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Heritage Hills Sewer Takeover to Get More Study

First formal look at creating a municipal district answers many questions, but raises others.

Somers officials have long discussed whether buying Heritage Hills’ water and sewer operation could save money for its customers. Now, a town-commissioned study suggests such a takeover would indeed cut the cost of day-to-day operations.

Still, the consultants’ conclusions, delivered in October and focusing largely on technical matters, have not persuaded Supervisor Mary Beth Murphy, who wants more answers to a host of questions, largely legal and financial.

"I see nothing at this point to convince me there would be any substantial savings to the residents [if the town acquired the utilities]," she told Patch.

The town’s consultants, Woodard & Curran, would likely agree on the need for further study, broader in scope. A national engineering, science, and operations company with an office in White Plains, Woodard & Curran evaluated the physical facilities at Heritage Hills and analyzed financial aspects of the deal. But the report stopped short of estimating some future costs, for instance, or saying whether the plant’s price tag, reportedly $18.2 million, made sense.    

Murphy said she planned to seek proposals from other firms that can help fill in such blanks.

Councilman Richard Benedict agreed.

“There are some technical questions raised in there that still have to be answered," he said.

The answers, he said, will impact the town’s financial and legal decision-making.

"You’re going to need a lawyer and a finance guy to come up with a plan," Benedict said. 

Except for the extra zeros in its purchase price, the water-and-sewer complex is just another used car you might like to buy. It’s been around some, has a bit of wear and tear and you’ll likely be putting money into it, even as you’re paying off the loan that bought it.

In the case of Heritage Hills, that “used car” was built in stages over the last 30 years, with pieces added as the development grew. It drives more than 360,000 gallons of drinking water each day to some 2,600 homes and a handful of commercial customers. It also carries away to a treatment plant about 280,000 gallons of wastewater, all of it over a network of PVC and asbestos-cement pipes.

Kicking the tires, a prospective buyer worries over what could go wrong and how soon. “We don’t want to get stuck with a lemon,” Benedict told his fellow town board members at a recent meeting. He stressed the importance of the system meeting real-world demands, not simply design specifications.   

Assuming a sound physical plant, financing must also be considered, and it’s not always as simple as it might look.

At a quick glance, for example, a town takeover would cut revenue needs of the sewer/water facility by 43 percent, a savings that could seemingly be passed along to customers. In reality, however, that savings, as Woodard & Curran notes, drops to a meager 2.6 percent when the cost of paying off the system’s purchase price—likely financed by a decades-long bond—is factored into the equation.

Moreover, much of the reduction in operating cost results from the sewer/water service’s abrupt freedom, as a government-owned entity, from paying real estate taxes. That amounted last year, the consultants point out, to $728,723 in school taxes; $148,652, county taxes; $64,523, town; and $26,106, fire, or in each case roughly 1 percent of the real estate revenue the jurisdiction collected.

As the questions—legal, technical and financial—continue to grow in complexity, Somers will seek outside help. 

"All of the answers have to be addressed by someone sharper-penciled than I," Benedict said. 

Murphy does not have a target date for requesting further consultant proposals, but she would "like to get it moving."

Howard Frank December 26, 2012 at 04:25 PM
Would any one buy a 30 Year old car ? With leaks , needs new pumps and connections with burried Asbestos exhust piping ready to start leaking in to the NYC water supply . The Town should be paid to take this system over.
Francis T McVetty December 26, 2012 at 08:48 PM
It would behoove the town of Somers to look very, very carefully at this proposal. Mr. Frank is right!

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