Minutes: December 19, 2013

Call to Order

The regular meeting of the Vernon Township Municipal Utilities Authority (VTMUA) of the Township of Vernon was convened at 7:00 p.m. on Thursday, December 19, 2013 in the Vernon Municipal Center, 21 Church Street, Vernon, New Jersey.

Statement of Compliance

Adequate notice of this meeting had been provided to the public and the press on January 8, 2013 and was posted on the bulletin board in the municipal building in accordance with the Open Public Meetings Act, N.J.S.A. 10:4-6.

Roll Call

Thomas BuchneyA
Barbara ChorzepaP
Gloria GalloA
James KensekP
Stephen PiccirilloA
Roy TanfieldP
Vincent ZinnoP

Professional Staff Present

Auditor Charles Ferraioli and Executive Director John Scerbo were also present. Attorney John Ursin arrived at 7:20 p.m.

1. Approval of Minutes

Approval of Minutes for Regular Meeting of November 7, 2013

Motion to approve the minutes made by Roy Tanfield
Seconded by James Kensek

Call for Discussion: None

All in Favor
Ayes: James Kensek, Roy Tanfield, Vincent Zinno
Nays: None
Abstention: Barbara Chorzepa (absent at 11/7/13 meeting)
Motion passed

2. Approval of Bills

Resolution 13-48: Payment of Bills List

Motion to approve the bills

Roy Tanfield questioned a $321,253.75 item that lists the vendor as Vernon Township. Auditor Charles Ferraioli explained that the money goes to a trust fund to Vernon Township, which then pays the Sussex County Municipal Utilities Authority (SCMUA). The township pays the SCMUA, and the VTMUA reimburses the township. The $321,253.75 payment is for the SCMUA. The money comes out of the VTMUA budget. Roy Tanfield questioned whether taxpayer funds were paying SCMUA bills. Mr. Ferraioli confirmed they are not. Mr. Tanfield asked the auditor whether all funding for all SCMUA bills comes from VTMUA sources. The auditor confirmed they did come from VTMUA sources.

Motion to approve made by Barbara Chorzepa
Seconded by James Kensek

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

3. Resolutions

A. Resolution 13-49: Approving Deferral of Mandatory Connection for a Period of Two Years for Brookside Florist to Hookup to the Sanitary Sewer System Due to Unique Physical Conditions Affecting Their Property at Block 145, Lot 7

Property owners Morgan and Patricia Guinta have asked for a waiver and two-year deferral from the hookup requirement due to unique physical conditions affecting the property. They submitted a sewer application, paid all applicable fees, and obtained the necessary permits in preparation for connecting to the sewer system but encountered the presence of a natural rock ledge that precludes installation of necessary components to the required depth, and connecting would be an extreme financial hardship. The Guintas have agreed to pay all user fees during the deferral period.

Motion to approve made by James Kensek
Seconded by Roy Tanfield

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

B. Resolution 13-50: Approving the Risk Management Consultant for 2014

The VTMUA appoints Risk Management as its local risk management consultant.

Motion to approve made by Vincent Zinno
Seconded by James Kensek

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

C. Resolution 13-51: Resolution Appointing Fund Commissioners for 2014

The VTMUA appoints Gloria Frato-Gallo as the fund commissioner for the local unit for the year 2014 and Thomas Buchney as the alternate fund commissioner for the year 2014.

Motion to approve made by James Kensek
Seconded by Barbara Chorzepa

Call for Discussion: Barbara Chorzepa asked if the appointees were contacted for affirmation. Vincent Zinno said they had, and they both agreed to the appointments.

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

D. Resolution 13-52: 2014 Fund Year Statewide Insurance Fund Risk Management Consultant’s Agreement

Agreement entered into among the VTMUA, the Statewide Insurance Fund, and consultant Risk Management

Motion to approve made by James Kensek
Seconded by Vincent Zinno

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

E. Resolution 13-53: Resolution Amending Rules and Regulations of the Vernon Township Municipal Utilities Authority Setting Late Payment Fees Pursuant to NJSA 40:14B-41

Motion to approve made by Barbara Chorzepa
Seconded by James Kensek

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

F. Resolution 13-54: Resolution to Enter into a Contract with Municipal Software Inc. for Billing and Payment Processing of Sewer Services by the VTMUA

The cost to switch will be $6,050 with the purchase of a receipt printer for $550 and annual technical support of $125 a month for 2014.

Motion to approve made by Vincent Zinno
Seconded by Barbara Chorzepa

Call for Discussion: Barbara Chorzepa asked if they received any other bids. Executive Director John Scerbo said they received four bids but the one from MSI was the best because the software interfaces with the finance department software and general ledger.

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

G. Resolution 13-55: Resolution Scheduling VTMUA Meetings for January and February 2014

The regular meeting for the VTMUA will be held on January 16, 2014 at 7 p.m. and the reorganization meeting on February 20, 2014 at 7 p.m., both meetings held at the regular location at the municipal center at 21 Church Street, Vernon, NJ.

Motion to approve made by Barbara Chorzepa
Seconded by James Kensek

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

4. Open Meeting for Public Comment

Motion to open the meeting to the public made by Roy Tanfield
Seconded by James Kensek
All in favor

Noreen Moran of Great Gorge Village asked the VTMUA if it would consider asking attorney John Ursin to resign in light of an ethics complaint in Sussex Borough. Vincent Zinno said the VTMUA has had no discussion on the matter that concerns another municipality. Ms. Moran asked if the public could bring up the matter. John Scerbo said he did not know what factual statements the public could make on the matter since no determination was made on the alleged conflict. Commissioner Roy Tanfield stated everybody is innocent until proven guilty.

Pat Lasorsa of Vernon asked if the public has access to information on what businesses and residences are supposed to hook up to the sewers and which ones have already. Chairman Vincent Zinno told her there is available to the public a table of all businesses and properties that have hooked up. John Scerbo said only four to six properties that require hook up have not already done so. Of the 4-6, three have already made the required payments, and he does not anticipate a problem.

Cindy Mooney of Great Gorge Village said there should be a way the VTMUA could charge based on actual flow and not by EDU. She claimed 98% of all MUAs in the state bill users based on flow calculations. VTMUA Commissioner Roy Tanfield said he is personally engaged in a research project along those lines right now on his own and hopes to report the results of his findings at the VTMUA meeting next month. Mr. Tanfield said he and several other individuals have met with Senator Oroho to discuss the matter. Commissioner Tanfield said all of his own research so far has indicated that 98% of all MUAs and public utilities across the country use water-based billing. Mr. Tanfield said Vernon is an extremely rare exception in using a fixed rate with EDUs. Mr. Tanfield said Senator Oroho also said this himself. Mr. Tanfield said he would complete a thorough research and give a report at next month’s VTMUA meeting. Ms. Mooney asked if they know what is the EDU count for Minerals Spa. She said she wanted to know the EDU count for all Mountain Creek properties. Vincent Zinno said she could call the executive director in the morning to get that information. Mr. Zinno and Mr. Scerbo said they believed it was about 300 EDUs. That does not include privately owned residences in the Appalachian. Ms. Mooney asked Roy Tanfield how many EDUs Great Gorge Village condo owners have in total. Mr. Tanfield said they have 1200. Mr. Zinno explained that based on NJ Department of Environmental Protection (NJDEP) regulations, there are two different calculations for hotels with 30-day stays or less and hotels with permanent residency. Roy Tanfield explained there are two methodologies in the United States for calculating rates: 1) EDUs and 2) based on usage. He said there are people supporting charging based on actual usage, including Mayor Victor Marotta. Mr. Tanfield said he met with the mayor for over an hour, and the mayor believes in the per gallon approach. Mr. Tanfield also said last week he anonymously had a lengthy conversation with a commissioner from the NJ Board of Public Utilities (BPU). The BPU commissioner told Mr. Tanfield the EDU system has been phased out over the past 20 years, and no one uses it anymore. Mr. Tanfield said that when he gives his report at the next meeting perhaps the VTMUA might reconsider its billing methods. He felt their billing might change at that point and the VTMUA might also discover that some people should be paying a lot more than they thought. Commissioner Barbara Chorzepa interjected that she would like to clarify for the record that all users, regardless of classification, are charged based on EDUs because state law does not permit two different billing systems within one sewer system if some users are metered and others are not. Therefore, the VTMUA is obligated by law to charge by EDU for all users.

Sally Rinker of Vernon said the township bonded $6.5 to $7 million for the MUA and questioned the bonds and payment. She said there is a “misconception” by some that only the users are paying for the sewer and she claimed that is not true and insisted all taxpayers are paying for them. She claimed all the taxpayers in the township are carrying the debt and she questioned at what point in time would the VTMUA take over that debt. Auditor Charles Ferraioli told Ms. Rinker her statements were erroneous and said only the sewer users are paying the debt. He said the debt and the interest in the bonds the town issued are wholly paid by the sewer users and said this debt service has been in the VTMUA’s budget for both 2012 and 2013 and all payments on the debt are up to date. Mr. Ferraioli said taxpayers are not paying the debt for those bonds and no taxpayer money whatsoever is paying for the bonds. Only sewer users are paying the bond debt and interest. Ms. Rinker asked what portion of the bonds have already been paid. Mr. Ferraioli responded that 100% of the payments owed thus far have been paid. Executive Director John Scerbo also confirmed there is no taxpayer money going into the debt. Only the users are paying the debt, said Mr. Scerbo. Ms. Rinker then asked how the situation looks going forward, saying she’s hearing “all kinds of different opinions” about how the utility is doing financially. Mr. Ferraioli said there is a contract between the township and the VTMUA, that all payments are up to date, and that the VTMUA will continue to make all of the payments. “That is our intention,” said Mr. Ferraioli. Ms. Rinker asked if the authority is able to make those payments going forward. Mr. Ferraioli responded yes. Roy Tanfield said Ms. Rinker’s concerns about the bonds are another issue he is also researching as he has a background in working with bonds on Wall Street years ago and knows about bonds. He said he anonymously called a number of investment bankers to see how attractive the VTMUA is to the bond market. He is trying to gain knowledge on what the VTMUA has to do to get into the bond market on its own without the township’s support. He said the purpose of any authority is to take all the debt off the balance sheet of the sponsoring municipality and run it autonomously financially. Mr. Tanfield said, “Sally is absolutely right because we (VTMUA) owe the taxpayers a fortune, a lot of money, and I have a feeling a lot of them don’t even know it.” Mr. Ferraioli stated Mr. Tanfield’s statement was not accurate and he disagreed with it and wanted to clarify that the VTMUA has the liability for all the debt and all payments owed for 2013 and 2014 are completely paid one hundred percent and all future payments will be made solely by sewer users. John Scerbo added the real point to the discussion is that taxpayers are not paying anything for the sewers. He said the only thing the VTMUA is “living off of” is the credit rating of the municipality but that credit line is not costing the taxpayers anything. “That’s the good credit rating of the municipality, period,” he added, saying, “There are no dollars and cents lost to the taxpayers.”

Close Meeting to the Public

Motion to close the meeting was made by Roy Tanfield
Seconded by Barbara Chorzepa

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

5. Correspondence

Letter from Rose Ann Brennan, Owner of Cider Mill (Block 143, Lot 19)

Ms. Brennan asked for a six-month extension of time to hook up to the sewer because it is not a feasible time for the Mill Creek Boutique and Snap Fitness to have business disrupted as it will cause hardships for both businesses. Furthermore, it will be difficult to pour asphalt to repave the parking lot during the winter months. During the extended time, the property owner will pay the sewer fees associated with the property. Attorney John Ursin said he had a conflict with the property because he did a real estate sale with the property a number of years ago but said generally the user fees should begin regardless. He said if the VTMUA wishes, they should get independent council. John Scerbo said the VTMUA was not asking for advice but just wanted a resolution drafted. Mr. Ursin said they could get independent council to draft a resolution.

James Kensek moved to table the decision and wait for a resolution to be drafted for the next meeting.
Seconded by Barbara Chorzepa

