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Rockaway (Morris)Green Risk

ClosedPublic Works & Infrastructure

See Overview of Water Rates and Debt Service Savings for Borough of Rockaway 2021

BID #: N/A

DUE: TBD

VALUE: $3,540,000

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Green Risk

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Executive Summary

The Borough of Rockaway has managed its Water Utility without a rate increase since 2013. However, increases in operating expenditures and significant capital improvements necessitated a water rate increase in 2021 to sustain operations for the next five years. To minimize costs, the Borough refinanced $1,200,000 of outstanding bonds and issued $1,250,000 in refunding bonds, resulting in savings of $248,480 over 16 years. Additionally, $3,540,000 in Water Utility Bonds were issued to finance outstanding Bond Anticipation Notes, yielding net interest cost savings of $878,246.

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Document Text

--- Document: See Overview of Water Rates and Debt Service Savings for Borough of Rockaway 2021 Document ---
The Borough has been able to operate its Water Utility without a water rate increase since 2013.  
Over the past 8 years, the Borough has been able to manage increases in salary and other operating 
expenditures and authorize approximately $4 million of capital ordinances and the related debt for 
equipment and improvements to the water system – the bulk of which occurred in the past 2 years.   
The Mayor and Council anticipated that an increase in the water rates would be necessary in 2021.  
To minimize future costs and the water rate increase, the Borough took advantage of the opportunity to 
refinance $1,200,000 of its outstanding 2011 Water Utility Bonds with interest rates ranging from 3.0%-
5.0% in 2021 and issued $1,250,000 Refunding bonds with interest rates ranging from .293%-2.44% 
without extending the final maturity of the original bonds.  The refunding resulted in cash savings of 
$248,480 over 16 years – average savings of $15,500 per year.  At the same time, the Borough issued 
$3,540,000 Water Utility Bonds at a premium of $629,766 with stated interest rates ranging from 3.05-
5.0% to permanently finance its $4,117,540 of Bond Anticipation Notes outstanding as of December 31, 
2020.  After factoring in the premium, which reduced the principal amount of the bonds to be repaid, the 
net interest cost of the bonds was 1.77%.  As a result of both bond issues, the Borough saved $878,246 in 
future debt service costs. 
The Borough had a water rate study prepared which demonstrates that the 2021 water rate increase 
is expected to sustain the Water Utility operations for the next five years.  The Borough intends to utilize 
annual capital appropriations to finance equipment and capital improvements and curtail the issuance of 
debt, and the Mayor and Council will continue to review the Water Utility’s annual operations and 
determine if smaller increases in the water rates are necessary on an ongoing basis.   
While the Mayor and Council would prefer to not to have to raise the water rates, it is not feasible 
to do so when costs continue to rise, and improvements are necessary.  The 2021 water rate increase, 
including the cost of some major capital improvements and related debt, averages from 2-4% on an annual 
basis over the 8-year period during which there was no water rate increase.