The city is considering rescinding antiquated sewer connection agreements with neighboring towns and Passaic County government in an effort to force those entities to pay their “fair share” of sewer usage fees.
Paterson is looking to rescind antiquated agreements with Clifton, Haledon, Woodland Park, Totowa, Prospect Park, and Passaic County in order to bring the six entities to the negotiating table to establish a “fair and equitable sewer rate.”
The city will launch legal actions against the six entities if rates cannot be agreed upon after the old agreements have been rescinded. At least one agreement goes back to 1918, according to city officials.
Surrounding towns have been paying rates that were established decades ago while city homeowners have seen their rates increase over the past several years. This has created frustration for city officials who have been attempting to work out agreements with surrounding towns to have them pay their “fair share” of sewer usage cost.
“You have unfair agreements that are way outdated. These towns have been getting the benefit and charging it to the city of Paterson,” said council president William McKoy on November 1st, 2016.
The city council in the early part of this year passed resolutions to force the surrounding communities to pay $1.54 million in sewer charges from 2012 through 2015 for underpaying their sewer fees and enter into new shared services agreements.
Mayor Jose “Joey” Torres attempted to collect the retroactive fees. “They said, ‘No. We’re not interested,’” he told the council. “They have been paying what they entered into the contract decades ago. They’re saying we’re not at default.”
Torres said the city sent demand letters to the six entities after the resolutions were passed in January.
Those contracts are “perpetual,” said the mayor. Assistant corporation counsel Ben-David Seligman said it was not uncommon for entities sharing sewer connections to enter into arrangements that ran forever, but he noted there is case law precedent allowing such agreements to be nullified because such contracts are valid for a “reasonable” amount of time.
The council has six pending resolutions to rescind antiquated agreements, allow the administration to negotiate new rates, and or take legal actions against those towns and the county.
McKoy wanted the city to go after Haledon and Clifton, the two towns that have the largest number of properties connected to the municipal sewer system. Those two municipalities combined owe Paterson $1.5 million in retroactive fees for the past three years, reckons the city.
“I don’t want to go around chasing 15 people when it doesn’t pay. Two people I’m concerned about are Clifton and Haledon because that’s where the money is. Other guys we can catch up with later,” said McKoy.
Torres preferred taking on all six entities at once.
McKoy was disturbed to learn the city has a meter at one of the connections with Clifton that has been broken for a while.
City engineer Frederick Margron said the meter is owned by Clifton. The council president said the city should order Clifton to fix the meter and issue estimated bills in the meantime.
Clifton has half-dozen connections to the Paterson sewer system. One has a meter the rest do not, said the engineer.
McKoy said Clifton is operating in “bad faith” and is in “breach of contract” for having continued with a broken meter and effectively “defrauding” Paterson. “You’re using and abusing me with a defective meter. That’s a criminal act,” he said.
The city attempted to work with the six entities to conduct a study funded through a state loan or grant to determine the accurate flow from those places into the city’s sewer system in its January resolution.
Paterson hired Iselin-based Hatch Mott MacDonald for $51,530 in April of this year to investigate the sewage flow from neighboring towns. And it also hired Charlotte, North Carolina-based Raftelis Financial Consultants for $67,565 to develop a rate reschedule.
Both studies will be completed by the end of this year, said the mayor. In the meantime, the city is using a 2001 study and the consumer price index to generate a current bill for the neighboring towns.
The mayor said once the new round of resolutions are approved, the city will send the new bills. Once those bills are unpaid, the city will take the neighboring towns to court.
Paterson is awarding a $150 per hour legal contract to Oakland-based Cleary, Giacobbe, Alfieri & Jacobs to negotiate new rates with the neighboring towns and if unsuccessful to begin legal actions. The $25,000 contract is up for a vote at the council’s regular meeting on November 22nd, 2016.
“I’m paying the current market rate, why aren’t they? Nobody around here pays 1945 gas or water rates,” remarked McKoy.