NY Times 24-12-2016, por Danielle Ivory, Ben Protess e Griff Palmer
In American Towns, Private Profits From Public Works
(..) Water rates in Bayonne have risen nearly 28 percent since Kohlberg
Kravis Roberts — one of Wall Street’s most storied private equity firms —
teamed up with another company to manage the city’s water system, the Times
analysis shows. City officials also promised residents a four-year rate freeze
that never materialized.
In one measure of residents’ distress, people are falling so far behind
on their bills that the city is placing more liens against their homes, which
can eventually lead to foreclosures.
In the typical private equity water deal, higher rates help the firms
earn returns of anywhere from 8 to 18 percent, more than what a regular
for-profit water company may expect. And to accelerate their returns, two of
the firms have applied a common strategy from the private equity playbook:
quickly flipping their investment to another firm. This includes K.K.R., which
is said to be shopping its 90 percent stake in the Bayonne venture, a
partnership with the water company Suez.
(..) President-elect Donald J. Trump has made the privatization of public
works a centerpiece of his strategy to rebuild America’s airports, bridges,
tunnels and roads. Members of his inner circle have sketched out a vision,
including billions of dollars of tax credits for private investors willing to
tackle big infrastructure projects. And Mr. Trump himself promised in his
victory speech “to rebuild our infrastructure, which will become, by the way,
second to none.” (..)
