Angler water-sewer proposal has pros and cons

Worth Richardson
Published: June 25, 2008

Angler Development’s creation of the Culpeper Utility Partners first strikes one as shady given Angler’s recent bankrupted projects and inability to see the oncoming freight train of a housing downturn — but privatizing water and sewer in Culpeper may be the best thing.

Economics tell us private firms are more efficient than government.

Creating a privately run water and sewer system helps alleviate the financial burdens ridden on Culpeper spurred on by a drop in tax revenues during our current growth-recession.

And let’s be honest, local politicians have proven that infrastructure is not their area of expertise, nor do they have the direct financial motivation (i.e. profits) that a private firm like Angler does.

Angler has a huge incentive to make this project work. First, it will generate revenue of water and sewer service it will provide. Second, Angler has been hurt by the housing downturn around here and improved water and sewer will help spur a rebound in housing. Last, Angler has incentive to see Culpeper grow effectively so it can pursue more projects down the road.

There are, however, a few caveats to this deal with Angler. First, there seems to be a shortcoming in terms of competition — meaning private firms are only efficient when there is someone to compete against them, effectively eliminating a monopoly.

So, will the current government water and sewer be allowed to compete against the Culpeper Utility Partners? Would the government be allowed to privatize water and sewer to another firm as well, not just Angler? Or are we trading government inefficiency for monopolistic inefficiency.

The other caveat is the 5.5-percent annual increase in tap fees. Inflation of that rate on tap fees will harm growth in the long run as it destroys the price stability of infrastructure which is key to growth. In fact, most economists or policy makers think price stability is the most important facet to normal economic growth.

There are both pros and cons to the Culpeper Utility Partners, but a decision must be made which will provide Culpeper with the opportunity to steady growth — not the roller coaster ride of the last decade.