TO: Batchellerville Bridge Action Committee Members
FROM: Peter VanAvery
DATE: November 13, 2003

The next meeting of the Regulating District's board will take place at 9:00 a.m. on Monday, December 15, at the Holiday Inn, 308 North Comrie Avenue (Route 30A), in Johnstown. Public comments concerning the board's consideration of permit changes will be welcome. A revised permit fee schedule may be available by then for public discussion. I hope you can make it!

In the near future, the Regulating District will mail you some detailed financial data about the access permit system, including actual revenues vs. operating expenses for 2000-2003 and projected revenues vs. operating expenses for 2004-2006. It also is providing job descriptions for the 12 employees who spend all or part of their time on the access permit system. In addition, you will find this information on the Regulating District's web site (www.hrbrrd.com) -- although some of its budget numbers are incorrect. This afternoon, I called the problem to the attention of Chief Engineer Robert Foltan. After the District makes a fix, its numbers will agree with mine. For my initial analysis, please see below.

About 200 people attended the Regulating District's November 3 board meeting at the Holiday Inn in Johnstown. It was an impressive turnout for a weekday morning. On our web site (www.nybbac.org), you'll find meeting coverage by the GAZETTE, RECORDER, LEADER-HERALD, and TIMES UNION. My statement was based on the text of a letter I had written to the Governor. You'll find a copy on our web site.

As is agonizingly apparent, the Regulating District is inept at communications. Whether this is intentional or not, you'll have to decide. The financial data you'll receive about the access permit system is raw. It does not come with an explanation, and it is difficult to understand. But it is extremely important. Let me provide you with my take.

Let's begin with a quote from "Rules and Regulations Governing Use by Permit Holders of State-Owned Property at Great Sacandaga Lake": "Most of the costs of the permit system derive from the salaries and benefits of District employees directly involved in its operation. Local taxes, salaries and expenses of Board members, consultants and most District executives are not permit system expenses.... Permit revenues recover 80 percent of the cost of operating the permit system. The remaining 20 percent is considered a reservoir maintenance expense in recognition of the work done by permit holders in fulfilling their obligation to maintain their permit area in a 'safe and sanitary' condition."

The District operates on a three-year budget cycle. According to the District, permit holders paid less than their 80 percent share of the permit system's operating costs from 2000-2003. In 2003, for example, the 80 percent share was $665,325, but permit holders actually paid only $442,668, for a loss to the District of $222,657. In 2004, the District forecasts that the 80 percent share will total $648,409, all of which it intends to recover from us. In other words, it proposes to increase total revenue from permits from $442,668 in 2003 to $648,409 in 2004. That's a 46 percent jump! Let's put that into perspective. If you asked your boss for a 46 percent raise, what would be the response?

Don't forget that the District initially budgeted $2 million for total revenue from permits in 2004. It has now reduced that number by $1,351,591. Without your loud protests, we would have been bilked out of that money. But is it enough? Absolutely not! Since October 1, I have attended two District board meetings and the public hearing in Northville. I heard one permit holder after another testify to the District's arrogance and ineptness. Who trusts the District's figures? What steps has it taken to increase productivity? Do you believe that the District actually needs 12 full- or part-time employees to run the permit system? Do they need to operate out of a $1.4 million field office, or can they find less expensive quarters? Is the headcount up, down, or the same since 1998? Why are we being charged for stone rip-rap? And what about the rest of the budget? Is the District still giving a 10 percent reduction to Erie Boulevard Hydro, which runs the hydroelectric plant at the Conklingville Dam?

From 2004-2006, the Regulating District proposes to spend a total of about $7 million a year. In my letter to the Governor, I urged him to request that the State Comptroller go over it line by line and assure us that the budget numbers are legitimate. Then, once a legitimate budget is in hand, cut it by 15 percent. Let District management decide how to implement the cuts. If they are not up to the task, replace them. There is no reason why the District should not be treated the same way as a $7 million business that operates in a bruising real-world environment.

Some advice: Don't become overly focused on the access permit fiasco! Remember that the District has launched a two-pronged attack against us. On its web site, you'll find the draft of the 87-page "Hudson River Flow Regulation Benefit Study" prepared under contract by the Utica-based firm of Gomez and Sullivan Engineers. The bottom line is that the District is exploring ways to hit us with a second large annual billing in addition to our access permit fee, and this study points the way.

Historically, downstream hydroelectric firms and municipalities, the prime "beneficiaries" of river regulation, have paid for the reservoir's operation and maintenance. But those hydroelectric firms believe they are being overcharged, and they have begun to pay their bills "with prejudice." They are challenging the amount and litigating for a sizable refund. The District has budgeted a total of $1 million from 2004-2006 to deal with this litigation. At the November 3 board meeting, the District's attorney cautioned that if the District loses, it may have to pay back millions of dollars to those firms.

Caving in to these corporate bullies, the District sponsored the Gomez-Sullivan Study. The section of concern to us extends the definition of Great Sacandaga Lake "beneficiaries" to include owners of property along its shoreline and possibly local towns and villages. The argument: Because the lake exists, this property is worth more than similar property elsewhere.

In my statement at the public hearing in Northville, I urged the District to repudiate this section of the Gomez-Sullivan Study. There has been no response. In my letter to the Governor, I urged him to ask the Attorney General to look into the substance of the litigation. Is there evidence of mismanagement by the District or harassment by the hydro firms? If the District is cleared, then the Public Service Commission should have the power to rein in the public utilities.

On its web site, the Regulating District has asked for comments about the Gomez-Sullivan Study. Please note that the District tried to sneak this study past access permit holders. It did not attempt to inform the public about the study via a press release. Nor was it interested enough in our inputs to send us a letter advising us about the study's existence. Send your comments to the Hudson River-Black River Regulating District, 350 Northern Boulevard, Albany, NY 12204. Be sure to send a copy of your letter to the Governor. And keep this question in mind: Who deserves to spend your hard-earned money, you or the Regulating District?

At District meetings, we've heard from some of our neighbors who live close to the financial edge and can't afford a huge jump in permit fees, let alone an annual assessment on lake "beneficiaries." Some are senior citizens on fixed incomes. Others work hard at jobs that don't pay much. Think of the woman who stood up with tears in her eyes and told us about her fear of losing her honeymoon cottage. Think about the senior citizen who told us how GE's layoffs forced him into early retirement, with consequent reduced pension and Social Security benefits. Think about the young man who told us with sorrow that he was in line to be the fourth generation to own the family camp, but he didn't know if he could swing the $400 permit transfer charge plus a steep annual permit fee.

The Regulating District does not care about these people. But we should. Since the Regulating District is a "public benefit corporation," its budget and fees are not subject to legislative approval. However, through our petitions, letters, and telephone calls, we have got the Governor's attention. We should keep pressuring him to insist that the District justify and squeeze every dollar. Through its arrogance and ineptness, the District has bumbled into the public spotlight. It is our task to keep it there.

The Regulating District is not the only public benefit corporation that's in the news. Others are the New York Racing Association and the Canal Corporation. Assemblyman Richard L. Brodsky is doing an admirable job of investigating these "shadow agencies," with a view to subjecting them to legislative oversight. I have asked him to place the Regulating District on his list. You can help by dropping him a line:

Richard L. Brodsky, Chairman
Committee on Corporations, Authorities & Commissions
NYS Assembly
422 Legislative Office Building
Albany, NY 12248