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

6. Resolutions

A. Resolution 13-56: Resolution to Introduce the Vernon Township Municipal Utilities Authority Budget for 2014 by Title

Auditor Charles Ferraioli introduced the $1,937,009 budget for 2014, which calls for no rate increase. Roy Tanfield asked Mr. Ferraioli to confirm that Great Gorge Village would not get a rate increase for 2014. Mr. Ferraioli confirmed no sewer users would have a rate increase in 2014. Mr. Tanfield said he thinks the authority should be commended for that. Mr. Ferraioli said $1,330,000 from user-based revenues is anticipated, with an additional $100,000 in revenues from connection fees. Appropriations are similar to last year, with the majority of the budget, $1.3 million, going to the SCMUA. About $150,000 is budgeted for capital improvements. The budgets for insurances and engineering went up, and a full year’s salary is now budgeted for the executive director, who was hired midyear last year. Chuck Ferraioli said the VTMUA has a balanced budget. Mr. Tanfield questioned the budget with regard to Mountain Creek and Great Gorge Village. He said the budget is $1,330,000, with Great Gorge Village paying approximately $1 million of that amount ($840 X 1200 EDUs, according to Mr. Tanfield). Mr. Tanfield said Mountain Creek and the downtown properties are paying the remaining approximate $330,000. He added that $498,575 is being paid under the term “Mountain Creek Agreement.” He said he has read the Mountain Creek agreement several times and knows it well. He said the “operative statement” in the agreement is, “The developer shall be responsible for 63% of any yearly budget deficit incurred by the VTMUA,” but he added Mountain Creek is not paying “one penny” of it for five years and he’s having a lot of trouble with that. Mr. Tanfield said, “Everyone else has to pay in cash...but Mountain Creek is paying its sewer bill in 15 years. The rest of us have to pay in 30 or 60 days or we get taken to court. I’m having a lot of trouble with that.” Mr. Tanfield said Mountain Creek is using half the sewer system in terms of flow, about 50-60% of the transmission line, but is only being billed for about 20 percent. He feels Mountain Creek should be paying $850,000 a year in user fees.

Attorney John Ursin said the Mountain Creek agreement is not designed to defer current user fees. It is designed to defer the payments that are made for the purchase of the capacity, and those are two different things.

Chairman Vincent Zinno said it sounds like Mr. Tanfield is making a very distinguished line between Great Gorge Village and Mountain Creek when there are other users and connections in the sewer system.

Mr. Tanfield said Great Gorge Village has 1200 EDUs allocated to it. Mr. Tanfield said Mountain Creek should have 900 EDUs, not the 300 EDUs for which they are currently charged. He said he is going to push for a water bill based system next year. He feels Mountain Creek is using a lot more water than anyone has been saying. He said there should be a “proportionality shift” between Mountain Creek and Great Gorge Village. Mr. Tanfield said Comet Management, the management company for Great Gorge Village, is undergoing a current research effort to find out Mountain Creek’s actual water usage.

Motion to approve the 2014 VTMUA budget by title only was made by James Kensek
Seconded by Roy Tanfield

Call for Discussion: No further discussion

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

B. Resolution 13-57: Approval of 2013 Budget Transfers

This resolution deals with funds that were either transferred out or into a line item in the budget. The transfer amounts total $444,742. The aggregate total of the overall budget is not altered by these transfers.

Motion to approve made by Vincent Zinno
Seconded by Roy Tanfield

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

7. Attorney’s Report

John Ursin reported there has been very little activity in the lawsuit filed by Great Gorge Village residents against the VTMUA. He will report on any further developments next month. Commissioner Barbara Chorzepa asked what the lawsuit is costing the VTMUA. Mr. Ursin said he did not have that number with him but he or John Scerbo would provide it to Ms. Chorzepa.

8. Auditor’s Report

No further report

9. Engineer’s Report

In Engineer Ceren Aralp’s absence, John Scerbo gave the report.

A. Vernon Electrical Supply, Block 141.01, Lot 10, Lot 1.03

Warehouse located at 9 Church Street with two employees working on site. Based on the site being classified as office space, an allocation of .25 EDUs was allocated to this property.

Motion to approve made by Roy Tanfield
Seconded by Vincent Zinno

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

B. Vernon Township Board of Education, Block 141, Lot 12.01 and Block 141, Lot 13, 293 Route 94

Vernon Township Historical Society headquarters, .75 EDUs allocated for the property; Executive Director John Scerbo said of these two contiguous lots, one is an empty lot.

Motion to approve made by Vincent Zinno
Seconded by James Kensek

Call for Discussion: None

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None

C. Vernon Township Board of Education, Block 144.01, Lot 7, 539 Route 15

Main office of the board of education, 3 EDUs allocated for the property designated as office space.

Motion to approve was made by Barbara Chorzepa
Seconded by James Kensek

Call for Discussion: Barbara Chorzepa asked if the board of education was paying connection fees, application fees, and other required fees. John Scerbo said it is.

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

D. H&H Auto Strip Mall, Block 141, Lot 15.05, 287 Route 94

H&H Auto Supply, 6 retail stores, two restaurants, allocation of 11.5 EDUs.

John Scerbo said the applicant did not identify a grease trap for Pizza Station and will have to come back and show it before a building permit can be issued.

