Montana City Attempts to Regain Control of Water System From Carlyle Group
“Three years ago, Carlyle Group CG +2.59% LP bought the pipes, pumps and water wells in Missoula, Mont., and several California communities in what the firm assumed was a relatively low-risk bet.
By most accounts, drinking-water systems nationwide need hundreds of billions of dollars in repairs and upgrades, making them ripe for private investment.
But the reality has been more complicated.
Carlyle finds itself fighting in court to retain control of the Montana water utility. Missoula officials are suing under eminent domain laws to take control, accusing one of the world’s largest private-equity firms of reneging on a handshake deal to sell the system to the city. One of the California locales is considering a similar takeover for its water system.
The dispute highlights the difficulties in what seems like a natural fit: using private money to fix the nation’s leaky pipes, outdated airports and crumbling bridges.
“When we began, we thought municipalities would be open to involving the private sector,” said Robert Dove, who leads Carlyle’s infrastructure investing. “That has turned out to be more of a challenge.”
In Washington, officials from both political parties are calling for more private investment in public works. The government says U.S. drinking water infrastructure alone needs $385 billion in repairs and upgrades by 2030.”
Peters, Mark and Ryan Dezember. The Wall Street Journal 14 September 2014.
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