Impact Report

COST ANALYSIS OF THE SWITCH FROM VILLAGE WATER TO MCWA WATER

Webster Citizen Action League

7/1/2013
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SUMMARY There are significant known and unknown costs associated with the transfer from Village Water to Monroe County Water (WCWA). If these costs have been examined, they have not been disclosed to Village residents. Some of the potential costs may be staggering and argue for a thorough, informed study and airing before any change occurs. BACKGROUND The Village of Webster (Village) operates its own source water production facility located on the bluffs between Dewitt Road and Irondequoit Bay in the Town of Webster. The Village first made an investment in the water system shortly after incorporation in 1905 to provide high quality, safe water for its customers and for fire protection. By 1930, it had purchased land at the well fields on Dewitt Road. Since that time, additional land was purchased, in a patch-work pattern. At present, the Village has a quasi-industrial infrastructure at the well fields including well houses, the main well facility, garages, poll barns, and smaller items. Other agencies, including WXXI, RG&E, and the Monroe County Water Authority, have infrastructure on or adjacent to Village property. Village water has infrastructure throughout the Town of Webster, including on the sandbar, with dozens of easements for waterlines and water-mains. WATER SYSTEM VALUE The value of the Village Water System, who assets are alluded to in the paragraph above, have been accumulated over the life of the system. The system can most easily be divided into four parts with the following values: distribution system - $8.9 million; buildings and structures $5.3million; land: $1.7 million; equipment: $1.2 million. The total value of the system is therefore around $17 million. The value of the system cannot be recouped under a typical retail lease agreement with MCWA. MCWA does not make any lease payment meaning that Village water customers would be giving away the entire system value. WATER BUDGET The water department is run as a separate department and has a distinct (enterprise) fund. The Village Trustees and Mayor act as the five Water Commissioners for the water department. It is likely that this department/fund separation exists due to the presence of a significant number of water customers in the Town of Webster. Many of these customers are large water users that connect to the Village water-main along Ridge Road. The estimated 2013 revenue for the water fund is
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$802,102. Ab bout three-quarters of that re evenue co omes m metered d water (roughly ( $610,000). The t total from appr ropriate 20 013 budge et was $93 37,659 due e to $135, ,557 com ming from m reserves s. Approx ximately $110,000 of reve enue is from m cell tow wer fees. The e estimated 2013 expenses e for f the water w fund d is $937,659, with h over $59 9,000 due to t the Gen neral Fund and l $114,557 7). Remov ving $85,557 due to pay debts (total se debts and a a non n-realized $130,000 grants, t total thes expe enses drop p to $662,6 688. With approxima a ately $720, ,000 in tota al revenue flowing to o the water fund d, the diffe erence is a surplus of o approxim mately $57 7,000. The increasing g profit ge enerated by y the V Village wa ater is show wn on the chart c below w.

RECT EXP PENSES DUE D TO WATER W CHANGE C E DIR Aq quick analy ysis of the budget is necessary y because t the direct impact of f a switch to MCWA A will l result in the t loss of f not less th han $610,0 000 per yea ar. It is possible that t further revenue may y be l lost if the contract c with w MCWA A stipulate es they gai in any cell revenue f from any w water tower that they lease (the gre eater numb ber of cell towers ex xist on the e large wa ater tower the one e CWA has expressed e the t greates st interest in). Regar rdless, sign nificant re evenue will be lost if MC Vill lage water no longer produces water w and signs s a reta ail lease ag greement w with MCW WA. How wever, sign nificant exp penses wil ll remain, especially e in the shor rt-term. Th hese includ de paymen nt of e employee retirement benefits, b general g fund repayme ent and pay yment on o outstanding g debt (it is s uncl lear if soci ial security y payment will have to be mad de. If so, th hat will be e additiona al expense) ). In a addition, li iability for r the well-field prop perty is est timated at t about $20,000 ann nually. It is s likely that the e State and County Health De epartments s will requ uire Villag ge water w wells to be e ndoned an nd closed at a a cost of o not less than $500 0,000. The e cost of w well closur re could be e aban
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indebted reducing the annual cost to about $60,000 per year (depending of the life of the bond). Without revenue to balance these expenses, at least $250,000 will have to be found, at least in the short-term. Over time, some of these expenses will diminish such as the debt payment and the money due to the General Fund. Revenue Lost (per year) estimates Water Production 1/3 cell tower revenue Total Lost Revenue Expenses (per year) estimates Employee retirement General Fund Re-payment Debt Re-Payment Well Abandonment and closure Total Expenses $610,000 $34,000 $644,000 $40,000 $60,000 $85,000 $60,000 $250,000

