The worst of many bad deals

The clock is ticking loudly on the Trenton Water Works deal, which will mean the sale of miles of piping and infrastructure and 40,000 suburban ratepayers to New Jersey American Water Co. for $80 million.

Citizens circulating a petition aimed at killing the deal have until early next week to accumulate 1100 signatures of registered voters, which would put the deal to a vote in a future election.

There continues to be outright confusion among many members of the public in Trenton, especially in light of scare tactics and misinformation courtesy of the city’s public officials, mainly regarding imminent catastrophic tax increases that would allegedly ensue should the deal not go through.

Opponents of the deal, however, continue to argue from a place of business sense and logic.

The $80 million generated from the sale – to be exhausted within two years – is ultimately worth far less than the value of  having those 40,000 extra ratepayers and a legal monopoly in the water supply business in perpetuity.

The pegs many deal supporters hang their hats upon, cost of maintenance and a stipulation that will have New Jersey American Water Co. buying water from the city for a fixed price for 20 years, are dubious.

Retaining the suburban ratepayers would provide a strong foundation for paying for future improvements and maintenance, and the water deal is surely worth less than the revenue generated from maintaining complete control of the suburban pipes for many years to come.

Also, there is no telling what happens to the sale of water at the end of the 20-year period, although there is a strong indication that New Jersey American Water will have little trouble piping in water from its surrounding jurisdictions at the close of the deal.

As Olga Kaganova and Marilee A. Utter wrote in The Washington Post back in 2006, get rich quick schemes and one-time cash infusions from such asset sales need to be looked at very carefully, especially when politicians “whose horizon may be limited by the next election, talk about disposing of assets for short-term budget relief rather than about the community’s long-term needs,” like Mayor Douglas H. Palmer.

More so, such deals need to be looked at extra carefully when pushed by politicians like Mayor Palmer, who has routinely sold off valuable assets like the city’s interest in the Trigen energy plant and numerous downtown parking facilities, only to head off potential tax increases.

Ominously, it appears that such a thorough vetting has not happened, and the deal’s near completion will have dire consequences for more than city residents left with a town of broken finances.

It is safe to say that the majority of City Council members, city activists, and others who support this deal are going to be wearing a huge albatross around their collective neck in two years, when budget shortfalls of a greater magnitude than the one currently facing the city emerge, without the benefit of a revenue-generating asset and 40,000 suburban ratepayers to shoulder some of the burden.

At that time the people who authored this deal could very well be far away from Trenton, bathed in the glow that comes when one gets safely away from a complete disaster, like this city’s finances.

The rest of us will be crushed beneath it.

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