GOVERNMENT TAKEOVERS OF PRIVATE WATER COMPANIES would be made more difficult under a bill that Rep. Phil Crane (R.-Ill.) introduced in Congress. Crane is a senior member of the tax-writing committee in the House.

The bill would label any bonds that a state or municipality issues to “acquire a water utility (or any facility thereof) by exercise of eminent domain power” a “private activity bond.” This means that the state or municipality would have to borrow at taxable — rather than tax-exempt — rates in order to finance the takeover. The bill makes two exceptions. One is where the acquisition is approved in a public referendum. The other is where there is a finding by a state public utility commission that the water utility “on a continued basis has been in violation of state or federal laws or regulations governing the provision of water services.”

The main beneficiary of the bill would be the American Water Works Co. The company supplies water to 900 communities in 23 states. It faced hostile takeover attempts last year by city governments in Chattanooga, Tennessee and Peoria, Illinois. Pekin, Illinois was also considering a takeover at year end.

Keith Martin