JC Municipal Utilities Authority (JCMUA)
UPDATE 
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 3 years of
operation!!! At this rate the MUA will be bankrupted in 3
years!!! This is with ANNUAL 8% water & sewer rate increases, 25% rate
increase year-to-date!!!! (42% increases budgeted over 10 years!)
Prior to Bret, the Water Department & JC Sewage Authority made a profit of about $2 million/ year, which went into the General Budget.. Keep in mind that the customer base for the MUA has increased dramatically due to all the waterfront office and luxury apartment buildings that came on line in the last 3 years while the MUA has spent pennies in desperately needed repairs in the rest of the city!!! Why?... because they're broke! Another great financial deal by Bret Schundler--- the financial wiz! ( 9/29/01)
history........
In February 1998, 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…. Soon it'll cost $5 to take a shower in Jersey City… Elect Schundler Governor and you can forget promoting New Jersey as the "Garden State " …
"The biggest issue for residents is high taxes, he said. "I'm going to lower your property taxes, to lower your income taxes and to lower those darn toll taxes," Schundler said. (Candidate promises tax relief, Courier News - LINK )... so he raises all the other fees...
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.".. City Council President Thomas DeGise 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. When Schundler discusses JC tax rates, he won't admit the annual increases in the water & sewer rates to finance the bonds he used to plug his budget deficits or the sale of Caven Point or his practically bankrupting the autonomous agencies.
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 ever since… 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. (See LAYOFFS) 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. The JJ's 8/2/96 front page article tells it all… "Tax bills will bring a defense…. Don't blame me, says Schundler's letter" … it's always somebody else's fault…
In May 1996, 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, LINK, "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). 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). 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! (well they're behind by $42 Million @ Dec 2000). This represents enormous savings for a City our size (total FY '96 property tax levy: $88 million). " 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.)
As it turns out, more of Schundler lies ... more of Schundler's wiz finance in which he gets a quick $$$ plug for his budget deficits and the taxpayers LOOSE over the short & long term!!
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!
By the way, the Director of the MUA Bill Macchi told me that to rehab 200 feet of the sewage system costs $ 2 MILLION & to solve just the downtown problems is about $150 Million! When I stated it ain't going to get cheaper & the flooding & sewage back-up problems in downtown are just not going to just go away, he didn't respond.. ( 9/30/01)
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