Gloucester Township voters to decide whether to sell sewer system

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Choosing the next President of the United States is not the only decision residents in Gloucester Township, New Jersey, will make when they head to the polls on Tuesday.

Voters must also decide whether to sell the town’s sewer system to New Jersey American Water, a subsidiary of the largest investor-owned water utility in the U.S.

If successful, the $143 million sale would become one of more than two dozen similar transactions by investor-owned utilities across the region in the past six years.

Gloucester Township officials say the sale would pay off a $65 million debt, and help reduce property taxes.

Residents who oppose the sale accuse town officials of passing their financial woes onto the backs of constituents, and say they’re worried privatization will raise their sewer bills.

“The residents have begged them over the years not to overborrow, not to overspend. And … they ignored us,” said resident Denise Coyne, who is part of a grassroots campaign against the sale. “Now, we’re in this huge hole, and they just want to push it off onto us.”

Water and sewer acquisitions have increased in the region and nationwide as municipalities try to pay off debts and eliminate the financial burden of running water systems. Infrastructure is aging, and many small towns can’t afford the upkeep required to meet federal drinking water standards, or address the impacts of climate change, such as increased flooding and drought.

A 2018 EPA report estimated public water systems across the U.S. need $472.6 billion in infrastructure investment over the next two decades. Though billions of dollars have been allocated to municipalities through the Bipartisan Infrastructure Law, some experts say water and sewer rates would need to rise by about 12% a year to upgrade infrastructure, replace lead pipes and filter toxic chemicals from drinking water.

There’s also a greater incentive for investor-owned utilities to acquire public water supplies, as several states have passed laws that allow companies to consider the future value of a utility, mark up the price, and pass along those costs to consumers.

A trend toward privatization

This year alone, American Water has gained nearly 50,000 new customers by acquiring seven new water or sewer systems across four states.

A Cornell University study of the 500 largest community water systems in the U.S. found that privately owned systems have higher annual bills and lower affordability. According to the report, New Jersey and Pennsylvania have some of the highest in the sample.

Customers across the region have reported significant rate increases — as much as double for some customers in Pennsylvania — following privatization.

New Jersey American Water President Mark McDonough said if the sale in Gloucester Township is approved, the company would freeze rate increases for two years.

Rates would gradually increase by about $16 a year after five years. Any other rate increase would require approval from New Jersey’s Board of Public Utilities. New Jersey American Water would offer senior discounts, and assist customers struggling to pay their bills, McDonough said.

Still, some residents say they’re skeptical, and are encouraging neighbors to vote against the sale by handing out flyers outside the local ShopRite and assembling yard signs throughout town. Meanwhile, American Water has spent hundreds of thousands of dollars on canvassing efforts, and advertisements.

Resident Dena Hendry said she doesn’t believe American Water won’t pass sale costs down to Gloucester Township residents.

“It’s money that I’d rather spend making memories, and doing things with my family. It’s an unnecessary cost,” she said. “And, everything is going up. The price of groceries is going up.”

Those who oppose the sale argue the town’s sewer system doesn’t need saving. Unlike other small towns that sold their water systems because of failures or contaminated drinking water, Gloucester Township’s sewer system is in decent shape, according to a 2023 engineering report.

Residents voice distrust in local leaders

Residents have become suspicious about the motivations behind the sale, as their mayor, David Mayer, is the director of government affairs for New Jersey American Water. Mayer has recused himself from the acquisition, however, and McDonough said the mayor has never been involved in any conversation about privatizing the town’s sewer system.

Residents also accuse township officials of being fiscally irresponsible, and say they don’t trust them to spend the proceeds wisely.

Gloucester Township’s business administrator, Tom Cardis, said the town’s debt was accrued because of necessary expenditures for road repairs, law enforcement and other infrastructure projects.

Cardis said not only would the sale pay off the debt, but it would also help the town reduce property taxes, and pay for improved recreational opportunities for residents.

“The proceeds of the sale are going towards helping the community at large,” he said. “It’s reducing taxes, and stabilizing taxes.”

If the referendum fails, the city may raise the sewer bills, Cardis said. The town’s utilities authority, which was dissolved last year, also had not raised rates since 2002. Though the sewer system isn’t currently failing, its future maintenance would require a significant investment, Cardis said.

Residents campaigning against the sale say they understand rates may rise if the referendum fails, but believe residents will have greater say in how the sewer system is operated.

“If our bills do [increase] there’s not a darn thing anybody can do about it,” Denise Coyne said about privatization. “It’s not like we could go purchase our sewer back. It’s gone forever.”