CITY OF HOBOKEN, NJ
DESCRIPTION OF PARTNERSHIP ARRANGEMENT
Hoboken operated its own water system for more than 100 years. Time took a toll on its infrastructure, regulations became more costly and a lack of an on-going capital improvement program left the system with an $800,000 a year deficit. In order to break even a rate increase of 35% would have been needed in one year. Increasing personnel costs, replacement of outdated equipment and implementing a capital improvement program would have required significant double digit rate increases each year well into the next millennium. Hoboken, while recognizing the serious problem facing its Water Utility sought innovative solutions which did not include the outright sale of the utility. In 1994, under the authority of the County and Municipal Water Supply Act (N.J.S.A. 40A.31) the City entered into an agreement with United Water Resources in what was considered to be one of the pioneer agreements of Public-Private partnership. Initially the City entered into a 10 year agreement which later was renegotiated to be a 20 year agreement.
ESTIMATED/ACTUAL COST SAVINGS -- IMPACT ON RATES
The 20 year contract provides for concession fees of $10 million to be paid in three payments of $5 million, $3 million and $2 million. Capital improvements are scheduled at $550,000.00 per year. The City receives percentage of growth of future income. The City also benefits from the installation of a state-of-the-art automated meter reading system, ownership of which reverts to the City, at its option, at the end of 10 years.
One third of the Water Utility employees were hired by United Water. Other employees
were either assigned to fill vacancies or were released.
The United States Conference of Mayors
J. Thomas Cochran, Executive Director
Copyright © 1996-97, U.S. Conference of Mayors, All rights reserved.