Water Distribution System

Q&A

Why do we have so many water main breaks?
Some parts of Hoboken’s water system are over 100 years old. As cast iron pipes age, they become brittle and are more prone to break from changes in temperature, pressure fluctuations, or vibrations.

Why are the pipes so old?
There have been no significant investments in Hoboken’s water distribution infrastructure in decades. Through a series of agreements, the City of Hoboken sold the rights to our water system in 1994 until 2024. A 30-year revenue stream of approximately $240 million was sold to United Water (now Suez Water) in exchange for $13.2 million dollars in one-time payments. Rather than invest those funds to improve the water infrastructure, the payments were used between 1994 and 2001 to plug municipal budget deficits. The City still has 7 years remaining in a contract that requires Suez Water to make almost no proactive investment in our water infrastructure.

What is the City of Hoboken doing to fix the problem?
The City is pursuing three parallel strategies to improve the water distribution infrastructure:

  1. $42+ million in direct investment. The City is directly financing upgrades to our water system. As part of the Washington Street redesign, we are taking out a $7 million low-interest loan from the NJ Environmental Infrastructure Trust (NJEIT) to upgrade the water mains along all of Washington Street. For project information and construction updates, visit the Washington Street Project website. In addition to Washington Street, the City is also funding $5.2 million in priority upgrades to the water main system throughout the city. Finally, the 6-year capital plan in the 2017 includes $5 million per year over the next 6 years, for an additional $30 million in investments.
  1. Rebidding contract. The City is conducting its due diligence in preparation for rebidding the contract to maintain and operate the water distribution system. This involves engineering work, a financial analysis, conducting test pits, etc.
  1. Renegotiating existing contract. While the City prepares to rebid the contract, we also continue negotiations with Suez Water to renegotiate and extend the existing contract, which runs through 2024, with terms that are fair to Hoboken and provide for necessary infrastructure upgrades. Regarding negotiations, Mayor Zimmer stated in her 2017 State of the City address: “I have made clear in our negotiations that one of the of the non-negotiable terms for me is at least a $1 million annual payment for repairs and upgrades to the City water main system, indexed for inflation. Hoboken would then be able to use these funds to finance approximately $20 million in improvements to our water system.”

Overall, the City is working to ensure a fair agreement, either through rebidding or renegotiation, that provides for a large investment in the water distribution system infrastructure.

New Proposed Agreement

July 12, 2017

MAYOR ZIMMER ANNOUNCES NEW SUEZ WATER AGREEMENT WITH OVER $40 MILLION BENEFIT TO HOBOKEN

Mayor Dawn Zimmer announced that her Administration and Suez Water have agreed on the terms of a renegotiated water service contract that would provide more than $31 million in infrastructure investments and a total of over $40 million in benefits to the City of Hoboken through 2034. The agreement requires City Council approval.

“Our aging water system is in need of expensive capital upgrades, yet the $350,000 provided annually by our existing water agreement from 1994 is not even enough for emergency repairs,” said Mayor Dawn Zimmer. “I am thrilled that our proposed agreement would provide on average over $1.8 million per year for capital investments. The City has already begun the process to invest $12 million in water main improvements, and this agreement will allow us to make the investments we need to modernize our water system.”

In addition to the investment capital for water main upgrades, the renegotiated agreement will forgive $10 million owed by the City to Suez under the terms of the existing agreement for excess repair and bulk water costs. The agreement would extend the contract from 2024 to 2034.

If the new agreement is not approved, the City will remain under the terms of the existing agreement, which ends in 2024. Under those terms, Suez will be required to make only $350,000 per year in emergency repairs for the next 7 years, while the City of Hoboken would continue to be responsible for all repair costs over $350,000 annually. The City would receive no funds for the needed modernization of the water main system. In addition, the City would be responsible for the approximately $10 million that would be forgiven in the renegotiated agreement for excess bulk water and repair costs.

A memorandum of understanding agreement is expected to be presented to the City Council for its approval at the August 2nd City Council meeting.

View a presentation highlighting the terms of the agreement.

View the memorandum of understanding and term sheet.

View the memo from Mayor Zimmer to the City Council regarding the agreement.