“There’s a reason many communities look for private partners to begin with: Their water systems are in poor shape. Budget shortfalls and political mismanagement can represent a real threat to both infrastructure and citizens. For evidence, look no further than the crisis in Flint, Mich., where the drinking water became tainted with lead.

Photo: Megan Matson and Peter Luchetti

Megan Matson and Peter Luchetti of Table Rock Infrastructure Partners.
Photo: Anthony Cruz for The New York Times.

‘Keeping rates down may sound like the ultimate righteous good for ratepayers, but the truth is, not if you’re failing to provide basic care and maintenance,’ said Megan Matson, a partner at Table Rock Capital, the boutique private equity firm that invested in Rialto’s water and sewer system. She added that it helps for deals to ‘provide more obvious public benefits,’ noting that her firm partnered with Ullico, the nation’s only labor-owned insurance and investment company.

Proponents of the public-private partnerships, citing recent studies in Canada and Europe, argue that private businesses operate more efficiently than governments do and that this translates into cost savings for citizens…

Supporters also say that the deals require private equity to spend millions of dollars a year to fix things (money that towns may not spend on their own), and that the firms sometimes pay towns millions more up front…

In water infrastructure alone, the nation needs about $600 billion over the next 20 years, according to federal estimates. And yet federal spending on water utilities has declined, prompting state and federal officials to try to play matchmaker, courting private investors to fix what needs fixing.

For years, the Obama administration has been cheerleading public-private partnerships. In a statement, the White House said it backed them “when they are well structured, include strong labor standards, and when there is confidence that taxpayers are getting a good deal.”…

Ms. Matson, of Table Rock, who has attended White House meetings on infrastructure, has tried to dispel concerns about these deals. Table Rock is part of a team that finances and manages the water system in Rialto, Calif., a deal that provided the city about $41 million to improve the water and wastewater infrastructure, she said…

Unlike in most other deals, Rialto residents had a say in the increases and ultimately approved them in a public vote, as required under state law. This year’s rate increase was delayed.

When the deal closed in 2012, all the public water utility employees kept their jobs. Everyone has since received raises. And Table Rock, like its partner Ullico, has committed to all 30 years of the arrangement.

‘We don’t do flips, we invest for life,’ Ms. Matson said, meaning that Table Rock doesn’t seek quick profits by unloading its investments. She also said that Table Rock declined to make deals that provided big up-front payments to towns without a sufficient commitment to infrastructure repairs. ‘Those deals give the rest of us a bad name,’ she said.”