A change in the way the Stony Brook Regional Sewerage Authority calculates its shareholders’ debt service will result in a hefty price tag in West Windsor’s 2010 budget — to the tune of $211,000.
The increase comes as a result of a change in the formula used to calculate the debt service owed by each of the seven communities. The new formula, which will stabilize annual payments and make them more predictable, uses a seven-year average flow rate to reapportion the cumulative debt service paid by each town — a formula agreed upon in the amended service contract each town has signed with the SBRSA.
Under the new formula, West Windsor will see an increase of $211,535. “Unfortunately, the timing can’t be worse because of the economy, but you need to know the numbers,” said John Kantorek, the executive director of the SBRSA, who made a presentation to the Township Council on February 1.
The 2010 number, however, will be a “good representative of what your debt service is going to be in the future,” said Kantorek.
The previous formula calculated a debt service adjustment based on flows for that year. The problem was that weather affected the flows of each community differently, meaning the rates fluctuated — sometimes drastically — from year to year. This past year, for example, it was a “wet” year, which means the Princetons paid more and West Windsor paid less.
The SBRSA was established in 1970, and along with West Windsor and the two Princetons, towns that are members of the SBRSA are South Brunswick, Pennington, Hopewell Borough, and Hopewell Township. The SBRSA treats and disposes of wastewater and its byproducts for the participating member municipalities.
There are two components to the annual bill to West Windsor — the base charge and the debt service adjustment (which is seeing the $211,535 increase), which pays for the construction of the facility in the 1970s.
The SBRSA’s overall budget for 2010 decreased by 3.7 percent to $15.23 million. West Windsor’s base charge in 2009 was $2.66 million. That will increase to $2.69 million this year, representing a $35,529 increase.
Because of an increase in flow percentages (due to more usage in the growing community) originally the increase was expected to be $50,614, but the overall budget decrease resulted in a $15,085 decrease in that charge.
“Due to flow percent change, you have seen an increase of $50,614,” explained Kantorek. “But because of the overall budget decrease of $15,085, your net increase is $35,529.”
Added Robert Bartolini, West Windsor’s representative on SBRSA: “You either have more users or some users are using more.”
According to Mayor Shing-Fu Hsueh, the old rate created ups and downs, and thus headaches, for the administration in coming up with the budget each year. “The seven-year average is very stable,” he said. “We want to try to make sure we can make our budget more predictable.”
So, “if there is good news, it’s that “next year there are predictable numbers,” said Bartolini.
In fact, according to Kantorek and Bartolini, the estimated debt service payment for 2011 should be around $200,000, and should be stable until 2022, the last year in which the seven communities will have to make these debt service payments.
Beginning in 2023, the towns will only be required to pay debt service on new projects, like the purchase of new equipment, and no longer on the original costs associated with the SBRSA’s establishment. Bartolini compared this to purchasing a new home and taking out the first mortgage and then later taking out an equity loan with a fluctuating rate. “You got rid of the equity loan, but still have the mortgage,” he explained.
