Minutes: January 19, 2017

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, January 19, 2017 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 February 18, 2016 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
Gloria GalloP
Edward SegerP
Joseph TadrickA
Vincent ZinnoP
Edward SnookP

Executive Director John Scerbo stated Mr. Buchney is away and unable to attend the meeting.

Roll Call of Professionals

Attorney Richard Wenner, Engineer Ceren Aralp, Auditor Charles Ferraioli, and Executive Director John Scerbo were present.

1. Open Meeting for Public Comment

Vincent Zinno moved to open the meeting to the public.
Edward Seger seconded the motion.
All were in favor.
The meeting was opened to the public.

Councilwoman Sandra Ooms came forward. She asked if at this point there had been an expansion of the sewer service area, what would the MUA have done to prevent a rate increase? Auditor Charles Ferraioli said if there were an expansion there would likely not be a rate increase.

Executive Director John Scerbo said the current rate increase follows the track of the projections provided by VTMUA auditor Charles Ferraioli, based on no increase in EDUs. Mr. Ferraioli confirmed what is driving the rate increase this year and the next two years after that is the debt service to the SCMUA.

Sandra Ooms said the township council hired the engineering firm of Remington & Vernick to examine an expansion study. She asked if the township council had forwarded the report generated from the study to the VTMUA. Mr. Scerbo and all of the commissioners said they have not seen the report and it has not been made available to them, nor did the engineer who did the study ever speak with any of them. Ms. Ooms said the report examines an expansion, and it would behoove them to read it.

Edward Snook said in order to do a study, no matter who is the engineering firm, they should have spoken with the VTMUA to have an understanding of what is going on.

Ms. Ooms said the engineer got all of the MUA records that were needed. Mr. Snook said they should have interviewed the VTMUA executive director or the commissioners. Ms. Ooms suggested they OPRA (Open Public Records Act) the report and read it.

Commissioner Gloria Gallo said she found it was amazing the mayor and council did not even tell the VTMUA about the report. Sandra Ooms said the mayor and council allocated money for the study and report in the township budget and discussed the report, so it is available to them. She suggested the VTMUA ask the mayor for a copy of the report. John Scerbo said he would request a copy from the mayor.

Vincent Zinno said the VTMUA’s presentation to the council in December 2015 stated if there were no steps to move forward with an expansion study or an attempt to get more users, or to bond for water in the town center to get more users, they were very clear in stating the rates would go up. Ms. Ooms said she does not believe the rates went up because the governing body stalled the VTMUA’s expansion study. Commissioner Edward Seger said the refusal to approve the VTMUA’s study “kicked the can down the road.”

Ms. Ooms stated the report contains information that conflicts with the VTMUA’s assertions. She said the report states the VTMUA would need 900 EDUs to be solvent. She said she could not see how the VTMUA would get an additional 900 EDUs unless they went into the residential areas for expansion.

Chairman Snook said residential homeowners are paying $20,000-$30,000 to update or repair their septic systems, and it would cost them less to hook up to sewers. If an expansion study were done and the homeowners gave their input, they might find that 80% of the homeowners would actually favor sewers.

Sandra Ooms questioned where homeowners would get the money to connect to sewers. Executive Director John Scerbo said he and engineer Ceren Aralp went to the state Department of Community Affairs and learned there is a grant available to municipalities on behalf of the homeowners. The grant gives three options for financing sewer connections for homeowners. With the grant money, a no-interest payment plan could be set up for all homeowners for sewer connections.

Mr. Scerbo said it would be interesting for the township council and the VTMUA to hold a meeting for the public to see if the homeowners would be willing to install sewers if they could get such financing, and the township could forgive the costs until they sold their homes or they could afford to pay back the money. The homeowners would reimburse the township, but the money would originate from the state through the grant, he said. Commissioner Edward Seger said sewers are an asset, not a liability.

Vincent Zinno said the valley floor contains the largest aquifer. Edward Seger noted the aquifer is not protected. He said aquifers usually have clay layers, but Vernon’s aquifer is open and septic systems could potentially contaminate it.

Vincent Zinno asked Ms. Ooms what was the summary result of the sewer expansion study done by the firm the township hired. She said the study states the infrastructure versus the user base would not make it feasible to expand the sewer system.

Engineer Ceren Aralp said it is still an unknown whether it would be feasible or not, as the VTMUA would first have to get approval from the DEP that determines the areas that could be expanded. If the DEP approved an expansion as proposed, or even a scaled-back expansion, the VTMUA would then need to assess the infrastructure to determine what would be the costs. Edward Snook said the expansion study they wanted to do would look at the infrastructure in different areas to determine feasibility. That has not yet been done. The VTMUA would not know where they could even expand until the DEP gives its approval.

2. Close Meeting for Public Comment

Seeing no one else from the public come forward to comment, Vincent Zinno moved to close the meeting to the public.
Edward Seger seconded the motion.
All were in favor.
The meeting was closed to the public.

3. Resolution 17-01: Approval and Adoption of the Sewer Rate as Advertised for 2017

The rate for an EDU for 2017 is $1,080, an increase of $100 from the 2016 rate.

  • A studio or one-bedroom unit, which is .6 EDU, would pay $648 annually, or an increase of about $15 quarterly.
  • A two-bedroom unit, which is .8 EDU, would pay $864 annually, or an increase of about $20 quarterly.
  • A unit of three bedrooms or more, which is 1 EDU, would pay $1080 annually, or an increase of about $25 quarterly.

Vincent Zinno moved to adopt the 2017 sewer rates.
Gloria Gallo seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Gloria Gallo, Vincent Zinno, and Edward Snook
Nays: Edward Seger

4. Approval of Minutes

December 22, 2016 Regular Meeting

Vincent Zinno moved to approve the December 22, 2016 regular meeting minutes.
Edward Seger seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

5. Receipt and Filing of Correspondence

None

6. Consent Resolution—Resolution #17-02: Payment of January Bills

Vincent Zinno moved to approve Resolution 17-02.
Edward Seger seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Thomas Buchney, Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

7. Other Resolutions

A. Resolution 17-03: Correcting the Amount of Escrow to Be Released to Vernon Valley Investors

The VTMUA released escrow funds in the amount of $1,656.72 to Vernon Valley Investors.

Vincent Zinno moved to approve Resolution 17-03.
Edward Seger seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

B. Resolution 17-06: Amendment to the 2017 Budget

This amendment consists of an allocation of $75,000 for total capital appropriations in the 2017 VTMUA operating budget.

Vincent Zinno moved to approve the amendment to the budget.
Edward Seger seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

C. Resolution 17-04: 2017 Adopted Budget

The annual budget presented for adoption reflects total revenues of $2,369,316 and total appropriations of $2,369,316.

The budget also reflects an additional amount for contracting with Hardyston Township to operate the sewers as a result of the mayor terminating the township DPW’s services to the VTMUA. The VTMUA was paying the township $120,000 annually, of which $20,000 represented overtime pay. On top of that amount, the VTMUA also paid Agra Environmental $20,000 annually for a licensed operator. Agra Environmental’s services are not needed with the VTMUA contracting with Hardyston Township because Hardyston has its own licensed operator, Mr. Scerbo explained. He also said if the VTMUA hired its own employees to operate the sewers, the cost would be $120,000 annually plus an additional 30% for benefits and another 36% for pensions.

Gloria Gallo moved to approve the resolution for the budget.
Vincent Zinno seconded the motion.

Discussion: None

Roll Call Vote:
Ayes: Gloria Gallo, Edward Seger, Vincent Zinno, and Edward Snook
Nays: None

C. Resolution 17-05: Authorizing the Vernon Township Municipal Utilities Authority to Execute an Addendum to the Employment Contract of Executive Director John Scerbo

Gloria Gallo moved to approve Resolution 17-05.
Vincent Zinno seconded the motion.

