Relates to the imposition of New York city water and sewer rents on non-profit institutions

Summary of provisions

Section 1 of this bill permits hospitals to install cooling tower meters to measure the amount of water that is evaporated from such system and to allow for the creation of a credit for that amount.

Justification

This bill addresses an issue that has grown out of the massive undertaking relating to the delivery of water and sewer service in New York City that has taken place over the course of the last thirty years. New York has long held that municipal levies for water and sewer service are not taxes. Tax exempt institutions located in New York City have at various times received exemptions from local water charges and sewer rents. The first such exemption was granted in 1887, when the state legislature enacted Chapter 696 of the Laws of New, prospectively exempting hospitals, orphan asylums and homes for the aged from the payment of "water rents to the City of New York" New York Courts have long held that water and sewer services are not taxes. The 1887 Law released certain non-profit institutions from the payment of any outstanding unpaid water and sewer charges. By 1970 the Act had been amended twelve times to exempt more classes of non-profit organizations from payment of water and sewer charges.

It is commonly accepted that non-profit institutions render an important service to the community. Consequently, they are subsidized by exemption from real property taxes. The benefits conferred upon society by these non-profit institutions. This is no more true than in the instance of "Safety Net Hospitals" located in New York City. If they do not survive, however tenuous their financial condition, government would be forced to assume a much greater share of the cost of providing health care services.

The New York City Water Board, which is responsible for setting water and sewer charges in New York City, determines water charges on the basis of the amount of water that flows through water meters installed on all buildings in New York City. Over a period of 30 years beginning in 1982 the City made major changes in the delivery of water and sewer service. The City had emerged from decades of fiscal woes and financial oversight but the water system had been neglected. In 1982 the City did not even require meters on residential property. Charges for residential property were determined by the size of the property. Not only was this system, called "frontage", completely subjective because the amount of actual consumption was unknown, this system also had no way to detect the millions of gallons of water that were lost

through leaks. Facing a major drought in 1985, New York city imposed stringent rules governing water use and the Rules Governing Water and Sewer Consumption in New York City were completely overhauled. Universal metering was imposed on all properties. Large non-profits were required to pay for water and to install sewer meters. In the absence of sewer meters the City bases the sewer charges on the amount of water that has entered a building as determined by the water meter. Sewer meters can register the amount of water which flows through a buildings sewer lines and is discharged into the City sewer system.

While the City levies charges for the amount of water that flows into a building, the City also levies a charge for water that is discharged into the City sewer system. The sewer charges help defray the cost of the City system which handles the discharge of all of the water that is discharged from a building. While twenty years ago the sewer charges were maybe 5%-10% of the water charges today they comprise nearly 160%, or $8.00 per 100 cubic foot, compared to $5 for the water. Many large buildings have cooling towers. As a result of those towers a good deal of the water that enters those buildings evaporates after it has been used for air conditioning, and therefore they do not tax the sewer system, but in the instances such as for which this bill is being introduced, such critical care institutions are still being charged for discharge to the sewer system.

After twenty plus years the City has made tremendous progress toward accomplishing its goals of overhauling nearly every single aspect of the water and sewer system. As with any large government undertaking, accompanied by be constant revision of rules and procedures the City's efforts have not been without some problems. Rules and regulations were evolving and there was a period when inspections were not done and the City agency responsible for enforcement witnessed personnel changes and several relocations. Some critical property owners, Safety Net Hospitals among them, made attempts to comply with the shifting landscape, while simply trying to stay solvent. Now these important institutions are being unduly burdened by charges, for which there was no provisioning of services, adding an onerous burden to important community institutions that are already struggling to sustain their unavoidable costs.

This legislation will ensure that after 30 years of transitional issues, institutions that undertook efforts to comply with the rules allowing for sewer credits will not be penalized.

Legislative history

New Bill

Local fiscal implications

To be determined.

Effective date

Immediately.