The $100 million sale of Trenton Water Works infrastructure in Ewing, Hopewell, Lawrence, and Hamilton townships to New Jersey American Water was assaulted by a united front of public officials and residents on Wednesday at Hamilton Township's Municipal Building.
A major sticking point for the criticism was how the City of Trenton has sapped millions of dollars in what was erroneously called "surplus" out of the Trenton Water Works budget and used it to fill budget gaps in other non-water related areas of the city's services.
"This constituted a fraudulent act, and a misappropriation of funds," said Lawrence Planning Board official Falk Engel.
That money should have been used to maintain the water utility's infrastructure, Mr. Engel said, which would have offset the emergence of a need to sell off the outside infrastructure to generate a one-time infusion of funds to maintain and upgrade pipes and equipment within the city.
Instead, the city took more than the 5 percent of the utility's revenue allowed by law and used it repeatedly, to the tune of $9 million, to plug budget holes.
Other municipal officials like Ewing Mayor Jack Ball also attacked the deal, calling it double-jeopardy for suburban residents faced with being forced to pay for the water utility sale and then pay for New Jersey American Water's alleged need in upgrading infrastructure, after illegally shelling out so much to shore up the city's finances.
"All four mayors are vehemently opposed to the sale," Mayor Ball said.
A lone lawyer represented the City of Trenton at the meeting, and both he and a lawyer for New Jersey American Water threatened the suburban townships with 40 percent rate hikes, should the deal not go through, compared with a 36 percent increase should the deal go through, as proposed.
Both lawyers also said the deal would shore up Trenton's finances and result in increased "revitalization" and residential and commercial development.
Trenton City officials were conspicuously absent, and only one Trenton resident, Patricia Stewart, spoke at the meeting.
She said she was totally against the deal and had visions of a future of bake sales at City Hall, should the city sell off one of its last remaining revenue-generating assets.
The City of Trenton was attacked as an organization repeatedly at the meeting, as municipal officials complained of denied Open Public Records Act requests and being kept totally in the dark about the entire process.
One official said Mayor Douglas H. Palmer and City Attorney Denise Lyles avoided communication about the deal, and that an acting City Clerk denied a public records request regarding public bids for the infrastructure.
"I have never heard of a public bid not being available for public review," said the official.
Thursday, July 24, 2008
Water deal draws ire of many
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The $9 million is only part of what the City has misappropriated. As noted in Mr. Guhl's 2004 letter to the NJBPU , known and blatant gross misappropriations have occurred as far back as 2002. These include about $1.75 of funds transferred from the Water Utility to the City for services never render to the Water Utility by the Fire Department. A similar transfer occurred one year for non-existent services rendered by the Street Division. These alone total $2 million.
While payment for valid services rendered by other City agencies to the Water Utility is allowed by statute, the value or cost of those services should be based upon reasonable and justifiable factors. The City has taken less obvious actions to further drain Water Utility funds for other than Water Utility purposes. The City has done this by disproportionately allocated costs to the Water Utility for various units within City government. Examples of this are the disproportionate amounts paid for the Department of Public Works, the Law Department, the Purchasing Office, and the Division of Information Technology among others.
In total these misappropriations could easily equal the more visible $9 million dollars now getting the headlines.
As with the $9 million, if these funds were not spent for non-utility purposes the need for a rate increase by the City would be far less likely.
It was pointed out that, in one year, the 5% statutory limitation of fund transfers from the Water Utility to the City would have resulted in a transfer of $1.5 million. That would mean that the Water Utility spent about $30 million. At no time has it been noted that the Water Utility is not collecting at least an equal amount. If an equal or greater amount is being collected, that would mean that current rates generate about $30 million.
The City's proposed and threatened rate increase would then generate an additional $12 million. As often repeated by Palmer Administration Officials, the primary need of these monies is to cover the borrowing costs for the $80 plus million capital improvement projects. But even if that total approaches $100 million, the annual cost of borrowing the $100 million would only be about $6 million, half of the proposed increase in revenues that a 40% rate increase would generate.
There would be a $6 million surplus generated for a number of years from the 40% rate increase. Based upon recent revelations, customers, and especially Township customers, now know what would happen to those funds.
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