The City of Bayonne is currently expected to see a 4.1 percent water rate tax increase in 2020, with the Mayor Jimmy Davis administration calling this an example of “an automatic, built-in” increase” as the result of the contract approved in 2012.
The 4.1 percent increase, the sixth year in a row residents will see hikes in their monthly water bills, is considerably less than it’s has been in recent memory.
Last year, residents were hit with a 9.1 percent increase – which translated into a roughly $9 increase per month. This year’s increase will equate about to a $1.60 increase per month, according to a Suez Water Communications Manager Ghilianie Soto.
The 4.1 percent increase is “in line with what was agreed to in the contract,” she added.
The city’s water contract guarantees certain revenue projections over the its 40-year life span. When the contract was inked in December 2012, residents were hit with a water rate increase of 8.5 percent — the city’s first increase since 2006.
Additionally, Bayonne’s water rates are calculated through a joint venture agreement between Suez and a private equity firm.
“Before Mayor Davis took office, a contract was signed that has automatic, built-in increases. This is the increase,” Bayonne spokesman Joe Ryan told HCV.
At the time the deal was finalized, the Mayor Mark Smith administration promised four years of no increases, but that only lasted for two years.
Residents saw a four percent raise in 2015, a 13.25 percent hike in 2016, a 3.5 percent and 4.5 percent raises in 2017 and 2018, respectively, and then a 9.1 percent increase last year.
The city evaded a potentially higher increase this year since rate increases are tied to inflation and capital investments each year, and the annual rates are based off of a “revenue path,” a predetermined schedule of how much the city has to pay in water bills.
When the city meets the revenue requirement, rates are increased annually by roughly four percent. However, when the city falls below the revenue path, rates increase in order to make up the difference.
Having met the revenue requirement, the city’s increase this year is the regularly mandated increase, per the contract. Excess revenue is supposed to go to go into a rate stabilization fund, but that has not happened since the contract was signed.