GO WITH THE FLOW: WATER & SEWER ADMINISTRATION

1. GO WITH THE FLOW: WATER & SEWER ADMINISTRATION NYCOM Fall Training School Lake Placid John Mancini NYCOM Counseland Barbara VanEppsNYCOM Deputy Director

2. HOW ARE WATER RENTS ESTABLISHED? • Generally established by local law pursuant to Village Law § 11-1116 • Cities establish in accordance with charter • Use of local law can be beneficial, especially with respect to penalties and late charges (provides citizens with due process) • In certain cases, laws can be written to allow for changes in rent amounts to be made via resolution 1

3. HOW ARE SEWER RENTS ESTABLISHED? • General Municipal Law Article 14-F provides authority to establish and impose sewer rents • GML outlines what rents may be based upon:-- consumption of water-- number and kind of plumbing fixtures-- number of persons served-- volume and character of sewage-- any other equitable basis 2

4. HOW ARE SEWER RENTS ESTABLISHED? • May be established and imposed via local law or resolution • Requires public hearing upon 5 days notice • Amendments must be accomplished in the same manner as the original establishment of rents 3

5. ARE TAX-EXEMPTS LIABLE FOR WATER/SEWER CHARGES? • YES! Water and sewer charges are user fees, not taxes • User fees, unlike general taxation, are charges for actual use and are contractual in nature • A clear connection can be made between the payment made and the benefit received • Tax exempt properties, therefore, are not exempt from user fees 4

6. ARE WATER & SEWER RENTS SUBJECT TO THE TAX CAP? • NO! Water and sewer charges are user fees, not taxes • Tax Cap applies to “taxes imposed on real property by or on behalf of a county, city, town, village, school district, fire district or special district” • It also applies to special ad valorem levies and special assessments • It does not apply to user fees and fines 5

7. CAN WATER AND/OR SEWER RENTS BE REFUNDED? • YES! In certain instances, all or a portion of water and/or sewer rents can be refunded to customers • Claims for refunds should be fully investigated and handled on a case-by-case basis • Refunds are governed by a six-year statute of limitations, with the six years beginning at the time of payment • Examples include negligence, breach of contract, when customer is not responsible, or when rents are computed using an incorrect assessed valuation 6

8. IS MUNICIPALLY-OWNED PROPERTY, USED FOR WATER/SEWER PURPOSES, BUT LOCATED OUTSIDE ITS BOUNDARIES TAXABLE? • MAYBE! Pursuant to RPTL § 406, property owned by a municipality that is within its corporate limits and is used for municipal purposes is exempt from taxation • Municipally-owned property used for certain purposes (public park, water, sewer) but NOT within its corporate limits MAY be exempt from property taxation • The exemption requires the approval of the governing board in which such property in located • An exemption granted by one municipality does not apply to taxes levied by another municipality 7

9. CAN HIGHER RATES BE CHARGED TO OUTSIDE USERS? • YES! Cities and villages have the authority to provide water outside their corporate limits, however this is limited to excess water alone • Water and sewer rates for outside users may be established at amounts greater than those set for city and village residents • The amount of such rates is determined by the municipality's legislative body • Consideration should be given to the cost of providing such service 8

10. HOW IS PAYMENT OF RENTS ENFORCED? • Cities are authorized and villages are required to include all unpaid water rents and penalties in the annual tax levy. Both have the authority to include sewer rents in the annual tax levy as well. • Cities and villages are also authorized to adopt rules and regulations for enforcing the collection of rents which may include terminating the supply/service • Once delinquent rents have been included in the annual tax levy, they may not be subsequently enforced by termination of the supply/service • Delinquent rents owed by outside users cannot be enforced by including them in the annual tax levy (OSC Opn. No. 2004-7) 9

11. CAN DISCOUNTS BE PROVIDED FOR PROMPT PAYMENT? • YES! Generally speaking, municipalities have more flexibility with payments for water/sewer services than they do for payment of property taxes. • Since cities and villages are authorized to establish a scale of rents and determine when such rents are to be paid, they may also provide a discount for prompt payment • Cities and villages may also provide discounts or partial exemptions to a particular class of persons (e.g., senior citizens) provided that it is rational and uniform 10

12. IS THERE A MAXIMUM PENALITY THAT CAN BE IMPOSED ON DELINQUENT BILLS? • No! There is no prescribed statutory maximum but the penalty should not be excessive or usurious • The local law establishing rents should set forth the method of calculating penalties and interest charges, and under what circumstances a penalty may be waived • Since water and sewer charges are not taxes, partial payments may be accepted 11

13. CAN INTEREST/PENALTIES ON DELINQUENT BILLS BE COMPOUNDED? • YES – Just as there is no prescribed maximum penalty, there is no prescribed method of calculating such penalty • The local law or resolution establishing rents should set forth the method of calculating penalties and interest charges, including whether the penalty will be compounded or applied to the base amount 11

