BILL NUMBER: S4370

SPONSOR: PARKER
 
TITLE OF BILL:  An act in relation to providing cooling tower credits

 
PURPOSE:  This bill provides credits to hospitals for certain New York
city water charges related to water which evaporates in cooling towers
and therefore has no impact on New York city's sewage system.

 
SUMMARY: OF PROVISIONS:

Section 1 of this bill permits hospitals to install cooling tower meters
to measure the amount of water that is evaporated from such system and
to allow for the creation of a credit for that amount.

 
JUSTIFICATION:

This bill addresses an issue that has grown out of the massive undertak-
ing relating to the delivery of water and sewer service in New York City
that has taken place over the course of the last thirty years. New York
              

has long held that municipal levies for water and sewer service are not
taxes. Tax exempt institutions located in New York City have at various
times received exemptions from local water charges and sewer rents. The
first such exemption was granted in 1887, when the state legislature
enacted Chapter 696 of the Laws of New, prospectively exempting hospi-
tals, orphan asylums and homes for the aged from the payment of "water
rents to the City of New York" New York Courts have long held that water
and sewer services are not taxes. The 1887 Law released certain non-pro-
fit institutions from the payment of any outstanding unpaid water and
sewer charges. By 1970 the Act had been amended twel ve times to exempt
more classes of non-profit organizations from payment of water and sewer
charges.

It is commonly accepted that non-profit institutions render an important
service to the community. Consequently, they are subsidized by exemption
from real property taxes. The benefits conferred upon society by these
non-profit institutions. This is no more true tha n in the instance of
"Safety Net Hospitals" located in New York City.  If they do not
survive, however tenuous their financial condition, government would be
forced to assume a much greater share of the cost of providing health
care services.

The New York City Water Board, which is responsible for setting water
and sewer charges in New York City, determines water charges on the
basis of the amount of water that flows through water meters installed
on all buildings in New York City. Over a period of 30 years beginning
in 1982 the City made major changes in the delivery of water and sewer
service. The City had emerged from decades of fiscal woes and,financial
oversight but the water system had been neglected. In 1982 the City did
not even require meters on residential property. Charges for residential
property were determined by the size of the property. Not only was this
system, called "frontage", completely subjective because the amount of
actual consumption was unknown, this system also had no way to detect
the millions of gallons of water that were lost through leaks. Facing a
major drought in 1985, New York city imposed stringent rules governing
water use and the Rules Governing Water and Sewer Consumption in New
York City were completely overhauled. Universal metering was imposed on
all properties. Large non-profits were required to pay for water and to
install sewer meters. In the absence of sewer meters the City bases the
sewer charges on the amount of water that has entered a building as
determined by the water meter. Sewer meters can register the amount of
water which flows through a buildings sewer lines and is discharged into
the City sewer system.

While the City levies charges for the amount of water that flows into a
building, the City also levies a charge for water that is discharged
into the City sewer system. The sewer charges help defray the cost of
the City system which handles the discharge of all of the water that is
discharged from a building. While twenty years ago the sewer charges
were maybe 5%-10% of the water charges today they comprise nearly 160%,
or $8.00 per 100 cubic foot, compared to $5 for the water. Many large
buildings have cooling towers. As a result of those towers a good deal
of the water that enters those buildings evaporates after it has been
used for air conditioning, and therefore they do not tax the sewer
system, but in the instances such as for which this bill is being intro-
duced, such critical care institutions are still being charged for
discharge to the sewer system.

After twenty plus years the City has made tremendous progress toward
accomplishing its goals of overhauling nearly every single aspect of the
water and sewer system. As with any large government undertaking, accom-
panied by be constant revision of rules and procedures the City's
efforts have not been without some problems. Rules and regulations were
evolving and there was a period when inspections were not done and the
City agency responsible for enforcement witnessed personnel changes and
several relocations. Some critical property owners, Safety Net Hospitals
among them, made attempts to comply with the shifting landscape, while
simply trying to stay solvent. Now these important institutions are
being unduly burdened by charges, for which there was no provisioning of
services, adding an onerous burden to important community institutions
that are already struggling to sustain their unavoidable costs.

This legislation will ensure that after 30 years of transitional issues,
institutions that undertook efforts to comply with the rules allowing
for sewer credits will not be penalized.

 
LEGISLATIVE HISTORY:

2017-18: S3264 - Referred to Cities
2015-16: S.4263A - Referred to Cities

 
LOCAL FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
Immediately.