Board hears on funding options for pending water improvement project
By Terry Duffy
Monday's Lewiston Town Board work session had some interesting but complex discussions with regard to the single water district plan the town is moving on. Included was the board's planning on a pending water line replacement project and how that would be funded.
"I have a question on the way it's being taxed," Town Councilman Rob Morreale said to Robert Lannon, town engineer, in reference to the town's still undecided funding path. "Didn't we say it was going to be put on our water bills, or am I thinking of something else?"
Morreale pointed to the town's water map plan report board members were reviewing, indicating references to funding for the water line replacements in the town's northern end being placed on residents' property taxes townwide.
"We haven't decided yet how we are going to do that," Supervisor Steve Broderick said. "We as a board need to decide how it's going to be paid for. This is (just) a synopsis of one of the options."
Broderick then sought the input of attorney Brian Seaman, former attorney for the town, who is now handling matters related to the water line project.
"The proceeding now, what we are looking at (is) for the establishment of a water district," Seaman said. "The map plan report sets out how that's going to operate."
He then detailed two potential funding mechanisms for the pending water line improvements under the new district plan. Under consideration are utilizing the user's water billing based on water rates or via real property taxes.
"There's two components to how the water district, once it's formed, will be funded," Seaman said. "One component is going to be water rates or water bills, and the other component will be a real property tax."
Seaman told the board of two ways it could assess a tax if it chooses to go that route. "They could do it on a benefit basis or on an ad valorem basis."
He said the town, in the past, has utilized an ad valorem basis.
"The lendings the town has done from the '70s until now, to do their meter and water improvements, have always been taxed to the entire town outside of the village on an ad valorem basis," Seaman said.
He explained that, unless he's instructed otherwise by the board, "That's the route we're going."
"There will be a component to the water district just like there is now," Seaman said. "Everybody's tax bill has a line on it that has the water improvement area. There will be a component that will be taxed, based on the value of your property. And, of course, everyone will pay their water bills based on the consumption."
In other words, funding for water improvements gets charged to a resident's water bill via the water improvement line versus the real property tax.
"It's always been that way," Seaman said. "I don't know of any districts that don't have some component of (this). A special district is basically a taxing entity."
He said that towns typically use a funding element that utilizes both on their water projects. "In some way, there's usually some town funds dedicated to the delivery of water and the infrastructure of the system, and then there's a water bill that is based on consumption."
With regard to funding via consumption, Seaman said the town would, in essence, have to set its water rates "at a rate high enough basically to eliminate that line (water improvement area) on your tax bill."
"I guess it (funding via water rates) could be done, (but) I've never heard of it done that way," Seaman said.
Town Finance Officer Martha Blazick commented, "I think the situation that we're unique in Lewiston is the fact that we have so many tax-exempt entities that don't pay the tax. So it moves the burden more on to those taxpayers (who do). That's why we've talked about doing it more, based on consumption ... so that all entities using water are paying for that improvement versus just those people paying taxes."
Broderick asked about the use of $850,000 in New York Power Authority hydropower money to fund such a project. Seaman indicated that could be an option, but it would be a matter to consider in the future, again reminding the board its task at present is the actual formation of a single water district and all the mechanisms involved, including project funding.
He said the map plan the board was reviewing acts as a framework in setting up the funding options of what could be considered.
"It sets up whether or not you're taxing on an ad valorem or a benefit basis," Seaman said. "Those are questions the board could readjust from year to year."
With regard to funding via an ad valorem component, Seaman said a property owner with a $500,000 assessed value would pay five times the amount as one with a $100,000 assessed value.
Of the town realizing revenue via ad valorem approach, Blazick said, "If you have more revenues - if you create more revenues by increasing your rates (or adding rates) - that is going to increase the revenue, less the expenses, so you'll have less money needing to be recouped by the tax."
Councilman Al Bax added, "What is important to note is that, on a year-to-year basis, we could raise or reduce our rates and thereby affect the ad valorem. It's something we can adjust accordingly in years to come."
As the in-depth discussions on funding drew to a close, Seaman advised the board of some steps it needed to move on that night to further the development of the single town water district.
"For today ... overall in this process, what you're determining is creation of that district, whether it's going to be ad valorem or on a benefit basis," he said.
Included would be the town establishing itself as the lead agency for the SEQR review for the water improvement project, the board approving a resolution with regard to funding on an ad valorem or benefit basis, the holding of a public hearing followed by ultimate board approval to move forward on actually approving the district.
"There are several steps to this (water district creation process)" Seaman said.
Soon after, on a Bax motion, the board moved unanimously on approving itself as the lead agency on the environmental analysis for SEQR.
Board members took no action on any funding mechanism.