5 things to know about proposed water deal

City Council is scheduled to hold a public hearing and final approval tonight on a new 20-year lease agreement for the city’s water treatment plant and a $14-million bond ordinance to borrow against an annual concession fee in the deal. UPDATED: Tonight’s meeting has been canceled. A combined conference/regular meeting has been scheduled for Nov. 21.

Rahway Water Treatment PlanThree ordinances are involved. Two (O-25-16) and (O-26-16) would authorize borrowing $14 million against annual concession fees in the agreement through the Union County Improvement Authority (UCIA). A third (O-20-16), introduced this past summer, would award the lease agreement to Suez Water. The state Local Finance Board was scheduled to review the new agreement last month.

Here are 5 things to know about the water treatment plant and lease agreement:

  • Water rates would be set at $6.31 in 2017 and rise gradually to $15.94 by 2036. The city projects a surplus of $19 million over 20 years and approximately $30.8 million “projected taxpayer savings,” based on projected revenues and water rates.
  • In the the current lease agreement, payments to Suez for operating the plant peaked at about $4.4 million in the middle years of the deal but now run about $3 million annually.
  • The city would borrow $14 million with the debt to be paid off through a $1-million annual concession fee from Suez Water. The current lease agreement does not include a concession fee.
  • The borrowed funds would be set aside for maintenance and long-term capital improvements to the Westfield Avenue plant and to stabilize water rates and tax increases. A total of $3.66 million is set aside over the first eight years of the deal for a “rate stabilization fund,” ranging from a high of $830,000 in 2018 to a low of $110,000 in 2024.
  • The new agreement would take effect in January even though the previous 20-year agreement runs through 2019. What role the timing of the mayor’s re-election in 2018 played in seeking a new water agreement early is unclear, although a cynical person might see a connection to the borrowing and set-asides in the early years of the deal.