The Atlantic City Municipal Utilities Authority has challenged the validity of a draft study saying it could generate millions of dollars in new revenue annually for the cash-strapped city.
Director G. Bruce Ward said Wednesday the authority will commission its study, to be completed over the next few weeks by the Alaimo Group.
The Alaimo Group, an engineering firm based in Mount Holly, is no stranger to work with the authority. In January, the Board of Commissioners approved a $12,000 contract with the firm to serve as the authority’s energy consultant. The company also was paid $5,725 by the authority in 2014 to perform inspections of Doughty Pond and Kuehnle Pond dams, according to public records.
A call to Alaimo was not immediately returned Wednesday.
Ward also proposed a new, revenue generating renewable energy project that he said the authority is ready to begin.
The authority is prepared to purchase Duck Island from the city, he said, at a cost of about $5 million to $6 million. The land could be used for a solar and wind farm, Ward said, potentially creating millions of dollars per year worth of electricity. Some of that revenue could be directed to the city, he said.
The Ford-Scott and Ernst and Young assessment, never publicly released but obtained by The Press in July, said the authority, which currently contributes about $600,000 to the city each year, could cut its annual costs by about $9.3 million, a number that included significant layoffs.
At a public meeting last week, Atlantic City Mayor Don Guardian said he asked for layoffs to be taken out of the equation, resulting in an estimate of $5 million to $6 million in potential annual savings.
Guardian said that while he opposes leasing or selling the authority, he wants it to deliver that much in additional funds to the city each year. If it does, Guardian said, it could remain independent. If not, he said, he will call for the Atlantic City Council to dissolve it and turn it into a city utility.
But Ward said the study was co-authored by accountants who aren’t qualified to make credible determinations about operating a water treatment and distribution system — and the recommendations even violate state requirements, he said.
For instance, he said the study recommended laying off required personnel, and called for non-feasible operational changes. He also said those behind the study never spoke with him directly and never visited the authority’s offices.
Bill Nowling, a spokesman for Emergency Manager Kevin Lavin, emailed a statement, saying in part, “The Emergency Manager believes the work Ernst and Young is performing in its review of the MUA is essential to creating a viable and achievable plan to address Atlantic City’s financial crisis. Ernst and Young continues to work on its review and the review is not yet finalized.”
On Wednesday, Reuters reported that Ernst and Young has billed the state $1.5 million so far this year for its work.
Chris Filiciello, Guardian’s chief of staff, said Wednesday the mayor has faith in the analysis by the accounting firms, although he noted that Guardian hadn’t seen it until it was reported by The Press.
Regarding Duck Island, Filiciello said Guardian is aware of the idea, adding that “all options are on the table.” He reiterated that the administration is looking for $5 million to $6 million per year from the authority.
“A purchase of Duck Island could only be a one-shot deal,” he said. “We’re trying to find long-term solutions to the financial problems that we’re facing.”
“We need to extract value from the authority on a yearly basis that helps close the financial gap in our budget,” Filiciello said. “If they can’t come to $5 (million) or $6 million a year, then we’re going to have to see what the next steps are.”
Ward challenged the figure’s validity, but wouldn’t offer an alternative for how much new revenue the authority could produce.
Ward also said the authority has not commissioned a study of Duck Island’s renewable energy potential — but said the idea is well established, and he has been championing it since 2009, when he was a council member. He noted a three-acre solar project the authority plans in Pleasantville is projected to save the authority nearly $200,000 per year for 15 years. By contrast, he said, the city owns 146 acres on Duck Island.
Among Ernst and Young and Ford-Scott’s recommendations was an authority rate hike that the firms said could generate as much as $3.5 million per year in extra revenue.
Guardian promoted that idea at last week’s public meeting, saying under that scenario, rates for city residents would remain approximately flat, while large commercial purchasers and off-island customers would pay more.
Ward said the proposal was worth considering, but noted it should be approached cautiously, so as not to discourage business development in the city. He said that concern had been raised by businesses he spoke to, including casinos.
Atlantic City Council would have to approve dissolving the authority before it could become a city utility. The council voted down that step in May, although under a 2008 rule, it could bring the matter back up.
Councilman Marty Small, who called for the anti-dissolution vote, said Wednesday he was familiar with the authority’s Duck Island proposal.
“They’re taking a proactive approach to try to keep the authority alive,” Small said. “It’s something that’s worth looking into.”
Councilman Frank M. Gilliam, who has expressed openness to bringing the authority back under the city, reacted with skepticism to the Duck Island idea Wednesday.
“Why would we sell land we own when we could benefit from it ourselves?” Gilliam said.
Nick Huba contributed reporting to this story.