Will town privatize water system?

By Ron Leir 

Observer Correspondent 


On March 1, Kearny Water Superintendent and Licensed Water System Operator Richard R. Ferraioli will retire after having completed 25 years on the job and his departure will leave the town treading water, so to speak.

That’s because the town isn’t sure whether to simply replace him or to re-think how the water department should be run. At the same time, the Kearny Town Council voted last week to approve a one-year renewal of its water services agreement with United Water of Harrington Park for $344,132 to handle water meter readings, billings and collections.

But how the town will reconcile the management of its water system after the superintendent exits is another matter. Members of the Town Council and Mayor Alberto Santos were informed of Ferraioli’s imminent departure at last Monday’s council meeting and voted to accept his retirement and to pay him $72,932 in terminal leave pay and unused vacation time.

Records in the state Treasury Department listed Ferraioli’s annual salary at $121,060. Santos said that Ferraioli’s decision to file his pension application was “very unexpected. He’s been an extremely knowledgeable, hands-on superintendent in a job that’s very taxing and he has done it well. It’s the kind of job where you’re always on call.”

Indeed, at virtually every meeting of the town’s governing body, the Town Council is asked to approve expenditures involving repairs of water leaks and/or water main ruptures that have been occurring on a regular basis – a fact of life that town officials attribute to the water system’s aging pipes.

Because of Ferraioli’s extensive experience dealing with the town’s water system, “we do not think he is replaceable,” the mayor said.

That’s why one of the options likely to be explored, he said, is “privatization of the management of the water system.”

One option that will not be entertained, however, Santos said, is selling the water system outright, much like North Arlington did some years ago by contracting with a state authority, the Passaic Valley Water Commission, to take over the borough’s water system.

Whatever the outcome, “it has to be done in a cost effective way,” Santos said.

One downside in transferring the operation of a water system to a third party, Santos said, “is that you lose control over [setting] your water user rates.” In the cases of Harrison – which contracts with United Water to run its system – and North Arlington, Santos said that the rates are “substantially higher” than those charged in Kearny.

“In some instances, the third party doesn’t even have to call a public hearing before it imposes an increase in the rates,” he noted.

“At least, if we do decide to contract out the management of our system in a cost-effective manner, we can retain our water rate function,” he said.

In November 2014, the Town Council approved nominal rate increases of 18 cents for residential users (going to $2.43 per 100 cubic feet up to 18,000 cubic feet), 34 cents for commercial users (going to $3.14 per 100 cubic feet up to 75,000 cubic feet) and 39 cents for industrial users (going to $3.64 per 100 cubic feet in excess of 75,000 cubic feet). The utility ended 2013 with a deficit but finished last year in the black.

The Kearny Water Department’s budget for 2014 was about $6.3 million, of which about $3.7 million was paid to the North Jersey District Water Supply Commission for the town’s potable water, nearly $1.5 million went for salaries and benefits for seven employees, about $50,000 for employee Social Security contributions and $600,000 for debt payments. As of Dec. 31, 2014, the water utility showed a cumulative outstanding debt of about $15.1 million.

“We’re going to sit down with Rich and [his brother and assistant water superintendent] Ted, along with Town Administrator Michael Martello and CFO Shuaib Firozvi, our engineer Michael Neglia and United Water to discuss what direction we should be pursuing,” Santos said.

He said that Martello would “manage the transition” as the town prepares to phase into a new management system.

Ferriaoli, who replaced his father, Richard Sr., as the town’s water boss, declined to discuss his retirement or his legacy with The Observer, but Council President Carol Jean Doyle offered her take on why he’s leaving when – since he’s only in his 50s – he could still have many productive years ahead.

“Rich is a replica of his father,” said Doyle, “with a beautiful work ethic, climbing down in the hole with his men to fix a pipe. He takes the job home 24/7 and I think he’s reached the stage where he’s burned out.”

The town has repeatedly advertised for additional water department staff, Doyle said, but “we haven’t been able to get people with the expertise required for this type of job.” It’s also hard to find someone with the state-mandated certification to operate a municipal water system, she added.

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