Death of Trenton Water Works deal may revive lawsuit

As Trenton prepares to evaluate the future of its water utility, the city is also dealing with the fallout from a failed proposal to sell the utility’s outlying infrastructure to a private company.


Earlier this month, talks were revived over a lawsuit that Ewing, Hamilton, Hope-well and Lawrence townships filed against Trenton in 2008, after the city hiked water rates for its suburban and city customers 40 percent. A settlement of the suit was contingent on the infrastructure sale going through, but it could be revived now that the sale is off.


“The pending litigation is being discussed between all the parties,” Lawrence Township manager Richard Krawczun said. “The conversations that have taken place thus far have been productive.”


The city-owned Trenton Water Works has customers in the four townships in addition to its customers in Trenton. The townships had asked the Trenton City Council to put off the rate hike, but they later focused their suit on the city’s practice of generating water revenue surpluses.

The townships argue that because Trenton planned to use money collected from water customers to balance Trenton’s general budget, the rate increase represents an unconstitutional tax on suburban water customers.

“They were actually budgeting for a surplus and billing the township residents for that,” said Steve Goodell, an attorney for Hopewell Township. “In effect, the township residents were subsidizing the municipal budget, and that’s inappropriate.”

The city subsequently announced plans to sell Trenton Water Works’ pipes and tanks in the townships to a private company — New Jersey American Water Co. That would make the township residents customers of the new owner. The two sides agreed to settle the case whenever the sale concluded.

However, a group of city residents successfully petitioned to put the sale to NJ American to a vote, and city voters overwhelming rejected the deal in June. That left the lawsuit in limbo.

The suit could still be settled, perhaps by the city agreeing to reduce the rate increase or to limit the amount of surplus it transfers to its general budget.

Trenton has transferred $3 million from the utility in most years, but in 2007 it transferred $6.2 million. The Board of Public Utilities had previously limited the transfers to 5 percent of Trenton Water Works’ revenues, but the utility was exempted from board oversight in 2006, when water rates for city and suburban customers were equalized.

The townships argue there are still limits to the amount Trenton can transfer to its budget. But as they decide whether to head back into court, Krawczun said the townships are willing to work with the new city administration elected in June.

“We respect the fact that the representatives of the city administration, including Mayor Tony Mack, are just coming online on this issue, among the many challenges the city faces,” he said. “We are being patient in working through this problem.”

Trenton is also having to address maintenance issues at the water utility now that the infrastructure sale would have taken care of, such as a high rate of water leakage. The administration has proposed hiring an outside contractor to evaluate Trenton Water Works and propose ways to improve its operations and management. City council has expressed skepticism about the need for such a contract.