Documentary History of American Water-works

Introduction Historical Background Chronology Geography Biography Technology Ownership and Financing General Bibliography

Ownership and Financing of American Water-Works

Ownership
Apart from a small number of systems owned by the federal and state governments, water works ownership can be divided into two basic categories. 

Unincorporated entities include sole proprietorships, partnerships, and various types of companies and associations.  These were widely used for smaller systems.

Incorporated entities have a charter authorized by the state, either by a specific law granting a charter, or under general authority granted by the legislature.  Municipal corporations are one type of incorporated entity and include counties, cities, towns, villages, and other subdivisions of the state, which later included special water districts.  Non-public corporations include stock companies and associations where individual water consumers own the system.  

Massachusetts in 1799 was the first state to pass a law allowing aqueduct companies to incorporate without a legislative charter.  Maine passed a nearly identical law after it became a state in 1820.  Applications for incorporation were made to a local justice of the peace and companies organized under these laws could only hold a maximum of $30,000 of real estate.  Permission from Selectmen was required prior to installation of pipes in public streets.  Vermont passed a similar law in 1835 requiring that a copy of the agreement be filed with the local town clerk. Other states passed various general incorporation laws during the ensuing decades.

Water works companies were usually, but not always, required to secure permission from the local selectboard or other governing body before installing pipes in public streets.

The right to own property was not universal in America until the second half of the 19th Century.  Charters for water works would often include language such as this language from an 1844 charter: "And in case any owner or owners of land, real estate or property taken by said trustees and company, shall be married women, infants, idiots, insane, or shall reside out of this state, then, and in such case, the said trustees and company shall cause the damages sustained by said owner or owners to be determined in the manner above prescribed, and shall pay the amount of the said last mentioned damages info the court of chancery, for the benefit of the person or persons entitled to the same, which damages shall be paid before the said trustees and company shall take possession of the property."

New York State passed laws in 1848 and 1849 granted substantial property rights to married women, and in 1851 gave them the right to vote their stock in corporations.  At least two water works companies are known to have been wholly owned by women:  The Aqueduct Association in the Village of Little-Falls was wholly owned by Nancy M. Boyer from 1883 to 1888; and the Virginia City (Montana) Water Company was owned by a black woman, Sarah Gammon Bickford, from 1900 to 1931. Anice A. Barlett owned the Plainfield, Vermont water works in 1940.

Ann Giffin was an incorporator of the Gettysburg Water Company in 1823.

1892 "Water Works Franchises," from Michigan Law Journal, 1(9):310-313  (October, 1892)

1905 "Municipal Ownership," The New York Times, August 29, 1905, Page 6.
Alleged to be a Failure in Nine Cases Out of Ten.

Financing
Financing the construction, operation and maintenance of water works systems has involved many different types of funding sources,

Many early systems were built using equity from assessments on shares in the entity.  Investor-owned public utilities still rely on this funding source.

Bequests have been used to fund several water works systems.

Donations have been made to several systems.

Lotteries were used as funding sources on some early systems.

Secured loans were used to build some early water works.

Bonds became the most common method of funding water works.  The first revenue bonds were issued in 1895 to rehabilitate the water system in Spoke, Washington. 

Special Districts

The first water works owned by a special district was in Pittsfield, Massachusetts, where the fire district was authorized to construct water works in 1852, but local voters did not approve the project until 1855.

1958 "The Legal and Governmental Status of the Metropolitan Special District," by Robert W. Tobin.  University of Miami Law Review 13(2):129-151  (Winter 1958)




2015 Morris A. Pierce