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Bozí voda municipal association

From Municipal Cooperation

Bozí voda municipal association
Service Areas: Water Management
Country: Czech Republic
Municipalities: Liběchov, Želízy, Tupadly, Dolní Zimoř
Contact persons: Josef Ulman
Legal form: Public law association
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Coordinates: 50° 24' 27" N, 14° 26' 46" E

Description of the problem/need for IMC

From 1954 to 1965, a sizeable drinking water network was built in central Bohemia from which rich sources of high quality underground water in Liběchov are drawn. In this period, all the households in Liběchov and the surrounding municipalities were connected to this network. After 1990, the prices of water increased rapidly (due to price liberalization and the abolishment of various types of subsidies) and consequently, consumption fell dramatically. Therefore, the water sources from Liběchov were not needed for supplying more distant places; they became important only in this area.

Within the framework of privatization and restitution, four municipalities created an Association and requested that the ownership of the water supply network be transferred from the National Property Fund to this Association. This transfer occurred in 1995 and the Association has been running the water supply ever since.

Due to the technical aspects of the water supply system, it was not possible to divide it among the four municipalities, so they acted together.

Description of the IMC practice

The Voluntary Municipal Association runs the water supply system in four municipalities. This is a recreational area with many holiday homes connected to the service area and serving more than 1,600 people; Josef Ulman estimated a 50 percent increase in the summer season).

In 1995, the State Property Fund transferred the entire infrastructure to the Association, thus avoiding having to build it with its own funds.

The water systems consists of one artesian drill hole, two storage reservoirs placed on the highest points of the area, waterworks and the pipelines. In the waterworks, hypochlorite is added to the water, which is pumped into the storage reservoirs. The water flows by gravity to the final consumers from the storage reservoirs.

The Association was established based on the Law on Municipalities. When the law was changed, the Association changed its status in 2002 accordingly. Mr Ulman considers this legal form more appropriate than, for example, a limited company, for two reasons: transparency and openness to citizens and his concerns over the possible loss of the property due to the weaker control by the municipalities. (According to him, these concerns could be justified, depending on the specific arrangements of a limited company.)

The Association has a President (the Mayor of Liběchov), Secretary (Deputy-Mayor of Želízy) and a Committee (the mayors of the participating municipalities). The Association has a contract with an accountant of Liběchov, who also has a separate contract with the municipality. The work of the Mayors/Deputy-Mayors (mostly by the Mayor of Liběchov) is not paid by the Association.

The Association is able to finance both the current operations of the water supply system and the reparations or improvements from its revenues from the water supply. In 2007, it collected CZK2.3 million from the water fee and the total costs (for the operation and repairs) were CZK2.1 million. Based on Mr Ulman’s experience, it is able in this way to finance any standard or even sizeable breakdown.

This cooperation is sustainable because the local water is of very good quality, so there is no need to buy it from elsewhere. At the same time, it is an integrated, indivisible system, so it is not possible for one municipality to withdraw, at least not at a reasonable cost.

The Association is a subject to the Law on Municipalities and the budgetary rules for local budgets. It must therefore publish the budget proposal prior to approval so that the citizens can contribute their own proposals; it then has to publish the approved budget and the final account. In addition, it is subject to audit.

The Association frequently monitors the technical aspects, especially the water quality, based on the relevant regulation. It calculates the water fee based on the costs.

Establishment of the IMC practice

Mr Ulman came to office in 1998, so he knows about the Association’s background only from documents and hearsay. Liběchov Municipality was interested in water production and consumption by exploiting its own artesian drill hole. Since Středočeské vodárny (Central Bohemia Waterworks) was no longer interested in supplying water to this territory on the basis of the technical parameters of the local water system, the four municipalities established an association, which originally consisted of two municipalities but split into four after 1990. This Association received the water pipes in 1995 from the State and started to run the water supply.

There were two initial steps: negotiation among the representatives of the four municipalities and then negotiation with the State Property Fund. The transfer of the property can be considered external support – had it not been transferred for free, this cooperation could not have started.

Main success factors

  • a great interest in using the excellent local water;
  • the characteristics of the water supply system;
  • lack of need for any contribution (financial or in-kind) from participating municipalities.

Benefits and shortcomings of the IMC practice

Benefits

The citizens benefit by the provision of high quality water. The water fees are slightly lower than those in the neighbouring town of Mělník. The fact that the municipalities are not only consumers of a large company, but also have a decision-making and control role regarding the water supply system may also be considered a benefit.

Shortcomings

  1. There is no agreement on how to solve a major breakdown, i.e. a situation when the funds of the Association are not be sufficient for reconstruction. The Association would have to ask for contributions from the member municipalities and their councils would have to decide. Mr Ulman said that he cannot imagine what could lead to such an extreme situation; however, there is a potential risk for two reasons: (a) except for Liběchov, the municipalities are very small and have very limited financial resources; (b) in case of a breakdown in a territory of only one municipality without serious impact on the others, it would be very difficult to reach an agreement among the municipalities on a evenly shared contribution. Since no standard rules have been set regarding sharing of costs in advance, it is likely that the municipal councils will engage in strategic behaviour, at least to some extent, in order to avoiding paying their share,.
  2. The water pipes were built more than 40 years ago; they are made of glass and fibro-cement. Pipes made of glass frequently break down. The fibro-cement contains asbestos, which can cause serious health problems. Based on expertise, asbestos does not oxidize and infiltrate into the water. Nevertheless, this old and – what is considered today– inappropriate pipe material is also a risk since, in case of a need for replacement, there are not sufficient funds.

Future plans for the development of the IMC practice

This cooperation was established with a single objective ­and was strongly determined by the type of the water supply system set in the past. The Association would like to supply water to other municipalities as well, but the market is divided, and at the moment, there is no room for expansion.

The municipality is a member of another Voluntary Municipal Association (Svazek obcí Povodí Liběchovky), which is a general-purpose association (local development, spatial planning, environmental protection and tourism) and is formed by the same municipalities as the Svazek obcí Boží voda with two more added. Due to frequent changes in the grant schemes, the areas of activity of this Association are ad hoc.

Main lessons learned in establishing IMC and making it a success

  • having a strong mutual interest (excellent water) and patriotism;
  • taking advantage of the right time or opportunity: e.g. the Association could receive the water; supply system from the state at a specific time, whereas conditions could be different ten years later;
  • choosing a legal form that suits the partners.

Mr Ulman was unaware of similar arrangements elsewhere. These were very unique conditions due to its natural resources (the artesian drill holes), the infrastructure and the timing, i.e. there was a mass transfer of property from the state to other subjects in the first half of the 1990s.

Municipalities can definitely cooperate in the area of drinking water supply, but they would probably have to build the whole system themselves.

There was support in form of the transferred water supply system.

Willingness to support other municipalities to establish IMC

The IMC is willing to support other IMCs.

Acknowledgment

The information about this practice was collected and presented by Lucie Sedmihradska.