Negotiations in Lawsuit Claiming Ridgewood Water Scammed Ratepayers for $3.3M Hit Dead End

Negotiations to resolve a filed by Wyckoff, Glen Rock and Midland Park alleging Ridgewood Water has bilked ratepayers out of millions, have stalled.

Attorney Joseph Fiorenzo claims in the law suit filed in Superior Court in Bergen County that the Village of Ridgewood has "been engaged in sham accounting to artificially inflate the costs of the Water Utility and decrease the expenses of the village."

The Hackensack-based attorney is accusing Ridgewood of falsely claiming that a and a were justified by an operating loss of more than $1 million in 2009-10.

"Evidence revealed... that there was no 'loss' to justify the extraordinary water rate increase," Fiorenzo wrote in a statement. "Rather, Ridgewood has been bilking the ratepayers of Wyckoff, Glen Rock and Midland Park by having the ratepayers pay for a substantial portion of the operating expenses of the Village of Ridgewood." 

Ridgewood and its neighboring municipalities have been engaged in a lenghty mediation process that multiple sources told Patch ended with tension on last Thursday afternoon.

Fiorenzo — who served as mayor of Wyckoff in 2003, 2006 and 2009 — said that village officials initially refused to sit down in the mediation room with him when he gave his presentation to mediator Anthony Sciuto last Thursday.

Multiple sources on both sides say a massive gap remains on settlement negotiations — pegged in the millions of dollars. As such, sources said, the next battle is set for the court room of Judge Manny Toskos.

Fiorenzo, in the lawsuit, claims that Ridgewood currently owes the neighboring municipalities a total of $3,309,291, but said that that liability will increase over time as the rate hikes remain on the books.

Ridgewood officials — who would not comment on this story as of this time — contend that in 2009 and 2010 the water utility had a $1,174,950 operating deficit and this fact allowed for the rates to take passage.

"Such a 'deficit' is a complete and utter sham," Fiorenzo wrote. The lawsuit seeks to rescind the dual rate hikes while refunding $1.64 million to Wyckoff, $1.04 million to Glen Rock, and $619,000 to Midland Park.

They claim the bulk of the alleged accounting tricks occurred during the tenure of former Ridgewood Village Manager James Ten Hoeve.

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Had Ridgewood "properly" checked its books, it would have operated at a more than $4 million surplus, Fiorenzo wrote.

The suing municipalities claim the village didn't "square" its accounting figures during the years of 2004-2009, choosing "arbitrary" rates on health care costs that deprived ratepayers out of $2.4 million.

Further, the suit alleges, the village has taken funneled hundreds of thousands of dollars to subsidize its police and fire departments, its engineering department, the municipal attorney, and expensive pension obligations. The figures, Wyckoff and others say, total $4.46 million during those years.

The bump raised rates from $3.32 per 1,000 gallons in 2009 to $4.20 per 1,000 gallons in 2011. Ridgewood's council has had another 2 percent proposed hike on its agenda for months but has taken no votes, which sources said were directly related to the pending litigation.

In 2010, Village Manager Ken Gabbert said the lawsuit was "baseless" and contended Ridgewood has done nothing wrong.

"Ridgewood Water provides a quality service at reasonable and competitive rates to all four municipalities served," he told Patch. "The Wyckoff suit, while bombastic in claims, is without merit. The quality of long-term water service will not be allowed to be damaged by attempts to undermine the financial strength of Ridgewood Water."

Village officials have been quick to point out Ridgewood Water's rates — despite the rate hikes — still among the lowest of all utilities in the area. They have also stated the rate hikes were enacted to keep the utility solvent. 

In 2009, utility director Moritz defended the increase, saying years of stable rates combined with rising costs on maintenance, health care and chlorine helped contribute to the need for the increase. Officials in Ridgewood have not publicly commented when asked if all monies collected went directly to the utility.

A state law allows Ridgewood's village council – which serves as the board of directors for all ratepayers – to raise rates by ordinances, provided its uniformly distributed throughout its service area.

Village Attorney Matt Rogers declined to comment. Mayor Keith Killion also did not comment.

Sources said the mediation period between the two sides is likely over and will move to legal arguments in the preceding months once the discovery phase is complete.

"The courts will determine who's right and who's wrong," Mayor Killion prophetically stated in December of 2010.