Discussion: Edward Seger said the executive director’s position is usually a salaried position and attendance at monthly meetings should be inclusive of the salary. Administrators do not generally get paid extra to attend meetings, he said. He thinks it should be part of the job as administrator. Mr. Scerbo said he does not have a salary; he was hired at an hourly rate. Mr. Seger suggested categorizing the position as a 35-hour-a-week salaried position, the same as the other municipal employees. After further discussion the VTMUA decided to adopt the resolution as presented and amend it in the future if necessary.

Roll Call Vote:
Ayes: Gloria Gallo, Vincent Zinno, and Edward Snook
Nays: Edward Seger

8. Auditor’s Report

No report

9. Attorney’s Report

Attorney Richard Wenner reported he had not been able to meet yet with Hardyston officials to finalize the contract for shared services but will be meeting with Fred Semrau, the attorney for Hardyston, to finalize the details of the shared services contract with the municipality for the sewer services.

Mr. Wenner also said the VFW litigation has been adjourned until February 3. There will be a status conference on the case tomorrow to discuss a discovery timeline. The judge will then set a day and time for the trial.

10. Engineer’s Report

A. Review of New Applications—None

B. Old Business—Update on Municipal Building Sewer Hookup

Ceren Aralp reported receiving a revised drawing for the Vernon Municipal Center. She recommends the drawings be approved and released and a building permit issued to the township.

11. Executive Director’s Report

Executive Director John Scerbo reported he received email today from the mayor stating the township is going to proceed with the process of getting Pump Station #2 rebuilt, with Mountain Creek being responsible for the design and construction of the facility. The VTMUA engineer will have the right of review and approval.

12. Commissioners’ Comments

Commissioner Edward Seger discussed the requests for proposals (RFPs) and bid specifications the VTMUA put out to contract for a licensed operator for the sewer system as a result of the mayor’s termination of the services being performed by the township department of public works as of January 1, 2017. Mr. Seger discussed the VTMUA’s rejection of the bid submitted by Michael Furrey of Agra Environmental. He said he reviewed the bid Agra Environmental submitted to the VTMUA and said he does not understand why the VTMUA did not consider the bid or did not negotiate with Agra Environmental.

Mr. Seger said Mr. Furrey happens to be a citizen of the town and the VTMUA did not show enough respect around that. He said he does not think the VTMUA took enough steps to work with Mr. Furrey and his bid. He felt the VTMUA should have worked with him.

Attorney Richard Wenner explained again, as he stated last month when the VTMUA rejected the bid, there were a number of reasons the bid was rejected. He said there were seven requirements in the RFP and the advertisement and proposal, and the RFP clearly stated failure to complete those requirements would result in automatic rejection of the bid. Mr. Wenner stated Agra’s bid did not complete those requirements. He said many of the requirements were left unanswered in the Agra bid, and he said there were other issues as well. More importantly, he said, because there was only one contractor that submitted a proposal to the VTMUA they did not have a good background against which to judge Agra’s bid proposal. Furthermore, he said at the front of the Agra proposal, there was a proposed consulting agreement that specified terms that conflicted with the bid specifications as well as the proposed contract the VTMUA had submitted.

Mr. Wenner said in order to negotiate, the law requires that they have had to bid twice and reject bids twice. Only then are they allowed to negotiate with a bidder. That would then show the public they went out to bid on two separate occasions and they were not able to find a proposal that worked for them, and only then could they discuss and negotiate the bids they got.

Mr. Wenner further stated because Vernon and Hardyston are both public bodies, they could do a shared service agreement without the solicitation of quotes. Public bodies can negotiate contracts, he said.

Executive Director John Scerbo said he disagreed with Mr. Seger about knowing Agra’s bid price. He said Mr. Furrey submitted a flat price, but then he said if certain people were used in the work it would cost the township so much more per hour, but he never specified when those people, which included Mr. Furrey, would be used. Therefore, the number that was in the Agra contract is not the all-inclusive number of what it would cost the VTMUA over the 365-day period because of the “wild card” of the three people specified. He said the VTMUA would not know when those individuals would be called to work and what the overall cost would be for the VTMUA. They would not know of the overall per hour costs incurred for those three individuals.

Mr. Scerbo said if they accepted a bid with such a clause, anyone who did not submit a bid could contest it, and it would be a liability for the VTMUA. He said after the bid process they were contacted by an organization that monitors RFPs, and the organization wanted to know what was the bid settlement. Mr. Scerbo said had the VTMUA accepted a bad proposal anyway regardless of the deficiencies, that organization would identify the municipality as accepting a bid in contradiction to what the bid specs proposed, adding a further legal liability for the VTMUA.

Commission Gloria Gallo said the VTMUA could face a lawsuit if the bid specifications are not followed and they accept a bid proposal regardless of the failure to comply with the bid specifications. She said she found it odd that Agra Environmental did not follow the bid specifications. She said the fact that Mr. Furrey was the sole bidder or because he is a township resident are not reasons to accept the bid.

Mr. Wenner said as the VTMUA discussed in December, the contract with Hardyston Township provides for a six-month notification of termination, so they could always put the contract out for bid again. He said perhaps the bid specifications were cumbersome, and they could simplify them and put it out again within six months to solicit other bids. If they get more competitive bids, they can terminate the contract with Hardyston Township. They have to do the bidding process twice before negotiating. Otherwise, he said, they are in contravention of the bidding laws.

Vincent Zinno said his company goes through the public bidding process two or three times a month, and it would have been illegal to award Agra Environmental the contract with incomplete documents. He said in his business experience with public bidding he has been second bidder and has had the low bidder thrown out after contested a bid for incomplete documentation. It is illegal for the VTMUA to have accepted an incomplete bid, Mr. Zinno said. If the VTMUA were in the private sector they might be able to accept such a bid proposal, but due to public bidding laws in the State of New Jersey they had no choice but to reject Mr. Furrey’s bid, he said.

Mr. Wenner reiterated that the specifications for the questionnaire stated that any omission in response would result in automatic rejection. There were at least 3 or 4 questions that were completely unanswered, and thus Mr. Furrey’s omissions were legal cause to reject the bid.

Vincent Zinno also said he has learned through his years of experience in public bidding that you never say, “He is a citizen in the community, so we should have given him a chance.” That is discriminating any other bidder, and the VTMUA could face a lawsuit for accepting a bid on that criterion, he added.

Gloria Gallo said in her position as a director of a municipal utility in a New Jersey municipality, she recently had to reject the lowest bidder because the bid was so low compared to other bids that when they sat down with that bidder they learned he had misinterpreted many specifications in the bid, which was the reason for the low bid. Had they accepted that bid, the other bidders could have contested it, so legally the VTMUA was obligated to reject Mr. Furrey’s bid. Mr. Wenner said that is also a good rational for wanting to get more than one bid for comparison.

13. Chairman’s Comments

Chairman Edward Snook discussed providing a plaque for Vincent Zinno, whose term expires on January 31, for his years of service to the VTMUA. Mr. Zinno was on the VTMUA since its inception and served as chairman until February of 2016. The commissioners all agreed.

Gloria Gallo moved to provide a plaque for Mr. Zinno.
Edward Seger seconded the motion.

Roll Call Vote:
Ayes: Gloria Gallo, Edward Seger, and Edward Snook
Nays: None
Abstentions: Vincent Zinno

In closing, Chairman Snook said the VTMUA will reorganize at the February 16 meeting, and he is unable to again serve as chairman. He has family obligations for the next several months that prohibit him from putting in the time as chairman.

Adjournment

Vincent Zinno moved to adjourn the meeting at 8:15 p.m.
Gloria Gallo seconded the motion.
All were in favor.
The meeting was adjourned at 8:15 p.m.

The next meeting of the VTMUA will be on February 16, 2017 at 7 p.m.

Transcribed and submitted by Jessica Paladini
Vernon Township MUA Secretary