Permit Holder John Barber Sued to Keep His Access Location
Landowner Access to Great Sacandaga Lake is Squeezed
Hudson River - Black River Regulating District Tried to Raise Fees over 300%
Guy Poulin happened to be browsing in the fine-print section of the Leader Herald newspaper during early September, and noticed an advertisement that looked like it could be important. It was an official legal notice related to increases in permit fees that adjacent and nearby landowners pay yearly for their access to the Great Sacandaga Lake. The largest reservoir in New York, the 42 square mile lake in Saratoga and Hamilton Counties was completed in 1930 to prevent flooding of the cities of Albany, Troy, Rensselaer, Watertown and Watervliet, as well as three villages located downstream along the Hudson River. Mr. Poulin had not heard about a plan to increase the annual access fees. The Northville resident hurried over to the field office of the Hudson River Black River Regulating District in Mayfield to find out what the notice was about.
The Regulating District is a public benefit corporation created by the Legislature to manage the flows over the Conklingville Dam to the Sacandaga River, which flows into the Hudson River about six miles downstream. In accordance with its legislated arrangement, the Regulating District receives fees from the beneficiary cities and villages downstream to operate the dam and reservoir, and from Niagara Mohawk Power Corporation, which generates electricity at the Conklingville Dam and another reservoir on the Black River system. The District also receives yearly permit fees from landowners who own the right of access to the lake along the 125-mile shoreline.
The official Handbook for users of the access permit system states, "None of the revenue derived from permit fees is used to operate the Hudson/Sacandaga River regulating system. Permit fees are used only to help offset the cost of running the permit system itself."
The Rules and Regulations state, "Permit revenues recover 80% of the cost of operating the Permit System. The remaining 20% is considered a reservoir maintenance expense in recognition of the work done by permit holders in fulfilling their obligation to maintain their permit area in a 'safe and sanitary condition.'"
At the Regulatory District office, which is located in Mayfield, Mr. Poulin was allowed to look at the papers describing a proposed fee increase for the 4,575 permit holders. However, he said recently that an official told him, "You can't have it. You have to FOIL it," referring to a Freedom of Information Law request. Mr. Poulin, a retired teacher, went to work gathering documentation. Uncooperative, secretive attitudes responding to citizen requests for documents are frustratingly common in New York.
A shell game was already being played with the numbers in the budget to wrongly attribute costs to the permit holders that by statute are to be paid by the downstream beneficiaries.
The information in the public notice in the newspaper and Mr. Poulin's visit to the field office began an uproar that reportedly brought almost 1,000 people to an overflowing auditorium in the Central School in the rural town of Northville on October 22, where the Board of the Regulating District intended to receive comment on access fee increases. Permit fees, which had ranged from $33 to $43 for a basic ten-ft. wide private access during the past ten years, were to be increased to $200. Other access permit fees would be as high as one or two thousand dollars, depending on the situation.
The Regulating District's new budget had features related to the permit system that had never appeared before. It was impossible to discern from the distributed materials how the expenses were allocated between the downstream beneficiaries and the permit holders, although this division was apparently being implemented. The biggest addition to the costs listed by the Board was the charge for the local town, county and school taxes, amounting to $7,280,000. A form letter to permit holders outlined portions of expense items ranging from $1 million for litigation to $110,000 for mandate costs created by the Federal Energy Regulatory Commission Licensing Agency.
"This is not an exhaustive list and it is designed to demonstrate the causes of a rate increase," the Board's official September 22 letter to permit holders stated. "The 2003-2006 budget calls for $2 million to operate the operations on the Great Sacandaga lake. It is hoped that you understand that this amount raised by permit fees does not pay for total taxes imposes by communities bordering the lake."
The September 22 letter, which was sent after a public controversy exploded, was the first direct communication that the permit holders received. The Board of the Regulating District had approved the 2003-2006 budget in June 2003. Increases in permit fees were scheduled to be acted upon during the November meeting. "Taxes of 80% of $7,000,000," or $5,600,000, were allocated to the "Permit System Costs." The total costs to operate the permit system were presented on official Board documents as $7,580,986 for the fiscal 2003-2006 fiscal years, by far the biggest single item being the local town, village and school taxes.
However, the Board's publication "A condensed version of the District's 'Review of Operations'" states "The District is funded almost entirely by beneficiary apportionments of its operating costs, which include reservoir operating and maintenance expenses, administrative costs and property taxes." Moreover, to further clarify the historic intent and practice, the official "Handbook for Holders of Access Permits at Great Sacandaga Lake" states that the property owners and municipalities downstream who shared the cost of building the dam "obligated themselves to share in perpetuity all of the operating and maintenance costs of the Regulating District not recovered by other District revenues. According, the District levies annual assessments upon these property owners and municipalities, using the same proportionate share agreed to in 1922 for initial construction of the river regulating system."
On November 3, the Regulating District held its Board meeting, where they intended to present a new budget. The meeting was scheduled for the field office in Northville, but it had to be moved to the Holiday Inn in Johnstown because of the anticipated crowd. At the meeting, the Board rescinded the budget, which had gone into effect in July, according to James J. Lewek, the Area Administrator at the field office. In an interview on November 6, he said that the Board is working with the Governor's Office of Regulatory Reform (GORR) on new permit fee rules and that the new budget is not yet available.
