Village Sues American Water

The settlement agreement includes the sale of the NYAW property located at 325 Prospect Ave. (Photo by Caroline Ryan)

In Sept. 2017, following astronomical rate increases from New York American Water Company (NYAW), the Village of Sea Cliff brought an Article 78 proceeding against NYAW and the Public Service Commission (PSC).

“An Article 78 proceeding seeks to challenge the actions of administrative agencies and other government bodies,” the New York Court website states.

During the investigation, NYAW revealed that internal errors and omissions had been made in preparing a rate request to the PSC. These misrepresentations caused the residents in the Sea Cliff Water District to experience unusually high rates for their water supply. The Sea Cliff Water District includes the areas of Sea Cliff, Glen Head and Glenwood Landing, as well as some residents of Roslyn Harbor, Old Brookville and Glen Cove.

The Citizens Campaign for the Environment, a Farmingdale-based advocacy group, recently released a report, which detailed a comprehensive analysis of residential water costs on Long Island.

According to the report, the North Shore/Sea Cliff area had the highest annual cost of water on Long Island, with customers paying an annual average of $1,124.52.
Throughout the legal proceeding, the Sea Cliff Water District has seen a number of changes. NYAW accelerated filings to the PSC, which reduced rates by approximately $6.4 million for all customers of the Sea Cliff Water District. NYAW’s shareholders were required to spend $1 million on a new water conservation study, which included a rebate program designed to lower future water bills. NYAW is compelled to implement new internal controls to reduce the likelihood of future tax filing errors and to ensure appropriate information sharing with the PSC and other stakeholders. NYAW has also been required to hire an independent monitor, compensated by its shareholders, and responsible to the PSC, to oversee NYAW’s new internal controls, tax filing accuracy and required improved customer communications.

“Being that the vast majority of the claims and our request for relief in our legal proceeding have been addressed and resolved in our favor, it is the obligation of the mayor and board of trustees to evaluate the additional unilateral costs of further litigation and determine if a resolution of our Article 78 is in our residents’ best interest,” a press release from the village stated.

“New York American Water is working with the Village of Sea Cliff and we are hopeful that we can resolve this matter amicably,” Lee Mueller, external affairs manager for New York American Water, said.

The village and NYAW have entered into a settlement agreement that includes the sale of the NYAW property located at 325 Prospect Ave., along with all its improvements, to the village at a $1 million discount off the appraised value.

Pending approval from the PSC, the Village of Sea Cliff will take ownership of the 2.5-acre lot. The village is looking to transform the building into an open space for public events and utilize the structure for activities, such as arts and cultural events, youth and senior activities, concerts, plays, presentations and meetings, yoga and other fitness programs, as well as other village-wide uses.

“I am pleased that Sea Cliff took the lead on this issue and with the village’s progress throughout these proceedings,” Mayor Lieberman said in a statement. “Obtaining this property may be a once-in-a lifetime opportunity that will prevent a developer from decimating this beautiful waterfront space. The possibilities for environmentally friendly public uses of this property are only limited by one’s imagination.”

In addition, all ratepayers throughout the district will receive and share a $1.6 million credit on their future water bills. These punitive measures are in accord with the recommendations of Governor Andrew Cuomo, the press release stated.

“The stipulation of settlement has been submitted to the judge for approval. The village and NYAW are preparing a joint petition to the PSC for their consideration; this submission is subject to a 30-day public comment period and the finality of the settlement will probably occur at the end of September,” Bruce Kennedy, administrator for the Village of Sea Cliff said.

The initiation and settlement of this specific Article 78 proceeding has and will bring many crucial benefits to the rate payers. It is important to recognize that the board of trustees of the Village of Sea Cliff continues to work diligently to become part of a municipal water district, which will end the dominance of a private water company’s control of our natural resource, water, the press release concluded.

“NYAW continues to be the water supplier for the district but the village is conducting a feasibility study as it relates to becoming part of an adjoining municipal water district or possibly creating its own water authority,” Kennedy stated.

—Additional information provided by the Village of Sea Cliff


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