North and Central Merrick Civic Association
Claudia Borecky, President          516-972-6988            claudiaborecky@gmail.com

Water Authority

March 21, 2017

After reviewing and submitting thousands of pages of testimony and exhibits, Dave Denenberg and Claudia Borecky, as directors of LI Clean Air Water & Soil ("CAWS") and as President of the North and Central Merrick Civic Association ("NCMCA"), requested and were granted a hearing to examine New York American Water's ("NYAW") and the Department of Public Service's ("DPS") witnesses in Albany on Wednesday, March 8.

Since 39.74% of NYAW's projected revenue pays for taxes on its properties; since it passes 100% of its property tax burden onto its ratepayers, making up 40-55% of our water bill; since NYAW projects a 24% increase in property taxes over the next four years; and since only10% of us who have NYAW pay these taxes that benefit all of Nassau County, while the other 90% do not pay taxes on their municipal utility properties; the brunt of our argument addressed this inequity.

Most of the 1500 comments made to the DPS addressed property taxes, yet not one elected official mentioned taxes. To oppose a rate hike and not the major reason for the hike leads one to wonder why. Could it be that the county, town or village does not want to give up what totals $36 million in taxes? Taxes that benefit everyone, but paid by very few. Is that even constitutional?
In Albany, Denenberg examined the witnesses for 9 hours. It became apparent that the DPS approves projected tax increases simply because they always have. They were unaware of the NYS Tax Cap nor had any idea about Nassau County's Assessement or Assessment Review Commission. Yet, Denenberg's questioning laid proof that NYAW charges the ratepayers higher taxes than actually levied so that it can profit from overestimating.  That's right, NYAW is allowed to profit from our property taxes in two ways.

First, NYAW projects a 4% increase in our property taxes every year of the next four-year rate period. If it comes in that taxes increase by only 1% in a given year, NYAW keeps 15% of the overestimated amount, even though 100% of the tax is paid by ratepayers in their water bill.

Second, when NYAW receives a refund from a tax grievance, it has been allowed to keep as much as 20% of that refund, plus attorney fees and expenses.

Denenberg argued that the obvious incentive for the greatest profit would be for NYAW to avoid working with the Assessor or the Assessment Review Commission to administratively resolve overassessments. Rather, it brings tax grievances to court and overestimates its tax obligation so it not only keeps a portion of the refund, but keeps a percentage of the amount that it overcharged us. And, as NYAW often drags tax certiori cases for 10 years, making for greater refunds and thus greater profits, there is no incentive to work out assessment errors in a timely manner.

Although CAWS questioned the increase in cost to change from bi-monthly to monthly billing, the Public Service Commission ruled that NYAW must bill monthly.

The Result

"NYAW requests an increase in its annual revenues of approximately $8.49 million, an increase in annual revenue of 8.3%, for the rate year ending March 31, 2018.  The Company estimates that the proposed increase in revenues will result in a total annual bill increase for an average residential customer in the Long Island District and Merrick District, the Company's two largest districts, of $67.09 (9.93%) and $57.60 (9.90%), respectively," NYS PSC Order (March 9, 2017)

It is important to understand that the original $2.7 million revenue request was for a one year rate plan.  Our legislator mistakenly compared the one year proposal with the four-year rate plan that is the subject of this proceeding. Facts are that in Year One, the initial revenue request of $2.7 million was substantially lowered to $330,000 - quite a savings to ratepayers over NYAW's initial request. However, CAWS has opposed any rate increase and is the only party that submitted papers in opposition to this rate proposal.

It should be noted that after eight months of arguments against NYAW's proposal to raise our rates, we had some successes. NYAW withdrew its request for reimbursement of $4.5 million for a research and development project. Further, CAWS argued that ratepayers should not fund future utility acquisitions and successfully had such acquisitions removed from this proposal. Further, since over 3,000 company-owned pipes are made of lead, CAWS insisted that a lead-removal policy be included in this proposal. And, since tens of thousands of homes in its district have lead pipes that are owned by the homeowners, CAWS also made sure that the proposal included a mechanism for removal of lead pipes owned by the ratepayer.

Conclusion

We are awaiting the Judge's ruling on the proposal. We'd like to thank all those who helped us fight the inequity of corporate v. public water.  Over 1200 posts on its website, over 300 signatures on petitions, over 500 people attending and testifying at the hearings have brought attention to these inequities. Whatever the result, please know that this is just one phase of our fight for affordable water.  Let's keep our fingers crossed and hope that the judges do the right thing. In any event, with your help, we will move forward with the next phase.





February 3, 2016

Without public notice or warning, the Water Authority of Southeast Nassau County was dissolved last night!!!

How we were blindsided

T
his report will not be one of my typical reports.  I'm angry.  I'm more than angry, I'm furious.  We've been blindsided by Hempstead Supervisor Santino, Oyster Bay Supervisor Venditto, their boards and County Legislator Rhoads.
 
All the pieces have come together.  The lengths that our representatives went to deceive the public is mindboggling - all along leading us to believe that they were going to help us.  The Water Authority of Southeast Nassau County ("WASENC"), the Towns and our Legislator conspired to end the quest for affordable water.  From the very beginning, we were being led to believe a public acquisition was moving forward.  Had people known that their representatives were looking to squash their hopes of getting affordable water, hundreds of people would have come down with pitchforks.

It's unconscionable that the Feasibility Study was made public in June of 2014 and they did not hold a meeting about it until 1-1/2 years later on January 5, 2016.  And then a second meeting, one month later, to dissolve WASENC.   
 
I should have seen it coming. When I read that on January 26, 2016, the Town of Hempstead filled a vacancy on the WASENC board,  I thought that WASENC was getting ready to take it to the next level - public acquisition of Long Island American Water ("LIAW").  But last night, we were blindsided by Supervisor Santino and the Town Board, who apparently only filled the vacancy so that they would have a full board to approve its own demise a week later.  Shamefully, on that same day, I received an email notification from WASENC Secretary Reinhardt of the February 2 meeting.  We were blindsided by the Town of Hempstead, which never let on that they intended to pass a Resolution to dissolve WASENC. 
 
In reflection, I thought it strange that when Legislator Rhoads spoke at the meeting last night,  WASENC said that they were going to give him our contact information after the meeting.  I wondered why WASENC, an independent public benefit corporation, established by New York State whose members were appointed by the Towns of Hempstead and Oyster Bay, would give our contact information to acounty legislator.  As a civic leader, I never share people's contact information with anyone.  I realize now that we were again blindsided by Legislator Rhoads who knew that this would be WASENC's last meeting.  He left the meeting immediately after he spoke, not even waiting to hear the reading of the Resolution just minutes before the Golf Course was closing.
 
How to Kill a Water Authority
 
Because of the high cost of our water bills in comparison to our neighbors who have public water, we protested, rallied and got hundreds of signatures, demanding public water.  For years, Legislator Denenberg had been asking the town for public water and Supervisor Murray on countless occasions, claimed that the town could do nothing about it.  Then in 2009, when then Aqua Water wanted to raise our water rates by 21%, Legislator Denenberg investigated the issue and found that not only can the town do something, but discovered that the Water Authority of Southeast Nassau County was established in the 1990's and had never been dissolved.  We worked together with other civics in the area, hundreds of concerned residents and our legislator in demanding that the Towns of Hempstead and Oyster Bay reconstitute WASENC. 
 
On January 11, 2010, the day before a town board meeting in which about 200 people were planning to attend, Supervisors Murray and Venditto announced that they were reconstituting WASENC to study the feasibility of a public takeover of Aqua Water which is now Long Island American Water ("LIAW").  WASENC is comprised of five members, three appointed by the Town of Hempstead and two appointed by the Town of Oyster Bay.
 
Upon learning that Hempstead was interviewing civic leaders to appoint to the board, several residents from all over the district asked me to interview for the position.  At that point, I had already done extensive investigation into this issue and had volumes of documentation from the Public Service Commission.  I had discovered that Aqua was paying school taxes to 33 school districts even though it only served eight school districts.  In fact, it paid five times more money to the East Meadow School District than it did to North Merrick - and East Meadow has public water.  Aqua was passing 100% of its tax obligation onto us - the consumers.  I had the ammunition to make public acquisition possible.
 
I interviewed with the Town of Hempstead, but suffice it to say, they did not appoint me because I didn't belong to their party. Instead, a civic leader from Massapequa was appointed to the board. I think it was obvious to most that it was just another patronage appointment.
 
