Three local municipalities are seeking an independent analysis of Ridgewood Water's 21 percent rate hike imposed late last year.
Wyckoff, Midland Park and Glen Rock retained Lerch, Vinci & Higgins LLP, a Fair Lawn-based accounting firm, to analyze Ridgewood's budget information in an effort to gauge whether the rate hike, opposed by the three municipalities, was necessary.
Mayors Rudy Boonstra (Wyckoff), Joseph Monahan (Midland Park) and John van Keuren (Glen Rock) alluded to a "pending lawsuit" in a letter sent to the Village Council last month, but Boonstra said this week a suit over the hike is not pending.
Rather, "we had brought a legal action to gain access to [budget] records," which became moot when Ridgewood voluntarily offered access to its budget documents, Boonstra said.
The letter, signed by all three mayors, essentially contends that the rate hike, which levied an average $80 increase per customer, was used in part to subsidize other village operations.
Ridgewood Water Director Frank Moritz denied that the rate hike or overall utility budget is used to pay for general village expenditures.
"Our preliminary analysis has uncovered that Ridgewood Water has been subsidizing a number of the operating expenses of the village without any justification," the letter charges. "It appears that approximately 21 percent of the total water utility expenses of $12,199,384 are for 'Indirect Administrative and Statutory Expenditures.' The expenses paid by the water utility, charged to the rate payers, include payments for police, the Village Council, financial administration and a variety of other expenditures which appear to be completely unnecessary for the operation of a water utility with 37 employees including 10 administrative staff.
"Our accounting expert has been advised that there is a report which purports to justify the passing off of such large expenditures to the water utility, but despite several requests it has yet to be provided," the letter continues.
First Increase in Six Years
The village, like most municipalities, faced a tough budget environment this year with rising uncontrollable expenses and declining state aid. The municipalities' letter was sent before Ridgewood adopted its $42.4 million spending plan, which required the village to lay off 24 employees. Ridgewood Water was not spared and will perhaps be hardest hit by the cuts, losing eight full-time employees.
The 21 percent water rate hike was the utility's first in six years, in an effort to stabilize its finances. Moritz has said the increase was necessary for the utility to stay solvent.
Although he wouldn't comment on specifics of the inquiry, Moritz described the report the three towns seek. "Our auditor came in and said we're $800,000 or whatever in debt, so we'll have to raise rates to make up for it," he said.
The increase changed rates from $3.32 per 1,000 gallons of water to $4 per 1,000 gallons, with landscapers and tree service companies paying $10 per 1,000 gallons of water used. However, the village ordinance setting the new rates also raised other costs, such as meter fees, after-hours service calls and resumption of service requests, among other measures. The ordinance also limits future increases to 3 percent annually.
In comparison, the $4 per 1,000 gallons appears in line with what customers of other local utilities pay. Ho-Ho-Kus pays $3.75 per 1,000 gallons, Ramsey $3.80, Waldwick $4.25 and Fair Lawn $4.50.
Public hearings were held as the village considered the rate hike request, which was essentially imposed on the customers in Wyckoff, Midland Park and Glen Rock. However, Ridgewood had invited Wyckoff officials to meetings they declined to attend under former Mayor Joe Fiorenzo, citing a need for further information before a discussion could take place. Moritz has said Glen Rock and Midland Park representatives did respond to Ridgewood's invitation for a meeting.
Village Council was able to set the new rates without state Board of Public Utilities approval, which would have been necessary only if the utility had proposed different rates for different municipalities, in effect having some customers subsidize the water usage of others. As the rates were uniform throughout its system, Ridgewood was able to raise rates with a simple vote.
The idea to conduct an independent analysis of the need for a rate hike emerged late last year, when Fiorenzo was still in office, but didn't gain traction until this year.
Moritz defended Ridgewood Water's right to make a profit, calling it "fair and equitable." However, he said the rate increase was needed to merely keep a utility that is hardly flush with revenue operating.
It is not yet clear what actions Wyckoff, Glen Rock and Midland Park may take when the accounting analysis is concluded.
Nicholas Loffredo is the editor of Wyckoff Patch. Sam Fran Scavuzzo contributed to this report.