Municipalities such as Bayonne, New Jersey have increasingly turned to P3 Concession deals to address the significant gap that exists between the amount of governmental capital available, and the enormous investment required to address decades of chronic underfinancing of the nation’s water infrastructure. This investment gap is a threat to the continued development of municipalities across America—particularly in communities of color, where underinvestment has been particularly acute.
The Bayonne concession agreement was transformative for the struggling municipality. The agreement brought about operational stability and a needed capital infusion that helped the City pursue its ambitious economic development plans.
The Bayonne agreement provided a $150 million fee to retire the City’s outstanding system-related debt and an initial investment of $14 million to fund infrastructure and technology projects. The agreement also called for annual capital investments of $2.5 million (increasing with inflation) to maintain and improve the water infrastructure over the 40-year term of the agreement.
Within the first three years of the agreement, Moody’s Investor Service upgraded Bayonne’s debt from Baa1 with negative outlook to A3. Based on the infrastructure investment and operating plans, the City estimated that the concession agreement would result in $35 million in savings over the life of the deal compared to the City’s continued management.
Year One improvements included:
- Implementing full GIS of Water and Sewer Systems
- Installing fixed Network AMI Systems
- Instating Asset Management System
- Cleaning over 28,000 feet of sewer main
- Cleaning and flushing over 10,300 feet of water main
- Inspecting over 1,500 hydrants and exercised over 400 valves
- Conducting over 2,500 hours of employee training
The concession deal exemplifies how ongoing, proactive investments in water technology and infrastructure, in concert with operational expertise, can produce the savings required to keep water and sewer rate increases below national averages. Most importantly, however, the citizens of Bayonne can count on reliable and affordable water and sewer service—which increasingly cannot be taken for granted—for years to come.
Interested in learning more about the innovative Bayonne concession arrangement?