But what we didn't realize then was that the Town never was going to allow a public takeover to happen. The Towns dragged their feet, taking nine months to make their appointments. We held their feet to the fire and in July 2012, WASENC hired George E. Sansoucy ("GES"), a New Hampshire company, to conduct a "preliminary" study to determine the value of New York Water's portion of LIAW. It found a value of $80 million, which we believe was grossly inflated since LIAW purchased Aqua Water for $71 million in 2012 and it included four systems throughout New York State, while we were only looking to acquire Nassau County's portion of the system.  Allowing for $20 million in operating expenses, GES determined that if the Water Authority bonded for $100 million, it would cost the average resident $133 per year for 30 years to pay for the acquisition.
 
Since the Towns never intended to seriously look into a public takeover, WASENC never asked GES to look at a takeover by Hempstead, which studies and history has found to realize savings to residents from day one.  Instead, GES was only asked to conduct an appraisal of LIAW and do an analysis of a takeover by WASENC, which was by far the most expensive scenario in that it assumed we would have to pay $8.8 million in taxes anyway. However, the study was comparing apples with oranges.
 
The problems lie in what the study omitted. The bottom line is that the Public Service Commission ("PSC") allows LIAW to get 7.85% on its investment.   That profit amounts to about $73 per year out of our pockets.  Hempstead does not pay school, town or county taxes.  LIAW pays $8.8 million in property taxes, making up one-third of LIAW's expenses, which we pay through our water bills.  What the report does not even look at is:
  • North Merrick School District received $64,000 from LIAW in 2009.  If we had public water, we would only pay $30 per year per household to fill the hole left from lost revenue from LIAW.  However, we are already paying those taxes and more through our water bill, but we can't deduct them on our income tax.
  • Hempstead only charges $75 to lease a fire hydrant to the fire departments and LIAW charges our fire departments $700 just to lease one hydrant.  Savings to our fire departments would reflect savings on our fire district taxes, which was never examined. 
  • Hempstead doesn't pay sales tax. 
  • Hempstead doesn't pay corporate taxes.
We were blindsided by WASENC, which was formed to "investigate, analyze and evaluate variousoptions for the distribution of water to the district" because it never intended to look into a viable option.  Truth is that a public takeover by the Town of Hempstead was never studied by WASENC or GES.  It was studied by former Comptroller Howard Weitzman in 2007.  That study found that if a water authority acquired New York Water and paid a PILOT (payment in lieu of taxes), not at first, but in years to come, residents would realize a savings.  However, in that same report, it found that if the Town of Hempstead (and not WASENC) acquired New York Water, residents would realize huge savings from day one. Yet, that scenario has never been investigated by WASENC or GES, no matter how many requests we made for WASENC to do so.
 
I find it too much of a coincidence that GES came up with a value of $80 million with $20 million in operating expenses when that is the exact same amount that Secretary Reinhardt said that it would cost before GES was hired. Isn't it more likely that WASENC hired GES to fix the numbers to come up with a value of $100 million? 
 
And then last night, we learned that if we had decided to take over LIAW within the first two years of LIAW's acquisition of Aqua Water, LIAW's closing costs would have been returned.  Could that be why WASENC didn't make its feasibility study public until June 2014 - just over two years from when LIAW acquired Aqua?
 
Bottom line - What a Town of Hempstead Takeover would mean annually:
 
 
Average water bill per household
 
Corporate taxes paid thru our water bill
 
Property taxes paid thru our water bill
 
No. of school taxes paid thru our water bill
  
Profit allowed by Public Service Comm
American Water
$800
 
$1.2 million
 
$8.8 million
 
8 (was 33)
 
$73 per year per household
Hempstead
$187
 
0
 
0
 
0
 
0

It is apparent that we've been deceived for the past six years by the Towns of Hempstead and Oyster Bay. They spent $100,000 and waited out six years in a feeble attempt to disprove what every resident knows.  A private corporation should not have a monopoly over a public necessity.  Once you take profits out of the equation, of course, you're going to save money. And they've been either denying, hiding or ignoring the facts all along.

Claudia Borecky

We will continue to keep the community informed and work toward improving the quality of life in North Merrick.  Please feel free to contact me regarding any issue that concerns you.  All calls will remain confidential.


