes; because cities don't have to make a profit for shareholders; and because cities can borrow money more cheaply by issuing tax-free bonds.
The only reason for a city not to purchase a privately held water system is that "it's a very hard thing to do," Kohlbuss said.
In Peoria's case, the water company helped put advisory questions on the ballot over the years and spent what he estimated to be millions of dollars advertising against public ownership, to which the city could not effectively respond, he said.
"They're just doing their jobs," Kohlbuss said about Illinois American Water officials. "They're just doing what monopolies do."
Kohlbuss urged Champaign and Urbana officials to take the plunge. The cities would have to use eminent domain to purchase the local water system, as the local franchise agreements don't include an option to buy.
"You can make the change," Kohlbuss urged. "I think it is demonstrably a change for the better. These fundamental financial forces will be working to your benefit."
About 40 people attended the discussion, which also included a talk by Stephen Gasteyer, a University of Illinois professor, who said 221 million Americans are served by public water systems, versus 46 million served by privately owned systems.
Barry Suits, network operations manager for Illinois American Water, attended the meeting and said afterward that Champaign-Urbana residents are pleased with their water service.
"What they tell us and say overwhelmingly is they're satisfied with the quality of the water, the taste and the price they pay," he said.
Urbana Mayor Laurel Prussing said Urbana and Champaign are in the process of hiring a consultant to examine whether the cities should purchase the water system.