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: