Residents Blast Proposed Sale Of Gloucester Township's Sewer Utility

GLOUCESTER TOWNSHIP, NJ — Residents continued to blast a proposed deal that would privatize Gloucester Township's sewage services. But council members approved plans that would bring the sale to an Election Day vote.

New Jersey American Water wants to purchase control of the township's wastewater-collection services for $143 million — an offer which municipal officials have tentatively accepted. But the sale requires approval from township residents, who are set to vote on the matter during November's General Election.

The Gloucester Township Municipal Utilities Authority (GTMUA) currently manages the township's sewage services. A sale to New Jersey American Water would disband the public entity.

Township officials have said that the deal would wipe out the municipality's debt of $65 million, while bringing in a company with access to capital that will allow for quicker repairs and improvements. But members of the public have decried the proposed sale in recent months, advocating for the GTMUA, speculating that the sale will result in higher sewer bills and claiming that the mayor has a conflict of interest.

Mayor David Mayer is New Jersey American Water's director of government affairs.

At Monday's meeting, the Township Council passed an ordinance on first reading to approve the tentative sale. The council's approval is necessary to put the transaction up for a public vote.

Numerous residents and public advocates expressed concerns throughout the meeting.

"There is a very obvious conflict of interest that our mayor serves as director of government affairs for the company that we're going to sell this public utility to," said Brian Everett, a Glendora resident.

One resident asked via email whether Mayer had any role in the sale, and whether New Jersey American Water would give him a bonus or incentives for a successful transaction.

Mayer has not and cannot participate in any discussions of the sale, said Council President Orlando Mercado.

"The bidder (New Jersey American Water) certified that no employee from the township assisted the bidder in the preparation of their bid," Mercado said. "In regards to any incentives or bonuses that the mayor may receive if the sale goes through, we're not aware of any incentives or bonuses. That's between American Water and Mayer if there is any incentives or bonuses."

The township initially considered selling its wastewater system, which has generated millions in revenue, to improve the municipality's finances, Mercado said. The proposed deal would eliminate the township's debt, which costs taxpayers $9 million annually, according to the council president.

Township resident Denise Coyne asked whether the sale would lower municipal taxes by $9 million per year. Mercado said it would make tax decreases possible but didn't say by what amount, initiating a back-and-forth with Coyne.

"My question was if you are paying $9 million a year in debt, are you going to decrease our taxes by $9 million (once the debt is eliminated)?" Coyne asked.

"I will advocate for that," Mercado said.

"OK, but that doesn't mean you’re going to do it," Coyne said.

The township opened bidding May 17 for its wastewater system. Two companies submitted offers by the July 2 deadline — New Jersey American Water for $143 million and Aqua New Jersey for $52 million.

If the acquisition goes through, New Jersey American Water — the state's largest water utility — would spend $90 million on the township's wastewater system in a decade, according to its published plan. The company is owned by American Water — the nation's largest publicly traded wastewater-utility company.

Township residents current pay quarterly bills of $46 per unit per unit — or, per single-family home. New Jersey American Water would collect bills monthly, but rates would remain the same for its first two years of ownership.

The company expects to raise costs by 9 percent over the following three years (5 percent in Year 3 and 2 percent in Years 4 and 5) before raising rates about every 2 to 3 years. New Jersey American Water would need approval from the state Board of Public Utilities to raise rates.

New Jersey American Water projects that Gloucester Township residents would save money through its ownership. But some residents have raised doubts.

"How long would that firm take to make their $143 million back if rates stayed the same?" Erial resident Ray Polidoro asked Monday. "Most investors like to make a profit."

All council members except James Nash, who was on vacation, voted Monday to approve the sale and advance it to a referendum. The final wording of the ballot question still needs to be determined, but the ordinance contains the following draft language:

Watch the full council meeting below: