However, President Claudia Borecky received information that GES has a disreputable record. In lawsuits, they were found to use unreliable methodology and technique in a manner accepted by the Uniform Standards of Professional Appraisal Practices. She found that its study had discrepancies; it made valuations based on hypotheticals that were not based on fact; compared apples with oranges; and failed to conduct an analysis of a takeover by the Towns of Hempstead and Oyster Bay. Our concerns are as follows:
1.
Comparing apples to oranges: In 2009, Aqua (our former water company) paid taxes to 33 school districts and it only served 8 of those districts. Through our water bill, we were paying taxes to 25 school districts that have public water. It is unclear whether that situation had been rectified since we first brought it to their attention and the amount of property taxes reported in the report does not specify which, if any, school districts it pays taxes to.
The GES Report did not compare the tax obligation of a public takeover scenario because it assumed we would still be obligated either way to pay taxes so it would zero out. However, if the portion of its obligation to the North Merrick School District was removed, for example, it would only cost a North Merrick resident $30 a year to fill the hole left from the lost revenue it would have received from LIAW. If the Town of Hempstead took over, we would not be responsible for paying for the education of children who do not live in our district, nor have to pay property tax to the county, town or villages. Since property taxes make up one-third of LIAW's expenses, a public acquisition should reduce our bill by one-third right off the bat.
2. GES projected that the cost of providing water would rise equally, whether it be public or private. This hypothesis is not based on fact. Town of Hempstead's water rate hadn't risen in ten years, while the Public Service Commission consistently allows our private water company to raise our rates much by as much as 14% so that it can make a profit.
3.
George E. Sanscoucy record
: The New Hampshire firm that conducted the feasibility study has been legally challenged on their findings, methods, calculations and level of expertise.
4.
Public takeover:
The NCMCA asked that the study look at six different scenarios, but it only analyzed LIAW being acquired by WASENC - the most costly to the consumer because WASENC would likely by a PILOT (payment in lieu of taxes.) No one looked at the feasibility of LIAW being acquired by the Town of Hempstead and merged with its existent public water district. Borecky surmised the following:
a.
LIAW pays almost $9 million in property taxes, which is one-third of its expenses. We pay 100% of its obligation through our water bills. However, Hempstead Water District does not pay property or corporate tax.
b.
LIAW receives a 7.85% profit from us. They claim to have strong earnings and dividend growth of 9%. Town of Hempstead does not make a profit.
c.
CEO of LIAW makes approx. $3 million annually. Hempstead Water Commissioner makes approx. $140,000.
d.
If the Town of Hempstead acquires LIAW, it would eliminate a redundancy of services, facilities, equipment, purchases and employees to some extent.
|
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
No. of school districts served by water co.
Profit allowed by Public Service Comm
|
American Water
$800
$1.2 million
$8.8 million
33
8
7.85%
|
Hempstead
$187
0
0
0
N/A
0%
|
