Paying for infrastructure by selling resources: New York NOW

Nov 14, 2014

This is Cooper Lake. One of the largest bodies of water in the Catskill Mountains holding over a billion gallons and serving as the main source of drinking water for the nearby city of Kingston and some of the surrounding communities. Recently the lake has drawn attention from the California based Niagara bottling which would like to tap into this natural resource so they can package and sell the water all over the country.

Water Department Superintendent Judith Hansen explains the central question facing the Kingston’s Water Board.

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“Do we have the surplus water to sell them and if we do is it in our best interest?”

The question has board members at odds with some in the community like Kingston Citizens.

In April, Hansen says the Board was approached by Niagara Bottling to find out, if the company built a plant near Kingston, could the Water Department provide them as much as 1-point-75-million gallons of water a day?

“We did a preliminary study and it certainly suggested that with a couple of minor improvements, yes we could and with the current infrastructure we could deliver up to a million gallons a day.”

Superintendent Hansen says she’s comfortable selling Niagara that much water because the department used to do that for IBM. The company was a major employer in the Hudson Valley for the latter half of the 20th century. They set up shop in the Town of Ulster, just north of Kingston, in a compound called Tech City. IBM reserved and paid for a million gallons to be available to them on a daily basis. For the Water Department the partnership worked out great. Revenue from IBM allowed the department, which acts as an independent utility, to keep rates down for city residents. Then in 2000, Hansen says the department’s contract with the tech giant ran out, the same time the century old water delivery infrastructure system reached crisis levels.

“We have been making upgrades throughout the years, it’s just that right now we have a lot on our plate, we just done about 5-million dollars’ worth of upgrades we got another 16 in the next 5 or 6 years that we have to deal with. Every 5 million dollars we borrow, the payment is approximately a 10% increase over our current rates.”

With 16-million dollars of mandated improvements on the line, like rebuilding reservoir dams, painting water towers and replacing parts of the underground delivery system; Hansen says rate payers could see as much as a 30 to 40-percent increase in their bills.

Selling water to another company could help cover costs. But members of Kingston Citizens say there are too many unanswered questions.

“Politicians don’t put money in the ground, they put it where you see it. They should have done, started this even 20 years ago because we’re in this situation now.”

Kingston Citizens is a small but passionate group advocating for stronger civic engagement between local government and constituents. Rebecca Martin is the groups founder.

“There really isn’t enough scientific study, there’s not any estimated budgets, there’s really no information to say for sure what benefits there are to this proposal for this community. And the comparison to IBM, IBM brought 7 or 8-thousand jobs into the community, good jobs and grew the community as it did back in the day when they were here. And it’s true that the city of Kingston sold a million gallons of water a day but it was water sewer and what have you it wasn’t to bottle and to sell.”

Members of the group can easily cite issues with Niagara’s practices in other states. They also say the water department doesn’t know what the potential environmental impact on Cooper Lake and the community is. Martin says their main issue, however, is ensuring that the State Environmental Quality Review, also known as SEQR (seeker) is as through as possible.

“As far as we know there hasn’t been any modeling done to really identify weather Cooper Lake can provide that much water for how long? You know how long could it possibly, uh create or offer that 1.75 million gallons per day?”

Superintendent Judith Hansen says they are considering the ‘safe yeild’ of Cooper Lake.

“The one thing we know is, they’re expecting to use between a quarter of a million a day and 800,000 a day and that 1.75 figure that everyone is kind of lazered on is what they’re gonna use potentially at maximum build out down the road a couple of times a year.”

To meet Niagara’s largest water request, Hansen says the department would need to add an additional pipe that the company would pay for. She says the water department has also considered its legal rights if Niagara’s demand for water from Cooper Lake ever got too big.

“Our attorney would incorporate any of those restrictions in our ability to turn off the tap. He’s also done the research to find out that case law in New York State would absolutely support our doing so.”

Niagara Bottling declined to be interview for this story, saying it would be premature, but they did send us an email.

Niagara Bottling, LLC is currently undertaking expansion due diligence in multiple locations.  The Town of Ulster, NY is one of the many communities under consideration.  Until such time as a successful due diligence process is completed and a location of choice is selected, Niagara will have no further media comment.  Once the company is ready to make an announcement on its next location of choice, it will do so in partnership with its governmental and community partners”.

Rebecca Martin and members of Kingston Citizens say they’ve had to fight to have Kingston declared an interested agency in the process and are hoping to get them elevated to an involved agency. Kingston Citizens says without involved agency status the city won’t have any influence in the SEQR process. Right now Town of Ulster, where the proposed plant would be, is the lead agency and the state Department of Environmental Conservation is only listed as an interested agency.

Kingston Citizens has also asked the Water Board about alternatives to doing business with Niagara,

“Have there been any recent conversations between the city and your department for alternative means to fund the 16-million or more needed?

No.

Ok.

And why not?

You asked if there’s been any discussions? There haven’t been. Why I don’t know.”

Rebecca Martin suggests the department and city consider a possible bond act to pay for the improvements.

“If the entire community paid for the updates that we all need and benefit from, in the same way that we do with the school district. We all pay into the school district, whether our children use the schools or not. So why couldn’t it apply here? What would the cost be?”

A possible bond act is on the table, but Kingston Mayor Shayne Gallo, who also has a seat on the water board, would like to see it addressed at the state level.

“Respectfully submitted that the state representatives should step up and acknowledge that municipalities like Kingston, all throughout New York State have aging infrastructure, no means by which to make the necessary repairs, we can’t keep going to the tax payers, they can’t afford it given the circumstances, and I think those are all the reasons why we should have some sort of state bond act to deal with these state infrastructure problems.”

While an official decision whether or not to welcome Niagara bottling to the town of Ulster and Tech City has yet to be determined. What is clear is that the city of Kingston needs to come up with a solid revenue source to update its rapidly aging water infrastructure system.

In Kingston, I’m Jenna Flanagan for New York NOW.