Ogdensburg home businesses face 'double rates' for water, sewer

Oct. 5—OGDENSBURG — Concerns of equity and fairness have prompted the City Council and administration to review the city code in regard to "double rates" for water and sewer for those running businesses out of their homes.

Currently, the city code is such that if you run a business out of your home, you are required to pay a separate flat rate for both water and sewer for each unit, according to City Manager Fonda Chronis.

"This approach is based on the assumption that a property serving both as a residence and a business will use more water, and therefore should contribute more to the system's costs," Chronis said. "As such, operating a business out of a home is charged two rates under the current code, as no single-family homes are metered."

Chronis said that the issue of equity arises because some residents — who are operating businesses out of their homes and are paying this "double rate" — argue that there are others who both live in and conduct businesses from homes but are not being charged similarly.

"This discrepancy has raised concerns about fairness," Chronis said. "To address this, city management was tasked with identifying properties where businesses are being operated and ensuring they are billed accordingly. The goal is to eliminate any inequity by making sure all businesses are treated the same under the code. However, identifying these home-based businesses can be challenging."

Tonya Snyder operates Tonya's Hair Styling at her residence and has been paying the double rates for the past four years. Snyder has been speaking to the City Council on the issue since May, she said.

She doesn't understand how the city came up with the rate for home businesses, but says she feels it needs to be fair. Freedom of Information Legislation (FOIL) requests she has received show that it's not happening — that there are a number of people who are not paying the double rates.

"It has to be fair and equitable across the board. You cannot just pick and choose who you feel is using this water," Snyder said at the Sept. 23 meeting. "Two water and two sewers, I don't get it."

According to a report to City Council on Sept. 23, Chronis said that due to a data system crash in 2023, information was incomplete on just how many properties qualify for what they call the "home business" category. A best guess from administration put it at between 20 and 30 properties.

Mayor Michael Tooley said there are three options currently being explored to deal with the issue of dual flat-rate user fees for home businesses.

The first option was presented by administration on Sept. 23, which includes amending the city code by defining what home businesses will be subject to dual flat rate fees; the sending of letters to homeowners that might operate a home business and requesting the homeowner complete an affidavit as to their status.

Homeowners currently paying one flat rate who are found to be operating a home business as newly defined will be given the option of paying the dual flat-rate fee or installing a water meter, according to Tooley.

Chronis said questions remain for this option.

"One of the key questions we encountered during this process is whether it is fair to charge businesses that don't have customers on-site (example such as contractors who only use their homes for billing and mail) double rates for water and sewer when their water usage is likely no higher than a typical household," he said. "This issue, too, is a question of fairness but also about being 'business friendly.' There needs to be some way to account for the extra costs to the water and sewer system when a business who uses additional water locates in a residence. Without metering, that task is difficult."

Chronis said that the plan reflects what residents had asked for — the identification of businesses that "should be paying more and ensuring they do."

"However, finding true equity isn't just about identifying unbilled home businesses. We've worked to anticipate unintended consequences, such as unfairly overcharging low-water-usage businesses. While this isn't a perfect solution, until all homes are metered, it's likely the most balanced and equitable approach we can take," he said.

Tooley said the second option would be to not change the city code, but to send the letter out with an affidavit to identify these home businesses.

The last option would be to amend the city code to eliminate the dual-rate fee, "thus homeowners with home businesses would pay one flat rate unless a meter is installed," the mayor said.

That would equate to some loss of revenues for the city.

"Based on numbers in the report shared with City Council on September 23, if dual rate fees are eliminated then I estimate annual loss of revenue in the water fund would be $12,000, loss in sewer fund $16,000," Tooley said. "Each is approximately one-half of one percent (.5%) of their respective flat rate budgeted revenue in 2024."

Tooley said that the council has asked the administration to offer its opinion on the second and third options at its next meeting on Oct. 15.

The most equitable solution, according to the mayor, would be the installation of water meters.

"Long term, installation of water meters would be the most equitable solution for water. Until such time, all home businesses should either be billed the double rate or the double rate should be eliminated for all," the mayor said.

Chronis agreed that if the goal was to ensure true equity in water and sewer billing, "then moving toward meters for all residents would be the most effective solution."

"It's important to note that metered rates typically have a minimum charge, covering a set volume of water. Beyond that threshold, additional water usage is charged based on volume. This ensures that the city can reliably cover the operational costs of providing water services, since relying solely on volume-based charges can lead to unpredictable revenue fluctuations," Chronis said. "With meters, everyone contributes fairly to the maintenance of the system, and those who exceed the maximum allowance pay for the extra usage, which promotes both equity and conservation. While the city's water and sewer rates must always cover operational costs, metering allows for a more accurate and fair distribution of those costs."

Chronis added that "though no system is perfect, meters offer the best path toward a more equitable billing process for all residents."