New Paltz Village Mayor Tim Rogers has provided our community with some insight into why a number of Plains Road residents might not want to be forced into giving up use of their individual water wells to become part of a proposed water district.
In New Paltz, as the mayor explained, 55% of the water used to supply the homes and businesses in our existing water districts is purchased from the New York City Department of Environmental Protection (DEP). As it turns out, the DEP is an expensive government agency to do business with, in that it has a bad habit of escalating its price for this precious commodity each year. According to the mayor, “…water purchased from the NYC DEP has risen 180% in the last decade, through 2016, for an average annual increase of 11%.” At this rate, the price of water purchased from the DEP doubles every 6.5 years.
You may wonder how this is possible, and the answer is that the DEP is a government agency operating as a monopolistic water company (emphasis on monopolistic), and thus not subject to the normal marketplace controls governing the financial decision-making behavior of companies which operate in a competitive environment. As a monopoly, the DEP can raise rates any time it pleases since it is selling to a captive audience, the largest being New York City, that has no alternative source of supply. In addition, the DEP is not an agency known for its frugal practices or competent management. As Robert F. Kennedy, Jr. pointed out in his scathing report, “A Culture of Mismanagement: Environmental Protection and Enforcement at the New York City Department of Environmental Protection, 15 Pace Envtl. L. Rev. 233, 1997, ”the DEP has a long history of lawsuits over alleged malfeasance.“
Each year the Council of the City of New York routinely approves the DEP budget. The 2015 final expense budget, which covers the salaries of more than 6,000 employees, as well as the cost of offices, vehicles, services and supplies, was $1.2 billion. This amount was “$60.6 million more than was anticipated in the preliminary budget…due to $68.4 million in new needs…” (Report on the Fiscal Year 2015 Budget for the Department of Environmental Protection, The Council of the City of New York, May 28, 2014). What “new needs?” “Ooonly The Shadow knooows.” In addition to its final expense budget, the DEP spends in the range of $14 billion a year in capital expenditures. All of these billions of dollars are then passed on to the ratepayers who need the water the agency provides.
Milton Friedman, 1976 Nobel Prize winner in economics, helps us understand the spending habits of government agencies such as the DEP. “There are four ways in which you can spend money. You can spend your own money on yourself. When you do that, then you really watch out for what you’re doing, and you try to get the most for your money. Then you can spend your own money on somebody else. For example, I buy a birthday present for someone. Well, then I’m not so careful about the content of the present, but I’m very careful about the cost. Then I can spend somebody else’s money on myself. And if I spend somebody else’s money on myself, then I’m sure going to have a good lunch! Finally, I can spend somebody else’s money on somebody else. And if I spend somebody else’s money on somebody else, I’m not concerned about how much it is, and I’m not concerned about what I get. And that’s government.”
(Milton Friedman interview, https://www.youtube.com/watch?v=k2Kg2SvsI8Q)
The DEP is a government agency spending somebody else’s money on somebody else, and that’s the reason they can, as my sainted Irish grandmother used to say, “spend like a drunken sailor” (with apologies to all naval personnel).
Now let’s examine the proposed purchase of a 58.3 acre parcel of land on Plains Road as part of the DEP’s solution to providing water to New Paltz residents during a planned ten-week shut down of the Catskill Aqueduct. The plan calls for the formation of a new water district, and the Plains Road land would be used to source water during the shut down. It is proposed that the Town of New Paltz purchase the parcel, for which it will be reimbursed in full by the DEP. The parcel is valued on the assessment roll at $165,500 ($2,839 per acre). The town is proposing to purchase the parcel for $1.8 million ($31,000 per acre).
Consider the price of comparable parcels purchased in the town between 2011 and 2016:
1. 134.3 acres of prime farmland off Butterville Road sold for $2.1 million ($15,637 per acre);
2. 534 acres just west of the Wallkill River sold for $2.15 million ($4,026 per acre);
3. 44.6 acres off Butterville Road sold for $550,000 ($12,332 per acre);
4. 77.5 acres on Huguenot Street sold for $1.14 ($14,710 per acre);
5. In June 2015, the Village of New Paltz purchased 64.5 acres behind Duzine Elementary School for $650,000 ($10,078 per acre).
