Panel Recommends $400M Bond Issue to Shore Up NJ’s Water Infrastructure

Tom Johnson | January 4, 2018 | Energy & Environment
It may only be a drop in the bucket toward solving $40B problem, but could help ease breaks and leaks plaguing outdated water system

water pipe leak
A joint legislative panel is recommending the state pass a $400 million bond issue to begin addressing New Jersey’s aging water infrastructure, a system plagued by pipeline breaks, routine leaks, and pollution from runoff.

In a 30-page report following months of public hearings, the Joint Legislative Task Force on Drinking Water Infrastructure also proposed a range of policy changes to deal with what shapes up to be a $40 billion problem, overhauling an infrastructure much of which has outlived its useful life.

The final report, to be voted on by the task force on Monday, stops short of recommending a stable source of new funding to fix drinking water systems that leak at least 20 percent of the water they treat, or dedicate money to replacing an estimated 350,000 lead service lines that may pose health risks to residents.

‘Ticking time bomb’

“The crisis facing our drinking water infrastructure is a ticking time bomb,’’ said Assemblyman John McKeon, an Essex County Democrat who co-chaired the task force. “Much of this system is past its useful life and is breaking down due to decades of underinvestment.’’

The task force suggests a wide range of recommendations for modernizing not only the state’s drinking water infrastructure, but also undertaking long-neglected upgrades to the state’s more than 200 facilities that treat sewage and combined sewer systems that spew untreated sewage into waterways.

The task force notes its proposals reflect only starting on a path to repairing New Jersey’s broken water infrastructure, but the start of a broader conversation and action by lawmakers, executive branch, and governor.

Issuing general-obligation bonds

Its main recommendation is for the state to issue $400 million in general-obligation bonds to support upgrades to water systems. The funding would be complemented by revenue from existing water and sewer rates, which will continue to provide the majority of funds for infrastructure repairs.

“I realize $400 million will not fix all of the state’s water infrastructure woes, and that spending more money is never easy, but it would be a start and it’s a must,’’ McKeon said.

Jeff Tittel, director of the New Jersey Sierra Club, said there were a lot of good recommendations in the report, but added, a “small bond issue is not going to get us where we need to go.’’

The task force paints a sobering picture of the state of New Jersey’s water infrastructure. In Hoboken, where parts of its water infrastructure dates to 1857, the city has experienced 20 water main breaks a year since 2000.

The state loses an estimated 20 percent to 22 percent of its treated drinking water annually from leaking pipes, with some suppliers reporting losses of as much as 33 percent. Ninety-five school districts across New Jersey have reported elevated levels of lead in drinking water, according to still incomplete reporting to the state.

In recommending new statewide borrowing to get a jump on fixing the problem, the task force suggested funding should be targeted to systems that have done detailed assessments of their water assets, water losses, and long-term financial needs.

Economically distressed

Others priorities would be to help smaller water systems, replacing lead service lines, and fixing combined sewer overflows (CSOs) in economically distressed communities.

Any funding would be allocated through the Environmental Infrastructure Trust, the successful financing organization set up by the state to divvy up federal funds to local governments through low-interest or zero-interest financing.

The task force suggests the Legislature and state look into other ways to help invest in the state’s infrastructure, such as allowing wastewater systems to increase rates modestly to finance upgrades without going through a full-blown regulatory rate case, a system now in place for investor-owned water utilities.

The report also urges the state explore setting up a new program to help low-income customers pay their water bills, similar to a low-income energy assistance fund to aid electric and gas customers.

In addition, the report revives a recommendation rejected by the Christie administration to create stormwater utilities to deal with problems posed by runoff from heavy rains and storms, a problem requiring $17 billion in investment, according to some estimates.