Earlier today another Water main break occurred in Hoboken which makes 6 since March 28th in the Mile Square. The location was at 11th and Bloomfield Streets and happened sometime around 10:30am. United Water Crews were on the scene and had a backhoe and water truck for residents in the area that did not have water. According to news sources as of 4pm the repairs have now been completed. More pictures are below as well as a prepared statement and comments by current Hoboken Mayor Dawn Zimmer and former mayor and convicted felon (for taking bribes) Anthony Russo on Hoboken’s water infrastructure issues.
Last week in response to the repeated water main breaks Mayor Zimmer made this formal statement in a press conference addressing the issue based on her assessment…
Remarks of Mayor Dawn Zimmer – As Prepared for Delivery – Press Conference on Water Supply Infrastructure, April 3, 2013
During the last week as we’ve had a series of water main breaks, lots of questions have been raised.
Members of the public and the press are rightly asking why we have so many water main breaks. Where are the investments in our infrastructure? What’s the plan moving forward?
I want to talk about all of those things, but first I want to address some of the immediate issues I just discussed this morning with United Water.
Last week’s 30 inch main break was caused by a contractor at a construction site who hit a main that was not marked properly. The Board of Public Utilities is conducting a markout investigation to understand what happened.
Any resident or business who suffered a loss as a result of the 30 inch break on Thursday, March 28th can submit a claim directly to United Water. They can call Debra Hummel at 201-750-3408. The City will also be submitting a claim for our expenses on that day.
Going forward, we also want residents to know that if they see water in the street, the quickest way to get it repaired is to call United Water directly at 201-487-0011. That will immediately begin the process of getting an inspector sent to the location.
Now I want to talk about why we have this situation. The fact is that today we are paying the price for investments that should have been made long ago. My Administration has done some research to understand why we’re in the situation we’re in, and I first want to provide some of that background information that sets the context to plan for moving forward.
Parts of our water system are cast iron pipes that are more than 100 years old. In the 1990’s, Hoboken faced budget deficits. Rather than balance the budget by cutting costs or raising revenues, Mayor Anthony Russo sold the future profits to our water system and used those one-time payments to plug budget holes instead of fixing our infrastructure.
Through a series of agreements, the city sold the rights to our water system in 1994 until 2024. There are 11 years left in that agreement.
Payments made by United Water to City of Hoboken
- July 1994 – $5,500,000
- June 1996 – $3,000,000
- June 1997 – $2,000,000
- June 2001 – $2,700,000
- Total – $13,200,000
Mayor Russo sold a 30 year revenue stream of $240 million and estimated $100 million in profit for $13.2 million in one-time payments.
Let me say that again. We sold $240 million in revenue and $100 million in profit for $13.2 million.
But it gets worse. That money, as little as it was, should have been invested in our infrastructure. Instead, it was used for the general budget.
Our agreements with United Water do require that they spend a small amount annually in capital expenditures or repairs — $350,000 per year. About 80% of that is spent just repairing our broken mains, and there is little left over for infrastructure improvements.
What’s important to understand is that our problem stems from a past Administration entering into unbelievably short-sighted agreements, not United Water’s failure to live up to those agreements.
This is important because we can’t move forward if we don’t understand where we are and how we got here.
So I want to talk about how we move forward from here.
Earlier today, I met with United Water to discuss our serious challenges and how we can solve them.
Most importantly, just as we are developing a stormwater master plan to address our flooding, the city needs to have a 10 or 20 year master plan for upgrading our water distribution system and meeting the future needs of our city. And I thank United Water for agreeing to share information that will help us develop that plan.
We will also look to establish an infrastructure trust fund to ensure that revenue that should be dedicated to infrastructure investments, like the funds received in the 1990’s from our agreements with United Water, are not diverted to operating expenses or other purposes.
Finally, the contracts we signed with United Water do have a termination cost. Earlier today I informed United Water that I am evaluating all options, including paying the buyout cost, terminating the contract, and renegotiating a new agreement that provides for extensive investment in infrastructure. We will be pursuing a process to evaluate all our options to determine which makes the most sense, but one thing is for sure: we cannot be stuck with the current system through 2024.
- End of Mayor Zimmer’s remarks
This prompted Mayor Anthony Russo in an NJ.com article dated April 5th to state:
Russo today hailed the agreement between the city and United Water that led to the firm taking over control of Hoboken’s water system. He said the agreement was “praised all over.” “The public-private partnership with United Water was a win-win,” he said.
Asked to respond, Zimmer said:
"If the contract ended during his term, Mayor Russo would have a point, but since his agreement with United Water extends until 2024 it has a serious impact on our city now and well into the future." "People may have praised the agreement as a win-win, but any objective analysis with all the facts shows this agreement is a disaster for our city, and Mayor’s Russo’s credibility with regard to contracts he entered into should be evaluated in the context of his felony conviction for taking bribes when he was mayor.”
Link to NJ.com article: http://www.nj.com/hudson/index.ssf/2013/04/former_hoboken_mayor_absurd_to.html
Editorial Comments: So the war of words may continue but it is clear the problem did not start with the current Mayor but she is stuck trying to fix it. This would not be the first problem she has inherited from previous administrations.
Former Anthony Russo gave us deficient contractor work at Sinatra Park which led to its collapse with shoddy workmanship and questionable procurement processes that led to it. The current Mayor is fixing it and re-construction is progressing. Former Anthony Russo also gave us this United Water contract out until 2024 for only $13 million when the potential profit is $100 million. Former Mayor Dave Roberts gave us an underfunded budget that Mayor Zimmer rectified and subsequently lowered municipal taxes. The Mayor also saved the taxpayer from the default of the HUMC which could have sent Hoboken into bankruptcy with a $60 million plus tax bill. Mayor Roberts also sold the Municipal Garage without a replacement to plug budget holes. Mayor Zimmer eventually got the garage back at low interest. The process was not smooth but it got done. There was never an acceptable alternative in the first place. Those are the major ones and the Mayor has faired pretty well to do in tackling these issues.
The next is for Mayor Dawn Zimmer to evaluation the termination costs and proceed with the option. Given her track record on the big issues that she has inherited in Hoboken my money is that she will come up with a plan to improve our water main situation long term. It is absolutely fair to say Hoboken could have got a lot more for privatizing its water rights. Privatization was the problem, a short sighted Mayor convicted of bribery selling those rights for a fraction of their worth most certainly was. Remember that when you see the Russo’s on the street. Don’t tolerate their histrionics. Sunlight is the ultimate disinfectant.