14. WHAT EFFECT DOES BANKRUPTCY HAVE ON COLLECTION OF DELINQUENT BILLS? • Typically once a bankruptcy petition is filed, there is an automatic stay against any action to collect a debt against the individual/estate • Any violation of that stay can result in sanctions • Oftentimes, pre-petition liabilities and post-petition liabilities are treated differently • Contact your attorney! 11

15. HOW MAY WATER AND SEWER REVENUES BE USED? • Pursuant to GML § 94, “profits” from a municipal water system may be transferred from the water fund and used for any lawful municipal purpose • Revenues derived from sewer rents must be credited to the “sewer rent fund” and pursuant to GML § 453, shall be used in the following order:-- for the cost of operation, maintenance and repairs of the system-- for the payment of indebtedness which has been incurred for the construction of the sewer system -- for the construction of sewage treatment and disposal works, or for the extension/replacement of the system 12

16. HOW ARE EXTENSIONS AND IMPROVEMENTS PAID FOR? • The cost of extending the mains or pipes can be borne wholly by the municipality, wholly by the benefitted property owners, or both • Funds to pay for such costs may be obtained via general taxation, special/benefit assessments or rents • If a city of village decides to impose a benefit assessment, all properties benefitted must be subject to the assessment and the charge assessed against the property should be in proportion to the benefit each parcel derives • Benefit assessments may be imposed upon vacant properties 13

17. HOW ARE EXTENSIONS AND IMPROVEMENTS PAID FOR? • The imposition of special assessments in villages is governed by Village Law § 22-2200 • The collection of special assessments is governed by Village Law § 5-516 and § 5-518 • State law on these topics is silent with respect to cities so cities should consult their charters. 13

18. WHO IS RESPONSIBLE FOR PIPES & MAINS? • Homeowners are responsible for the lateral line extending from the home to the street which connects to the water/sewer main or “trunk” lines • The Village or City is responsible for the for water or sewer main 14

19. CAN A MUNICIPALITY ASSUME THE COST OF REPAIR OF A SEWER LATERAL IN THE STREET OR RIGHT-OF-WAY BETWEEN THE SEWER MAIN AND THE PROPERTY LINE? • Yes! • The cost of repairing and reconstructing sewer laterals located in the street or right-of-way between the sewer main and the property line may be a village charge. OSC AO 80-108 (unreported) 15

20. CAN MUNICIPAL EMPLOYEES PERFORM WATER/SEWER WORK ON PRIVATE PROPERTY? • Generally NO! – Municipalities cannot enter private properties to install or repair water or sewer lines as a municipal charge or give money to aid or assist, even if the property owner is willing to reimburse the municipality • Performing such work on private property is not a proper municipal purpose 16

21. CAN MUNICIPAL EMPLOYEES PERFORM WATER/SEWER WORK ON PRIVATE PROPERTY? There are limited exceptions to the general rule! • Village Law §11-1112(2), a village is authorized to require property owners to repair connecting pipes on the owners’ property • Where the owner or occupant refuses such direction, the village may go in and make the repair and assess the cost back against the private property involved 17

22. CAN MUNICIPAL EMPLOYEES PERFORM WATER/SEWER WORK ON PRIVATE PROPERTY? There are limited exceptions to the general rule! • Village Law §4-414, authorizes a village to enter upon property in the interest of public safety, health, comfort, and general welfare to perform necessary repairs which the owner has failed to make and assess the cost to the owner as provided by local law 18

23. CAN MUNICIPAL EMPLOYEES PERFORM WATER/SEWER WORK ON PRIVATE PROPERTY? There are limited exceptions to the general rule! • In the event of an emergency endangering public health, safety and welfare, cities and villages may • Perform work on private sewer line where sewage is seeping into the street and may recoup cost of repairs if authorized my previously enacted local law • During a local state of emergency, install filters for private wells and try to recoup expenses when emergency ends 18

24. IS A CUSTOMER LIABLE FOR PAYMENT OF WATER & SEWER CHARGES IF A BILL IS NOT RECEIVED? • YES! • There is an implied contract between the municipal supplier of water and sewer and the consumer • When a consumer requests municipal water and/or sewer service, a contract to pay the rates currently in effect results 19

25. MUST A MUNICIPALITY PROVIDE WATER TO ITS RESIDENTS? • YES! • Municipalities have a duty to assure that their residents have an adequate supply of water. • Residents cannot be denied access where an adequate supply exists. • Exception: shutting off water for non-payment 19

26. TERMINATION OF SERVICE FOR NON-PAYMENT • § 11-116 of the Village Law authorizes termination • Local law must be in place • User is entitled to file a complaint with the county health department • County health department may consider this a public health nuisance • Discuss this matter with your county or local health department!!

