Our Response to “The Benefits Of The Sewer Sale For Gloucester Township Residents”

On August 27th, the Gloucester Township website added a page titled “PROPOSED SALE OF THE GLOUCESTER TOWNSHIP SEWER UTILITY SYSTEM BY REFERENDUM.” This page outlines key benefits to persuade residents to vote YES on selling our sewer utility to American Water.

The first thing we noticed is that many promises on the website are contingent upon proper legislation. Even if the referendum passes on November 5th and we sell the sewer utility to American Water, there are still processes that dictate what can and cannot be done with the $143,000,000. The first claim, which involves wiping out our debt, is the only exception as it is required by law in this situation. All other claims would need to be presented to our council and receive approval before proceeding.

For the website to assert that all these claims will be approved by the council suggests a lack of independent thought among council members. How can they assume that all council members will vote YES on all these claims? In a truly functioning legislative branch, our council members should act as individuals who prioritize the best interests of our community, rather than simply aligning with the administration.

Let’s get into the rest of their promises.

I will highlight the content taken from their website in red so you can distinguish their claims from our responses.

There will be a referendum question on the ballot this year asking Gloucester Township voters to approve the sale of the sewer system to New Jersey American Water for $143 MILLION DOLLARS! Outlined below are commitments being made by the Township, should the referendum pass. There will be additional information provided in the coming weeks so voters can make an informed decision in this year’s election.

Residents will receive the following benefits if the referendum passes.

 ELIMINATE ALL TOWNSHIP DEBT estimated at $64 million, reducing approximately $8 million annually in the budget that is currently used for debt service payments
By law, they have to set aside our current debt amount in escrow to make the payments on the $64 million. This money is borrowed with 10-year bonds and cannot be paid off early. This does indeed free up $8 million annually in our budget.

The problem we have with this is that it doesn’t wipe out OUR debt; it wipes out THEIR debt. You may ask, “Isn’t their debt also our debt?” It is! That’s why we have been arguing with them for over a decade to control spending and borrowing. If this sale goes through, they will be off the hook for $64 million, and we will be responsible for ensuring American Water gets back their $143 million and starts making a profit. What lesson does this teach our administration about responsible budgeting if we bail them out?

Not only is American Water paying $143 million to purchase our system, but they are also planning to spend $90 million to upgrade it. That’s $233 million they will have invested in our system. Who knows how long shareholders will want to wait to make a profit on this deal, but with 21,000 ratepayers in Gloucester Township, it will likely take well over 10 years, or we will face astronomical rate hikes. Let’s take a look at some rough math here. (Keep in mind they can’t change the rate at all for the first 2 years, and for the 3 years after that, they can only increase the rate by no more than 9% total.)

The 10-Year Plan: $233,000,000 divided by 120 months (10 years) divided by 21,000 ratepayers = $92 a month ($925 a year more than you pay now). The 20-Year Plan: $233,000,000 divided by 240 months (20 years) divided by 21,000 ratepayers = $46 a month ($370 more than you pay now).

We currently pay essentially $15 a month. I’m not saying this math will play out exactly as in the example I gave, but they are only telling us what rates will be for the first 5 years. Keep in mind, all of their other customers will help pay back their investments, but that also means we will be helping them acquire other municipalities.

They are also going to tell you the Board Of Public Utilities will save you from large increases. If you’ve received an astronomical electric bill this summer, we should remind you that the BPU also limits how much your electric bills can go up.

 USE $35 MILLION TO DECREASE AND FREEZE LOCAL PROPERY TAX RATES OVER THE NEXT FIVE YEARS.
How much are they going to lower our taxes? They didn’t specify a number in this list of hypothetical promises, so will it be enough to offset our new sewer bill costs? At one meeting, Council President Mercado stated he would push for an 18-cent decrease. On a $250,000 appraised home, that should be around $450 a year. If American Water doesn’t want to make a profit for 20 years, then you will have saved $80 a year (on a $250,000 house). That’s a lot of things happening to save us a measly $80 a year. I guess the folks with much larger houses will benefit a lot more than most.

 GUARANTEED CONTINUED EMPLOYMENT FOR ALL SEWER EMPLOYEES WITH THE TOWNSHIP in the Public Works Department with the same pay, benefits and union status currently in place, or the choice to pursue employment with New Jersey American Water, if desired
The township finally addressed their workers’ concerns after keeping them in limbo for over a year. Thankfully, the workers have union representation to look out for them. The guarantee is that NJAW will keep the current Sewer Utility employees employed for at least 6 months. A recent agreement also gave workers the ability to continue working for GT Public Works. Hopefully, we don’t end up with more employees needing jobs than there are open positions. It doesn’t really make sense to have skilled MUA workers doing jobs they are overqualified for. If we are keeping them around to do “free sewer cleanouts,” it’s no longer free because we are paying for them to stay with GT and also paying NJAW for the rest of the service.

 FREE SEWER LATERAL CLEANOUTS for all Gloucester Township residents 24/7, 365 days a year
For how long? Is this a guarantee? You’ve lied to us before. Will this conflict with anything owned by NJAW? If all former MUA employees go to NJAW, does that mean we will have to hire more employees to perform this work?

 RECREATION ENHANCEMENT PROGRAM setting aside $10 – 15 million to fund recreational projects for all age groups through an application process
This initiative didn’t start off well. Gloucester Township is a big sports community with many participants. Winning over the coaches and parents could secure a significant number of supporters for the sale. Their intention to do so was evident when several voicemails were sent out to the heads of our recreational programs.

We aren’t neglecting our children’s needs, but promising $10–$15 million for recreation after a major sale to get us out of debt seems irresponsible. Why not explore grants and sponsorships for our recreational programs? These recreational entities are non-profit organizations, so they have the ability to raise funds for their needs.

Additionally, if we spend $10–$15 million on new recreational facilities, we’ll also have to maintain them. We can’t restrict who uses them, so the more we expand, the more outsiders will come in to use our services.

 EXPAND SENIOR CITIZENS AND ARTS/CULTURAL ACTIVITIES throughout Gloucester Township
What our seniors need is a break! They are on fixed incomes and shouldn’t have to spend more on sewer service. While they already benefit from a tax freeze, the discount they will receive from NJAW won’t be as significant. This proposal seems like fluff. Ask any seniors you know if they are in need of more activities.

 POLICE AND FIRST RESPONDERS funding to be made available for support apparatus and other assistance
They always like to throw in public safety to tug at your heartstrings. It’s been a winning strategy for them for a long time. “You don’t want to be unsafe, do you?” We’ve heard this argument forever. Our police force is doing fine, and many of their large purchases are funded by state grants.

Our fire departments manage their own budgets and our EMS was already outsourced.

Approval of the sewer system sale referendum in the November election will allow Gloucester Township to accomplish all the above goals and commitments.

Approving the sale is nothing more than a bailout for an administration that has proven incapable of managing a budget. This issue didn’t arise overnight. Residents of Gloucester Township have been criticizing their budgeting, spending, and borrowing practices for over a decade. It’s time to hold them accountable for their inefficiencies by voting NO.