October 27, 2004

To My fellow Citizens and Taxpayers of North Arlington:

The Mayor and Council have voted to sell the North Arlington Municipal Water Company to the Passaic Valley Water Commission and we believe all residents and taxpayers should understand the terms and the reasons for this sale and its effect upon each of you.

Why Is The Water Department Being Sold To The Passaic Valley Water Commission?
 

We believe that the residents of the Borough must be assured the best and highest quality water delivery to their homes; and we believe this sale insures that quality. Passaic Valley Water Commission's sole business is the maintenance of the water systems, service to its customers and delivery of water, which meets and maintains both State and Federal standards. On December 31st, when this sale is completed Passaic Valley Water will have the responsibility to maintain and repair our pipes, our meters and our gages and to insure the delivery of water to all of their customers.

The Borough of North Arlington is not in the business of supplying water, we cannot do as good a job as Passaic Valley, and experience has shown us this. We have had water leaks some of which have lasted for months if not years before they were discovered and repaired. Repairs have been sporadic and maintenance is almost non-existent. We firmly believe that this transfer will insure to the people of North Arlington the best quality service and water, much improved over the service and maintenance that this town can provide. We believe in the long run the services and water supplied by Passaic Valley will be less costly to our residents. In our contract, we have spread out over two (2) years  the rate increase, which Passaic Valley charges its customers. This is to insure that the people of North Arlington have a period of time to absorb these rate increases. However, the residents must understand that if North Arlington were to give the services required in operating a Water Company the rates would have been much, much higher than what Passaic Valley charges its customers.

In 2000, the previous administration embarked upon a study to determine both
financially and internally what must be done to maintain and improve our water department.

Their experts recommended a substantial rate increase, none of which was implemented. The Borough's Engineer recommended major capital improvement to the water system, which would have cost the taxpayers an additional $4.5 million dollars.

These repairs were not done. If these recommendations had been implemented than the state of the water department, as it presently exists would have been greatly changed. Without the implementation, we are still faced with approximately three ($3) million dollars in capital improvements and projected rate increase far exceeding those of the Passaic Valley Water Company.
 

The present report of our Engineer still indicates million's of dollars necessary for
capital improvements The Passaic Valley Water Company will of necessity have to make these improvements in order to maintain their commitment to deliver quality water and services to the community. Taxpayers will not spend this money.

Why Are We Doing This Now?

Detractors claim this is being done because it is a method in which we can defer any tax increase. This is not the truth.  The capital improvements, which our Engineer tells us, must to be made, will have to be made this year in order to supply quality water services. That means that the rate increase to our customers, if we kept the water company would increase next year tenfold. In addition, all of the taxpayers will have to pay the interest and costs of floating additional bonds to pay for the millions of dollars in capital improvements .

This should have been done four (4) years ago.

The Passaic Valley Water Commission intends to spend several million dollars on our
system immediately on replacement of lead valves, pipes, lead inhibitors and environmental infrastructure as testified to before the Local Finance Board of the Sate of New Jersey.
 

Of the 576 municipalities in this state, less than 10% maintain their own water
companies. It is an idea that has lost its meaning. To delay this sale is detrimental to the pocketbook of every citizen of this town and detrimental to their receiving quality water when they turn on their faucet.

What Are We Going To Do With The Money We Receive?

We are receiving approximately $4.3 million dollars, and the first thing we are going to
do is payoff all the bonds, notes and outstanding liabilities that we have as a result of the Water Department. That means there will be an immediate benefit to the community as of January of 2005, in that the amount of interest that we will be paying on our long-term debt, will be lessened substantially.
 

Approximately one ($1) million dollars of this money is being used to off set the 2004 budget, in other words to reduce taxes to every taxpayer in this community. There is no better public purpose then to keep our residents money in their pockets, rather then paying it to the community. The balance of the money will be placed in a reserve account to be used by the community next year and in the following years to come to benefit the taxpayers. There is no higher purpose that the Governing Body can have then to operate a community at the least cost, to its individual taxpayers.

Are We Selling It Too Cheaply?
 

From the municipality's standpoint, we are getting more than a fair price. The net asset
value of the Water Company as set forth in audit reports, prepared not by my auditors, but by auditors of the prior administration is only $250,000.00. We owe over $2 million on the Water Company, as it exists now.

Finally, there is no question in our minds that the sale of this Water Company is beneficial to each and every taxpayer of this community. It insures better quality service, better quality water, all at lesser expense to the residents.
       

As your Mayor, I appreciate the opportunity to communicate with you on issues of governmental concern. North Arlington is our town and I am committed to delivering essential services in the most cost effective way possible. I know you share that commitment of fiscal responsibility.

Thank you for the opportunity to govern.

Very truly yours,

Mayor Russell L. Pitman

 

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