NAWC Applauds Passage Of Fair Market Value Legislation

Passage of Fair Market Value legislation in Texas will benefit the state’s customers, water and wastewater systems, and municipalities. Fair Market Value legislation is a proven method that allows municipalities to gain access to the resources necessary to enable urgent infrastructure investments and provide greater expertise to their water and wastewater systems.

“We applaud Rep. Phelan, Sen. Lucio, and Governor Abbott for their leadership in passing this important measure that will enable municipalities to make decisions about the future of their water and wastewater systems that best suit their unique needs” said Robert Powelson, President and Chief Executive Officer of the National Association of Water Companies (NAWC). “Fair Market Value allows municipalities to get the best deal possible for their assets and ensures water and wastewater systems receive needed operational expertise and investment. Most importantly, customers benefit by receiving high-quality, reliable water service provided by expert water providers.”

Across Texas and around the country, municipalities face significant infrastructure needs and increasing compliance regulations while also dealing with budgetary challenges and competing local priorities. Voluntarily selling water and wastewater systems to a water company is an effective way for local governments to access expertise, provide customers with high-quality, reliable service and to focus on other critical constituent services.

Prior to passage of Fair Market Value legislation, acquisition prices for water and wastewater systems were calculated at book value, which considerably undervalues the assets of water and wastewater systems as it fails to account for capital investments made over several decades. Fair Market Value legislation establishes a transparent process for independent valuation experts to use to calculate a reasonable and fair value for a municipality’s water system assets.

Similar Fair Market Value legislation has already been enacted in California, Illinois, Indiana, Iowa, Maryland, Missouri, New Jersey, North Carolina, Ohio and Pennsylvania.

About The NAWC
The National Association of Water Companies (NAWC) represents regulated water and wastewater companies, as well as ones engaging in partnerships with municipal utilities. NAWC members provide 73 million Americans with safe and reliable water service every day and have an exceptional record of compliance with federal and state health and environmental regulations. Ensuring this high standard of quality requires extraordinary amounts of capital investment. NAWC estimates that its ten largest members alone collectively invested $3B in 2018 in their water and wastewater systems. For more information, visit NAWC.org.