New Jersey American Water announced Nov. 30 it signed an agreement to acquire the water and sewer system of the City of Salem for $18 million. 

As NJBIZ previously reported, more than 60% of voters approved the move in a referendum on the Nov. 7 ballot. The municipally-owned system serves more than 2,300 customers. 

“I want to thank the elected officials, community leaders and residents of Salem for entrusting us to manage and improve their water and sewer utilities,” New Jersey American Water President Mark McDonough said in a statement. “Providing water and sewer service is all we do, and we are deeply committed to making the necessary improvements to these systems to help ensure clean, safe, reliable and affordable service for all residents.” 

Subject to approval by the New Jersey Board of Public Utilities, the acquisition is expected to close in the second half of 2024. 

As part of the deal, NJ American Water will invest more than $50 million in infrastructure improvements in the first 10 years of ownership. The Camden-based utility company will also hold current sewer rates for two years following closing, then increase rates no more than 3% annually for the next three years. 

In addition to handing the city’s water and sewer utilities to industry experts, Salem City Mayor Jody Veler added, “The sale will also eliminate $11 million in utility debt and pay off a portion of the municipal debt, as well as enable us to put over $1 million back into the city budget annually.” 

Also on the horizon for NJ American Water is a deal with the Borough of Manville, where residents approved the sale of their sewer system with more than 80% of the vote on Election Day. That transaction is for $6.5 million, plus a commitment by NJ American Water to invest $10 million in upgrades and repairs in the first 10 years of ownership. 

The company also recently completed its $7 million acquisition of the Borough of Somerville’s wastewater collection system. This follows deals with Bound Brook in 2022 ($5 million); Long Hill Township in 2020 ($12.7 million); and Mount Ephraim in 2019 ($1.4 million). Additionally, this June, the company acquired Egg Harbor City’s water and sewer system for $21.8 million via the state’s Water Infrastructure Protection Act, which added more than 1,500 customers to its service area.