River agency seeking $3.8m loan
The Hudson River-Black River Regulating District will borrow as much as $3.8 million, using all of the Black River area's reserves as security against the loan, to keep the financially troubled Hudson River side of the district from folding.
That is, if the state Legislature allows it to do so. The regulating district will need a bill, now hung up in the Assembly, to be signed by Gov. David A. Paterson before it can issue a tax anticipation note using the Black River area's reserves as collateral against the loan.
The bill authorizes temporary loans to be made between the Hudson River and Black River areas. Loaned funds, with interest included, must be paid back in the same fiscal year.
"The $3.8 (million) is the maximum amount we would borrow," said Richard J. Ferrara, regulating district chief fiscal officer. "It doesn't necessarily need to be that much."
The regulating district unanimously approved the resolution at its July 13 meeting in Johnstown.
The district oversees flows on the Hudson and Black rivers, providing water during dry periods and holding back water as flood protection during wet seasons.
The Hudson River region, with an annual $5.4 million budget, is facing a $4.5 million budget shortfall after a federal court in November 2008 ruled that the Federal Power Act pre-empts the district from assessing under state law hydroelectric projects that are downstream of the Conklingville Dam.
The ruling affects the regulating district's authority to charge downstream Federal Energy Regulatory Commission-licensed hydropower projects.
Before the ruling, the regulating district was supported by fees paid by companies that own "head" on the river. Head is the change in elevation of the river, which gives it the ability to power a hydroelectric turbine.
To compensate for the lost revenue, the regulating district instead levied $4.45 million against the five Hudson River counties: Albany, Rensselaer, Saratoga, Warren and Washington.
Those counties have sued in an attempt to overturn the assessments, arguing that additional communities downriver of the regulating district's dams, including New York City, should be charged the additional expenses incurred by the regulating district.
The tax anticipation note would provide funds for the Hudson River Area while the regulating district waits for a resolution of the suit and the headwater benefit analysis to be completed. Any future assessments the regulating district can charge would be used to pay back the note.
"It is very precarious, to say the least, the situation we're in, but given the layoffs that the board authorized a couple of months back and the other assumption that we continue to defer payment of the district's property and school taxes ... we are still in the black," Mr. Ferrara said.
"However, any somewhat significant project to repair any of the structures could change this thing in a heartbeat, so we're razor thin, but we're able to operate and we are able to complete our mission."
The regulating district is waiting for a FERC-ordered study that will quantify benefits received by the hydroelectric projects downstream from the Conklingville Dam and Great Sacandaga Lake. Until that study is complete, the regulating district cannot charge downriver hydropower plants for the services it provides.
In a May interview, then-Executive Director Glenn A. LaFave said the study likely will show that the amount the regulating district can assess hydropower plants on the Hudson River will be limited.
Mr. LaFave retired from the regulating district earlier this month.
On Friday, Mr. Ferrara said that without the governor's signature on the bill, the resolution will not take effect.
"The resolution was designed to bridge what we thought was the immediate need because we haven't collected assessments," he said.
Legislation passed June 24 by the Senate would allow the regulating district to move funds between the Hudson River and Black River areas, which is now prohibited. Sen. Darrel J. Aubertine, D-Cape Vincent, was the lone legislator to vote against the bill. The Assembly version, which has toiled in the Environmental Conservation Committee since its June 25 introduction, was sponsored by Assemblywoman Addie J. Russell, D-Theresa. A message left at her office Friday was not returned.
A bill still in the Legislature would abolish the regulating district and turn over the district's functions to the New York Power Authority. Another bill would split the Hudson River and Black River areas, allowing them to act independently of each other.
The regulating district must wait for the Legislature to reconvene — which is not expected to happen until late September or early October — for any action to take place on the Assembly bill.
