Municipalities under financial pressure from rising budgetary costs and long-term obligations are increasingly looking for options to “monetize” publicly owned assets through transfers to private entities. Especially attractive are municipal water and wastewater systems. With the delivery of water and wastewater utility services becoming increasingly complex and subject to more and more regulation each year, municipalities have an additional incentive to sell or lease such assets beyond any expected financial windfall.
Monetization is usually accomplished by entering into a long-term lease with a private operator, under what is known commonly as a “concession” agreement. Municipalities might instead opt for an outright sale of assets. Whatever the process, it almost always involves the conveyance of significant real estate interests necessary to support the facilities in question. Too often, however, public sector entities jump into deals before undertaking thorough due diligence and without resolving thorny real estate issues to ensure a smooth transition.
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