Berkeley Heights Sewer Sale – Everything We Know So Far
-John Migueis
The Township of Berkeley Heights is moving forward with a plan to sell its entire public sewer system to a private company—a deal that would shift ownership, operations, and long-term risk away from the municipality. But with final bids due July 1 and a fifth (and final) addendum still pending, several key terms remain unresolved.
One especially glaring omission: the Township still has not disclosed the 2024 base sewer rate that would serve as the foundation for a seven-year price cap. That uncertainty, along with other ongoing disclosures, has left bidders—and residents—trying to assess a complex deal with important blanks still not filled in.
What’s Being Proposed
The sale would transfer full ownership of the wastewater treatment plant, pumping stations, sewer lines, equalization basins, and related real estate to the highest responsible bidder. All future responsibility for regulatory compliance, environmental risk, and capital investment would shift to the buyer. Once the sale is finalized, the Township would no longer have any direct control over operations, infrastructure decisions, staffing, or rates.
In return, Berkeley Heights would receive a lump-sum payment. According to Township officials, proceeds would be used to pay off system debt, reduce future capital risk, and provide financial flexibility for municipal needs.
But before any sale is finalized, state law requires a public referendum. If the Township accepts a bid, the proposed sale will appear on the November 2025 general election ballot, leaving the final decision to voters.
The Terms Prospective Buyers Must Accept
The Request for Bids (RFB) lays out a series of contractual requirements bidders must agree to:
A seven-year binding rate cap: increases are limited to 2% in year one, 3% in years two through five, and 4% in years six and seven.
Capital investment: at least $15 million must be spent in the first five years, and $30 million over ten years.
Labor protections: the buyer must offer continued employment to the current system director for five years, and to all other operators for at least two years, at equal or better salary and benefits.
Public service terms: senior citizen and veteran discounts must remain in place for 10 years, and Township-owned buildings must receive free sewer service for three years.
Permitting and compliance: the buyer must assume responsibility for all environmental permits, including unresolved NJDEP violations and an outstanding air permit revision that has not yet been filed.
Bidders must accept these terms without changes. Material modifications to the sale agreement would render a bid non-responsive.
The Process: Pivot Points and Pressure
The RFB was released May 15, 2025. In the six weeks since, the Township has issued four addenda that have significantly shaped the process. Each responded to bidder questions, but also revealed just how many foundational details were missing from the original documentation.
In Addendum #1, bidders were told they could not ask questions during the system tour. On-site inspections were limited.
Addendum #2 codified the seven-year rate cap into the contract—but still did not include the actual 2024 base rate on which the cap is calculated.
Addendum #3 turned to labor. It finally required the township to provide detailed employee information (salaries, benefits, pension status), but the data itself was not provided by the Township until after requests from multiple bidders.
Addendum #4 confirmed that the Township has not submitted the required NJDEP air permit revision for an enclosed flare—despite a hard deadline in September. The permit is a contractual requirement for the buyer, who will inherit any delays in compliance.
Throughout these pivots, the Township has extended the bid deadline (originally June 26) to July 1, with a final addendum now expected June 23. Each shift narrows the window for bidders to incorporate newly released information into binding price proposals.
Concerns About Transparency and Competition
The Township has taken the position that controlling disclosure timelines is necessary to maintain fairness and limit liability. But this staged approach has prompted questions from bidders and observers alike.
Bidders are being asked to:
Commit to legally binding capital investments
Lock in a capped seven-year rate schedule
Retain Township staff under defined terms
Assume all permitting and environmental risk
—while still lacking the actual 2024 sewer rate, a finalized employee roster, complete regulatory clearance, and key financial context.
That leaves bidders to estimate future returns using partial data. And for residents, it raises a larger question: are these terms truly drawing robust market interest, or simply filtering for companies willing to absorb risk under tight timelines?
Public Impact: Short-Term Stability, Long-Term Uncertainty
On paper, the seven-year rate cap provides a measure of financial predictability for residents. But after year seven, there is no mechanism to control future rate increases. Rates would be set by the private owner, reviewed by the BPU, and largely insulated from local input.
From a labor standpoint, job protections only last as long as the contract requires. After that, private operators could restructure benefits, eliminate positions, or change staffing models. Some current employees are nearing pension vesting thresholds, and uncertainty remains about how a sale would affect their long-term retirement.
Aging Infrastructure, Mixed Signals
The wastewater system has seen notable recent investments—disk filtration, peracetic acid disinfection, and chemical feed systems are either complete or under construction.
But the plant’s SCADA control system remains only partially functional, and condition assessments have led to ongoing liner repairs at both equalization basins. Regulatory violations dating back to 2022 are still being addressed. Meanwhile, an industrial discharge agreement with Chevron/Millmaster adds complexity to long-term operations and monitoring.
And while sewer connection fees have spiked in recent years—from $430,000 in 2022 to a projected $3.5 million in 2025—they remain closely tied to development cycles and may not be reliable revenue for future planning.
What Comes Next
If bids are submitted and deemed acceptable, the Township will pass a formal sale ordinance and place the question on the November ballot. If voters approve, the system will transfer to the selected private owner—and from that point forward, local control will be effectively eliminated.
FAQ: What Do the Documents Say About the Questions We Asked In Prior Articles
Rate increases: The documents define increases only for the first 7 years (2% in year one, 3% in years 2–5, 4% in years 6–7). After that, there are no caps. Future increases will go through NJ BPU rate filings.
Who handles billing and customer service?: The (private) buyer takes full responsibility for billing, customer service, collections, and service response. No specific standards for customer service response times are defined.
Path for the town to exit deal if things go south: There is no path. The sale is permanent, and ownership cannot be reclaimed by the Township unless voluntarily resold by the buyer.
Private operator’s legal commitments: The buyer must uphold the rate caps, capital investment schedule, labor protections, senior discounts, municipal discounts, and environmental compliance responsibilities. Beyond these, oversight falls to the BPU and NJDEP- NO TOWNSHIP OVERSIGHT.
Use of proceeds: No specific allocation to public schools or shared services. Proceeds will be used to pay off sewer debt and for general municipal purposes.
Tax relief or budget reduction requirements: No language exists in the bid or referendum requiring tax cuts or budget reductions following the sale.
Offsetting property taxes for future sewer rate increases: There is no mechanism tying property taxes to sewer rate increases.
Township obligation to intervene post-sale: The Township will have no formal role in resolving service or billing disputes after the sale. Oversight moves to the BPU.
Scope of sale: The full system, including infrastructure ownership, is being sold. Vehicles, cash reserves, and certain receivables are excluded.
Performance or service-response standards: No specific performance standards beyond general regulatory compliance are outlined.
Protections if buyer underperforms: Enforcement would be handled by NJDEP (environmental issues) and BPU (rates, service). The Township has no direct authority after closing.
Protections for current workers: The system director is protected for 5 years, other staff for 2 years. Pensions for employees nearing vesting remain unresolved beyond the initial employment guarantees.
Buyer recouping purchase price from ratepayers: The buyer can recover acquisition costs through BPU-approved rate structures after year 7.
Low-income protections: Senior, disabled, and veteran discounts remain for 10 years. No other income-based protections are included.
Who responds to emergencies: The private buyer will handle all operational and emergency responses.
Public meetings or reports: The buyer is not required to hold public meetings or issue public reports after the sale.
Can the town ever get the system back: There is no repurchase option built into the agreement.