Jersey City Municipal Utilities Authority
The more
departments, divisions, authorities.... the more patronage...
The more
confusion.... the more corruption....
Current newspaper articles
on problems with other cities MUAs' /// the City Council ordinance
approving a reduced revenue stream from the JC MUA
updated 5/20/2007
SUBSEQUENT
EVENTS
On March 6, 2006, The Authority and the City of Jersey
City entered into an agreement with the North Bergen municipal utilities
Authority and the township of North Bergen to allow North Bergen to use
excess capacity in the Authority's sewer system for a term of 25 years.
The agreement would allow North Bergen to transport sewage through the
Authority's system to Passaic Valley sewage Commission ( PVSC). North
Bergen will pay for improvements to the Authority's pump station and grit
chamber. They will also pay for the cost to connect to the Authority's
system. The Authority will receive an upfront initial fee
of $8,000,000 payable by June 30, 2007. The Authority will also
receive an annual operations and maintenance fee ranging from 4306,500 in
the first year of operations to $988,493 in the twenty-fifth year. It
will take approximately two years to begin operations. North Bergen
will pay the cost of sewage treatment directly to PVSC.... (
page 52 of the audit report..)
Translation..... North Bergen got a sweet-heart deal at the expense of the JC ratepayers/taxpayers. The $8 Million fee is a small fraction of the $1,791 per dwelling unit in North Bergen which number in the thousands. In addition, I question the excess sewage capacity when during heavy rainfalls the sewer lines are clogged with rainwater and sewage backs up in people's homes in Jersey City! Also what about capacity for the planned development in the Greenville Yards/ Hackensack River areas? In a few short years, will Jersey City's growth be stunted by this deal?? The big question people have been asking for years, is when is the City going to FIX the sewage back-up / flooding problems throughout the city. It's getting worse.... The word is out that many banks will not give mortgages to houses that have wet basements!
Join the new JCSOS@yahoogroups.com and get in the know about these issues...
FYI.... In addition to the $250 million of debt owed by the JC MUA, and ultimately the JC taxpayers since the city guarantees $183 million of that debt, the city has $606 Million of additional debt..... Concerned about getting those sewers fixed? You should be....
Recap of the financial condition of the JC MUA... not a pretty picture...
| YEAR |
Water & Sewer annual rate increases |
JC MUA Profit / ( Loss ) for the year... |
Retained Earnings/ Fund Equities or ( LOSS ) |
Retained Earnings/ Fund Equities or ( LOSS ) |
TOTAL DEBT $$$$$$$$ |
| WATER FUND | SEWER FUND | ||||
|
1998 |
8 % | ( $ 6,407,331) | ($744,714) | $34,380,095 | |
|
1999 |
8 % |
( $ 8,785,622) | ($7,423,181) | $32,272,940 | $168,320,897 |
|
2000 |
8 % |
( $ 6,257,409) | ($11,322,671) | $29,915,021 | $158,087,231 |
|
2001 |
0 % |
( $ 9,257,969) | ($18,039,060) | $27,373,441 | $175,721,225 |
|
2002 |
0 % |
( $ 8,918,553) |
($23,488,890) | $23,904,718 | $166,000,816 |
|
2003 |
8.8 % |
( $ 8,454,846) |
($27,688,392) | $44,986,089 | $241,075,563 |
|
2004 |
0 % |
( $ 8,720,714) |
($30,329,070) | $38,906,053 | $249,201,839 |
| 2005 | 15 % | ( $5,479,020) | ($31,441,398) | $34,539,361 | $249,543,863 |
| 2006 | 3.75 % | ||||
| 2007 |
3.7 % |
|
The JC MUA's year-end is December 31st. Sources of the annual financial data are the audited annual reports done on the JC MUA by Donohue, Gironda & Doria CPAs' from Bayonne NJ. They also prepare the audit for the City of Jersey City. Prior to former Mayor Bret Schundler the city's auditors were KPMG LLP and Deloitte LLP ( Big 4 CPA firms).
