Hoboken and Suez agree to new contract that invests $33 million into water upgrades

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After countless headaches related to water main breaks in Hoboken, also seven months after the council put their water services provider out to bid, the city announced a new agreement today that calls for $33 million in investments through 2034.

Mayor Ravi Bhalla noted during Friday’s press conference outside City Hall that there are three main components to the new agreement through 2034.

The most significant is the establishment of a new water utility where the revenue from the bulk water consumption would be managed by the city, who would then allocate funds towards yearly infrastructure upgrades.

“This renegotiated agreement will finally allow Hoboken to make the critical investments needed over the coming years to upgrade our water main system,” the mayor said.

“To be clear, this won’t magically prevent all water main breaks from occurring ever again, but the agreement puts us on the right path forward to phase out the oldest of our water mains in the coming years.”

According to the city, the water system would no longer be operated as a private water concession, but instead as a new public water utility.

2nd Ward Councilwoman Tiffanie Fisher noted this is a significant aspect of the agreement because it was back in 1994 when Hoboken forfeited those revenues to Suez (formerly United Water) in order to plug a hole in the budget back then.

“It was 1994 that Hoboken sold its future water revenues to fill an unexpected budget gaps, and now today for the first time in 25 years we get those revenues back,” she began.

“To me the most exciting thing is that with this new agreement is that our new water utility will be self-funding, which means Hoboken will be able to fund 100 percent of our critical reinvestment needs and upgrades to our water system more than $30 million under this contract, and, are you ready, all of this is with no impact to taxpayers and no step increases to our water rates.”

Bhalla and Fisher agreed that the city seemed to be on the verge of a new agreement with Suez in 2017 under former Mayor Dawn Zimmer, but it fell through after the council decided Suez wasn’t willing to give enough revenues back to the city.

They also felt the deal included significant water rate increases.

By September, the city put their water services provider out to bid, shortly after the city filed a lawsuit against Suez (the lawsuit has since been dropped).

In an interview, Fisher clarified what she believes has changed since then.

“I think at the time, we were just coming off multiple major water main breaks, and there was just a general sense of frustration and we wanted to consider all avenues and all paths,” began Fisher.

“I was always a big supporter of trying to solve this with Suez, given their historic knowledge of our system, and if there is an opportunity to have a better financial deal, a better operational deal, to me that would have been a great outcome, but that being said, we didn’t have confidence that would have been the case at the time, so we also voted to pursue a path that would have considered other service providers.”

During the question and answer session with the media, we asked Chris Riat, a senior executive with Suez, what convinced the company to give back more revenues to the city this time, unlike in 2017.

“Really, it’s just a change in philosophy from the city’s standpoint. The negotiations with Mayor Zimmer’s administration produced an adequate deal for the city, the city here is now looking to be in greater control of the water utility. So all we did was simply move the business model to accommodate that,” he explained.

“A company like Suez operates under a number of different business models, and any contract that we enter into needs to meet the needs of the city that we serve. So in 1994 in the contract that was struck met the city as Hoboken was constituted at the time [which was] 33,000 people, a water system that was losing $1 million a year, there was a need for an interconnection to Weehawken, so that deal met the needs of the city at that time. It’s now 2019, so the contract that we have now meets the city’s needs.”

Bhalla said that the two other main components of the new agreement include an average of $2.2 million, “over six times the amount required in the current contract,” would be invested by the city each year for water main upgrades.

Furthermore, the new deal includes $1.5 million in proactive upgrades and $700,00 for maintenance and repairs.

“Additionally, the contract also includes $2 million in smart leak detection technology, which will record water consumption data in real-time to detect leaks,” Bhalla said.

Bhalla’s main political rival, 1st Ward Councilman Michael DeFusco, could not attend the presser, but released a statement that almost solely gave the council the credit for negotiating a deal and noted that there are problems that still need solving.

“Last summer, I demanded that the Mayor start a dialogue with the company and work towards an agreement that would make the investments in our water infrastructure,” he said.

“The leadership shown by the City Council, particularly Ruben Ramos and Tiffanie Fisher, rescued our city from a legal battle that would have served no one … This is a great first step to making much needed investments in our water system, but this is not a silver bullet, it will not entirely fix the century-old problem.”

We live streamed the entire press conference on our Facebook Page, which can be viewed below:

Hoboken Mayor Ravi Bhalla, other officials, announcing new water agreement with Suez.

Posted by Hudson County View on Friday, April 12, 2019

20 COMMENTS

  1. The fact that the HCV even gave Michael De Phony a quote in this article is shameful. Everyone knows he has done nothing but bash the Mayor and try to take credit for things he had nothing to do with.

