GLOUCESTER TOWNSHIP, NJ — The Gloucester Township Council voted July 8 to accept a bid of $143 million to sell its sewer system even though the deal calls for spending millions of dollars on unnecessary capital work that will drive sewer bills up for no reason. The council also took the action despite being made aware of a “fatal flaw” in the winning bid. 

NJ American Water and Aqua NJ both bid on the sewer system, which serves 30,000. The NJAW bid was $143 million, and it pledged $90 million in capital improvements. The Aqua bid was $52 million with a pledge of $25 million for capital improvements. A township five-year capital plan estimated that $21 million in capital improvements are necessary. Corporate utilities like NJAW and Aqua are permitted to make Return on Investment (profit) for every dollar of they spend on capital work. Many see this as a disincentive to moderate costs and as an incentive to steer system planning toward capital solutions rather than toward operations improvements, that are less costly.

“Studies of the Gloucester Township sewer system show that the system is in good working order. This sale to New Jersey American Water is completely unnecessary. Residents will be saddled with massive rate hikes. Investor–owned utilities typically charge 63% more for sewer service than local government utilities,” said South Jersey Food and Water Watch political organizer Kate Delaney. “The fact that Mayor David Mayer works for New Jersey American Water is enormously concerning. Corporate and political interests seem to be trumping what’s best for the public.”

GT resident Dennis Palmer, addressing the council, noted that the NJAW bid should have been deemed “non-responsive” to the township’s Request for Proposal (RFP), the bid document issued by the town. He said it proposed a rate increase that was higher than the 9 percent specified in the RFP. Palmer noted that under NJ bidding laws the township should have rejected the bid.

Other residents who spoke urged the council not to sell the sewer system. Some expressed concerns about rate hikes and the potential loss of local jobs. Others noted that the bid was awarded to NJAW, which submitted the higher of the two bids and that the Mayor of Gloucester Township, David Mayer, is the NJAW Director of Government Affairs. 

A NJAW purchase would also mean that at least half of sewer customers, possibly all, would begin to pay for sewer based on their water consumption. Under township ownership, sewer users pay flat fees determined by the type of connection, e.g. dwelling or business type. Their use of water for pools, a child’s sprinkler, or to water a lawn does not impact their sewer bills. 

“Taxpayers will be reimbursing New Jersey American Water for all or most of the $143 million for purchase price of our sewer system—which we already own! That is ridiculous,” said Gloucester Township resident Denise Coyne. “It is especially galling considering that taxpayers also provided $164 million in tax breaks for American Water’s new building on the Camden waterfront, which cost them $160 million to build.” American Water Works, the parent company of NJAW, is headquartered in Camden. Its subsidiary, NJ American, recently constructed a new facility in Lawnside, which houses an operations center, 20,000 sq.ft. of administrative and office space, and 30,000 sq.ft. of warehouse and garage space. 

“Gloucester Township customers, as well as others in places like Mount Ephraim, Haddonfield, Egg Harbor City, and throughout the NJAW service area, are starting to see how what a bad deal corporate-owned water and sewer is,” said Peggy Gallos, executive director of the Association of Environmental Authorities. “In Pennsylvania, where a big push to privatize has been underway for since 2016, many systems have been acquired. The Commonwealth’s Consumer Advocate has testified that Pennsylvania water and sewer ratepayers have been saddled with $1.1 billion in costs they would not otherwise have borne for “substantially the same service. New Jersey ratepayers should pay attention.”

“This Council unanimously voted to overspend and over borrow, putting us $65 million in debt despite residents pleading meeting after meeting for them not to. Giving this Council and administration $143 million would be like giving a person with a gambling addiction a lottery win. The money will disappear, and we will end up right back where we are with higher sewer bills forever. We need real change to fix the problems that got us here,” Ms. Coyne added. 

Residents attending the meeting also asked about American Water’s connection to the recently indicted Democratic party boss, George Norcross. American Water received a $164 million tax break to build their $160 million headquarters in Camden. Attorney Phil Norcross, also recently indicted, serves as the lobbyist for New Jersey American Water.