Stateless Sewage

A desert city goes it alone.

Residents of Apache Junction, Arizona—a popular wintering spot whose population fluctuates seasonally between 18,000 and 55,000—have told the government to leave their sewage alone. In a move that industry observers say may spark a trend, a developer is building a fully private sewer system and wastewater treatment plant in the desert community located 40 miles west of Phoenix.

Typically, small communities rely on septic tanks, switching to publicly financed sewer systems as they expand. Residents usually pay for the new system with a bond measure and are then forced by law to connect to it at their own cost—often thousands of dollars.

But in Apache Junction, voters twice shot down bond measures to finance the construction of a modern wastewater facility. Sensing a demand nonetheless for such services, a Phoenix-based company, Interwest Management Inc., approached the Apache Junction city council and proposed building a sewer system without any taxpayer money. After receiving the council's approval, Interwest put together a private team that is financing, designing, building, and will operate the sewer district.

And unlike most publicly operated systems, when the $31 million, 100-acre facility is completed this October, no one will be forced to connect to it. Instead, the district will seek subscribers in much the same way a cable company does. Steven Brinkman, a senior vice president at Miserow Financial Inc., the project's underwriter, predicts 50 percent participation by the time the system begins operation. (Thirty percent of property owners had signed up with the district when the venture was announced last November.)

Grant Holland, director of analytical services at Interwest, says that ventures like Apache Junction help cash-strapped municipalities while giving entrepreneurs a variety of ways to earn profits. For example, the Apache Junction plant will offset initially low connection rates to the sewer system by operating a waste disposal site for septic haulers. Even though only 2 percent of wastewater facilities in the United States are privately operated, Holland believes that Apache Junction marks the start of a "long-term trend toward privatization" in water and wastewater management and ownership.