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City Council Voting on Water Utility Privatization Deal Already in Effect

Mayor Cahill Under Fire For Hiring Private Company to Take Over Day-to-Day Operations at Embattled Agency as "Emergency Fix" Without Telling Council or Public
Protest
Protesters against water privatization stood outside a city-sponsored event at the State Theatre earlier this month. Lauren Petrie

UPDATE (7/17): The City Council voted 5-0 to approve the privatization agreement with American Water, after hearing from only a fraction of those present who wished to speak on the issue.

NEW BRUNSWICK, NJ—The City Council has scheduled a vote on whether or not to approve a controversial agreement that already went into effect on July 7, effectively privatizing the day-to-day operations at the New Brunswick Water Utility.

A public hearing and vote is expected to occur at City Hall tonight, July 16, at the City Council's 5:30pm meeting.

City officials could not say what would happen if the City Council decided to table or vote against the deal, which was made public for the first time yesterday.

City spokesperson Jennifer Bradshaw said she thought, but wasn't sure, that "by the nature of this agreement being signed under an emergency," the deal with NJ American Water would not be affected, even if Council members fail to approve it "nunc pro tunc," or after the fact.

According to the city spokesperson, the deal is already costing taxpayers an additional $38,000 per month above what it had cost to run the utility as a an entirely public entity.

The current agreement will last "about 45 days," during which time the city will pay in excess of 120,000 to NJ American Water, who recently lured away the city's Water Director by offerring him a higher salary.

In exchange, the company will provide "licensed operators" and other staff to supervise the treatment plant and water system, which serves New Brunswick, Milltown, and parts of Franklin Township.

Mayor James Cahill allegedly declined to give Director Frank Marascia a raise, and when Marascia resigned, the mayor named himself Interim Water Director and cut a deal with Marascia's new employer.

Citizens, including members of the city's Environmental Commission, were outraged at the suspicious move, where Cahill appointed himself as the Water Director.

A national consumer advocacy group with offices in New Brunswick also spoke out forcefully against the plan. The group, Food & Water Watch, succeeded last year in getting the City Council to ban fracking within the city limits, and eventually convinced the county government to do the same,

"Mayor Cahill's shortsighted plan to privatize New Brunswick's drinking water system would be a bad deal for residents' pocketbooks and a bad deal for their peace of mind," said Lauren Petrie, a city resident and organizer with Food & Water Watch.

"This would mean higher rates for customers and a disregard for long-term stability and efficiency."

Just last year, Marascia had helped identify problems at the Comstock Street Water Treatment Plant, sparking investigations by the NJ Attorney General's Office, the Department of Environmental Protection, and the Environmental Protection Agency.

During his tenure, the Water Utility was restructured to improve accountability and the city borrowed and spent millions of dollars to upgrade its water system.

Cahill's spokesperson Jennifer Bradshaw said that without Marascia and another licensed operator who left the job after just eight months, the city was stuck with little choice but to privatize aspects of the utility.

But critics of the deal countered that the city could have hired any of the licensed individuals in nearby towns as a stopgap measure, and said they find the mayor's motives suspect.

Bradshaw said, "the city is negotiating with the company to implement a more permanent agreement."

Marascia had tendered his resignation on May 26, but his departure was kept secret from the public for an additional month while Cahill quietly negotiated outside a public bidding process with American Water.

Sources said NJ American Water initially was not interested in being involved in New Brunswick.

The DEP, the state agency that is paying close attention to the water system in New Brunswick after charging major violations over the course of three years, approved the deal and called American Water a "reputable company."

"We were involved and we did sign off on an agreement," confirmed DEP spokesperson Larry Ragonese. "We think it's a good arrangement because it provides good license coverage and operating ability for New Brunswick."

"We did it to ensure proper license coverage to operate the treatment plant... while they sort out what they want to do."

In November 2013, the DEP suspended the license of the plant's longtime Water Treatment Plant Superintendent Edward O'Rourke.

"It's an interim arrangment until a longer agreement can be reached between the two," said Ragonese, adding that a term of one to two years was under consideration. 

Bradshaw made an unannounced appearance at last night's Environmental Commission to the discuss privatization agreement, where commission members took issue with her personal definition of privatization.

