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Show Private ownership of i. sewage facilities in doubt , by Christopher Smart The private operation and ownership owner-ship of the Snyderville Basin Sewer Improvement District's proposed $8.9 million sewage line and treatment plant may not be advantageous to the district, said' District Manager Rex Ausburn. Following negotiations with two California engineering firms, the Snyderville Basin's negotiating committee has determined it cannot presently recommend "privatization" "privatiza-tion" to the board of trustees of the sewer district The firms of Fluor Engineering and Metcalf and Eddy Engineering may come back to the district with a better offer, Ausburn said. But as it stands now the potential savings of privatization do not outweigh the risks. When the Synderville District began discussing the private operation opera-tion and ownership of the proposed sewage facilities last fall, it was estimated 25 to 35 percent of the operating costs could be saved over a 20-year period because private corporations can receive investment tax credits as well as tax savings on depreciation of the faciliites. The sewer district, a taxing entity ' itself, cannot, achieve such savings...,' But upon the completion of a "present worth" analysis by the district and Fluor, Metcalf and Eddy, it was found the savings are in the range of 12 to 1 2 1 2 percent. Ausburn said the savings would have to be significantly higher for the negotiating committee to recommend recom-mend approval of privatization to the firms. While he could not speak for the board of trustees, Ausburn said savings would need to be in the 20 percent range before they would outweigh the risks. The sewer district must assume a cautious stance when considering privatization, Ausburn noted. Many unknowns in the next 20 years could wipe out a 12 percent savings. Among the risks is the potential for tax laws to change. If depreciations and tax credits are altered or removed, the current climate for savings could vanish, he said. Another unknown is the repurchase repur-chase price of the sewage facilities 20 years from now, Ausburn said. Under the privatization option, the district could buy back the facilities at fair market value. However it is impossible to determine what that price will be in 20 years. Because it is dealing with such uncertainty, Ausburn said the district must begin the project with the belief that a substantial savings " is possible in spite of snafus. "If )l everything went wrong, we'd want to be in a better position than if the district owned and operated the plant,!' he said. |