A PRO-LEASE VOICE
Pawlowski has invited Jim Kennedy, former mayor of Rahway, N.J., to share his town’s water leasing experience with City Council Wednesday night.
Thirteen years ago, said Kennedy, Rahway entered into a 20-year lease with United Water, one of the potential bidders to lease Allentown’s sewer and water systems.
“Our deal was very successful,” said Kennedy. ”We have among the lowest rates in New Jersey. They went up marginally, but they remain stable.”
By no longer running its own water system, he said, Rahway originally was projected to save $20 million during the 20-year lease,
But Kennedy said Rahway already has saved more than $20.8 million. He said the city now anticipates saving a total of $30 million over those 20 years. “We did it right and it paid off,” said Kennedy. “It was a very smart thing to do.”
He said leasing Rahway’s water system was one of the reasons he kept getting re-elected to serve a total of five terms as mayor.
Rahway’s 19th-century water system was very old, had been operating in the red for two years and was not meeting New Jersey’s environmental standards – which are more stringent than federal clean water requirements.
Kennedy said the cost to run the water system became impractical for the small city, which has less than 30,000 residents. If Rahway had not leased its water system, he said, its water rates would have tripled.
He said all income from the lease is used to improve Rahway’s water system. “Water quality has been improved because of the investment into the system.”
Kennedy said a very active group of residents opposed the lease, “but they really weren’t looking at it fairly.”
He said one of the criticisms of leasing a public water supply is that private companies do it to make money, “which is accurate, but theoretically so does the municipality. You don’t want to lose money.”
Kennedy said a private water company can do a better job of running a municipal water system than a single municipality can do because of “economies of scale. They have access to large amounts of capital, to soften the impact on the taxpayer.”
Kennedy said Rahway’s City Council still controls water rates.
He said none of the city’s water system employees lost their jobs. A related improvement for water customers was that Rahway added electronic meters so meter readers no longer had to go inside people’s homes to check their water usage.
City Council meets at 6 P.M. Wednesday in City Hall at 435 Hamilton St. A vote is expected on whether council supports the next step in the Mayor's Plan, asking interested private companies their proposals to operate the city's water and sewer systems.