Stephen Gallo, the Bayonne Municipal Utilities Authority's Executive Director, said United Water will take over Bayonne's water and sewage operations in a $150 million deal with the BMUA.Once the agreement is ratified by both parties, city residents will be socked with immediate 8.5 percent hikes on both their water and sewerage bills, according to the over 105-page agreement scheduled for a public hearing at Tuesday's BMUA commissioners meeting, 6 p.m., at City Hall, 630 Avenue C.
The 40-year-contract would be between the BMUA and Bayonne Water Joint Venture, LLC, a joint venture between United Water Operations Contract and the investment firm, Kohlberg Kravis Roberts & Co.
Under the proposed agreement, Bayonne Water Joint Venture will collect water and sewerage tariffs from customers and take over the operation, maintenance and repairs for the authority's water, sewerage and sanitation systems.
The BMUA will continue to have oversight over the contract, and purchase water and pay sewerage treatment fees.
"The people of the city will continue to own the utility and it is not being sold," BMUA Executive Director Stephen Gallo said yesterday. "It is a long-term contract and public officials, accountable to the public, will continue oversee the contract."
The 8.5 percent bump, the first increase since 2006, would be applied to the first quarterly billing cycle after the deal is finalized.
Customers who use less than 82,280 gallons each quarter, would see the cost of 748 gallons increase from $4.29 to $4.65, according to the contract. Larger volume customers will see rates increase from $4.72 to $5.12 for 748 gallons.
"The BMUA hasn't had a rate increase since six years ago," Gallo said. "Regardless of this transaction we were contemplating having to raise the rates."
Gallo said that Bayonne Water Joint Venture has agreed to continue to employ the 27 people currently employed at the BMUA.
The $150 million one-time payment would be used to pay off current BMUA debt, outstanding bills, and cover BMUA administrative fees, Gallo said, adding money would be placed in a rate stabilization fund to cover major emergencies and unforeseen capital projects.
Some of the $150 million payment will also go toward a $14.5 million capital improvement plan over the next two years, which includes replacing aging water meters and introducing a high-tech system to monitor water usage centrally, officials said.
"United Water has been providing services in Hudson County for a long, long period and time we are looking to providing excellent services to residents and business," said Gary Hennigh, a spokesman for United Water.
After Tuesday's hearing there is a seven-day comment period and the contract would go to the BMUA for approval at their next meeting.
Gallo said that a closing date for the deal has not been set, but the deal requires the approval from various state agencies.
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