In 2016, the town deemed only one appraisal necessary for the Plains Road parcel . . one appraisal for what may be the largest single purchase of real estate the town has ever made. That single appraisal valued the 58.3 acre parcel at $1.3 million ($22,298 per acre). This valuation was derived from what the Uniform Standards of Professional Appraisal Practice defines as an “Extraordinary Assumption,” which, in this case, was based solely on information provided by the current owner of the parcel and not verified independently by the town. Nevertheless, the town board voted on April 14, 2016 to enter into a Purchase Option Agreement for the parcel at a cost of $1.8 million (half a million dollars more than the appraised value), and to pay the landowner an additional $50,000 every six months until closing.
I asked Town Supervisor Neil Bettez, who had been in office for only four months when the option was signed, and town councilperson Marty Irwin, in office during the entire time the deal was being negotiated, why only one appraisal was done and what they felt justified adding an additional half million dollars to the appraised value.
Supervisor Bettez replied, “There might be many reasons why a municipality might forego multiple appraisals, among them budgetary considerations and other economic factors.” So it appears that the town government was willing to forego a second opinion on a $1.8 million purchase in order to save approximately $3,000 in appraisal fees. Interesting.
Bettez went on, “…any monies expended by the town in its initial acquisition of the parcel are to be reimbursed to the town (by the) DEP, thus making the acquisition of the parcel a “no cost” obligation to the town taxpayers.” Councilman Irwin made this same point. But, of course, we know full well that the monies will, in fact, end up being the obligation of the town taxpayers, as well as that of all the other ratepayers who live in water districts throughout New York State that rely on the DEP for their water source, since we know that the DEP always, in one way or another, passes on its costs to its customers.
Bettez also commented that, “…there is no statutory or other authority in New York which requires that a municipality be constrained only to pay to purchase real property for municipal purposes at its appraised value. “ Again, interesting.
Even if you care nothing about the cost of water, or the cost to ratepayers who must buy water supplied by the DEP, if you are a taxpayer or renter in New Paltz, there is one more dot to connect in this tale of flawed decision-making.
The village and the town are both currently engaged in a search for a permanent source of water, independent of the possible acquisition of the parcel on Plains Road. As shown earlier, the highest price paid for any comparable parcel in the last six years has been $15,000 per acre. If the deal for the Plains Road parcel were to go through at the current $31,000 per acre, it would have the same impact on the price of parcels the town and village are seeking to purchase as the impact experienced when, for example, wealthy buyers purchase overpriced property for second homes in our community. Such real estate transactions contribute to an overall increase in the cost of property and associated taxes, one of the reasons young people cannot afford to purchase homes or land in the town where they grew up and why some in retirement are forced to move away.
If the parcel on Plains Road were to sell for $31,000 per acre, it would have an impact on all future land appraisals of comparable parcels, and that would indeed impact all the taxpayers of New Paltz.
It is important that the current town and village administrations take a fresh look at the possible unintended impact on land values of this current deal.
The proposed purchase price of the parcel on Plains Road is not the only problem with the plan for a new water district in New Paltz. Serious concerns have been raised by Mayor Rogers and others about the adequacy of the plan in terms of the quantity and quality of the water that would be available to village residents in an emergency. As the “Don’t Water District Me” signs along Plains Road indicate, many families continue to be fearful of what they see as a poorly researched, poorly planned and poorly negotiated solution to a problem which may actually no longer even exist due to a change in DEP requirements regarding the proposed shut down of the Catskill Aqueduct. Since the DEP first identified the need for a temporary alternate water supply over a decade ago, the underlying assumptions about the time and methodology required for a shut down and repairs to the aqueduct have changed drastically. It is time for the elected officials of the town and village of New Paltz to re-examine the proposed solution and to make sure they are doing what is best for the citizens and water district ratepayers of New Paltz.
If you agree, you can send a message to our local elected officials telling them you will no longer tolerate their decision to act as willing co-conspirators with the DEP as that agency continues to engage in its long-held practice of profligate spending, this time in our community, as it proposes to spend $1.8 million on a parcel of land carried on our assessment roll at $165,500.
If you would like to learn more about these issues, you can inquire at the town hall on any weekday or attend the public comment period provided at the beginning of all town board meetings, which take place on the first and third Thursday of every month.
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