**********************
In the spring of 2004, Mark Curtis
Esq., the former attorney for the JC MUA in consultation with the former Director of Finance Jennifer Bloom and with the
MUA board's approval
hired RGL,
Forensic Accountants and Consultants. Their assignment was to review the current operations
of the water billing process United Water Jersey City provides the JC Municipal Utility Authority.
Schundler had revised the JCMUA contract with United Water in January 2000.
RGL's findings in their report was
issued in May 2004.
click>
PDF file of this 48 page report.
The MUA pays United Water more than $8 million a
year to run the city's water system, maintaining everything from the Boonton
Reservoir to the aqueducts and water mains that carry the water to the meters in
individual households.
Excerpts from the report:
I. United NJ and its affiliated company United Hoboken have diverted JCMUA
water resources and perhaps other resources for its own benefit without properly
compensating the JCMUA. ...page 2
II. United JC has been deficient in its oversight and enforcement of
JCMUA's wholesale water contracts with bulk water contractors....page 3
V. 1. The underpayment by United NJ for water transactions in 2003 total
approximately $717,000 plus an additional $216,000 of underpaid water deliveries
occurring in 2000 and 2002. United NJ owes JCMUA a total of $933,000
before interest is added for underpayments related to Bulk Water deliveries.....page
6
V 2. JCMUA supplies Hoboken their water. The report goes on
to highlight the sweet heart deal Hoboken has including no minimum water
purchases unlike JCMUA's other 4 bulk water customers/towns.. In addition, Hoboken
pays the lowest price for water and has 60 days to pay unlike the 45 days the
other 4 customers have. The report describes the "wheeling" of
excess water through the Hoboken system to other customers/systems that
have no direct connection to the JCMUA. Hoboken gets a cheap price and
United Water sells their excess water to other systems at our expense...Sounds
to me they're describing United Water is siphoning off our water through Hoboken
and pocketing the extra cash. During 2002 United JC supplied United Hoboken 58 MG
(water) free of any charge. During 2003 an additional 5 MG was supplied
without charge to United Hoboken...... These two transactions
represent $70,000 in lost water sales..... page 7
V 3. Lyndhurst ---- During 2003 United JC
under-billed Lyndhurst $127,000 in Bulk Water....page 8
Under-payments for United affiliates for bulk water deliveries have occurred
in each of the contract years reviewed 2000, 2001, 2002, and 2003. (
United Water has had the contract since 1998.) The levels of
under-payments are significant in amount and aggregate $1,004,000 before
adjustments for accrued interest.... page 17
BULK WATER SALES CONCLUSION: United JC has diverted JCMUA assets
without compensating the JCMUA.
RETAIL WATER BILLING SERVICES:
IV. The Billing Process has serious, if not fatal, flaws of operations from the
acquisition of customer information, through the meter reading, and billing of
water and sewer revenues.....
1. There is a systematic and fundamental problem in the
process for adding or charging new accounts for water services in the JCMUA
service area. .... page 4
450 accounts had ZERO billing even though the buildings were occupied and being served water and sewer services. These found properties included all types of structures including single and multi-family residential dwellings, commercial businesses, and public properties including a state hospital and a cemetery...... between $270,000 and $675,000 (annually) is not being billed and collected from these accounts.... page 11
RGL did a computer match
between JCMUA's customer records and the city's property tax records.
After adjusting for vacant lots that are taxed but don't use water, they found
4,600 more buildings on the tax rolls than water customers! What these
people don't take showers or flush the toilet??? Assuming
most found buildings are served water and sewer, un-billed revenues could
produce revenues in the range of $1.5 million in the most conservative estimate
of all parcels being single family dwellings to $5.5 Million of yearly income
assuming a mix of multi-family dwellings, commercial and industrial
customers. These estimates are estimates and the actual could be higher
than the estimates..... page 12
f. The prospect that 4,600 buildings have been constructed within
the City and not been included by United JC in the Water and Sewer billings
database is shocking to contemplate and alarming.... page 13
New housing developments in the City are not being included in the water
and sewer billings database and accordingly, the City is supplying free water
and/of sewer services..... page 12 (It's not enough they're getting
cheap tax abatements but now also water while the paying customers see constant
massive increases.)
