The township gave no public reason for pausing the procurement after New Jersey American Water became the only qualified respondent. No proposed purchase price or updated valuation has been disclosed.
MENDHAM TOWNSHIP, NJ – Mendham Township suspended the request-for-proposals process for the possible sale of its two municipal wastewater systems on July 28, interrupting a schedule that had called for a preferred proposal to be selected in August.
A one-page procurement addendum says the request for proposals and its submission deadline are suspended “until further notice.” It gives no reason for the decision and does not say whether the township received a purchase proposal before the suspension.
The unexplained pause came after New Jersey American Water became the only company to respond to the township’s earlier request for qualifications.
According to the June 22 Township Committee minutes, the water company submitted its qualifications on June 8 and was found to meet all of the township’s requirements. The committee designated it as a qualified respondent, allowing the company to advance to the price-proposal stage.
The township’s original schedule contemplated a site visit on July 7, proposals on July 24, and possible selection of a qualified proposal on Aug. 18. The June minutes described the July deadline as subject to extension.
The township’s WIPA webpage currently posts the suspension as Addendum No. 3 but does not provide the underlying request for proposals or the first two addenda. The posted record therefore does not establish what deadline was in effect immediately before the suspension.
The township’s earlier request for qualifications was not a request for a purchase price. It sought information about respondents’ experience, finances and interest in acquiring the systems. It also expressly reserved the township’s right to stop the process or decline to complete a sale.
That distinction matters: New Jersey American Water’s June submission qualified it to participate, but it was not itself approval of a sale or evidence of an agreed price.
About 200 customers and millions in projected work
The proposed transaction concerns the Mendham East and Mendham West wastewater collection and treatment systems, which serve approximately 200 residential customers. Veolia currently operates the facilities under contract with the township.
The process is proceeding under New Jersey’s Water Infrastructure Protection Act, or WIPA. The law permits certain public water and wastewater systems to be sold without advance voter approval when state regulators find qualifying emergent conditions.
On April 20, the New Jersey Department of Environmental Protection found that the West system had a history of significant noncompliance and that both systems had suffered from insufficient investment and sustainable maintenance. DEP nevertheless rejected the township’s separate claim that it lacked the financial, technical or managerial capacity to operate the systems.
The DEP determination cited approximately $2.68 million in estimated short- and long-term repairs and improvements, including about $1.54 million for the East system and $1.13 million for the West system. DEP cautioned that it was not independently verifying the accuracy of those cost estimates.
DEP also questioned parts of the township’s financial analysis. The department said assumptions used to project the ratepayer burden were not sufficiently explained and appeared to increase the projected costs. It also found that claims suggesting rates could remain steady were vague and unsupported.
The financial pressure is already reaching customers. On May 11, the Township Committee adopted rates representing an approximately 33% increase for East customers and 20% increase for West customers.
Under the adopted rates, annual East charges range from $1,443 for a one-bedroom unit to $7,347 for a five-bedroom unit. West customers pay $1,946 for a single-family home or $803 for a condominium.
Township budget materials said capital projects were removed from the 2026 utility budget to limit the immediate rate increases.
Purchase price, updated valuation and petition status remain unclear
An independent financial report prepared in May 2025 estimated the combined systems’ value at approximately $7.72 million, including $4.92 million for Mendham East and $2.8 million for Mendham West. That figure was based on an average of income and replacement-cost valuation methods.
That 2025 report should not be treated as a current sale price. The 2026 request for qualifications references an updated financial report dated Feb. 20, but the township’s WIPA page does not currently provide that report as a separate document.
The public materials also do not answer whether New Jersey American Water submitted a purchase price before the procurement was suspended.
Residents had until June 7 to file a petition requiring a referendum on the proposed disposition. Under the township’s public notice, a valid petition would have required signatures equal to at least 15% of the votes cast in the township during the most recent election for the General Assembly.
The township’s posted WIPA materials do not show a filed petition or a scheduled referendum. The available records alone, however, do not conclusively establish whether a petition was submitted.
A sale would still require several approvals
DEP’s emergent-condition finding made the systems eligible for the WIPA process. It did not approve a sale.
After selecting a proposal, the township would have to negotiate a purchase agreement and submit the transaction for regulatory review. The state Board of Public Utilities would examine the price and rate treatment, while the Department of Community Affairs would review the proposed use of the proceeds. Final township approval would require an affirmative vote by at least two-thirds of the governing body.
Under WIPA, the transaction price must be sufficient to defease debt associated with the wastewater systems. The municipal debt therefore would generally be paid or retired through the transaction instead of simply being transferred to the purchaser. Any remaining proceeds would be subject to state review.
No public purchase agreement currently establishes how much debt would be retired, what capital improvements the buyer would promise, how remaining proceeds would be used or whether customers would receive temporary rate protections.
The 2025 financial adviser’s report said the township could seek a five-to-seven-year rate structure as part of a sale. That was a potential negotiating position, not a guaranteed protection.
New Jersey American Water also has a pending statewide rate case. The company initially requested $146.4 million in additional annual revenue, later reducing the request to approximately $139.2 million. In a June 10 order, the BPU suspended the proposed changes through Oct. 16 while the case remains under review.
That proceeding does not set rates for Mendham’s municipally owned systems today. Any eventual effect would depend on the terms of a sale, an approved rate schedule and the BPU’s decisions. The public record provides no basis to conclude that the rate case caused the township’s suspension.
The Township Committee’s next regular meeting is scheduled for Aug. 18, the date previously identified for possible selection of a proposal. Unless the procurement resumes, that timetable is no longer operative. The township has announced no replacement deadline.