Haddonfield Water Sale: Examining Claims

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Haddonfield residents will vote Tuesday whether to retain local control of the borough water and sewer utility or sell it to a private operator.

By Matt Skoufalos

Haddonfield residents have been sifting through competing literature on the water sale. Credit: Matt Skoufalos.

Haddonfield residents have been sifting through competing literature on the water sale. Credit: Matt Skoufalos.

In June, when Haddonfield resident Deirdre Benjamin addressed the borough government on the proposal to sell its water and sewer infrastructure to private operator New Jersey American Water, she warned them that the deal is “a total tragedy of the commons.”

Four months later, with a town-wide referendum on the sale imminent, she hasn’t backed off her assessment.

Benjamin, a professor of environmental conservation, believes that in addition to foisting the cost of system repairs onto the taxpayers, the hypothetical benefits of selling the locally controlled utility to a private corporation hinges on guarantees the company is unlikely to fulfill.

Absence of evidence

For starters, literature circulated by New Jersey American Water promises $16 million in infrastructure improvements in the first five years of its operations in Haddonfield. Benjamin objects to the vagueness of that claim.

Benjamin is also critical of the rigorousness of the study cited by the borough government as evidence of the dilapidation of the Haddonfield water infrastructure. The report, prepared by local engineers Remington and Vernick, only claims to provide “preliminary information to evaluate the condition of the existing infrastructure,” and cautions that its findings are only meant as a starting point for decision-making.

“We haven’t seen a detailed study, where they put cameras down every pipe,” Benjamin said. “I can dig up any infrastructure and there’s going to be corroding pipes, but you wouldn’t just sell my house because you think there’s going to be a corroding pipe. It’s a water system; there’s going to be problems.”

“They can say all this stuff, but we’ve never seen a proposed contract,” she said. “[New Jersey American Water is] going to do the same thing they’re doing now: fix problems when they pop up. They’re not going to just dig up streets to dig them up. Would you just dig up a street to check out the pipes underneath of it?”

Furthermore, Benjamin said she is troubled by the lack of data regarding the specific number of service calls to the borough water department, and questioned whether those incidents have been trumped up by elected officials in their push for the sale.

“We want to know how many times people have called about water problems, about service to their houses,” she said. “We also asked [commissioners]for how many times people had to wait for someone to come out to their house.”

Haddonfield resident Deirdre Benjamin called the potential sale 'a tragedy of the commons,' and encouraged the town to vote against it. Credit: Matt Skoufalos.

Haddonfield resident Deirdre Benjamin called the potential sale ‘a tragedy of the commons,’ and encouraged the town to vote against it. Credit: Matt Skoufalos.

‘These guys are going to lose their jobs’

The absence of borough public works employees from townhall meetings about the water sale is also telling, Benjamin said.

She said that such staffers are likely to lose their jobs if the sale goes through, and any reports of them interviewing for positions at New Jersey American Water are “part of the mystique that this [deal]should be done.

“[Commissioners] never brought any of those guys to the meetings for them to say, ‘Hey guys, it’s really bad,’” Benjamin said, “because those guys are going to lose their jobs.”

Most problematic from a practical standpoint, Benjamin said, is that borough residents have no useful basis of comparison with which to measure the projected future rates after the sale. New Jersey American Water has promised a three-year rate freeze at current rates, but has shied away from any estimations beyond that.

“They still will not propose it, and it’s still not going to be out until after the three-year rate freeze,” Benjamin said. “At that point what are you going to say? You’ve already sold your water system.”

Evaluations from the nonprofit Food and Water Watch policy group have outright torpedoed the borough’s numbers, claiming that “privatization will cost the typical household more than an extra $8,200, or more than $4,300 in constant 2014 dollars.”

Even comparing the projected rates in Haddonfield with those of another community, like next-door Cherry Hill, isn’t useful, Benjamin said, because New Jersey American Water has said that part of the fees will be based upon the condition of the local infrastructure, which she again believes has never been substantively surveyed.

Prices could also increase for water that’s pumped in from the Delaware River—which requires extra processing to sterilize—and not from the local aquifer. With no way to identify the source of the water provided to Haddonfield customers, residents could theoretically be billed at a higher rate, Benjamin said.

That would mean that the cost of the repairs could be coming out of taxpayers’ pockets, just in another form—and it doesn’t necessarily have to. Even according to Haddonfield Commissioner John Moscatelli’s projections, Benjamin said, the rates paid by Haddonfield residents under a borough-operated water and sewer system start to diverge from those in a system operated by New Jersey American Water around 2040.

