Southeast Town Board to Reconsider Sewer Rates for Home Depot
Court was in session Thursday night in the Town of Southeast, but it wasn’t a judge presiding, rather the Southeast town board.
With Supervisor Tony Hay moderating, Southeast town board members heard both sides of the sewer price fight between Home Depot and Independent Sewer Works Inc. in which Home Depot, located along Route 312, argued its sewer rate that is set by the town board is too high and should be reduced. Home Depot had brought an Article 78 proceeding forward and roughly six months ago Judge Victor Grossman ruled that the town board must reconsider how much they charge Home Depot for sewer.
Attorney Richard O’Rourke, representing Independent Sewer Works that wants Home Depot to pay the same amount, said the case was straightforward and the sewer rate setting has to keep companies financially viable because “if not, you’re going to own this company and you’re going to have to deal with these rates.”
John Guastella, an expert in the field also representing Independent Sewer Works, said the town’s rate decision was in line with rate setting principle. The primary cost of the sewer treatment plant is based on square footage and the rest of the costs are fixed, Guastella noted. He said if the rates were based on water usage that can fluctuate, commercial entities may not be able to generate the revenue needed to keep rates stable.
Guastella said the rates set up by the town were based on square footage and a change in that structure would be “dramatic” for businesses at the shopping center.
“The customer should expect not to have major changes once the rates that were established when they got involved with this commercial development,” Guastella said.
Home Depot’s contention that someone else should pay for the water rate costs like the landlord has “never been done before,” Guastella said, noting he’s been involved in close to 2,000 cases.
But attorney Al Natoli, representing Home Depot, said he hopes Southeast would change its view on what it should charge Home Depot, or the case could continue in litigation. Contrary to Guastella, he said rates should be based on water usage, arguing the restaurants use most of the water at the shopping plaza. Retail stores use 20 percent of the flow and 80 percent of the revenue is paid toward it and restaurants use 70 percent of the flow and only 20 percent of the revenue is paid, Natoli, who has experience with sewer rate setting, said.
Natoli said the landlord and Independent Sewer have not reinvested in the plant at all since its inception. If the only charges were operation and maintenance costs, Natoli said there wouldn’t be the issue there is in front of the board. Retail stories are subsidizing the restaurants, Natoli said.
“If there was some allowance for the replacement of the plant, the rate issues we see here would be gone,” he said, placing blame on the landlord. “It might be a slight rate increase for the high use customers.”
Natoli also said the landlord worked out a deal with Kohl’s in which the landlord pays some of the rates, but that a deal was never worked out with Home Depot. He said the landlord should work out a similar deal with other businesses if the water rates increase.
Attorney Daniel Stafford, representing Eveready Diner that could see a price increase if Home Depot wins, said in his eight-year career, he’s never seen a more procedurally wrong undertaking by Judge Grossman because he didn’t have the full record in front of him to consider when making his ruling against the town. He didn’t think Grossman’s decision should sway the board and a different judge could side with the town this time.
He said if the town board sides with Home Depot, the sewer costs to the diner wouldn’t be sustainable and the shopping center would turn into the “ghost town.”
Attorney Daniel Hollis, who represent Applebee’s, voiced similar sentiment. He said there is no way Applebee’s can sell enough family meals to make up for the increase Home Depot is proposing. He also noted any increase would put Applebee’s in an adversarial position with the landlord if it’s pushed to renegotiate its contract.
“I know unfairness when I see it and I know a truck or a bus about to run over my client who has been thrown under it, that’s for sure,” Hollis said.
A decision from the Southeast town board could be as early as May.
