Controversial Sale Of Sewer Utility Up For Vote From Gloucester Township Council

GLOUCESTER TOWNSHIP, NJ — Local officials will decide Thursday whether to advance a controversial sale that would privatize Gloucester Township's wastewater services.

During a special meeting, the Township Council are slated to hold a final vote on whether to sell control of the township's wastewater-collection services to New Jersey American Water for $143 million. If the ordinance passes, township residents will vote on whether to approve the transaction during November's General Election.

The Gloucester Township Municipal Utilities Authority (GTMUA) currently manages the township's sewage services. A sale to New Jersey American Water would disband the public entity.

Several residents have blasted the township's efforts to sell its wastewater system, which officials have publicly discussed throughout the year. Critics have advocated for the GTMUA, speculated that the sale will result in higher sewer bills and claimed that the mayor has a conflict of interest.

Mayor David Mayer is New Jersey American Water's director of government affairs. Mayer has not and cannot participate in any discussions of the transaction, according to local officials.

Council members have spoken positively about the prospect of selling the rights to the township's sewage system, saying it would wipe out the municipality's debt of $65 million and bring in a company with access to capital, allowing for quicker repairs and improvements.

Thursday's meeting will include a public hearing on the ordinance to tentatively approve the sale. All present council members passed the measure on first reading during July 8's meeting — James Nash was absent because he was on vacation.

The only other item on Thursday's meeting agenda is a resolution for the council to privately discuss certain matters exempt from public discussion. The resolution will only get a vote if needed, the agenda notes.

If the ordinance passes, township residents would vote Nov. 5 on a ballot question to decide whether to approve the sale. The questions posted on the ordinance reads as follows:

PROPOSAL
“Shall the Township of Gloucester, in the County of Camden, New Jersey, be authorized to sell its wastewater system to New Jersey-American Water Company, Inc. for the sum of one hundred forty-three million dollars ($143,000,000)?”

(options to vote yes or no)

Explanation
If a majority of the legal voters in the Township vote “yes”, the Township of Gloucester will sign an agreement of sale with New Jersey-American Water Company, Inc. for the wastewater system servicing the residents and property owners in the Township in the amount of $143,000,000. This agreement provides that New Jersey-American Water Company, Inc. will provide and maintain all wastewater collection and conveyance services to the existing customers of the Township’s System and will make substantial capital improvements to such System in accordance with the terms of the Agreement of Sale approved by the Township. The service rates to the customers of the Township’s System will be subject to approval by the New Jersey Board of Public Utilities from time to time.

If the council adopts the ordinance on Thursday, the township will submit the ballot question to the Camden County clerk the day after, says Council President Orlando Mercado. The township will then hold public meetings on the referendum in the coming months.

"The statement has been prepared by legal counsel and reviewed and approved by council members," Mercado said of the ballot question at July 8's council meeting. "The mayor has no input with regards to any matters concerning the potential sale."

If the referendum passes, the township and New Jersey American Water will execute the sale. The process typically takes about six months, with a closing estimated for the end of June 2025, Mercado said.

But if the referendum fails, the sale won't happen "unless council decides to commence a new procurement process in the future," Mercado said.

If the acquisition goes through, New Jersey American Water would spend $90 million on the township's wastewater system in a decade, according to its published plan. The company, which is the state's largest water utility, is owned by American Water — the nation's largest publicly traded wastewater-utility company.

Township residents currently pay quarterly bills of $46 per unit per unit — or, per single-family home. New Jersey American Water would collect bills monthly, but rates would remain the same for its first two years of ownership.

The company expects to raise costs by 9 percent over the following three years (5 percent in Year 3 and 2 percent in Years 4 and 5) before raising rates about every 2 to 3 years. New Jersey American Water would need approval from the state Board of Public Utilities to raise rates.

New Jersey American Water projects that Gloucester Township residents would save money through its ownership. But some residents have raised doubts.

"How long would that firm take to make their $143 million back if rates stayed the same?" Erial resident Ray Polidoro asked at July 8's meeting. "Most investors like to make a profit."

The special council meeting begins at 6 p.m. Thursday in the Municipal Building (1261 Chews Landing Rd., Laurel Springs). See the agenda.