TO: Batchellerville Bridge Action Committee Members
FROM: Peter VanAvery
DATE: May 13, 2004
You will soon find newspaper coverage of the Hudson River-Black River Regulating District's May 10 board meeting posted on our web site: www.nybbac.org. I will report more extensively on that meeting in a future Newsletter. For space reasons, I only want to say at this time that I was appalled at the irresponsible manner in which the directors are crafting a budget for Fiscal Year 2004/05. They appear to have learned nothing from last fall's fiasco when they attempted to hike access permit fees by 500-1,000 percent. The rollback of that proposed hike left the District with a $1,600,000 budget hole. In response, the Directors have made some sharp cuts. In addition, they propose to generate an additional $800,000 by raising the assessment on downstream beneficiaries by 30 percent. That boggles the mind! Those beneficiaries -- namely, Niagara Mohawk and Reliant Resources, Inc. -- have claimed for years that they are being overcharged, and they already are litigating for huge refunds totaling many millions of dollars.
You will find more background -- and the scary details of how the District's budgeting ineptness could cost us -- in the letter below. It describes the possibility that the District could reduce its budget woes by charging us two annual fees: one for our traditional access permits, and one based on the alleged claim that we are "beneficiaries" of the lake. In the letter, I ask Hugh Farley and Jim Tedisco to dispel this cloud of uncertainty hanging over our heads by co-sponsoring legislation that would exempt us from this possibility now and forever.
I urge you to write Hugh and Jim expressing support for my request, with a copy to Governor Pataki and any other elected officials you favor. Now is the time to head off this outrage!
2013 Salem Road
Schenectady, NY 12309
May 11, 2004
Hon. Hugh T. Farley Hon. James N. Tedisco
NYS Senate NYS Assembly
412 Legislative Office Building 12 Jay Street
Albany, NY 12247 Schenectady, NY 12305
Gentlemen:
The 4,650 access permit holders around Great Sacandaga Lake need your help.
We already pay the Hudson River-Black River Regulating District an annual fee for a permit that entitles us to exclusive use of the state-owned buffer zone around the reservoir's shoreline.
Now, we suddenly face the possibility that the Regulating District will impose a second annual fee on us -- one based on the absurd allegation that we are "beneficiaries" of the reservoir. This would lump us together with the downstream hydroelectric plants and cities that benefit from flood control and river regulation and that traditionally have been charged an annual assessment to pay for operation and maintenance of the reservoir. In our case, so the argument goes, we allegedly benefit because existence of the lake adds value to our private property.
This line of reasoning is illogical and unjust. It ignores the fact that lake-area property owners paid inflated values for their property in the first place and are subject to skyrocketing property taxes. Identifying access permit holders as "beneficiaries" of the reservoir would be equivalent to charging the citizens of Saratoga Springs an assessment because the presence of the NYRA, another public authority, adds value to their private property.
The Regulating District was created in 1922, a year when Warren G. Harding was President of the United States. Many of the rules and regulations under which it operates are archaic, and it is unclear whether the Regulating District has the power to classify access permit holders as "beneficiaries" of the reservoir. What is clear is that a cloud of uncertainty hangs over our heads. We respectfully request that you dispel that cloud by jointly sponsoring legislation that would exempt us as "beneficiaries" now and forever.
The Regulating District's "Handbook for Holders of Access Permits at Great Sacandaga Lake" makes it quite clear who should be responsible for paying for operation and maintenance of the reservoir:
"Those benefiting most from river regulation -- the owners of some 37 riverside properties in Saratoga, Warren, Washington, Rensselaer and Albany counties at which the power of moving water can be directly utilized -- agreed to share 95.34 percent of the cost of acquiring the Sacandaga Valley land and building the necessary facilities. The remainder was shared among the cities of Albany, Watervliet, Troy and Rensselaer and the Village of Green Island in recognition of the flood protection they would realize.... Moreover, the same property owners and municipalities obligated themselves to share in perpetuity all of the operating and maintenance costs of the Regulating District not recovered by other District revenues."
Most of the income generated by this annual assessment on downstream "beneficiaries" comes from two energy firms, Niagara Mohawk (2003 revenues: $4 billion) and Reliant Resources, Inc. (2003 revenues: $11 billion). But for several years, both firms have claimed that they are being grossly overcharged, paying their annual assessments "with prejudice" -- litigating for huge refunds totaling millions of dollars. What is astounding is that the Regulating District has not placed the disputed funds in escrow until the litigation has been resolved. Instead, it has spent them as if a day of reckoning will never come.
What is even more astounding is that the Regulating District now proposes to help fill a gaping hole in its fiscal year 2004/05 budget by hiking its assessment on those same litigating downstream beneficiaries by more than 30%. If the litigation goes against the Regulating District, which the authority's attorney admits is a possibility, a multimillion-dollar refund could be in order. As residents of Schenectady -- which, with the Town of Rotterdam, overassessed GE and was forced to refund millions of dollars in taxes -- both of you have first-hand experience of the potential disaster that awaits the Regulating District.
In 2003, as required by the Offer of Settlement (which it helped to negotiate), the Regulating District hired Gomez and Sullivan, P.C., of Utica to conduct a "Hudson River Flow Regulation Benefit Study" designed "to identify potential beneficiaries and the relative magnitude of the benefits they receive from flow regulation provided by Great Sacandaga Lake." Much to the shock of access permit holders, the study (page 2) placed "increased real estate values for lakeshore property" at the top of the potential hit list.
To quote the Gomez and Sullivan study: "One of the biggest benefits derived from Great Sacandaga Lake is the creation of 125 miles of lakeshore property. The increased real estate benefits derived from the Great Sacandaga Lake would be the difference between current property values and property values without the reservoir." The study then recommended that the Regulating District contract with a real estate appraisal firm "to determine the benefit of increased real estate values."
Last fall, when the Regulating District proposed to balance its budget by hiking access permit fees by an outrageous 500% to 1,000%, both of you rallied to our support. Now, we property owners around the lake look to you once again for relief. Unlike Niagara Mohawk and Reliant Resources, we can not fund a battalion of attorneys to protect our interests from an out-of-control public benefit corporation. We urge you to sponsor legislation that will permanently shield us from any attempt by the Regulating District to classify us as "beneficiaries" of Great Sacandaga Lake and to subject us to an unjust annual assessment.
Thank you.
Sincerely,
Peter VanAvery
Batchellerville Bridge Action Committee
cc: GE Pataki, Governor
JP Cahill, Secretary to Governor
MO Donohue, Lieutenant Governor
DD Hogan, Governor's Office of Regulatory Reform
AG Hevesi, NYS Comptroller
E Spitzer, NYS Attorney General
AB McDonald, Hudson River-Black River Regulating District
RH Lefebvre, Hudson River-Black River Regulating District
RA Whaley, NYS Adirondack Park Agency
EM Crotty, NYS Department of Environmental Conservation