Scottsdale Water Condemnation Proposal Leaves a Bad Taste
Exercising eminent domain to take over private water utility is fiscally irresponsible, violates private property rights
By Leonard C. Gilroy, AICP

The Tribune is spot on in its critique of the proposed City of Scottsdale takeover of Arizona American Water Company's water utility ("Our View: Don't buy water company, but keep close tabs on it," June 24th).

A takeover would be fiscally irresponsible given current budget conditions and future needs. Taxpayers would likely face exorbitant acquisition and legal costs far higher than initial projections, as seen recently with the Toll Brothers' condemnation case. Add in the potential for rising operations, maintenance, and environmental compliance costs into the future--not to mention the staggering long-term investment needed to meet the water demands of a rapidly growing population--and the folly of a takeover becomes quickly apparent.

More importantly, using the power of eminent domain to expropriate a private business with a long track record of safe and successful operations would be an egregious affront to private property rights and an idea better suited for Hugo Chavez's Venezuela than modern America.

As we saw with the overwhelming support for Prop 207 in 2006, most Arizonans understand that strong private property rights are key to freedom, progress, and a dynamic market economy. A City takeover of American Water's facility would be just as egregious as expropriating assets from APS, Qwest or any other investor-owned utility that serves its customers while being held accountable to stringent federal, state, and local regulations. Government's role is to protect private property rights whenever possible, not selectively undermine them.

Hopefully, the City Council will re-evaluate its position. As rapid growth brings increasing pressure on scarce tax dollars, we should be partnering more with private businesses to help meet our infrastructure demands, not driving them away through government bullying.

Leonard Gilroy is director of government reform at the Reason Foundation. An archive of Gilroy's work is here. Reason's water research and commentary is here, and Reason's property rights and eminent domain research is here.

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