“We can still fix this system and it will be an asset,” she said. “It might not be until 2060, but I have a three-, a four-, and a five-year-old. In 2060, they’ll still be around.”

Haddonfield mayor Jeffrey Kasko. Credit: Matt Skoufalos.

Haddonfield mayor Jeffrey Kasko. Credit: Matt Skoufalos.

Rebuttal

When invited to address Benjamin’s criticisms, Haddonfield Mayor Jeffrey Kasko was frank in his responses.

For starters, he didn’t back away from the likelihood that a sale would mean layoffs in the borough public works department.

“I imagine that we’ll have a couple of employees that work in the water and sewer department that we’d no longer need,” Kasko said.

Although the mayor said he’d “been assured” that any such workers would potentially be offered positions at New Jersey American Water, “I don’t know that they can make that process iron-clad, nor can I demand it.”

Neither, Kasko said, could the borough government demand—nor New Jersey American Water promise—that water service to Haddonfield customers be drawn from the local aquifer after the sale.

But he did downplay the likelihood that a significant percentage of the borough drinking water would be sourced from the Delaware River.

“Our water versus Cherry Hill’s water versus Voorhees’ water; I don’t think it’s really significant,” Kasko said. “They tell me that the farther you are from the Delaware, the less likely you are to have water from the Delaware. Two-thirds of it will be from the aquifer from the ground. As long as they operate our wells, they’ll pull the water from here.”

Kasko also defended the findings of the Remington and Vernick study as being valid even if lacking in extensive detail.

“We know what’s on the list for the next five years to be improved,” he said. “We know how much maintenance needs to be done. I don’t have a million dollars to go around and scope every water and sewer main. We have to go on the best information we have, and we have to go with what Remington and Vernick has given us and what they discussed with the citizens committee .”

A New Jersey American Water vehicle parked outside of Haddonfield borough hall. Credit: Matt Skoufalos.

A New Jersey American Water vehicle parked outside of Haddonfield borough hall. Credit: Matt Skoufalos.

‘I think it makes more sense to sell’

As to whether selling the borough infrastructure to New Jersey American Water would guarantee specific repairs, Kasko said the company “looked at what we were planning to possibly do in the next five years, and they are going to follow that blueprint.

“There is a commitment to spend money for the first eight years,” the mayor said. “After that, I don’t have a crystal ball and neither do they.”

Kasko was similarly circumspect in commenting on the financial viability of maintaining local control of the borough water system, even if the cost trends diverge at the 2040-year mark.

“With respect to everyone who’s been involved in trying to make projections, it’s very, very difficult to project out 30 years,” he said.

“We are very close to an environmental and financial catastrophe in the next few years if something happens,” Kasko said. “I think it’s too risky to continue having a very small, very inefficient operation delivering water and taking care of sewage in this town. I think it makes much more sense to sell it to professionals who do this all the time.”

Finally, Kasko sought to refute the claim that the proposed sale is driven strictly by a desire to retire a significant portion of the borough debt service. Instead, he said, the commissioners are trying to make the best of the hand they have been dealt.

“I wish we could keep [the water and sewer system],” the mayor said. “I want to keep it. My gut says I want to keep local control of a small-town utility like this. The financial reality and the operational reality; it’s too overwhelming. We’re looking at hefty, hefty increases and borrowing in the future.”

At the least, the mayor acceded, a negative vote on the referendum would lead local officials to the exploration of alternative solutions, although he said the commissioners had not examined any such possibilities. Different proposals could include leasing the borough water and sewer system to a private controller rather than selling it, or arranging some public-private partnership for its operation.

“I think if that happens, we’ll go back to committee,” Kasko said. “It’s fair to assume there are other options to look at.”

But to a potential service provider who would take on the challenges associated with leasing the antiquated local water system rather than buying it outright, he said, “we’re going to look a lot less attractive.”

“There’s no perfect solution, and if people want perfection and they’re not happy that we’re going to lose it and sell it, then they should vote no,” Kasko said.

“There are significant benefits for current rate payers in this town, and future ones as well, that make it more affordable in the long term for New Jersey American Water to [manage the borough water system].

“It’s a vital, important service, but municipalities don’t control electricity that comes into your house,” he said. “We don’t control gas. We don’t run cable TV or internet. You do all those things through the private sector.

“Whether you’re for it or against it, this is the wave,” Kasko continued. “Just like those other services you have in your house, this appears to be going the same way. Sometimes you have to be accepting of the change.”

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