Under an agreement made by Mayor Mark Smith administration’s in 2012, at that time, the city gave up its management of the local water-sewer utility, and turned it over to United Water and its private investment partner, Kohlberg Kravis Roberts (KKR), for a 40-year period. After the deal was made, United Water was renamed Suez Water, and KKR was succeeded by another investment company.

Under the terms of the agreement, the private investment firm was guaranteed a profit of 11 percent each year. Also under that deal made by the Smith administration, the private companies were guaranteed annual rate increases of from a range of 3.75 to 4 percent.

Per the agreement, Suez Water is required to provide annual maintenance and repairs to the Bayonne water-sewer system up to $500,000 per year. If additional funds are required for maintenance and repairs, the private companies are required to incur the cost upfront, but must be paid back by the municipality with water-sewer revenues within twelve months. If existing revenues are not sufficient, utility rates must be raised to reimburse the private entities.

In May of 2021, former Director of Municipal Services Tim Boyle told Casais and others that the city is bound to the contract and that the only way out of it would be to pay hundreds of millions to buy out the contract. A review by outside legal counsel at Rainone, Coughlin, and Michello confirmed that the city would have to pay over $300 million to cover the cost of the life of the contract.

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