Russ Barksdale, president and CEO of Waveny LifeCare Network, received notification this week about $8,5000 in annual sewer usage fees that the nonprofit organization would be expected to pay for the fiscal year starting July 1.
A proposal from Town Hall that’s designed to more fairly distribute sewer-related costs among residential and commercial property owners, the fee ultimately would see both for-profit and nonprofit businesses—including churches, charitable organizations and municipal buildings—taxed for water usage for the first time.
Barksdale in addressing the Board of Finance on Tuesday night during a public hearing on the proposal said he found that his organization, which includes both the Waveny Care Center on Farm Road and The Inn on Oenoke Ridge, would be “hit more than any other nonprofit in our area, sizably more than any other nonprofit.”
“I went to then think of the pebble effect, the pebble effect that it would have for that usage fee to be placed on us as a nonprofit, to be placed upon the other churches and other nonprofits that enrich the culture of this great community that we have in New Canaan,” Barksdale said during the well-attended hearing, held at Town Hall.
Noting that Waveny has provided some $10 million in charity care in the past two years in ways that saves government spending, Barksdale added, “We have a very fragile, very large group of seniors that come to us who cannot afford or find themselves at the end of being able to afford the highest level of care that we provide. And so I applaud our charity care to provide that. Who do we bill that usage fee to?”
Medicare and Medicaid are not options, he said, and there’s “really no place to pass that fee on to others to be able to incorporate, so we have to as a nonprofit be able to absorb that expense.”
“We would just ask that, similarly to the $15 minimum wage, that you give us an opportunity and all the nonprofits that are here the opportunity to build it within our budget. Right? To give us the notification to be able to say, ‘OK guess what? We have to pay that usage fee over this period of time,’ so that we can ramp up and build it into our budget and so that we can find the best way to pay for it.”
Barksdale was one of several people—including property owners, nonprofit representatives, spiritual leaders and elected officials—who urged the Board of Finance to take more time and rethink the proposed new “sewer usage fee” system.
While noting that the current system is not equitable, the finance board voted unanimously to hold a second public hearing on May 28 and put off a decision until that time. Those voting included board members Michael Chen, Secretary Judy Neville, Tom Schulte, Chairman Todd Lavieri, George Blauvelt, Vice Chairman Bob Spangler, Amy Murphy Carroll and Neil Budnick.
The Board of Finance had taken up the proposal in January and during its April meeting called for more tiers to be introduced into the planned new fee schedule.
New Canaan is expected to collect about $1.3 million in sewer taxes during the current fiscal year.
Right now, the burden is carried primarily by residential property owners, with a sewer tax also paid by commercial property owners though nonprofit, municipal and church uses have been exempted, and specific fees have been divvied up based on assessments rather than actual water usage.
Tasked with researching the system, the Department of Public Works earlier this year came forward with a tiered, flat-rate system. According to First Selectman Kevin Moynihan, state law requires that if municipalities move to such flat-rate systems, as about half of Connecticut has, then churches, nonprofits, schools and municipal budding also must pay a fee.
Under a proposed new schedule posted on the town website, a total of 213 commercial, nonprofit, church and municipal properties would generate $313,500 in those fees. Commercial sewer users would fall into one of five tiers or “quintiles” under the proposal, paying between $750 and $5,000 per year based on usage.
The four commercial properties falling within the highest category of $5,000 in the first year are Waveny Care Center, New Canaan YMCA, the high school and middle school. Those in the next tier down—paying $3,500 the first year—include a car wash on Cross Street, the Roger Sherman Inn and a Pine Street building that houses Walgreen’s, South End and New Canaan Wine Merchants.
Meanwhile, residential properties, which have ranged up to $5,000 in sewer taxes annually in the past, would move into a different set of tiers that, at the end of three years, would result in a flat-rate range of $275 to $735 per year, under the proposal.
Meanwhile, according to Public Works Director Tiger Mann, who presented the new sewer fee proposal with town CFO Sandra Dennies, said an analysis of 1,200 residences showed that proposed system would result in 75% of single-family homes seeing a lower payment while 25% would see an higher payment. Homes that had been paying the most in sewer taxes—those in “quartile 4,” under the language of the flat-rate system—stand to save as much as $3,000 per year, Mann said.
That’s because some homeowners had been paying so much under the existing “ad valorem” taxing system. Mann said that after studying the matter, officials found that “it seemed to be unfair.”