During the dispute with the permit holders, it had come out that the change in the permit fee calculation in the new three-year budget was a substantial change in the rules, if not in violation of the law. The rules change required that the Board go through the process required in the State Administrative Procedure law (SAPA), which was said to be the reason for GORR's involvement.
Mr. Lewek, the only Regulating District spokesperson available for comment, said that he did not know whether the new budget would allocate local taxes to permit holders. Willard W. Loveless, the Executive Director of the Regulating District, did not return telephone calls.
An expert on Regulating District matters told PRFA that the taxes are paid to local towns, counties and school districts from the State's General Fund after being received from the downstream beneficiaries. Charging taxes to the permit holders could mean that the State would receive the taxes twice but of course pay them only once to the local towns, counties and school districts. This would be a tricky "cost saving" measure during the State's budget crunch.
Mr. Lewek stated that, when the new budget comes out, the salaries of the majority of the people employed in the field office would be included in the charge allocated to the permit holders. A budget for "Permit System Operating Expenses" posted on the Regulating District web site on November 8 lists twelve salaried employees with salaries ranging from $29,906 to $56,925 during 2004, and related benefits, plus expenses for retired permit system employees, with each of the three subsequent years showing increases. The yearly totals for labor expenses begin at $671,132 in 2004 and reach $732,187 in 2006, totaling $2,107,441 for the three years.
The access permit system began with the construction of the Conklingville Dam. According to the official handbook, "Many who sold their Sacandaga Valley land to the State in the 1920's, did so with the provision that they and their heirs always be allowed access to the body of water which would result from the damming of the river at Conklingville. Accordingly, after the reservoir was completed, these former land owners were assigned segments of buffer zone land which would afford them Lake access. Soon, other nearby property owners requested similar private access. To accommodate them, the Board of the Regulating District adopted the policy of issuing one-year Access Permits and developed the mechanisms of the permit system." The Handbook points out that "neither they nor anyone else has inherent or deeded right to be granted a permit to use any specific segment of District buffer zone land for Lake access."
The handbook states that access permits are non-transferable, but they are routinely considered inherent to the value of property that has one of the permits. If the District decides to move a permitted access to a new location instead of allowing a property owner to keep the access that has been historically associated with the property, it affects the value of the property with which the access has been associated and may cause financial loss to the permit holder.
Such a situation threatened John Barber, the president of the Hunt Lake Holding Company in Hadley. He brought a lawsuit on July 19, 2002 that raised the question as to the degree to which a property owner possesses a historic access permit to the reservoir or whether the access is entirely discretionary on the part of the part of the Regulatory District.
Hunt Lake Holding Company acquired a 114-acre property on in the town of Northampton in 1999 that had a particular 100-ft. wide access located about a mile away that had been held by the owner of the 114-acre property since 1949. Hunt Lake's use of the permitted access continued undisturbed for three years after the company acquired title to the land. This is borne out by the fact that, early in 2000, Hunt Lake paid the Regulating District $300 to survey the permit area. In addition, the company complied with all the District's regulations and paid the annual permit fees for the access in March 2000, 2001, and 2002.
However, on March 20, 2002, Mr. Lewek, the Area Administrator, notified Hunt Lake that their access permit location was too far from their property. Instead, he wrote, they would be given a nearby 10-ft.wide access. This 10-ft. access turned out to swampy, inaccessible, and undesirable. The change would reduce the value of the permit holder's property.
Meanwhile, the lawsuit states, the District proposed to grant the desirable, 100-ft. wide permit held by the petitioners to another man, who also happened to have contacted Hunt Lake in 2000 to try to buy the 114-acre property but had been turned down. Sometime after March 2002, the lawsuit states, the same man contacted John Barber and discussed buying his property, pointing out that the property was not worth as much as the price discussed in 2000 because Hunt Lake was losing valuable footage.
The Hunt Lake lawsuit challenged the Regulating District's right to change the access that the owner of the property has held "after 52 years at the same site," on the grounds that the change in access location was arbitrary and capricious. Among other arguments Hunt Lake raised in the lawsuit, was that the "relocation or threatened relocation of the access area without notice and an opportunity to be heard violates [their] Constitutional rights."
In a telephone conversation, Mr. Barber's attorney, Wilson S. Mathias of Queensbury, said, "There are over 4,300 non-commercial permit holders who are similarly situated." Others claim that there is a lot of wheeling and dealing with access locations, to the ire of access permit holders who count on keeping their permit locations. Mr. Barber's lawsuit was settled, but the issues remain.
The principles raised in Mr. Barber's lawsuit and the issues raised by Mr. Poulin and the many permit holders who were startled by the proposed access fee increases point to the urgent need for important reforms of the Regulating District. First, the New York State Comptroller should conduct timely, public audits of the District's budgets, beginning with the current proposal, while investigating the origin of the scheme to charge the payment of local taxes and other inappropriate expenses to the permit holders. Equally importantly, the legislators who have expressed their concern about the fee increase controversy should take responsibility to see that the State establishes a fair, reliable process that stabilizes the access permit into a form of property ownership associated with particular parcels. The current management of the permit system makes it a pure gamble when a buyer pays for a property that has a particular access permit.
- Carol W. LaGrasse