On Wednesday, Sept. 24, Haddonfield held its first public information session on the sale of Haddonfield’s water and sewer utility. Commissioner John Moscatelli made a presentation about the sale and how it would affect Haddonfield.
New Jersey American Water, part of American Water Works Company, Inc., was there along with Moscatelli to address public comments and questions after the presentation. Some residents voiced their support, while most spoke about their concerns of selling the asset rather than other alternatives for the water and sewer system.
Moscatelli started his presentation saying that Haddonfield does not own or sell the water. The state owns it. What the borough is selling is the utilities: the three wells, two water treatment plants, 51 miles of water mains, six pump stations and 55.5 miles of terra cotta mains for the sewer system.
Pictures were displayed of the utilities mentioned. There were rust, mold, cracks, corroding and more on or in the systems.
“At the end of the day, the system is old,” Moscatelli said.
Moscatelli then explained how the systems came to be this way. Before 2003, very little was invested into the water and sewer systems. If things broke, they were fixed, but nothing systematic was replaced, even when they hit their expected service life. Things weren’t failing so the decision was made by past commissioners to keep the taxes low and not invest in the infrastructure.
“But we did it at the expense of the system, and we have extracted the useful life of the system Right now the system is in trouble,” Moscatelli said.
Since around 2003, money has been invested into the system and there is now a $16 million debt. That money is not from the borough budget; the funding is from fees that residents pay using the postcards that they get in the mail, which is why fees increased on average 25 percent this year. After this year, rates will go up again.
“I can guarantee you that if the current commissioners and future commissioners continue to invest in the system, rates will go up each and every year. We will have rate increases no matter who owns the system, whether we sell or keep it,” Moscatelli said.
After having engineers look at what is known that needs to be done, the improvements to the water and sewer utilities would cost about $47.2 million over the next 30 years. That number is if everything works out well and there aren’t any unknowns.
The borough projected how much rates would increase if the borough kept the system as well as if it sold it to NJAW. The borough’s rates showed to be about 25 percent more than NJAW’s rates, and Moscatelli said that it is most likely to go much higher than that because of unknowns. However, after about 30 years, the borough’s estimation does drop below NJAW’s estimated projection.
That is part of the reason the commissioners are behind the sale. However, they also feel that the borough will benefit from the money left over after the sale.
NJAW will be paying the borough $28.5 million for the utility. The commissioners have to use that money to pay off the $16 million that was invested in the systems. That leaves $12.5 million left.
The $12.5 million must be spent to pay off the borough’s debt. It is illegal to us it otherwise. However, there are multiple ways that the money can be used. They can spend the money on the debt itself and pay off some bonds, they can reduce taxes for the residents of Haddonfield, or they can invest the money into the roads, which is an $18.5 million dollar project. However, the $12.5 million is a big chunk of that money and the $18.5 million will be spread out into a 30-year project.
Moscatelli said that he was in support of the investments to the roads as well as to the sale of the systems to NJAW. According to Moscatelli, selling to a company like NJAW makes the most sense because it has more experts, more experience and, overall, can manage it better.
“If we keep it we are still keeping the decisions to the same group, the elected commissioners who got us here today. I think it seems terribly optimistic, given that 50–60–80 years of political history, that suddenly going forward the political control is going to yield dramatically better results,” said Moscatelli.
Carmen Tierno and Jordan Mersky of NJAW spoke after that explaining a little about their company and why the decision to sell to it would be a good idea. Mersky explained that NJAW, because it is so big in size and customer-base, could keep rates stable, could be a safer choice with decisions on rate increases and could provide faster service because of its investments in new technology. He explained the process of how they choose their rate increases, including having to talk to a third party that represents the people and must approve of the increase.
When it came to the public’s turn, most voiced their concern with NJAW taking over the system. Some said they would rather keep the vote for rate increases local. Others wanted to know more about other alternatives, such as leasing the system rather than selling it. There was a lot of debate.
