HOBOKEN -- The City of Hoboken would save millions in annual spending on repairs to its aging water system, though customers would see a 2 percent rate hike over a seven-year period, under a new deal with the city's water utility announced by Mayor Dawn Zimmer on Wednesday.



The new deal, which is scheduled for a vote by the City Council on Aug. 2, would replace an existing agreement with Suez Water that dates back to 1994, when the utility was still known as United Water Company. Terms of the deal are outlined here



Under the current deal, Suez is obligated to pay for $350,000 a year worth of repairs to Hoboken's water system, which is a century old in places. Water main breaks have become all too familiar events in Mile-Square City winters, flooding streets and snarling traffic, spoiling holiday plans , and even swallowing entire vehicles in sinkholes.

Under the new deal, Suez' annual maintenance obligation would increase five-fold, to $1.8 million, meaning the city would no longer be on the hook for as much as $1.45 million a year in annual repair costs.

But the deal also calls for a one-time 1.8% rate increase in 2018, followed increases of about 2% per year for the next six years, which officials say would gradually bring rates up to the true cost of the amount of water the city consumes, a difference that now amounts to a city subsidy for water.



The new deal would also forgive $10 million in debt the city has accrued to Suez for repair costs in excess of the existing $350,000 annual maintenance allowance, and for excess water use not covered by ratepayers.

"Our aging water system is in need of expensive capital upgrades, yet the $350,000 provided annually by our existing water agreement from 1994 is not even enough for emergency repairs," Zimmer said in a statement. "I am thrilled that our proposed agreement would provide on average over $1.8 million per year for capital investments."

A Suez spokeswoman, Treva Spencer, confirmed that a new agreement had been hammered out, though she declined to discuss the terms.

The current agreement is set to expire in 2024, but the new deal would extend to 2034.

Securing a new deal with Suez would let Zimmer satisfy a key goal of hers before she steps down in January, following her surprise announcement last month that she would not seek a third term in the November election.

Three members of the City Council are among the field of candidates to succeed Zimmer as mayor: Councilman Ravinder Bhalla, who has Zimmer's backing and vowed to follow-up on her initiatives; Council President Jennifer Giattino, who has yet to present her platform; and Councilman Michael DeFusco, a sometime-critic of the mayor.

DeFusco called the announcement of the agreement "troubling," in thqt it comes only month before Zimmer steps down, but would bind the city for another 17 years.

"It's particularly concerning that the contract would include an annual increase of at least 2%, which would annount to yet another hidden tax on Hoboken residents that many will struggle to afford," DeFusco said in a text.

Giattino said the new deal might be a better one for the city.

"The terms as presented seem more favorable versus our current contract," Giattino texted. But, she added, "We will not know if this is the best possible outcome for Hoboken until we better understand the profit margins for Suez within what is being proposed."

Steve Strunsky may be reached at sstrunsky@njadvancemedia.com. Follow him on Twitter @SteveStrunsky. Find NJ.com on Facebook.