Ridgewood Water Litigation ;the Good, the Bad, and the Ugly

the staff of the Ridgewood blog

Ridgewood NJ, Mayor Hache fills us in on all the details and where we stand . Since 2010, the governing bodies of the three communities outside of Ridgewood served by Ridgewood Water (Gen Rock, Midland Park and Wyckoff) have been engaged in a law suit, which challenged the allocation of expenses by the Village for the water company’s budget. The 3 towns felt that a 21 percent increase in rates in 2010 was excessive. The actual rate per 1,000 gallons is not excessive and, in fact, is in the lower middle of rates offered by other neighboring water utilities and still much cheaper than Suez. The challenge was started by the governing body of Wyckoff, whose auditor is a member of the former auditing firm of the Village when similar allocation methods procedures were used by the Village for the Water Utility budget. The claim argued that the methodology used by the Village in allocating percentages of Village expenses to the Water Utility was unfair (since it was not actual expenses) to the 3 towns and it caused the rates for water usage to be unreasonably excessive to the rate payers of the 3 towns and those rate payers were subsidizing the property taxes of Village residents.

The methodology used by the Village had been accepted by the Local Finance Board of the State in 2004, and the Village continued using that method throughout the years. This litigation which was started in 2010 (and amended in each of 2011 & 2012), finally reached trial in 2017. The trial court decided that the ordinances which approved rate increases in 2010, 2011 and 2012, did not have an adequate factual basis in the record that would warrant the rate increases that were adopted by the Village. As a result, the Court required the Village to hire an expert to calculate what the appropriate rate increases for the years in question should have been.
The Village (while still disagreeing with the Court’s decision that the record lacked an adequate factual basis), complied with the preparation of the rate study by hiring the most qualified expert in the field of water rate studies, Howard Woods. Mr. Woods completed his rate study and has recognized that the Village did not adopt excessive rates during those years challenged by the 3 towns.

The three communities decided to appeal the Court’s decision, and that appeal is pending; the Village cross-appealed on those issues raised by Plaintiffs. Their requests to stay the rate study pending the outcome of the appeal has been denied (at least for now) by the trial Judge. The rate study was presented to the Village Council in early 2018. The Village Council adopted an ordinance to adopt rates established by the Woods study, with the purpose of establishing rates for the years of 2010 through 2017.