Using a new model to address water infrastructure needs, United Water and KKR announced today the initiation of a partnership for water and wastewater system operations in the City of Bayonne, NJ. Operations will begin tomorrow December 21. The agreement was approved by the Bayonne Municipal Utilities Authority (BMUA) and by numerous state agencies.
The innovative model is a joint venture between United Water and KKR to acquire a 40-year water and wastewater concession from the BMUA. Under the agreement, the joint venture has made an initial payment to the BMUA of $150 million, which will be used to eliminate the BMUA’s existing debt and improve its finances. The joint venture has further committed to funding another $157 million into the system over the life of the contract. KKR, which made the investment through its infrastructure fund, will fund 90% of the joint venture with United Water.
The BMUA will maintain ownership of the water and wastewater system and will provide oversight of the partnership and its adherence to high quality standards and customer service performance. In addition, the BMUA will maintain control of rates charged to users, which will be guided by a formula in the agreement. United Water will operate the system for the 40-year term under an operations and maintenance agreement with the joint venture.
“What is unique about this model is that it is a blend of United Water’s operations expertise and KKR’s long-term vision, which brings credibility to address America’s water challenges. Our commitment to funding improvements in the water and wastewater system is critical to keeping rates stable and under BMUA’s control,” said Bertrand Camus, CEO of United Water. “KKR has a long history of making infrastructure investments and a proven commitment to improving the operational and environmental performance of the companies in its portfolio, making it an ideal partner for this investment.”