We recommend the appointment of an independent monitor to observe all
aspects of the United JC Operations Contract until a through review and
evaluation of the services provided JCMUA are fully evaluated..... United
JC should pay for the cost of the independent monitor. The report
goes on to discuss the problems the City of Atlanta had with United Water.
Atlanta eventually fired United Water and killed the contract.... page 19
We recommend that JCMUA bring in a team of skilled utility system operators to assemble a seamless new customer accounts process. .... RGL also recommends 2 service providers to provide a team of experienced water system professionals. The recommendations included San Jose Water Company or Itron. Itron has past experience with the City of Philadelphia. ... page 20
________________________________________________
So what was the response from the JCMUA board???..... Ignore the report ! The auditor & author of the report flew in from San Francisco to meet with the board at one of their meetings. The board's response was to adjourn the meeting and go into closed session. Shortly thereafter they fired Mark Curtis Esq. and Jennifer Bloom.
In April 2005, the JCMUA board had no problem passing a 15% water & sewer rate increase plus about 200% increase in the monthly meter equipment. The increases were retroactive to January 1st. These increases follows numerous others including an 8.8% increase in 2003... See the chart below for the non-stop operating losses and rate increases.
The report point blank recommends an
investigation by the County Prosecutor's office. Personally I've never heard them ever
doing a white collar crime investigation especially on this scale. They
have their hands full investigating all the JC homicides! As for the
state, they're worthless. I've called and been passed along to 5 different
departments under the Attorney General's office... It's an election year
and the Democrats can't afford any more scandals.... The 2 top issues in the
Governor's election are property taxes and corruption..... This is Jersey
City's ENRON.... The victims are the residents of Jersey City who pay for
water...
Soon it'll cost $10 to take a shower in Jersey City!
To make matter worse, in September
2005, the JC City Council adopted ordinance 05-106, approving a
reduced revenue stream from the JC MUA! click
> PDF copy of the ordinance.
The
revenue from the JC MUA, our water & sewer payments, drop from $14 million
to $7 million in five years! Look around at all the new condo developments
in the city coming on-line now let alone in the next 5 years and we'll be collecting less!
Our only hope is an investigation by
US Attorney Christopher Christie.... He's located at:
US Attorney's Office 970 Broad Street, Room 700, Newark, NJ 07102...
973-645-2700
We need your help! Contact
Christopher Christie and demand an investigation!
history........
In February 1998, former Mayor Bret Schundler formed the Municipal Utilities Authority from the defunct JC Sewage Authority with the promise of improved service, and fiscal savings through streamlined services. None of it materialized. "While the administration officials have promoted the MUA as a way to streamline services, the ordinance.. has left the city with two agencies with state authorization to handle solid waste" the MUA and the JC Incinerator Authority (JJ 11/27/97). " Prior to the reorganization of the Authority, the City operated its water system as a utility within the City's budget. The City determined that it was in the best interest of the users of the water system for the Authority to operate both the sewage system and the water system, creating economies for both systems." (from the December 1999 and 1998 audited financial statements, page 11)
Within weeks of the MUA formation, April 1998, Schundler bonded $36 Million through the MUA to plug his FYE 98 budget, which ended in June 1998! Schundler financed the 10-year bonds through a 42% increase in water and sewer bills, 8% annually in the early years, 25% in the first 3 years, paid by JC ratepayers,! So much for Schundler's promise of no rate increases for five years when he promoted the sale of the City's water to United Water in 1996…. The real reason he set-up the MUA was as an "autonomous agency", the MUA has unlimited bonding capacity whereas the city at that time was way over their limit/cap. The city had about $700 million in debt prior to the MUA's bonding.
As explained by former Business Administrator Rob Lombard in a JJ article dated 11/25/97 when the MUA was being voted on "'This is a way of realizing long term stability for property taxes in the city by raising water rates every year.".. Former City Council President Thomas DeGise ( now Hudson County Exec ) defended the 10-year plan that sees a privatized, MUA-administered water utility as the city's new cash cow. "It's more democratic than a tax increase,' DeGise said."
