OF JERSEY CITY, NJ
DESCRIPTION OF PARTNERSHIP ARRANGEMENT
In April, 1996, the City of Jersey City and United Water Resources entered into a five year contract for the operations and management of the City's water system. The contract was made possible by the passage of the New Jersey Water Supply Public-Private Contracting Act in 1995. Under the agreement, United Water will be responsible for all aspects of the City water system, including: management of the City's 3,000 acre watershed and treatment facility; operation and maintenance of the transmission and distribution system; providing billing and collection services; and providing customer and emergency services. The City will continue to own all system components, retain rate setting authority and retain control and responsibility for capital investment.
ESTIMATED/ACTUAL COST SAVINGS -- IMPACT ON RATES
The City will pay United Water a service fee for managing the water system. Over the term of the contract, the City expects to realize approximately $17.5 million in operational savings. In addition, United Water paid a $2.5 million up-front concession fee. The City will receive $18.5 million in a direct water purchase agreement with United Water. The agreement includes incentives for United Water to sell excess water from the system and share in higher annual earnings. Through a lost and unaccounted for water program, computerized distribution system database, value hydrant and flushing programs, meter replacement program, reduction in water leakage and improved billing and collection, an additional $20 million to $35 million in future economic benefit is expected to accrue to the City and the local sewerage authority, for which the water utility does billing and collection. Over the term of the contract, the total economic benefit to the citizens of Jersey City should be between $58 million and $73 million - as much as $14 million annually.
No water department workers have been laid off involuntarily. In the first year of the
public-private partnership, the work force has been reduced by about 40 percent through
attrition, retirement and reassignment to other city divisions. United Water will
effectively "lease" the City employees, who will retain their current wages and
benefits, including the public retirement system.
The United States Conference of Mayors
J. Thomas Cochran, Executive Director
Copyright © 1996-97, U.S. Conference of Mayors, All rights reserved.