Legislation allowing sale of NJ water systems overhauled

A bill that would make it easier for municipalities to sell their drinking water and sewer systems to private companies got a major overhaul Monday in the state Senate — the measure no longer applies to any sewer systems or to the water system of the state's largest city, Newark.

It also now gives residents of a town 45 days, rather than 20, to get enough signatures to force a public vote on a proposed sale.

The measure attempts to help speed up sales of water systems to for-profit companies by stripping away a mandatory public vote on such deals and reducing oversight of the sale price by the state Board of Public Utilities — two aspects that have drawn intense criticism.

The prime sponsor, Sen. Paul Sarlo, D-Wood-Ridge, said Monday that the bill would help attract private equity to invest in sorely needed upgrades to drinking water systems that have been neglected. He said such infrastructure improvements would not only ensure safe drinking water, but could spur the economy and generate new jobs.

"The folks opposed to this bill are being very negligent by allowing unsafe drinking water systems to continue to exist," Sarlo said.

The bill comes as many municipalities have been weighing whether to make costly investments to upgrade leaky, aging water systems or instead sell them to large for-profit companies.

Water operators are facing a huge bill to maintain aging systems, some of which lose 25 percent of their treated water through leaky pipes and burst mains before it ever reaches customers. The federal Environmental Protection Agency has estimated $4.7 billion worth of work is needed to upgrade transmission and distribution mains in New Jersey at a time when federal and state money for such projects has dwindled.

In North Jersey, Allendale and Ramsey recently considered such sales, though both ultimately decided to keep their systems.

In a story that appeared in The Record on Sunday, critics said they were concerned that the bill cut the public out of the process and could lead to water rate hikes. There is also a concern about the selling off of a natural resource.

On Monday, Newark's sprawling water system, which includes a series of reservoirs in northern New Jersey, was eliminated from the bill's purview. The changes approved on the Senate floor Monday also excluded any municipal sewage systems or regional sewer authorities, such as the Bergen County Utilities Authority, which handles sewage for 47 municipalities.

And before any water system sale, a town's governing body would need to take three votes on the sale with a two-thirds majority approval — including one to select a top bid and another to actually award the contract, Sarlo said.

But the changes didn't silence the bill's critics. They worry the for-profit companies could run up the sales prices knowing the BPU would have to approve rate hikes that recover the entire cost of such sales — inflating water rates. And the sales of these systems would no longer be subject to a public vote unless residents can get enough signatures for a petition to force a vote.

"There's no way we should be passing bills that limit public involvement in water systems — this cuts the public out of the discussion," said Jim Walsh, New Jersey director of Food and Water Watch. "When you sell a system off, the decisions are made in corporate boardrooms where the public has very little control."

Walsh said that, unlike for-profit companies, municipalities don't need to pay property taxes on their infrastructure and can often borrow money at lower interest rates, keeping water rates lower. He said Sarlo should instead push for more public money to help towns make water system upgrades through such devices as a per unit tax on bottled beverages.

Jeff Tittel, director of the Sierra Club's New Jersey chapter, said the environmental advocacy group has serious concerns about privatizing water systems. "Many public systems have problems, but letting something as fundamental as our water supply be controlled by foreign multinational corporations is a big potential problem," he said.

Sarlo said he would not put the Senate bill up for a final vote until the Assembly moves its version of the bill out of committee.

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