"The Water Utility has not been privatized," Bradshaw originally told New Brunswick Today.

She later conceeded that the day-to-day operations and part of the utility's management, have in fact been handed over to a private company.

"We don't see this as privatization because we're still doing the billing, the customer service," Bradshaw insisted last night, either in denial or unaware of the term's definition.

It's just the latest example of the abuse of power in the city's Orwellian dictatorship government.  Mayor Jim Cahill has been in office since 1991, and for the first time no one has filed to run against him as he seeks an unprecedented seventh term this fall.

Within the past twelve months alone, various city officials have been allegedly caught:

The five-member City Council and leaders in Franklin and Milltown were not notified of the decision.  Cahill supposedly signed the agreement just hours before a City Council meeting on July 2.

The Council was caught off-guard by questions about the changes, and it was Bradshaw who revealed the details of the privatization only after New Brunswick Today asked what happened to Marascia.

Council Vice President Kevin Egan, a union official and one of Cahill's two running mates in the November election, seemed unhappy that the mayor had not consulted the Council about the deal.

Cahill, Egan, and Council President Rebecca Escobar are each running for re-election this fall as a team, but they too face no opposition.

All five Council members did not respond to questions about when they first learned of the deal, and whether or not they were supportive.  The mayors and council members in Franklin and Milltown, whose residents will be affected, also did not respond to the same question.

Ragonese, the DEP spokesman said that a multi-year deal could give the company and city to decide whether to work out an even longer deal with American Water, giving the city "the time that would be needed to allow New Brunswick to kind of wade through the various municipal regulations on establishing a longer-term agreement should they care to."

But at last night's Environmental Commission meeting, Bradshaw said the city had no intentions of continuing the deal with American Water beyond a one to two year timeframe.

That comes as good news to Food & Water Watch, and other organizations actively fighting the privatization efforts.  A large turnout is expected at tonight's City Council meeting.

"New Brunswick needs strong public oversight to ensure that drinking water is safe and accessible for all residents," said Petrie, whose organization is expecting a large turnout at this evening's meeting.

"The first order of business should be hiring a new public water director and licensed operator so that recent progress made on upgrading the water system can continue unabated."

Bradshaw told the Home News Tribune that serving in the city's part-time mayor job for 21 years qualified Mayor Cahill for the interim cabinet-level job.

It emulated a previous situation at the utility, where Cahill appointed his Business Adminsitrator Thomas Loughlin III as Interim Water Director.  Loughlin did not have any experience with water treatment or water supplies, but he remained in the Director position for over five years.

"While this emergency plan ensures that water service remains consistent for all residents, the City will negotiate a longer contract with American Water to keep the plant running," said Bradshaw.

A longer "non-emergency" deal would require the approval of the five-member City Council, each who are closely allied with Cahill, who has been in power since 1991.

A letter released by the city on Facebook last week marked their first direct communication with the public on the issue.

"If we do not have licensed staff to run the plant, we cannot supply water. That's where American Water comes in, and will provide some of their staff to serve as our licensed staff to make sure the plant stays running," the unsigned letter said.

"The City is currently searching for licensed staff to hire to our in-house staff, including a new director for the Water Utility," wrote Bradshaw.  "In the interim, Mayor James Cahill will serve as Interim Director of the department."

Bradshaw said Cahill is not receiving additional pay for serving in the temporary role.  He works for just $40,000 a year as the city's part-time mayor, but also collects a large pension.

Asked flat out if Cahill declined to give Marascia a raise, Bradshaw could not say whether the account was accurate.

"I don't have any information on that, one way or another," said Bradshaw, who covered the document falsification scandal as a journalist last year, before taking the City Hall job in March.

In a November 21, 2013 article published in her online newspaper, New Brunswick Patch, Bradshaw gave a nod to New Brunswick Today.

"Resident and New Brunswick Today publisher Charlie Kratovil tore into the council, accusing the city of keeping the findings from the public and underplaying the severity of what transpired, focusing on what their employees did right instead of the three years that went wrong.

"It's an embarrassing violation of public trust," Bradshaw quoted the author of this article as saying.

Editor's Note: The author of this article was one of the leaders of the campaign that successfully prevented the sale of much of the City of Trenton's water system to American Water in 2010.