PRESENTATION ON THE EMUA DISSOLUTION PROPOSALOVERVIEW OF STATE SUBMISSION

Legislation to Initiate State LFB Application Process

A. Dissolution Ordinance – Public Hearing March 22ndB. Refunding Bond Ordinance – Public Hearing March 22ndC. Resolution Authorizing ApplicationD. Resolution Approving Financial Advisor’s Plan

Application due February 17th for a March 9th NJDCA ‐LFB meeting.

EMUAOriginally established by ordinance of the Township Council in 1953 and amended in 1977.

POLICY CONSIDERATIONS – WHY NOW? REVELOPMENT

2. Over the past 40‐years, the State of New Jersey and successive governors have been urging townships to reduce local layers of government. 

1. Developers installed most infrastructure, redevelopment falls on the community.  The financing, management, & coordination of rehabilitating the infrastructure is more cost effective.

WHAT ARE THE FUNCTIONS OF A UTILITY OR AUTHORITY?

• Provide for the provision and distribution of an adequate supply of water for the Township.

• Provide for the collection & disposal solid waste & sewer sludge, in an environmentally sound manner.

• Acquire, construct, finance, operate and maintain works to achieve its purpose.

• Establish and collect service charges for its products and service.

SYSTEM OVERVIEW• 3 Water treatment plants• 174 miles of sewage lines• 5 miles of force mains• 24 pumping stations• 11 water wells• 3 elevated water towers• 1 in‐ground tank• 2 booster stations

• 179 miles of water lines

• Budget = $18,228,700• 55 Employees• 16,607 water customers• 15,834 sewer customers

WHAT IS THE STATUS OF THE UTILITY SYSTEMS INFRASTRUCTURE?

• Most of the infrastructure was installed by developers.

• The infrastructure is in need of significant redevelopment.

• The EMUA commissioned a report that helps prioritize ongoing improvements.

WHAT SAVINGS ARE ANTICIPATED WITH CREATING A UTILITY DEPARTMENT?

1. Be more efficient by better coordinating road and W&S projects.

2. Take advantage of the Township’s unique ability to refinance the authority’s existing debt at a considerable savings.

3. Take advantage of the Township’s unique ability to more cost effectively issue debt for the utility’s future needs.

4. Eliminate duplication of various operations.

1. BETTER COORDINATE OVERLAPPING PROJECTS

• A new utility department would allows us to plan, design, bid and construct more efficiently. 

• We expect the cost of a $2.5 million road project and a $2.5 million sewer project to be reduced by $250,000 or 5% if coordinated through the Township.

2. REFINANCING AUTHORITY’S DEBT?

• Authorities are required to use Revenue Bonds, meaning the MUA has to lock away funds as a guarantee to investors.

• A Township Utility Department would use General Obligation Bonds and no such guarantees would be required.  

ALL the existing revenue bond reserves would be used to reduce the Authority’s debt thus saving the community 

$4.5 million in debt service over 10 years. 

3. FINANCING FUTURE PROJECTS

• Future capital projects funded by the Township will not reserve requirements.

• The next $5 million dollars in projects funded by EMUA would require raising $336,000 in reserves.  These funds can now be put to work on other priority projects. 

$336,000 a year will not be unnecessarily set aside.  

4. ELIMINATE DUPLICATION OF DAY TO DAY OPERATIONS

• Operating expense savings: $197,574

• Personnel Consolidation: $316,000 (open positions)

• One not two policy making bodies: $34,960

• Efficiencies resulting in added value• Development application process• Plowing routes• Facility management• Inventory management• Tax and fee collection

Projected Savings SummaryAnnual bond revenue reserve requirement extinguished $      336,500 

(on $5 million per year in capital)

Personnel (between both) $      331,348 

Operation Savings (Fleet, Facilities, Human Resources) $       197,574

Capital projects coordination $      215,000 

(on $5 million per year in capital)

Board of Commissioners Expenses (Includes staff time)

$        34,960

Total of Annual Savings $ 1,115,382

Projected Savings Over 10‐YearsTotal of Annual Savings $  1,115,382

Existing revenue bond reserves reinvested  $   4,500,000 

Savings over 10 years $ 15,653,820 

WHAT HAPPENS TO EMUA EMPLOYEES IF UTILITY DEPT. CREATED?

• Executive team maintains their roles with some added responsibilities.

• Township will honor Collective Bargaining Agreements.

• Non‐Unionized employees become township employees.

OTHER ITEMS IN OUR APPLICATION

1. The Township Council is including a referendum provision that would require the residents to vote on any future proposals to sell the utility to a private utility.

2. There will also be a provision requiring significant funding of a reserve to address emergency and pay as you improvements of $3.5 million.  Any deviation from these levels would require a super‐majority vote of the Council. 

DOES THE TOWNSHIP’S DEBT AND DEBT RATING CHANGE?

• No.  Both the Township and EMUA have aAa3 rating from Moody’s.   

WHAT DOES IT COST TO DISSOLVE AN AUTHORITY?

Estimated Budget for DissolutionCost of Issuance 250,000General Legal 20,000 Financial Advisor 17,192 Fixed Asset Inventory  15,000 Logo for Vehicles/Equipment 7,500 Payroll/Processing 5,000 Bond Counsel 3,136 Letterhead 2,000 Business Cards(20 Staff) 1,800 Regulatory Consulting 1,575 Contingency 60,000 Total 323,204 

Thank You• Please feel free to make an appointment to discuss this matter or arrange for a presentation in front of your club or neighborhood association at 856‐985‐4336.