I am thankful that my colleagues and our borough’s long-time advisers have secured a real alternative to the increasing costs of operating our aging water system through a sale to New Jersey American Water. With millions in capital projects needed and only a small pool of residents and businesses to spread them across, our professionals predict that our already higher rates could nearly double in the next decade.
But that’s not the whole story, as a sale of our water system will also bring the Borough between two and three times what we collect each year in taxes for all municipal services. By allocating that $6.4 million purchase price to paying off all our town’s debt, we have the opportunity as a community to consider significant tax relief and invest in other pressing community priorities without the need for new taxes.
When we look at the future of Hopewell’s water system, we can’t separate the cost of ownership from the broader benefits this sale offers. It’s not just about water rates. It’s about the long-term financial health and opportunities of our entire community.
While we’ve been publicly pursuing this option since I was sworn in as mayor nearly two years ago, recently I’ve been asked about the impact of “pausing” for more review or to negotiate a better deal. Let me be clear: delaying another year to try to dig up or develop a reason not to sell comes at a significant cost to our community.
Each day that we keep the system, we cumulatively pay more for water: money that we will never get back. Even more than lower cost for water, we need to consider approximately $1 million in avoided annual debt payments that come from the sale.
Each year of a “pause” means another year of using a million of your tax dollars for debt, rather than returning it to you or using it for other community priorities without new taxes. With the added water costs that amounts to more than $3,000 per day. $102,000 per month, gone. That’s before we have to raise our rates further and assumes we don’t start investing in our water system. And the next deal likely won’t be better because we’ll have more debt to pay off with the proceeds.
Replacing our water storage system and the water main on West Broad Street are two major priorities costing about $2M and $2.1M, respectfully, that are planned for the next two years. If we “pause” and do that work, we pay for it, our debt increases, and then we have to pay off that new debt in a future sale — without any real expectation of an increased purchase price. So the pause really could cost us more than $3M for a year. More than $6M for two years. And counting.
Second, a “pause” directly impacts the grant we have been awarded for restoring/remediating wells Nos. 4 and 6 for PFOS. While the borough carefully confirmed initial design costs are not at risk, after actual construction starts, we would likely have to pay back that money when we “unpause” costing us millions.
Adding it all up, the entire sale proceeds could be wiped out unless we “pause” essential improvements to the system — and even if we did, still cost us more than $100,000 per month. (And for the grants themselves, while securing them was a monumental achievement — it covers only a fraction of our needed repairs, and “independence” from outside water purchases doesn’t save us much: our already higher rates are projected to increase another 25% after we achieve it).
In our May and September town hall meetings (recordings available on the borough website), we outlined how we can use some of that $1.2M savings to continue to subsidize the residents who will pay slightly more after the sale (the biggest increase is about $11/month, assuming the resident doesn’t qualify for need based assistance and possibly pay less than they do now).
Adding that all up for everyone combined, the total amount of increase amounts to about $10,000 — in my mind, an excellent use of a fraction of the more than $1.2MM in our total first year savings. Additionally, while our planner has confirmed there is no connection between the sale and additional development in or around our town (just as there been none over the two decades that NJAW has already had mains and service east and south of the borough), I personally will be advocating for using some of that savings to further invest in our open space green belt.
For the past two years, each incremental step has been posted online, emailed and even sent via postcard to our community. And now on Nov. 4, borough voters will have the chance to decide at the ballot box. A yes vote means historic financial benefit for our town, which we as a community can decide to apply to tax relief, open space purchases, our parks or other priorities.
A no vote, even just to “pause” for another year, will cost us all between $1.2 and 3.2 million dollars, much of which we will never get back. That’s more than $100,000 a month. Every month. And counting.
Ryan Kennedy is the mayor of Hopewell Borough. The opinions expressed are his own as a borough resident, ratepayer and taxpayer.
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