Prepared by
James Doherty - Administrator, Chester Borough, New Jersey
James Binder, President - Alternative Resources, Inc.
Michael Kelly, Regional Manager - Earth Tech
February 1999
Okay, so you are a New Jersey municipality that owns a public water system and/or sewer system. Every year, you see the rates of your customers increasing. The newspaper reporters and this year's candidates for the Primary keep jumping on the band wagon called "privatization". That business executive from the Fortune 500 Company who shows up at every meeting is once again asking why the town can't be run more like a business. It's time to run the newspaper advertisement about hydrant flushing again. And you have existing debt on an aging system, which will need additional repairs in the near future. On the other hand, you have a good crew of experienced municipal employees. Being a municipality, you are eligible to receive long term, low interest loans from the United States Government and the State of New Jersey to help you finance your debt. Your town controls its own destiny instead of being at the whims of a private water company or sewer system operator. And you have a sneaking suspicion that the devil you know is better than the devil you don't know.
If you begin a feasibility study to investigate privatization, will the relatives and friends of the existing municipal employees be showing up at your doorstep to protest the unfair efforts to fire them? Will there be charges of politics and personalities? Then again, if you do not investigate privatization, might you be ignoring an opportunity that the residents, ratepayers and taxpayers of your community deserve? Which way do you go? The answer to this question must be found, of course, in the specific details, which define your particular community. "Privatization", per se, is not an entity that is either right or wrong for the State of New Jersey. Benefits and drawbacks must be weighed for each community.
For the Borough of Chester in Morris County, the decision to offer the municipal water system and sewer system for sale did not come without criticism or second guessing, but a careful analysis of the situation helped cut through the guessing game. The process of privatization for Chester Borough's water and sewer systems is presented in this article from the viewpoint of the Municipality, the professional consultant firm hired by the Borough, and the company who was successful in receiving a twenty year contract for operation and maintenance of the municipal wastewater system.