    Wake up Hoboken Mike Del Fusgo is a fraud!

    • Wasn’t Ravi Bhalla the one that threatened a law suit against Suez to financially benefit his job at as a politically connected law firm, and “Mike Del Fusgo” was the one who called him out on it? Get the spelling right next time you want to bash a guy who you know nothing about – DeFusco.

      • TOTAL HORSE STUFF That was just phony political spin from a ultra bias, sad angry old man blogger who gets much his funding from one of MDF’s City Council allies shill for his site.

      • Bob, apparently someone didn’t get their proper meds adjusted. Crazy Nancy thinks that you are the Hoboken horse. The Hobokenhorse.com website only started detailing the good news.

        Good thing Ravi Bhalla rethought the litigation route. Hoboken was not in a good position but now that all this hard work was focused, a far better outcome! Congrats!!

  2. Great for the City to have this finally resolved.

    If I’m understanding this correctly, Fisher is saying that our existing water revenue is sufficient to cover the full costs of this deal including paying Suez’s annual fee (which for some reason was not disclosed), $2.2 million in annual repairs/capital improvements, bulk water costs including the ongoing $1.3 million excess, and about $1 million per year to cover the arrears plus interest.

    That would be amazing, but seems improbable.
    I guess we’ll soon find out.

    • To give Fisher’s almost certainly false claim that water rates won’t rise some context (and consider that the Mayor did NOT say rates woukdnt rise – only Fisher did), consider this:

      If we fully fund known costs (including Suez’s current profit and arrears) and add in the proposed investments, the system is “underfunded” by about $4.5 million per year. This money will come from 2 sources – a reduction in Suez’s annual profit and higher water rates. In order for water rates not to rise, Suez’s profit would have to decline by $4.5 million per year.

      I have no idea how much profit Suez is making under the existing deal but my understanding is that our total annual water revenue is around $11 million. Is a full 1/2 of that Suez profit?

      That seems pretty implausible, certainly far less plausible than that Councilwoman Fisher “mispoke” when she said water rates wouldn’t rise, or she was being too cute by half since the exact quote was there would be no “step” raises and I’m not sure what that means.

      Under Zimmer’s proposed agreement, the City and Suez agreed to a schedule of how much water rates would go up each year, phasing in higher rates to avoid a rate shock.

      Under this hopefully soon to be adopted agreement, it seems like the City will have to set water rates each year to fully fund costs, and funding those costs, including the needed infrastructure upgrades, will require higher rates, whether “negotiated now” or set by the mayor and council annually like taxes. Instead of phasing in increases, the city will have to pay as it goes each year.

      It is far from clear which “deal” will ultimately be “better” for ratepayers, especially since Zimmer’s deal included a $10 million forgiveness of arrears not included in the new deal.

      Fifteen years from now, if anyone is interested, they will be able to look back, crunch the numbers, and know which deal is better. But it looks to me like the City spent a year and a half re-arranging the chairs thanks to Fisher and her merry band of “politrickers.’

      • Just kills you that Zimmer tried to hoist a really bad deal on the citizens of Hoboken and then put on an appalling display about it at an election season council meeting, doesn’t it?

      • Oh Stan, you just can’t get over the fact your wife had to mysteriously choose not to run…Was it her lack of math skills, her botched Washington St plan, the 15 million dollar plaza that took her a decade to complete or was it YOU and your foolish email habits and need to control her and every commissioner that would listen to you?

        Who knows?

        There’s 700,000 possible answers…

      • I apologize for a typo above. My understanding is that total current water revenue is about $8.5 – $9 million per year – not $11 million. But I’m sure Lewis&Clark can provide the exact figure, and will if she is interested in having an informed discussion about this vitally important issue.

  3. Oh man! Has anyone else seen the mayor’s propaganda email blast? It’s a hoot. He actually thanks mayor Zimmer (the one that almost hoisted a disastrous contract on the citizenry.) Here’s a excerpt:

    “want to give a special thank you to Mayor Zimmer for beginning this process several years ago, SUEZ for coming to the negotiating table, the infrastructure sub-committee, and Business Administrator Stephen Marks and Director Jennifer Gonzalez for leading our team in negotiations.”

    When I read crap like this I’m reminded how important it is to ensure that the infant in the mayor’s seat doesn’t secure a city council majority in November. The guy doesn’t even acknowledge the infrastructure subcommittee. The citizens of Hoboken need some protection from a mayor that doesn’t have the maturity or ability to separate his future political ambitions, hunger for power and control, and petty inclinations from his role as an elected official.

