What you need to know about MUA sale referendum

Referendum set on $12.5M sale of Municipal Utilities Authority

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In the right hand corner of their ballot, West Milford residents will have the opportunity to approve or disapprove of the sale of the West Milford Municipal Utilities Authority’s assets to Suez Water New Jersey when they go to the polls on Nov. 7.

With the decision nearing, township officials and Suez representatives have been holding informational meetings with the public — with two more planned for next week — presenting what will happen if the sale is approved, and what will happen if the sale is denied.

The saleThe MUA’s aging system — which has experienced many issues over the last few years — provides water services to approximately 1,700 homes and sewer services to about 1,500 homes within the township. Due to the increasing issues caused by the aging infrastructure, the township mayor and council, along with the MUA board, began looking into selling the MUA in 2014.

After a proposal process earlier this year, the council agreed to sell the MUA to Suez Water New Jersey. The company, has agreed to buy the MUA’s 15 water and sewer systems for $12.5 million.

The proposed sale would also cover all of the MUA’s existing debt and any fines owed to the New Jersey Department of Environmental Protection — a total of about $8 million. The remaining funds will go directly towards paying down the township’s municipal debt of $30 million.

RatesLikely the biggest concern MUA customers have is whether the sale will cause their rate to go up.

For the first three years after the sale, Suez has agreed to a plan that will keep rates frozen. Then in year two, MUA customers who receive combined water and wastewater bills will see their rates decrease by 1 percent, according to Suez. Following the three-year freeze, Suez will consider whether to adjust rates.

“Historically, we have filed for approximately a 5 or 6 percent rate increase every other year,” according to Billie Gallo, director of communications for Suez Water New Jersey. “Compared to the historical increases of the MUA and also the anticipated increases to cover the needed infrastructure investment, the 5 or 6 percent is a fraction of what customers would and could be paying should they stay with the MUA.”

MUA customers will become part of the larger Suez Water New Jersey rate base, according to Gallo, which provides water service to approximately 850,000 customers throughout New Jersey. Costs are spread over the entire rate base, so costs are offset because there are so many customers.

And unlike the MUA, Suez is a regulated utility, so any decision on rates must be approved by the New Jersey Board of Public Utilities.

West Milford Mayor Bettina Bieri, speaking as an individual, explained it this way: “If you’re an MUA user, the MUA did not need to go to the BPU for any kind of rate increases, and they were very sporadic with their rate increases. Overall, when compared to Suez’s long term history as well as their rate stabilization plan included in the township’s agreement, the MUA users will experience less increases — and definitely more stabilized than it ever has been. “Prices go up, nobody’s claiming that they will remain constant,” Bieri continued, “but they will be stabilized and they will be at reduced increases, lower increases than what they’ve experienced through the MUA.”

For West Milford residents who are already Suez customers, which includes 535 residents of the senior village Bald Eagle Commons, their rates will not be impacted by the sale, according to Bieri. The sale will also have no impact on West Milford residents with septic systems and well water.

UpgradesTo address the MUA’s failing infrastructure, Gallo said that if the sale is approved, Suez will immediately begin a comprehensive system-wide due diligence evaluation of the MUA’s existing eight potable water and seven wastewater systems. Afterward, the findings will be analyzed and an upgrade and/or replacement plan will be put in place.

This will begin the design and permitting process, which will be followed by the construction phase.

Financially, Suez has committed to investing $30 million in upgrades and repairs to ensure that all of the current MUA facilities and systems are operated to meet or exceed all state and federal regulations, according to Gallo. Then over the next 15 years, Suez will invest an additional $40 million, totalling $70 million over the next 20 years.

If it doesn’t passWhile the MUA sale will only impact rates and service for MUA customers, if the sale is voted down by West Milford voters, every resident will face negative effects, according to Bieri, speaking as an individual.

“If the voters don’t approve this and it fails, the MUA is basically bankrupt and what will definitely happen will be catastrophic for this township,” Bieri said. “because the township would have to take over the MUA, which means the township inherits $8 million debt and deteriorated, failing infrastructure that’s going to need improvements.”

Both the tax burden from the MUA’s debt and the tax burden from paying for needed infrastructure upgrades would all fall onto the backs of all West Milford residents.

In addition, the MUA is a tax-exempt organization, so all of the MUA properties, including all of their sewer and water plants, are tax exempt. Suez is a taxable entity, so if Suez purchases the MUA, all of their properties will become ratables, bringing in tax revenue to the township on an annual basis, benefiting all West Milford taxpayers residents.

“This sale is rather unique in that only 20 percent of West Milford residents are served by the MUA, but 100 percent of residents get to vote on it,” Gallo said. “That’s why we’ve been attending public meetings and meetings with community groups. We’re trying to educate all residents about the importance of the vote because if it’s a ‘yes’ vote, only MUA residents will be impacted, but if residents vote ‘no’ on Nov. 7, there will be financial implications for all who live in West Milford.”

The next information meetings are scheduled for Monday, Oct. 30 and Wednesday, Nov. 1. Each meeting will be at 7 p.m. in the Town Hall Meeting Room.

Informational meetings

The next Town Hall meetings regarding the MUA sale for residents to ask ownship officials and Suez representatives questions are:
Monday, 10/30/17 at Town Hall Main Meeting Room, 1480 Union Valley Road, West Milford – 7 p.m.
Wednesday, 11/1/17 at Town Hall Main Meeting Room, 1480 Union Valley Road, West Milford – 7 p.m.
Election Day: Tuesday November 7, polls open 6 a.m - 8 p.m.

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