Motion to approve was made by Vincent Zinno
Seconded by Roy Tanfield

Call for Discussion: Two grease traps are required for this strip mall, at Pizza Station and at China Star. The one for China Star has been identified on the map.

Roll Call Vote:
Ayes: Barbara Chorzepa, James Kensek, Roy Tanfield, and Vincent Zinno
Nays: None
Motion passed

E. Old Business

Block 145 Lot 1.01, 542 Route 515, James Lombardo/Prudential Insurance
Block 141, Lot 15.03, Kan C. Cheng
Block 145, Lot 1.02 Waheguru Gas

John Scerbo reported that all the conditions regarding map or design changes necessary for these three properties prior to getting building permits have been met and satisfied. It was recommended that building permits be released for all three applications.

10. Executive Director’s Report

No further report

11. VTMUA Commissioner Comments

Roy Tanfield said he wants the public to know that while he and the other commissioners might have disagreements on issues, he has had no problems getting any reports or documentation he has requested from any staff member. He said he has “zero issues” with transparency or availability of data from the VTMUA.

Mr. Tanfield also said that on November 4, he and two colleagues from Great Gorge Village—Ed Dilworth, Board President of Great Gorge Village and Craig Thompson, President of Comet Management, the management firm for Great Gorge Village—met with Senator Oroho, the senator from the 24th district, for about one-and-a-half hours. Mr. Tanfield said it was at his own request that the meeting was arranged and said it was worth it. The purpose of the meeting, he said, was for consumer protection for MUA customers throughout the state. He said there are about 90 MUAs in the state, but there is nowhere for these MUA customers to go if they have a complaint, unlike other utilities that can go to the BPU or to Consumer Affairs. Mr. Tanfield said about a year ago he got in touch with Senator Stephen Sweeney, president of the New Jersey Senate and a Democrat from Gloucester County. He said Senator Sweeney is known for being a consumer advocate and has corresponded with Mr. Tanfield directly several times. Senator Sweeney suggested Mr. Tanfield and the Great Gorge Village representatives go to see Senator Oroho. According to Mr. Tanfield, Senator Oroho cosponsored a bill a year ago to subject county and municipal sewerage authorities to rate increase approvals to the Board of Public Utilities. He said that means SCMUA will have to go through the BPU before it can raise its rates again. Mr. Tanfield said Allison McHose, two legislative aides, and their chief of staff were also present at this meeting. Mr. Tanfield said from “his side” there were eight people at the meeting. He said additionally Senator Oroho cosponsored a bill that will require state oversight over budgets of regional sewerage authorities such as the SCMUA. He said Senator Sweeney informed him of a third bill that is pending that will give municipal mayors the authority to unilaterally veto anything an MUA does. He said these three bills will significantly reduce the autonomies of MUAs throughout the state.

Mr. Tanfield said he had a third comment. He said most MUAs are fine, and he does not think the VTMUA is too bad and is moving in the right direction and improving, but some MUAs are really notorious and have taken advantage of customers. He said during the meeting he and Great Gorge Village representatives had with Senator Oroho, the chief of staff quoted Governor Christie as allegedly saying, “All too often MUAs have become a kind of shadow government reporting to no one but themselves.” Mr. Tanfield said there is a bipartisan effort to regulate all the MUAs in New Jersey for the first time in 50 years. He said that as the VTMUA moves forward over the next year, they should be cognizant that at some point they might have bureaucrats from Trenton looking over their shoulders, which would be what the SCMUA in particular needs.

Auditor Charles Ferraioli asserted that those bills refer to a different type of authorities that are created by different state laws. They are not directed at municipal MUAs such as the VTMUA. Municipal MUAs are already regulated by the Department of Community Affairs (DCA). The VTMUA budget must also be approved by the DCA. Mr. Ferraioli said that by state statute there are already many regulations over municipal MUAs such as the VTMUA.

12. Chairman’s Comments

Chairman Zinno had no comments other than to wish everyone Happy Holidays, a Merry Christmas, and a Happy New Year.

Motion to Adjourn the Meeting

Made by James Kensek
Seconded by Barbara Chorzepa
All in favor
Meeting was adjourned at 8:42 p.m.

The next meeting of the VTMUA will be on January 16, 2014.

Transcribed and submitted by Jessica Paladini
Secretary, Vernon Township MUA