The first hearing on a proposal to shift the costs of hydrant rental fees to the paying customers for town water drew criticism at the April 7 Town Council meeting.
The proposal was made by Town Administrator Galen Stearns and presented by Thomas Carrier, Deputy Director of Public Works, as one of the cost-saving measures to reduce the impact of property taxes. While residents agreed that it would bring a chunk of change back into town coffers, they worried that shifting the costs of the hydrants to town water customers would create an unfair burden on those users, as the water from the hydrants is used to fight fires in all of Derry and not just areas on town water.
Carrier explained that the costs to provide fire protection are provided “entirely and exclusively” by water users. To reimburse these costs to water users, the Water Department charges a hydrant rental fee to all taxpayers. The hydrant rental charge has been in place for 25 years, included in the Buildings and Grounds budget in 1990 and subsequently moved to the General Administration budget.
Carrier said, “The town’s policy has historically been that fire protection of the tax base is a benefit to all Derry taxpayers, not just those on municipal water or those in West Derry. That is why the hydrant rental charge is assessed to all taxpayers, including those in East Derry. In FY 2006 when the Fire Departments merged, the fee was moved to the Fire Department budget.”
Carrier added that the Department of Public Works was directed to present to the Council a revision to the town ordinance to remove the hydrant rental charge, with the intent of reducing the general fund expenses, as part of the Council directive to reduce the municipal portion of the tax rate.
He said, “This would reflect a new town policy that those directly serviced by municipal fire hydrants shall bear the full costs associated with that service.”
Derry maintains 570 hydrants in Derry and 26 in Londonderry, Carrier said.
Carrier said hydrant rental fees represent $414,013 in general fund revenue for Derry and $19,112 in Londonderry revenues that go to the water enterprise fund. Under Public Utilities Commission rules, any reduction in the Derry charges will require a proportionate reduction in the Londonderry charges.
The elimination of the charge would reduce overall revenues to the water fund by $433,125, or 17 percent, and would reduce the tax rate by $0.167 per $1,000, or approximately $3 per month for the average homeowner.
But, Carrier said, the loss of revenue would have to be made up somewhere and the water user rates would increase by $12.77 per customer billing unit per quarter, or $51 per year for an average single-family home.
The shifting of costs is necessary, Carrier wrote in a memo, because “to reduce the water budget will have a significant impact on services to customers, our ability to comply with NHDES (New Hampshire Department of Environmental Services) and EPA (Environmental Protection Agency) mandates, and the maintenance of our infrastructure.”
The move would increase the customer base charge from $23.03 per billing cycle to $35.80 per billing cycle, effective July 1.
In the public hearing, resident Brian Chirichiello asked for clarification. “Does this mean that we would shift some of the rate to the actual water users, and increase their rates?” he asked.
Stearns confirmed that. “It would shift the cost from the whole town to the water users,” he said.
Resident Neil Wetherbee said for him it’s a win-win. “But I’m still speaking against it because all it is is a tax shift,” he told the Council. It would not only affect $300,000 to $400,000 houses but also the Mom and Pop businesses in the downtown area, Wetherbee warned.
“How can this come out as positive?” Wetherbee asked.
Resident Janis DelPozzo advocated energy-saving initiatives such as a “rain bank,” rather than putting the burden on taxpayers.
Mark Connors, who is not on town water, would be part of the 40 percent of residents not paying for the hydrants. But it isn’t necessarily fair, he said, noting, “When there’s a fire, the responders don’t say, ‘Oh, he doesn’t pay so we’re not going there.’” Fire service benefits everyone, Connors said.
It leaves room for a philosophical discussion, Carrier said. “Is the primary benefit lowering the tax rate or lowering people’s water bill?” he asked.
“I am willing to pay my share,” Connors said.
Resident Phil Brophy observed that when he lived in Massachusetts, a hydrant in front of the house was considered part of the infrastructure. “You can’t get insurance with many carriers if you don’t have a hydrant,” he said.
Like DelPozzo, Brophy encouraged thinking outside of the box – or in the case of national chains, inside the box. “With big box stores, could we consider a tie-in fee?” he asked.
Resident Michael Layon said he’s not opposed to paying what needs to be paid. “But we need to look at how many people we actually protect,” he said. “The split may not be 60-40.”
After the public hearing closed, Councilor Richard Tripp asked Carrier if the prime motivation for the change was to lower the tax rate.
Carrier said it would reduce the tax rate. “While 60 percent of the community uses town water, the whole community benefits from the hydrants,” he said.
“I am concerned about shifting the cost,” Councilor David Fischer said. “I have some hesitation about this one.”
Carrier warned that if they eliminated the rental charge for Derry, they could also not charge Londonderry, losing $19,000 of revenue.
Councilor Al Dimmock said, “I don’t think the rate users should be responsible for all the water going to firefighting.”
“To shift it from one part of the town to another, I’m not crazy about it,” Chairman Tom Cardon said.
And Councilor Joshua Bourdon warned against fault lines forming in his town. “To me, it seems like this whole process is shifting us from a community of people to a community of ‘To each his own.’ I’m not loving the idea of this,” he said.
The proposal will have a second hearing in an upcoming meeting.