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As noted above, several factors are motivating local governments to look to <br />the private sector to take on the operation and management of water and <br />wastewater systems. Large and medium size municipalities, as well as small <br />investor owned utilities and regional water districts, are facing rising service <br />costs, and confronted by a need for large capital infusions to modernize their <br />infrastructure to meet the growing demand and to comply with regulatory <br />requirements of the Safe Drinking Water Act. These factors have provided <br />incentives for local governments and small utilities to look to the private <br />sector for financial, professional and technological assistance. These same <br />conditions have encouraged private investor-owned utilities, including large <br />multi-national corporations to look to this public service sector as a business <br />opportunity? <br /> <br />There are five major types of water utility privatization initiatives, each of <br />which relies on a tailor-made contract between a public (governmental) entity <br />and a private company: <br /> <br />· Outsourcing specific operational tasks, such as metering or billing. <br /> <br />Contracting with a private entity to operate and maintain <br />(a&M) some or all of its water - wastewater treatment <br />facilities. Most frequently with this arrangement, the community <br />retains the water rights and sets the rates while paying a fee to the <br />private entity to manage the system. Currently, this is one of most <br />popular forms of water - wastewater privatization. <br /> <br />· A long-term lease agreement with a for-profit entity to design-build <br /> and operate (DBa) water-wastewater systems. <br /> <br />A long-term concession in the form of a build-operate-transfer <br />(BAT) agreement. Under this arrangement a governmental entity <br />contracts with private entity to construct a water or wastewater <br />facility and operate it under a long-term agreement. At the <br />termination of the contract, the public utility gains all rights to the <br />facility and its operation. Under most concession or BOT agreements <br />for water services, the municipality is often under a "take-or-pay" <br />obligation. That is, the utility must pay for a specific amount of water <br />whether it uses it or not.l0 <br /> <br />The sale of a community or district water-wastewater system to <br />a private entity. This is the most extreme form of privatization, but <br />it is taking place in a few communities across country. <br /> <br /> <br />