Red Bank’s water plant. (Photo by John T. Ward. Click to enlarge.)
By BRIAN DONOHUE
Red Bank’s water utility is headed for financial troubles unless residents and businesses start paying more for water and sewer services, according to a report by engineers hired by the borough.
Slides from the water rate study presentation above and below.( Click to enlarge.)
A study by the firms Engenuity Infrastructure and CDM Smith recommends a series of incremental rate increases over the next five years that would have customers paying about 46 percent more by 2029.
The results of the study of the water utility operations, commissioned by the borough in 2023, was presented at a public hearing Wednesday night.
The rate increases, if approved by the Borough Council, would be the first since 2015, officials said.
“If you think about everything that has gone up in the last ten years, even your grocery bills, everything, inflation has raised everything,” said Jaclyn Flor, President of Engenuity. “And so every piece of infrastructure that these water and sewer rates cover has gone up in cost. “
“What hasn’t gone up,” she added, “is your water and sewer rates.”
While the borough had been carrying a surplus of about $2 million from year to year, last year operations and rising costs cut into that by about half.
If current trends continue without a rate increase, it could soon be in the red, the report found.
“It’s even surprising that you made it a decade and you’re not under water right now,” said an engineer and report author from CDM Smith.
The report laid out several options, all with the goal of maintaining an annual surplus of either $800,000 or $1.6 million, amid rising costs of everything from salaries to water treatment chemicals.
The options included a one-time 45 percent rate increase and a one-time hike in the fixed charges on customers bills. (see chart below, click to enlarge)
Instead, engineers recommend a series of incremental increases over the next half decade, beginning with 9.5 percent increases the first two years and declining to two percent for each of the last two years. That plan has the lower annual surplus target of $800,000.
For a household using 7,500 cubic feet of water a year, the annual bill would increase in steps from $1,057 to $1,538 over the next five years.
“The benefit of this is it balances out and mitigates rate spikes so there’s no really sharp increase one year, then almost nothing the next year,” the engineer, identified at the meeting only by his first name of Steve said. “It’s easier for people to plan.”
The report includes a ten-year capital improvement plan, which Borough Manager Jim Gant said is crucial to maintain a system of wells, pumps and aging pipes that has been plagued by problems going unaddressed and pushed to the future.
“This is going to be a major step to what the borough has done in the last eight to ten years, which is not much,” Gant said. “You have to be able to fund things to get things done.”
If passed by the Borough Council, the rate increases could take effect in July for the system’s 4,500 customers. Gant said the alternative of not raising rates may seem attractive, but warned the borough is already paying more for neglect in the past.
“It’s very easy to be short sighted,” he said. “I have seen that aging infrastructure bite us. We have some problems that we have to deal with.”
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