27. CAN A MUNICIPALITY REQUIRE THE USE OF WATER METERS? • YES! • Villages and cities can require that water consumption be measured by meters • A municipal regulation that requires water meter installation before water may be purchased is a reasonable regulation • It would be improper to require installation of water meters in all buildings used for business purposes and commercial enterprises – with installation first in new buildings, and then in existing buildings – without first establishing a time limit for completion 20

28. EXTENDING WATER SYSTEM OUTSIDE MUNICIPAL BOUNDARIES • Villages and cities can extend water mains outside their boundaries • Villages: Board must adopt resolution containing a description of the proposed extension and the estimated expense and Board of water commissioners must adopt rules, regulations and rates to apply to outside consumers • Cities: Refer to your charter 20

29. EXTENDING WATER SYSTEM OUTSIDE MUNICIPAL BOUNDARIES • Villages are authorized to contract with towns, fire districts, or other village boards for the purchase and sale of water for up to 10 years (Village Law 11-1124) • Villages that maintain their own distribution system may contract with any other municipality or improvement district to purchase all or part of the water supply for 40 years • Cities are authorized to provide for the development of a supply of water in excess of its own needs to a municipality or improvement district for up to 40 years (GML 118) 20

30. SALE OF EXCESS SEWAGE CAPACITY • Villages and cities which have sewage treatment capacity in excess of its own needs may enter into a contract to convey, treat, dispose of sewage of another municipality or improvement district • Contract cannot exceed 40 years • May not sell excess sewer capacity if it will render the system inadequate for the needs of its inhabitants 20

31. MUST A MUNICIPALITY SUPPLY WATER OUTSIDE OF ITS CORPORATE LIMITS? • No! – Generally, a municipality which supplies water to outside consumers may validly refuse to furnish water to additional prospective users • If an excess water supply exists, a municipality has a continuing obligation to those outside consumers currently using municipal water pursuant to a contract 22

32. RENTAL PROPERTIES: MUST THE MUNICIPALITY BILL THE OWNER OR CAN IT BILL THE TENANT? • The municipality may bill the owner or tenant for water/sewer service, BUT it is advisable to bill the property owner 23

33. ARE WATER & SEWER BILLS SUBJECT TO FOIL? • Yes – The Committee on Open Government has opined that water and sewer bills are subject to FOIL and should be disclosed, including the names of customers or users of municipal water and sewer systems. (COOG Advisory Opinion, February 18, 1999, www.dos.state.ny.us/coog/ftext/f11313.htm) 24

34. IS A MUNICIPALITY LIABLE FOR DAMAGES CAUSED BY A LEAK IN ITS WATER SYSTEM? • Maybe • Courts have held that a municipality is only liable when the injury was caused by neglect during construction or maintenance • All that is required during construction and maintenance is reasonable care • Reasonable care ≠ unearthing system to detect leak or inspect system • Exercise caution when there is a warning of a potential defect or leak • Failure to act promptly  liability 24

35. VILLAGE WATER/SEWER BOARDS • Subsidiary body acting for and at the pleasure of the board of trustees • The mayor may not unilaterally supersede the authority of a board of commissioners but, as ex-officio member of such board, they have all of the voting and participating rights which are vested in the other members of the commission • The village board of trustees determines the composition, powers, duties and responsibilities of each board and may from time to time amend the same (OSC AO 81-355) • Village board may serve as board of commissioners (OSC AO 81-421) 26

36. INTERMUNICIPAL AGREEMENTS • NY General Municipal Law § 119-O grants municipalities the authority to jointly undertake any activity or service which each participant has the power to provide separately. • Municipalities may enter into agreements with other municipalities for provision of joint water/sewer service or a water/sewer project 26

37. INTERMUNICIPAL AGREEMENTS • Agreements must be approved by the participating governing bodies • May contain terms regarding governance, terms and conditions of employment, operation and maintenance, etc. • GML 5-B authorizes two or more municipalities to enter into a contract to provide for a common water supply 26

38. NEW LAWS SEWAGE RIGHT TO KNOW ACT • POTW or operator must notify DEC, local health department (or State, if no local DOH) • Immediately, no later than two hours after discovery • Report includes • Volume and treated state • Date and time • Expected duration • Steps taken to contain the discharge • Location • Reason

39. NEW LAWS SEWAGE RIGHT TO KNOW ACT • POTW or operator must notify local DOH (or State, if no local DOH), CEO of municipality and adjoining municipality (ONLY if affected) • ASAP, no later than four hours after discovery • POTW or operator must also notify general public • ASAP, no later than four hours after discovery • Only if discharge presents a threat to public health! • Waiting on DEC regulations

40. NEW LAWS USE OF SEWER FUND SURPLUS • Chapters 121 & 222 of the Laws of 2012 • Authorized the Villages of Patchogue and Sherburne to use 40% of sewer fund surplus for infrastructure improvements • One year extension for Village of Patchogue -- Chapter 301 of Laws of 2013 • NYCOM is lobbying for similar authority statewide.

41. FOR FURTHER INFORMATION, PLEASE CONTACT….. John A. Mancini, NYCOM Counsel or Barbara VanEpps, NYCOM Deputy Director 1-800-446-9266 or 518-463-1185 Fax: 518-463-1190 Email: jmancini@nycom.org barbara@nycom.org Web Site: www.nycom.org 27