Lawsuit Challenges Ridgewood Water Rate Increase

The township has filed suit against Ridgewood Water, challenging the water utility's 21 percent rate hike on customers.

After months of discussions and an outside accounting of village finances, the township decided to proceed with a legal action that seeks the repeal of the Ridgewood ordinance that adjusted the rate schedule.

"We felt that the rate increase was handled improperly and was not necessary," Mayor Rudy Boonstra said.

Former Mayor Joseph Fiorenzo is handling the matter, pro bono, on Wyckoff's behalf. Discussion of Wyckoff's options had begun late last year in the last weeks of Fiorenzo's tenure, and the attorney from the Hackensack-based firm Sokol, Behot & Fiorenzo said he was "quite displeased with the rate increase."

The class action suit, filed on behalf of ratepayers, seeks the complete repeal of the rate hike, which village representatives have said was necessary for the utility to stay solvent.

It seeks to "invalidate the ordinance that Ridgewood adopted to raise rates," Fiorenzo said. It also hopes to "require Ridgewood to pay back the ratepayers" for revenues already collected in 2010, and "prospectively, would negate the 21 percent increase going forward," the former mayor said.

Dr. Kenneth Gabbert, Ridgewood manager, said the village has not yet responded to the suit, which he feels is baseless in its claims.

"Ridgewood Water provides a quality service at reasonable and competitive rates to all four municipalities served. The Wyckoff suit, while bombastic in claims, is without merit. The quality of long-term water service will  not be allowed to be damaged by attempts to undermine the financial strength of Ridgewood Water," Gabbert said.

The water utility, which serves Ridgewood, Wyckoff, Midland Park and Glen Rock, raised rates by 21 percent effective Jan. 1 after holding rates stable for six years. Currently, residents pay $4 for every 1,000 gallons of water used, up from $3.32 per 1,000 gallons, representing an average $80 increase per customer. Under the village ordinance, the utility can raise rates annually by no more than 3 percent.

At the time, utility Director Frank Moritz defended the increase, saying years of stable rates combined with rising costs on maintenance, health care and chlorine helped contribute to the need for the increase. Moritz could not be reached for further comment.

Gabbert said Thursday that the "increase was to secure the solid financial condition of Ridgewood Water. There were two deficit years (2008 and 2009) to be covered in addition to putting the utility on a better financial basis."

Additionally, Ridgewood wasn't spared during the tough budgeting environment this year, laying off employees as part of its $42.4 million spending plan.

The village had retained Louis C. Mai CPA and Associates for an audit of Ridgewood Water's 2010 operational projections, but Gabbert declined to answer if that accounting contributed to the justification for a rate hike.

Wyckoff, Midland Park and Glen Rock had sought its own accounting of utility finances and retained Lerch, Vinci & Higgins LLP of Fair Lawn to complete a forensic analysis of Ridgewood's budget, an effort Fiorenzo said is still ongoing.

However, a letter to Ridgewood sent by the mayors of the three municipalities in June contended that approximately 21 percent of the utility's more than $12 million in expenses for 2010 are going toward general village operations independent of water utility needs.

"They've been asking the ratepayers to subsidize the operating budget of the village," Fiorenzo said. "The lawsuit asserts that what they've done is improper."

Gabbert declined to answer when asked if the revenues garnered from ratepayers are used solely for utility expenses.

Furthermore, Fiorenzo contends that the analysis shows there's "no justification for any increase" at all.

Wyckoff declined last year to meet with Ridgewood representatives when the village was considering the rate hike, which was imposed on township, Midland Park and Glen Rock customers by the Village Council's vote. The increase did not have to be approved by the state Board of Public Utilities, as is often the case, because the utility was proposing uniform rates throughout its entire system. A spokesman for the state board had said BPU hearings would have been necessary had the village adopted a disproportionate rate schedule, essentially asking some customers to subsidize the water service of others.

However, scarcely attended public hearings were held in Ridgewood, and Midland Park and Glen Rock representatives met with Ridgewood officials prior to the vote. Since then, both sides say discussions have been ongoing and could continue.

While talks "haven't led to a resolution," Fiorenzo said, "we haven't closed the door on further discussions."

Similarly, Gabbert said "Ridgewood Water has cooperated for several months with an auditor authorized and paid for by Wyckoff (Lerch, Vinci & Higgins). Ridgewood Water staff had discussions/meetings with the Wyckoff mayor, former mayor, attorney, special auditor and other officials." However, the village manager said discussions were suspended when the village was served with the suit, which he said occurred before Ridgewood could respond to the outside analysis' allegations.

Both Fiorenzo, a veteran litigator, and Gabbert said the municipalities are prepared to follow the suit to its conclusion if an amicable solution can't be reached.

"While we understand this can be a multi-year process, Ridgewood Water will defend against such suits," Gabbert said.

Midland Park Mayor Joseph Monahan declined comment, and Glen Rock Mayor John van Keuren could not be reached.