Senate Bill S4263A

                                BILL NUMBER:S4263

TITLE OF BILL:  An act to amend chapter 696 of the laws of 1887,
relating to the establishment of certain water charges for hospitals
and charities in New York city, in relation to the imposition of New
York city water and sewer rents on non-profit institutions

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 undertaking 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 hospitals, 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-profit institutions from the
payment of any outstanding unpaid water and sewer charges. By 1970 the
Act had been amended twelve 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 than 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 introduced, 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,
accompanied 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:  New Bill

LOCAL FISCAL IMPLICATIONS: To be determined.

EFFECTIVE DATE: Immediately.