New Jersey American Water announced Nov. 30 that it had signed an agreement to acquire the city of Salem’s water and sewer system for $18 million.
As NJBIZ has already been reported, more than 60% of voters approved this decision in a referendum held on November 7. The municipally owned system serves more than 2,300 customers.
“I want to thank the elected officials, community leaders and residents of Salem for entrusting us with the management and improvement of their water and sewer services,” said New Jersey Water President , Mark McDonough, in a press release. “Providing water and sewer service is everything we do, and we are deeply committed to making the necessary improvements to these systems to help ensure clean, safe, reliable and affordable service for all residents.”
Subject to the approval of New Jersey Board of Public Utilitiesthe acquisition is expected to be completed in the second half of 2024.
As part of the agreement, NJ American Water will invest more than $50 million in infrastructure improvements over the first 10 years of ownership. The Camden-based utility company will also maintain current sewer rates for two years after the closure, then increase rates by no more than 3 percent per year for the next three years.
In addition to turning the city’s water and sewer services over to industry experts, City of Salem Mayor Jody Veler added, “The sale will also eliminate $11 million in debt from the utilities and will pay down a portion of the city debt, while allowing us to set aside $1 million back into the city budget each year.
A deal with Manville Borough, where residents approved the sale of their sewer system with more than 80 percent of the vote on Election Day, is also on the horizon for NJ American Water. This transaction is worth $6.5 million, plus a commitment from NJ American Water to invest $10 million in improvements and repairs during the first 10 years of ownership.
The company also recently completed its $7 million acquisition of the Somerville Borough wastewater collection system. This following deals with Bound stream in 2022 ($5 million); Long Hill Township in 2020 ($12.7 million); And Mount Ephraim in 2019 ($1.4 million). Additionally, last June, the company acquired Egg Harbor City’s water and sewer system for $21.8 million through the state’s Water Infrastructure Protection Act, which added more than 1,500 customers to its service area.