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Update: Proposed Ordinance Ties Water Rate Hikes To Suppliers’ Increases, Establishes New Charge

Township Council members Kimberly Francois and James Vassanella react Nov. 28 after a motion they sponsored to remove part of a proposed ordinance was defeated.


Update: The Township Council tabled the ordinance at its public hearing on Dec. 12.

Township Manager Robert Vornlocker suggested the move, saying that he may have a “better way” to keep water rates in synch with rising supplier prices and ensure there is money for needed maintenance and upgrades.

“I took the opportunity over the last two weeks to look into this further and how other towns bill for water, and all of the different other options that we have,” Vornlocker told the council. “I believe I have found a better way to do this.”

“The problem that I have is that that better way will take me much longer than two weeks to sort out because there are 19,000 lines in that Excel spreadsheet that I need to do the analysis on to determine exactly how this will work,” he said. “I’m not going to spring this on you, but I think that it would be wise at this point to table this ordinance amendment and allow me to work on this so there could be a new ordinance introduced in January or early February, which will be in more than enough time to deal with the issues that need to be dealt with.”

The council agreed and voted to table the ordinance.

Original Story: Township water rates would increase whenever supplier rates are hiked, and a new charge created to pay for water system capital improvements under an ordinance that was introduced by the Township Council Nov. 28.

The proposed ordinance elicited some spirited debate among council members, with James Vassanella (D-Ward 5) speaking out against what he considered to be an ill-conceived plan.

The long debate over the ordinance – discussion lasted about an hour – and the questions council members asked was proof that the ordinance was not ready for prime-time, Vassanella argued.

But in the end, his was the lone “no” vote cast, as council members agreed that the plan was transparent, fair to township rate-payers and would guarantee that the township’s water infrastructure would be maintained.

The ordinance only affects those who are on public water, households with wells would not be affected because they do not use public water.

The plan has been kicking around for about three years. Should the ordinance be adopted, future water bills would be increased whenever one of the township’s water suppliers – New Brunswick, East Brunswick and New Jersey American Water – hikes what it charges the  township.

The ordinance also authorizes what’s called a “Distribution System Investment Charge,” which would be used to pay for capital improvements to the water utility. The charge would be calculated based on individual rate payers’ total water usage during the quarter in which it is being considered, according to the ordinance.

The DSIC would have to be approved through an ordinance. That aspect was part of the discussion; the ordinance as originally presented to the council did not specify that, and it was assumed that the council could approve the hike in fees with just a resolution.

But township attorney Lou Rainone told the council that approving the ordinance as originally presented could leave the township open to a legal challenge.

“My problem is you’re creating an ordinance that creates a mechanism by which you raise rates every year by resolution,” he said. “That’s a problem.”

Rainone said he would have no problem if language was included that the DSIC had to be approved by an ordinance whenever it was needed.

Language was also added establishing the quarter in which the DSIC was proposed as the baseline for water consumption calculations.

Earlier in the discussion, Vassanella moved that the DSIC portion of the ordinance be removed for further study. That motion, seconded by Councilwoman Kimberly Francois (D-At Large) was defeated.

“The spirit of this is great,” Vassanella said, adding that he did not think the ordinance was “ready for consumption.”

“You don’t write ordinances from the dais,” he said.

The details of the plan “are not clear to any of us,” he said. “I think we should take some time to make sure it’s as tweaked out as possible.”

Township Manager Robert Vornlocker said the ordinance has been through “a number of edits over the past three years to get to this point.”

Township Councilman Ted Chase (D-Ward 1) said the DSIC amounted to a “pay-as-you-go” plan.

The proposal “provides that the charge levied is based on projections” and that the council would “approve projects and costs.”

The proposal is also a better alternative to paying for capital improvements than through bonding, Chase said.

“We should have a means in place to pay for the improvements, and doing it this way saves the taxpayers the interest on bonds,” he said.

The DSIC would only be enacted when the township couldn’t pay for improvements with money on hand, officials said.

The change in how the water rate is calculated came as a result of the township’s desire to avoid rate hike jumps every few years, Mayor Phil Kramer said. The water rate is used to not only pay for the water, but to pay for the water utility’s operations.

Under this plan, he said, “as the cost of the product goes up, the charge is passed on to the consumer.”

Currently, the minimum quarterly water charge for the average household is $56.60. That assumes the use of 10,000 gallons of water as a minimum. If more water is used, the rate is higher.

That charge will increase annually based on a calculation of how much water was purchased from each supplier and the suppliers’ yearly increase, according to the ordinance.

Vassanella was more understanding of that portion of the ordinance, although he acknowledged that rates would rise annually.

“I see the proactive need to increase the per-gallon costs as we get increases,” he said. “I can see the wisdom in automatic increases in that regard.”

The ordinance will have a public hearing and final vote at the council’s Dec. 12 meeting.

 

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