Elizabeth suing sewage treatment plant for $1.3 mil.

ELIZABETH – Last week Mayor Chris Bollwage levied a $1.3 million lawsuit against the sewage treatment plant the city uses, claiming breach of contract. However, the sewage agency has an entirely different take on what took place.

Bollwage’s entire basis of the city’s lawsuit, which also included 11 other member towns, was based on the fact Joint Meeting of Essex and Union Counties failed to pay the city their fair share of surplus money remaining in the sewage agency pot at the end of 2013.
In fact, he was so upset by not receiving $1.3 million he fired off a press release accusing the sewage agency of violating “terms, conditions and responsibilities” that date back to 1930.

The Joint Meeting of Essex and Union Counties owns and operates the Edward P. Decher Secondary Wastewater Treatment Facility in Elizabeth, which receives industrial, commercial and residential wastewater from 600,000 customers in a 65-square-mile
area in Union and Essex counties.

The wastewater agency has been in operation since the late 1800s when six towns got together for a “joint meeting” to discuss a cooperative means of disposing their sewage.

Today the agency services 11 member towns, in addition to customers, like Elizabeth, who are assessed a specific amount well in advance of the coming year. Each of the members or customers are assessed a certain amount each year, which depending on the amount of wastewater flowing through the system, varies year to year.

Elizabeth actually has the largest wastewater flow of all the municipalities serviced by this sewage agency and in 2013 was assessed $10.8 million for use of the system.

The assessment varies each year according to Joint Meeting Executive Director Samuel McGhee, who explained the assessment for members and customers is based on prior use of the system.

The 11 member towns include Union, Summit, Hillside, Roselle Park, Maplewood, West Orange, East Orange, Irvington, South Orange, Millburn and Newark. Each of these municipality assessments, though, did not come close to what Elizabeth used in 2013 and, in fact, was considerably lower.

For example, in 2013, Union, with 50,000 residents, was the next highest assessed at $3.6 million, or a 17.6 percent use ratio. The lowest use went to Roselle Park, population 13,281, who was assessed $599,921, or a 2.93 percent use ratio.
Summit, population 21,457, had an 8.86 percent share ratio, receiving a bill for $1.8 million, while Hillside, with a 21,747 population was assessed $1.5 million or a 7.8 percent share.

Other Joint Meeting member municipalities had high wastewater flow usage, including Irvington with 60,695 population, had a 17.18 percent ratio, and was assessed $3.5 million.

East Orange, even though they have a population of 64,268, had low wastewater usage so they only took a 4.2 percent share or $867,024.73 assessment for 2013.

Other municipalities, such as West Orange, with a population of 44,943, was assessed $2.5 million or 12.3 percent, while Maplewood, on the other hand, with a population of 23,868, had to take a 7.7 percent share, or $1.5 million.
South Orange, which has a 16,468 population, was only assessed a 4.8 percent use, bringing their assessment to $994,330 last year.

At the end of the year, wastewater use and any profits generated are tallied up and the wastewater agency provides a refund to member municipalities and customers receive a refund.

According to McGhee, the amount depends entirely on a municipality’s wastewater flow through the system, which is monitored. Bollwage, though, did not agree with how Joint Meeting did their math.

”Contract and agreements are executed to clearly define expectations, roles and responsibilities as well as protect all of the interested parties. However, when terms and conditions cease to be met, such as in this instance, the City of Elizabeth will apply its resources and explore all avenues available to recoup money it is owed,” Bollwage said, adding, “this is an outrageous use of public funds and the city will challenge this misuse to ensure that justice prevails.”

The city is seeking a judgment of $1,350,986, as well as damages and costs relating to legal fees incurred as a result of the Passaic River litigation, which Joint Meeting and all member towns have been involved in for years.

The Passaic River litigation is an ongoing lawsuit brought by industrial companies along this waterway against the sewage agency and 11 member towns and customers. The lawsuit was filed by the industrial companies because the New Jersey Department of Environmental Protection Agency demanded they clean up the river of pollutants, which were spilled into the waterway over many decades.

As a result of having to clean up the Passaic River, the industrial companies sued the municipalities and sewage companies whose wastewater contributed to the pollution over decades. This also included sewage authorities, for instance, like Rahway Valley Sewerage Authority, and their member towns.

The defense of this litigation has cost millions, but as a result of arbitration, last year there was a partial agreement whereby many of the towns would pay a flat amount as a settlement. For some towns, such as Cranford, Union, Springfield and Clark, that amount came to $95,000.

Bollwage alleged in the lawsuit against Joint Meeting that the sewage agency had excessive and unauthorized legal charges and expenses deducted from “over one million” in surplus the city was due at the end of 2013 for the Passaic River litigation in 2013 when that should not have occurred.

“The City of Elizabeth was represented by our in-house lawyers and did not need excessive legal costs placed on us by Joint Meeting,” Bollwage said in the press release, noting “as a tenant we should not be responsible for legal or lobbying fees authorized by Joint Meeting.”

McGhee disagreed, explaining in an interview with LocalSource late last week what actually transpired involving Elizabeth and how the sewage agency handled this situation.

“The first time we heard about Elizabeth having its own legal representation for the Passaic River litigation was after Joint Meeting sent a letter to Mayor Bollwage explaining how much money he’d be receiving from surplus,” said McGhee, adding that Elizabeth never advised them previously that they had their own attorneys working on it.

In addition, McGhee said, the 2013 assessment includes litigation fees from 2012, and not 2013.
The executive director said Elizabeth did not receive the $1.4 million of surplus because, quite simply, the city stopped paying the required quarterly installments they were mandated to pay toward the $10.8 million assessment for 2013. The sewage agency executive director explained that given this, they had no choice but to deduct the amount.

“Elizabeth chose not to pay their total assessment, so when we had surplus money, we deducted the amount they still owed — $1,350,986.06 — from the surplus money they would have received, which left $65,650.67,” McGhee said, pointing out the city was sent this amount.

He also explained this was the first time Elizabeth, or any member or customer, failed to pay their assessment in full. However, he said Joint Meeting was not backing down on this one.

“We feel we are on solid ground here,” McGhee said, pointing out “Elizabeth chose not to pay their total assessment.”
Total assessments by Joint Meeting for 2013 came to $31.7 million, but at the end of the year, McGhee explained, Elizabeth had $1.4 million in surplus coming to them, but because they failed to pay $1,350,986.06 of their assessment of $10.8 million, the sewage agency deducted that amount from the surplus, which left the $65,650.67 share for Elizabeth.

Member towns shared in the surplus, with Union receiving $293,880; Summit $147,559; Hillside $130,139; and Roselle Park $48,845.

Other member towns such as Maplewood received $129,551; West Orange, $204,880; East Orange, $70,593; Millburn, $100,016; South Orange, $80,958; and Irvington, $286,091.