“It did not account for the number of users per facility, it didn’t account for the type of use, whether it was personal or business, it didn’t account for volume of flow or quality of flow or type of flow,” Mann said. “It basically was the assessed value of the parcel was then attributed a mill rate and that was their charge. So you could have two single family homes, one of a larger size, one of a smaller size, one of an empty nester and one with five children in it and someone would be charging more even though usage was a little less.”
Mann said that officials also discovered in studying the matter that some hadn’t been paying in, and that state law “allows” for entities including nonprofit organizations and municipalities to be assessed a fee and even “encourages” it.
Under the Town Code, the Board of Finance is New Canaan’s “water pollution control authority.”
Finance board members asked Mann whether the proposed flat-rate fees would take hold this year or next (in 2020), whether the data used in determining how properties would be tiered also captured the revaluation (yes), whether property owners could appeal their assigned quartiles or quintiles (yes), who’s on the town’s administrative review team that would handle initial inquiries about tiering (Mann, Dennies and Budget Director Lunda Asmani) and what criteria was used to decide quartile-quintile placement (mostly water usage data from Aquarion).
Asked by Spangler for more specifics on how properties were reviewed, Mann said the town’s study spanned five months. Some on the board, including Spangler, said it would have been preferable to capture a full year’s worth of water usage data, to account for such variables as seasonality.
Those who took to the podium thanked Mann, Dennies and the board for their work. The concerns they voiced came in two basic forms—some spoke out against the specific provisions of the flat-rate system, while others objected to its spirit.
Russ Kimes applauded a change in sewer changes from property value-based to usage-based, though he said the specific proposed residential fees are not “fair and reasonable,” as required by law, but rather “arbitrary and unreasonable.” He said that form of ownership is not an acceptable criteria for determining what set of fees homeowners would pay. For example, Kimes said, Pride’s Crossing condos are individually owned and while their fees will change from a range of $279 to $664 annually to $235 to $550 annually, the owners of the 16 units at the Hatfield Mews townhouse co-op net door will pay just $350 apiece. Kimes also said that the 104 apartments at Avalon Lakeview would go up from $158 to $350 per year.
“Because these proposed residential rates are nether fair nor reasonable, or based o the criteria or standards allowed in the statute, they must be rejected,” Kimes said.
John Engel addressed the Board as the owner of two commercial buildings downtown—at 199 and 215 Elm St.—and said that even though he stands to benefit financially from the new flat-rate system that it is “probably not fair” and “needs some work.” Specifically, Engel said, a 2,500-square-foot building that houses just a liquor store with typically one employee on one level and home furnishing business that has at most one employee above it is in the same “quintile,” under the new categorization, as the 19,000-square-foot building next door, which includes the Glass House Visitors Center (and its dozens of daily visitors), 25 architects, about 30 to 40 hedge fund workers and six bathrooms.
The finance board needs to “study it some more” before approving the proposed new fee system, Engel said.
Ginny Apy thanked board members for their “endless hours of service” and called them an “asset to this town.”
At the same time, Apy said she was concerned about “fair representation.”
“The Board of Finance requirement to serve is that you are a property owner so you have skin in the game in making your decisions,” she said. “I don’t believe other than Mr. Moynihan that there is anybody on this committee who is in the sewer tax district. I believe you will do what is fair. The public needs to know you are not part of the sewer tax district and not once in your meetings or discussions of the sewer fee has the topic of adjusting septic dumping fees come up.”
She referred to residential property owners who are not connected to the town’s sewers, and instead have their own septic systems, which require clearing out periodically and for which the town collects a fee.
The Rev. Eric Fieldal, pastor at United Methodist Church, said he hadn’t planned to speak but that many of his colleagues were unable to attend
His concern is “the change in our community.”
“We have gone from a community that was much more relational, to a community that has become transactional,” he said.
Most of the groups that use the church, for example, don’t make any money, and United Methodist doesn’t charge organizations such as the Gridiron Club, Boy Scouts or Girl Scouts to use its facility. Fjeldal said that nonprofit organizations generously allow use of their spaces for good causes that benefit the wider community, and that the proposed flat-rate system would work against that spirit.
“I see this tax as something that does not allow the community to work together, but sets us up in an adversarial relationship,” he said. “And I for one am not in favor of that for a a beautiful community like New Canaan.”