The "democratic" DeGise is referring to is that tax abated properties will also pay the increase as opposed to only the small businesses and 1 to 4 family homeowners always picking up the tab with tax increases. Property taxes are tax deductible, which is not the case for water & sewer bills unless you're a multiple family with rental income.
State legislation had been introduced by Assemblymen Joseph Doria and Paul DiGaetano and passed by the Assembly in February 1999 to disallow the bonding within MUA's to plug a municipal operating deficit, like what Schundler did. It stalled in the Republican controlled Senate's Community and Urban Affairs Committee… Even with the plug of a net $31 million of bonding ( $5 million went to the bond counsel, auditors & investment bankers) , municipal taxes went up 15% and water & sewer bills went up 8% in 1998!
For the 1995 and 1996 FYE budgets, Schundler took the JC Sewage Authority's $15 million reserve for repairs and plugged the funds into his general operating budget deficits. Since the JC Sewage Authority was an autonomous authority, the $15 million reserve should have been refunded to the ratepayers of JC or used to repair the 100 year old system. So as to appear legal, the City sold the CATCHBASINS and NEWPORT SEWER SYSTEM to the MUA for the $15 Million! Of course the MUA has no staff to clean the catchbasins and you can gag from the sewer stench while standing on a corner waiting for the light and this is on Grove Street, a major commercial street....The Authority should never have approved the transfer of the $15 Million which was and still is desperately needed for repairs to the 100 year old, combined sewer/rainstorm system. But most of the sewage authority board members were city employees, a consistent Schundler tactic. This system is a combined storm and sanitary sewer lines that dates from the 19th century in many parts of the City.
Even with the $15 million plug, municipal taxes went up 51% in 1995 and in October 1996 the City had to authorize $11 million in bonds for needed capital repairs. The City also ended the 1995 year $ 8.6 MILLION in the red, against state municipal law. In other words, Schundler overspent the city's budget by $8.6 million.
In May 1998, Schundler signed a 5 year deal to have United Water Company operate and manage the city's water system. Prior to it's take-over by United Water, the JC Water Department and Sewage Authority made about a $2 Million profit annually. Schundler promoted the sale by saying the improved collection management would guarantee no rate increase for the next five years! By 1998, see above, they raised rates 42% over the next ten years and the MUA is broke! After the sale, many residents got exorbitant water bills and many went into lien.
Schundler stated that the City would realize $38.5 million from the sale. On the Mayor's web site in May 2001 the numbers are even better: In his article Turning Cities' "Liquid" Assets Into Cash! by Mayor Bret Schundler, "Over the five year term of our contract, United Water is guaranteeing the City a minimum of $19 million in surplus water sales (actual $7,884,678 in 2000), $16 million in operational savings (NONE), and $2.5 million in up-front concession fees (that he got of course to plug his budget deficit). Through stanching water leakage and improving billing and collections, United Water further projects $20 million to $35 million of additional future economic benefits to the City and our local sewerage authority, for which the municipal water utility does billing and bill collection (hasn't materialized. From the report above, seems like United Water is helping themselves to our water. The billing system is horrendous and never seems to improve. ). Add it up and the total economic benefit to our citizens should fall between $58 million and $73 million over five years -- or as much as $14 million per year! (they're behind by $42 Million @ Dec 2000). " The litany of benefits continues, "United Water is promising the city's Municipal Utilities Authority $145 million in savings and revenue if it agrees to add an additional 10 years to the current contract" (JJ 10/21/98). .... (They got the contract & we got nothing.)
The audited financials show a measly Bulk Water revenue increase from 1998 to 2000 of $787,741 and no decrease in operating expenses... Now bonding debt & expenses, legal fees etc, that's another issue... all up!
The audited financial statements of the MUA show a LOSS for 2000 of $6,257,409, a LOSS for 1999 of $8,785,622 and a LOSS for 1998 of $6,407,331, the first 3 years of operation!!! This is with ANNUAL 8% water & sewer rate increases, 25% rate increase through 2000!!!! (42% increases budgeted over 10 years!- see the chart below...)
Prior to Bret, the Water Department & JC Sewage Authority made a profit of about $2 million/ year, which went into the General Budget.. ... The History above is from my StopBretSchundler.com website which dates back to Feb 2001.