Other expenses not calculated here (and these are not exhaustive) include the cost of utilities to the well field buildings and well-houses (which now run at over $80,000), annual inspections of applicable water infrastructure, cost to survey the well fields for any potential sale, and environmental tests at the well-field. Also not addressed in this report (but perhaps a future one) is the impact of the loss of water personnel and equipment on the General Fund. At present, the Department of Public Works and Water share equipment and personnel, with special emphasis on cost savings for snow plowing. The Village should directly address these costs before any change occurs. IMPACT ON VILLAGE RESIDENTS AND BUSINESSES Bearing on any change of water is consideration of the settlement between the Town of Webster, Village and MCWA arising from court cases in the late 1990s. Of great note is reference to the Town district served by Village water dissolving if MCWA water is brought to those customers. This means that the significant water expenses (including debt) noted above would be charged solely to Village residents, augmenting the impact. The Village has four methods to offset expenses arising out of a change to MCWA: (1) Use water reserves where applicable (2) Sell water assets (such as the well-field) (3) Use existing cell-tower revenue (4) Raise taxes on Village residents The Village has two main water reserves: capital and debt. The capital reserve is restricted to specific expenses, whereas the debt reserve (about $300,000) can be used to pay down water
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debt. It should be noted that MCWA may demand that the Village make repairs to the water system before signing a lease. If it does so, the Village will incur additional cost that can only be offset by using reserves. If reserves are used to pay down debt, such action would be subject to a permissive referendum. If approved, this would lower total expenses to not less than $165,000 per year. The sale of Village well-field is problematic and will be dealt with later in this impact statement. Outside of any minor sales, it is likely that if any well-field sale is possible, it will not be immediate and therefore revenue cannot be generated in the short term to off-set costs. Cell tower revenue, which is contractual and may diminish, will not exceed about $60,000, leaving the Village with a revenue gap of $110,000 per year, MINIMUM. It is unclear if the Village would have to raise taxes or would be able to charge a water fee. However, the cost of the switch to MCWA water will be painful and affect every property owner in the Village of Webster. VILLAGE WELL FIELD Any discussion of the Village well field should begin by looking at a map so one has been included here.

A casual glace will reveal that much of the land considered Village is in fact, not owned by the Village. The Village Water Works does own a few large parcels, but these tend to lie directly adjacent to Irondequoit Bay. The area in which the well fields lie contains many utilities including a WXXI antenna, an RG&E Substation and a MCWA water tank. Existing
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resid dential ho omes are directly d ad djacent to the land. In additio on, Monro oe County and many y priv vate individ duals own small parc cels that bre eak up the area into a patchwor rk. The e location of o prime Village Water W Work ks land is of critical importanc ce since the e well field d lies on envir ronmentall ly sensitiv ve land classified c Departmen nt of Env vironmenta al by the D nservation (DEC) as a Class 1 wetland. The weigh hing stand dard for Cl lass I wetlands states s Con that a reductio on in the be enefits provided is acceptable a only in the e most unu usual circu umstances. ther, A pe ermit will be issued only if it is determi ined that th he propose ed activity satisfied a Furt com mpelling ec conomic or o social need n that clearly c and d substantially outw weighs the loss of or detr riment to the t benefit ts(s) of the e Class I wetland. w I In discussi ing the spe ecific stan ndards, it is s state ed that th he vast maj jority of ac ctivities tha at could no ot avoid re educing a b benefit pro ovided by a Clas ss I wetlan nd would not be ap pproved. Further, F th he definitio on of com mpelling ec conomic or soci ial need is s that the proposed p activity a car rries more e than a se ense of des sirability o or urgency y, but t of actual l necessity y; that the proposed activity m must be d done; that it i is unavoi idable. Furt thermore, most of the t land exists e alon ng designa ated stee ep slopes. Of O particul lar attentio on is the la and where the main n building gs are locat ted. A par rcel map does d not sh how the extreme st teep slopes s that exist. Howeve er, the map p to mpts to sho ow the deep p gorge that exists w west the right attem t main well-field w building, b in i addition n to and north of the me of the ut tilities pres sent. som The e well field d property is located d within a designated d Town of f Webster greenprin nt area, is s liste ed as an op pen space asset on the t Town Comprehe ensive Plan n and show wn as a high coasta al eros sion area. The follow wing maps show thos se designat tions:

The land in which the well fields are situated is included in many environmental studies. The Irondequoit Bay Harbor Management Plan notes that The Monroe County Environmental Management Council (EMC) considers the Irondequoit Bay Ecosystem to be one of the top environmentally sensitive areas in Monroe County, and specifically names the northeast shoreline, the Webster well field In addition to designated green space the Town of Webster Local Waterfront Revitalization Program notes that the complexity of the well-field: However, because the site has been subdivided into several small parcels and because ownership of these parcels is in the hands of many different individuals, as well as the Town and the County governments, acquisition and assembly of the site for development will be very difficult and time consuming. It seems obvious, based on many past studies, that the environmental sensitivity of the Village well fields property will make any development of them problematic. Certainly, any sale will not be quick or easy and will involve multiple surveys and deed clarifications. SUMMARY The switch to MCWA water by the Village of Webster will likely have a large negative financial impact on Village water customers. Much of this impact has been detailed with in this impact statement, but questions remain about the use of reserve funds, about the impact on the General Fund, the property tax implications on Village residents and businesses, and the effect on the work of Village employees. These issues should be examined by the Village and not doing so is an abrogation of public trust. What is certain is that taxes or fees on Village residents and businesses will increase and that, though producing no water and having no water revenue, Village water will be a perpetual, burdensome, liability far into the future.