A new fiscal analysis provided to the Baltimore Regional Water Governance Task Force shows that the regional authority plan being rushed ahead for a vote could be costly. Based on those figures and a similar arrangement in Detroit, advocates estimate that the total cost could be $1.7 billion to $2 billion.

The report will be discussed at the Task Force meeting this evening. 

The consultants estimate that, depending on a future legal analysis, a new authority could need to refinance existing debt at a cost of $370 million to $725 million. Other costs include yet-unquantified retirement benefit transition costs and lease payments. In Detroit, the new authority paid $344 million in pension contributions to ensure the city met its promises to its workers, and an additional $976 million in lease payments over the term of the deal.

These additional costs could deepen the city’s water affordability crisis, which disproportionately affects Black Baltimore residents. A report by the NAACP Legal Defense Fund found that water bills in Baltimore exceeded two percent of median income (which is the affordability threshold for water) in 131 of 200 census tracts – 108 of which were majority-Black. 

“Baltimore has already been working to address a water affordability crisis which has had a disproportionate and detrimental impact on the city’s Black neighborhoods,” said David Wheaton, Economic Justice Policy Fellow, NAACP Legal Defense Fund. “Hastily rushing to establish a regional authority without doing critical analyses on how a new regional authority will affect Black residents and low-income ratepayers risks undermining this progress and creating even greater disparities. We urge the Task Force to do a racial and economic equity analysis of a new regional authority model.”

The task force is considering three restructuring options – a renegotiated intermunicipal service agreement, a wholesale purchase agreement with the county as a bulk customer, and a regional authority model. So far, the task force process appears weighted towards the regional authority as the leading model – despite the fact that the alternatives would be more affordable, and would keep control of the city water system in local public hands. 

“The Task Force is turning a blind eye to history as they look toward regional authority as a restructuring option for Baltimore’s water system,” said Courtland Merkel, Consumer and Housing Staff Attorney with Maryland Volunteer Lawyers Service. “The regional authority model has been implemented in Detroit where the transfer of models led to disproportionate harm to the Black residents of the city. Detroit residents suffered mass shutoffs affecting more than 140,000 households, city customers pay higher water and sewer rates due to the city being charged retail rates and their suburban counterparts being charged wholesale rates. Baltimoreans already must endure higher water bills, rushing into the regional authority model will only lead to more hardship for residents.” 

The consultant’s analysis cites Tampa Bay Water and Detroit as models for a regional authority approach. Tampa Bay Water privatized several treatment plants, including a notorious boondoggle of a desalination plant. In Detroit, a state-appointed emergency manager used a bankruptcy crisis to lease the publicly owned system without voter approval. The deal has been a disaster for city residents, who have been forced to deal with mass water shutoffs, rate hikes and the loss of a public asset that was worth billions of dollars. 

“In their September 12th op-ed in the Baltimore Sun, Mayor Scott and County Executive Olszewski made clear that water privatization would not be considered as the task force studied the future governance model for Baltimore City’s water and wastewater utility,” said Antoinette Ryan-Johnson, President of the City Union of Baltimore. “Yet, tonight, as the taskforce considers the regional water utility model as an option moving forward, the example they use to illustrate the specifics of utility regionalization is Tampa Water, which has privatized numerous components of their water utility over time, to the detriment of the overall system and the services provided to residents. We call on the taskforce to be true to their word and promise to the public– to reject a Tampa-style privatized water utility model, and to keep the city’s largest asset in the control and management of the residents of the city.”

Despite promises that privatization is not on the table, advocates point out that the authority could facilitate future privatization deals, costing residents even more. 

“There is no reason for the task force to rush forward with a new governance model that could cost ratepayers billions of dollars, and could even lead to the privatization of some essential functions,” said Food & Water Watch organizer Jomar Lloyd. “The task force must prioritize a solution that promotes water justice, protects the city’s most valuable asset, and defends the interests of residents and workers alike.”