    • Fascinating post. Leaving aside your strange and somewhat narcissistic concern about the Mayor not giving sufficient thanks to the “Council Subcommittee” which presumably means Councilwoman Fisher, and your classless objection to Mayor Bhalla noting Mayor Zimmer’s role, can you answer a few questions so the rest of us can better understand the new deal and how it is so much better than the one Mayor Zimmer proposed?

      1. What is the amount paid each year to Suez to manage the system? If it goes up each year what is the percentage increase.

      2. What is the total amount of arrears and how is it being paid. If interest is being charged, what is the rate? If it is being paid over the 15 year life of the contract, how much will that come to each year, including principle and interest.

      3. Will the new water utility incur any costs? Will it have any paid personnel? What safeguards are in place to prevent it from becoming a patronage mill?

      4. Has the City committed to hiring Suez to do the capital improvements rather than bid them out as under Zimmer’s proposed agreement? If so, what safeguards are in place to ensure the projects are competitively priced by Suez.

      6. What are the anticipated annual costs that will be incurred by the utility, including Suez’s annual fee, emergency repairs costs, capital improvement costs, arrears plus interest, bulk water costs, personnel or other costs not covered by Suez if any, and anything else I may have left out that you are aware of.

      What are the current annual water revenues?

      7. Will increases in water rates be needed to fully fund the system? If so, please provide a schedule of the projected increases needed to full the system to cover the anticipated costs.

      Once you’ve answered these questions it will be possible to compare the two deals in an honest and analytic way. That will also give us an idea whether or not Councilwoman Fisher deserves our thanks or not.

  4. The total revenue for Hoboken water services is currently at around $9 million per year. The cost of the water is around $4 million per year. That leaves $5 million or so for Hoboken and Suez to divvy up. The old deal pre Zimmer only required Suez to pony up $350k a year and keep the rest. That deal totally sucked. Everyone agrees.

    Delayed Debt Dawn knew about the accumulation of liabilities in excess of $10 million with Suez in the old contract and failed to report them to bond holders. These liabilities did not need to be on the books but they certainly could have been footnoted in Emma reports. Contingent liabilities such as Angel Alicea’s lawsuit were listed but not Suez. Some in the world of finance world might actually call that bond fraud as a potential $10 million liability is actually a material concern in a $100 million a year budget. But no, CrossdressisStan insisted that they were double secret liabilities that did not need to be mentioned.

    Zimmer came up with a better deal than the prior one but it also increased rates and the rate payers because Dingbat Dithering Delayed Decisison Doofus Dawn negotiated with one hand behind her back (exclusivity with Suez) and got Hoboken something like $1.7 million per annum. However that included rate increases because politically Dawn did not want it to be a tax but a usage fee. The City Council rejected that deal because it was not good enough and because she was witholding information or too incompetent to convey it properly. That would include her Shadow too.

    With support of Mayor Bhalla the City Council put out to bid our water services and as a result it brought Suez back to the table to get an even better deal. Highlights of the new deal are. The revenue is still $9 million or so per year, Water still costs $4 million per year. The rest of the money is only $2 million to Suez and $3 million to Hoboken. $2 million will go to infrastructure and $1 million will go to that Dawn of The Debt repayments for her dithering delays. Simply put it’s a better deal and no credit should have went to Zimmer. Ravi was just trying to butter up Dawn after the Waiters debacle.

    • Councilwoman Tiffanie Fisher went into a lot of the specifics on the vastly improved contract.

      No increases are in other than CPI. But a lot more revenues for Hoboken.

  5. Lane Jr is unstoppable!!! There are 8 years of his blog still there for all the world to read where the former mayor was held up as a model of good government. Anyone making ugly comments about her would soon find himself in the cross-hairs of the blog owner. Now Lane Jr routinely refers to her as nothing more than an unintelligent puppet. Kudos, Lane Jr! You have arrived!

    • Lane Jr copies his ideas from the best role models!!!!! He also worships the great Dave Liebler! He’s using Stawn from Davey Liebs. Lane Jr is a fine judge of talent!

      • Beth Lite.
        Lindaloser and his wife, the lightbulb saleslady hate the fact that Washington St is getting done, The Hilton is being built and SUEZ has to pay us not us pay them.

        Maybe Ravi was the better choice all along? At least he’s not listening to the Shadow.

  6. Looks like the forecast calls for winds of change in the 2nd Ward.
    Southerly gusts of fresh air will displace a 4 year system of hot air that has been sitting in the region for almost 48 months.
    Forecasters are suggesting Bhalla has a candidate ready to blow through any day.

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