Hoboken, Suez Water Reach Deal With $33M In ‘Critical Upgrades’

HOBOKEN, NJ — Hoboken city officials and Suez Water have reached a tentative deal on a new service contract that would provide $33 million in “critical” infrastructure upgrades and establish a new public water utility.

The new contract – which will still have to be approved by the Hoboken City Council – was announced during a press conference on Friday, April 12. It includes an average of $2.2 million in water investments per year, more than six times the amount of the current contract, city officials said.

The new agreement was based upon the framework of the initial Suez negotiations led by former mayor Dawn Zimmer and her administration in 2017, according to current mayor Ravinder Bhalla.

Zimmer gave the deal her blessing.

“I am pleased that Mayor Bhalla's administration and Suez have agreed to a revised contract that provides critical funding for annual water main investments,” Zimmer said. “Thank you to the many public servants from both of our administrations who worked so hard to make this happen.”

Bhalla also lauded the potential benefits to the city if the contract is approved.

“This contract with Suez provides for unprecedented investments in Hoboken’s water system,” Bhalla said. “Hoboken has been suffering for years with increasing water main breaks due to a previous, woefully inadequate contract that provides for no proactive water main upgrades. The renegotiated agreement will finally allow Hoboken to make the critical upgrades to our water infrastructure that have been badly needed for years. I am hopeful the council will agree and vote in support at Wednesday’s meeting.”

Hoboken city officials provided the following details about the pending deal on Friday:

“The agreement with the city and Suez calls for the establishment of a new water utility. The revenue from the bulk water consumption would then be placed in the new water utility, and the city would then reinvest the majority of the revenue into water main upgrades. The water system would no longer be operated as a private water concession, but instead as a new public water utility. Suez would continue to maintain and operate the water system, however all revenues generated from water bills would be invested by the city as opposed to Suez.”

Hoboken officials continued:

“An average of $2.2 million, over six times the amount required in the current contract, would be invested by the city each year for water main upgrades according to the contract, which includes $1.5 million in proactive upgrades and $700,000 for maintenance and repairs. Additionally, the contract also includes $2 million in smart leak detection technology, which will record water consumption data in real-time to detect leaks.”

Hoboken officials added:

“Under a contract and several extensions negotiated by a prior administration beginning in 1994, several multi-million upfront payments to the city were used to fill budget deficits and were not invested into infrastructure upgrades. The previous agreement required only $350,000 per year for capital repairs and upgrades, which has been substantially insufficient for even emergency repairs… Under the terms of the new contract, at least 18% of the city’s water mains will be upgraded by 2034, while the old contract upgraded only 5% of the system from 1994 to 2017.”

Chris Riat of SUEZ Water said that the company is proud to continue its partnership with the city.

“Our priority, as well as the city’s, has always been ensuring the safety and reliability of the residents’ drinking water,” Riat said. “We look forward to working with the city to modernize Hoboken’s infrastructure for years to come.”

The tentative deal got praise and support from Hoboken Councilwoman Tiffanie Fisher, who said she will encourage her colleagues on the council to give a thumbs-up to the contract.

“For three years I have advocated for Hoboken to keep its water revenues instead of Suez so we can invest in our aging system,” Fisher said. “This contract finally gets it done.”

LAWSUIT, WATER MAIN BREAKS

The new agreement with Suez comes less than a year after Mayor Bhalla threatened to launch a lawsuit against the utility provider to recoup “damages to the city” following a spate of 14 water main breaks in a 64-day period.

• See related article: Hoboken May File Suit Against Suez After 14 Water Main Breaks

After Bhalla announced the city was contemplating a lawsuit in August 2018, a Suez spokesperson chastised him for “pointing fingers” at the company.

Rich Henning, senior vice president of communications with Suez Water, previously told Patch:

“Hoboken's water infrastructure is over a century old in many places, and unless Mayor Bhalla stops pointing fingers and starts investing in the system the problems residents are facing will continue to get worse, not better. The City of Hoboken owns the system and is ultimately responsible for making investments necessary for improving it, and SUEZ has proposed making major investments into it several times in the past only to have the city continue to neglect its infrastructure needs. SUEZ stands ready to do what is necessary to solve this problem by investing the millions of dollars needed to replace these functionally obsolete pipes and also to improve services for residents by installing new technology to more quickly identify leaks and restore service faster. We hope that the City of Hoboken will work with us in this effort instead of pursuing an unnecessary lawsuit that will only burden the city's taxpayers while doing nothing to invest in the city's infrastructure.”

Bhalla said Friday that in addition to the renegotiated contract with Suez, his administration and the former Zimmer administration have independently invested more than $17 million in water main infrastructure upgrades through the city budgeting process.

“This includes $7 million for the complete replacement of century-old water mains along Washington Street and a combined $10 million in water main replacements in identified priority areas,” the mayor’s office stated.

About $5.2 million of those replacements will begin construction in the summer of 2019, officials said.

In a Friday statement, Hoboken Councilman Mike DeFusco offered tentative support for the city’s new contract, but also reminded residents that the city would have made a “historic mistake” if officials had proceeded with a lawsuit against Suez.

“Last summer, I demanded that the mayor start a dialogue with the company and work towards an agreement that would make the investments in our water infrastructure that are so badly needed,” DeFusco said. “The leadership shown by the City Council, particularly Ruben Ramos and Tiffanie Fisher, rescued our city from a legal battle that would have served no one and allowed us to reach a responsible agreement with Suez. This is a great first step to making much needed investments in our water system, but this is not a silver bullet, it will not entirely fix the century-old problem. We can and need to do more and I look forward to improving infrastructure across Hoboken.”

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