Water sale could be dead

Trenton could be in even deeper fiscal trouble than it already is.

It appears the proposal to sell outyling Trenton Water Works infrastructure to New Jersey American Water for $100 million could fall through, or be seriously reduced in value, according to industry insiders.

Apparently the valuation process that resulted in the $100 million figure was seriously flawed, and because of that, state staffers could recommend that the state Board of Public Utilities kill the sale outright, or reduce it in value.

The city’s valuation firm inappropriately chose to include in the $100 million portions of infrastructure financed by developers and residents in the suburbs surrounding Trenton that was handed over to the city at no charge, and that has proven problematic for the deal.

In most official valuations of this kind such infrastructure should not be included in the sales price, according to testimony given to BPU staff by independent authorities like Howard Woods.

Mr. Woods and others have said the infrastructure belongs to the ratepayers that have rented or purchased the properties serviced by the pipes, pumps, and other water infrastructure and is not Trenton’s to sell.

It remains to be seen whether the city would accept a much lower sale price – said to be in the neighborhood of between $50 million and $70 million – but given the city’s financial straits, such a firesale of a valuable asset will likely be construed as necessary by city officials like Mayor Douglas H. Palmer.

The city administration was relying on the deal to provide a $20 million infusion of cash into the city’s coffers that would help close a massive budget shortfall, but if the deal falls through, the $7 million hole could increase to $27 million.

The city already plans on cutting 150 jobs from the municipal payroll to help deal with the $7 million deficit, but increasing that budget gap by another $20 million would likely result in a nearly catastrophic cut in municipal services.

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