Council to borrow $14m against new water deal

The city plans to borrow $14 million against a new operating agreement that’s expected to pay the city $1 million annually over the course of a new 20-year contract.

City Council introduced O-25-16 and O-26-16 at its Sept. 12 regular meeting to borrow and guarantee the funds. The ordinances are scheduled to come up for a public hearing and final adoption at the Oct. 11 regular meeting. Also scheduled for a public hearing and final approval at that meeting is an ordinance (O-20-16) to award a new services agreement for the water treatment plant to Suez Water.

Rahway Water Treatment PlanUnder the operating agreement that would begin in January, Suez Water would pay the city an annual concession fee of $1 million over the 20-year contract. Three years still remain on the existing operating agreement, which expires in 2019, but the city has been negotiating a new deal since last year.

It’s unclear whether the funds raised through borrowing would be earmarked for anything specific or simply go into the city’s general fund. The loan agreement with the UCIA stipulates that the $1 million annual concession fee payments would be used to repay the loan, according to the guaranty ordinance (O-25-16).

City Administrator Cherron Rountree did not return a email message seeking comment about the ordinances. Previously, she said she would recuse herself from any of the city’s dealings with the UCIA since she also serves as vice chairman of its board.