 

Claudia Borecky, President




March 7, 2015 Update
  1. Public Water v. Private Water – As you know, the NCMCA played a major role in urging the Towns of Hempstead and Oyster Bay to reconstitute the Water Authority of Southeast Nassau County (“WASENC”).  WASENC was commissioned to conduct a study to see if it would be feasible for we, the people, to acquire Long Island American Water.  The study is complete.  Despite numerous requests, the WASENC has still not held a hearing on the results of that study.  Having reviewed the study, President Claudia Borecky found many discrepancies and believes that the conclusion reached was based on a hypothesis and not on truths. 

However, we need an expert in the field who can review the report line by line and see if their conclusion is justified.  If you know of someone with a financial background, preferably familiar with water district budgets, who is willing to review the report on a pro bono basis, please email claudiaborecky@gmail.com


July 17, 2014

Today, members of the North and Central Merrick Civic Association stood with Legislators Dave Denenberg and Laura Curran in requesting disclosure and production of the Water Authority of Southeast Nassau County's ("WASENC") feasibility study of a public acquisition of American Water's territory formerly serviced by Aqua Water. Please
click here to view Legislator Denenberg's Freedom of Information Request for the feasibility study and other related documentation.  It took nine months for WASENC to appoint the board and another nine months to hire a firm to do the study. 

We presented the timeline, showing that in this 4-1/2 year period since Denenberg first brought the existence of WASENC to the Town of Hempstead's attention, Hempstead and Oyster Bay Towns  reestablished WASENC, Aqua Water changed hands, one commissioner dropped out and was not replaced, and the feasibility study has yet to be made  public. 

Residents complain that they are paying $150 per month for water, while their neighbors with public water pay $15 for the same usage.  Our fire districts are paying over $700 to rent a fire hydrant, while the Town of Hempstead charges $75. Denenberg believes it to be unconstitutional for a municipality to provide some of its residents with public water, and not others, forcing those with private water to pay exorbitant prices for their water.

The territory, previously served by New York Water and later Aqua Water, was acquired by Long Island American Water two years ago. In 2010, the Towns of Hempstead and Oyster Bay granted WASENC $100,000 to organize and conduct the study.  In January 2014, Hempstead hired a consultant, John A. Mastromarino, and is paying him up to $50,000 to review the feasibility study that had been in their hands since last fall.  And still, the public has not seen this feasibility study.

Long Island American Water is planning to close its Lynbrook offices and move to its Brooklyn Street, Merrick property.  Further, Long Island American Water stockholders could make millions of dollars by selling our water to New York City while the City improves upon its pipes.  Over-pumping our aquifers could result in saltwater intrusion, rendering our water undrinkable.

Denenberg, standing with his constituency, demanded that WASENC produce the long-awaited feasibility study so that we can make a decision on what steps we should take moving forward.

TIMELINE

 

 

 

January 11, 2010                     Towns of Hempstead and Oyster Bay reconstituted the Water Authority of Southeast Nassau County (“WASENC”) to conduct a feasibility study of a public takeover of Aqua Water

 

September 7, 2010                  Towns of Hempstead and Oyster Bay announce the appointment of seven commissioners to conduct the feasibility study

 

December 2, 2010                   WASENC holds its first meeting.  No progress.

 

February 9, 2011                     WASENC meets.  No progress.

 

April 13, 2011                         WASENC meets.  No progress.

 

June 2011                                WASENC meets.  No progress.

 

September 7, 2011                  WASENC meets and announces the proposed sale of Aqua to American Water; that it will conduct its own feasibility study; that it will retain a firm to do a financial analysis; and that it will hire an attorney.

 

January 11, 2012                     WASENC meets and announces that the Town of Hempstead/Oyster Bay awarded $75,000 for a feasibility study.

 

WASENC hired an attorney and stated they were sending out RFP for a feasibility study.  After 30 days, the winning bidder would be asked to submit its findings within three to six months.

 

April 12, 2012                         American Water acquired Aqua New York for $71 million, serving Long Island and small pockets in upstate New York.

 

July 2012                                 WASENC meets and announces that it hired a New Hampshire firm, George S. Sansoucy, to conduct the feasibility study of a public takeover

 

April 3, 2013                           WASENC meets.  No progress.

 

November 18, 2013                Email received from WASENC Commissioner stating that the feasibility study was ready.

 

January 22, 2014                     Hempstead hires John Mastromarino for up to $50,000 as consultant to the Town’s Comptroller’s Office to review the feasibility report of a public takeover of the former Aqua New York Inc.

 

 

 


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