Court rules Riverhead Town overcharged county for sewer services
A Supreme Court judge ruled last month that Riverhead Town illegally overcharged Suffolk County for its sewer services for out-of-district facilities, such as the County Center, the Arthur Cromarty Court Complex and the county jail, from 2018 to 2021.
The county buildings south of the Peconic River are located within Southampton Town but have been connected to Riverhead Town’s sewer district for years. In 2021, Suffolk County sued Riverhead Town after 2018 and 2021 resolutions were approved by the Town Board for out-of-district rent charges.
Judge Maureen T. Liccione ruled on Jan. 21 that Riverhead Town is prohibited from imposing the sewer charges established in these two Town Board resolutions, calling them “arbitrary and capricious and [having] no rational basis,” according to the court order.
The last intermunicipal agreement from December 1997 allowed Suffolk County to use the Riverhead Sewer District for treatment of the sewage generated by the county-owned facilities through December 2017. Both parties agreed at the time that the county would pay Riverhead Town sewer rents for each calendar year — from 2006 to 2017, the average payments for services to Riverhead were roughly $345,966.21. The payment for the 2016/2017 fiscal year was $280,294.08, according to the court documents.
Former Riverhead Town Supervisor Sean Walter rejected a proposal to extend the expired agreement in 2017 with Suffolk County, claiming they failed to pay for 2016 and 2017 sewer rates. The town pursued legal action that same year, and the town’s claims were dismissed in 2020.
The Riverhead Sewer District continued to provide services to the county-owned facilities under an expired agreement. However, the county claimed in the court documents that even though there was not another intermunicipal agreement between the two parties, the Town Board adopted multiple resolutions to set sewer charges for the Suffolk County facilities anyway.
The 2018 resolution determined “fair and reasonable” sewer rent charges totaling $720,311.44 to Suffolk County that year, as well as $696,073.83 in 2019. In 2020, the charges totaled $684,171.43 and $756,343.24 in 2021, according to the town resolutions listed in the court order.
There was a minimum charge agreed upon by both parties for the services spanning 2018 to 2022, the court documents stated, and on June 29, 2022, Suffolk County sent Riverhead a check of nearly $1.3 million for these services.
Suffolk County argued that Riverhead’s demand for $2.8 million for sewer services provided from fiscal years 2017/2018 through 2020/2021 — when the County calculated that the actual cost of such services would total $1.1 million — was “arbitrary, capricious, and unreasonable,” the document said.
The other two components Suffolk County challenged have to do with the maximum design flow and the town’s 1.75 multiplier to the base sewer rent. Riverhead Town imposed a base sewer rent on the annual flow of 161,830,635 gallons, which means their formula would require Suffolk County to pay for almost “100 million gallons of sewer service not actually utilized over a four-year-period” and pay $622,831 in unrelated costs of providing these services.
Essentially, Suffolk County would experience an increase in charges above its actual roughly 61.6% usage from 2017 to 2021.
“The County contends that such a base rent is in excess of any reasonable charge for the services provided and bears no relation to the actual services provided to the County or the sewer rents historically charged to the County for such services,” the court document stated.
The second factor the county brought up is Riverhead Town’s multiplier of 1.75 applied to the base sewer rent, which is an additional 75% of the base rent and assessed as a surcharge “against the County” because it is an out-of-district user.
Riverhead Town explained that unlike in-district users, Suffolk County can withdraw from the district’s sewer treatment plant at any time, making the Riverhead Sewer District “financially vulnerable.” The town argued that a portion of the multiplier is attributed to Suffolk County “no longer contributing to the payment of the Sewer District’s substantial debt service.”
Additionally, the Town claimed they would have to implement “costlier practices” to collect unpaid charges. The judge wrote that the court finds Riverhead’s arguments justifying the multiplier “unavailing.” The court also decided that there was “no financial analysis of formula” behind the decision to add the multiplier.
Riverhead Town’s defense attorney Frank Isler filed an appeal against the court’s decision on Jan. 28.
Town Attorney Erik Howard expressed the town officials’ disappointment in the trial court’s decision and the lack of focus on the “unreasonable, unfair, and substantial impact imposed upon” the Riverhead Sewer District and ratepayers, as well as the obligation to reserve a certain amount of flow for the “comparatively massive County Center and Jail property.”
“I think the Notice of Appeal reflects that frustration and we will pursue our judicial options to prevent this inequity from being shouldered by our sewer district ratepayers,” Mr. Howard said in an emailed statement. “Second, the decision only amplifies the importance of Southampton expanding their proposed district and connecting [Suffolk County’s] existing facility to their planned sewage treatment plan.”
Mr. Howard also stated the town believes there is “no legitimate reason” Riverhead should continue to service an out-of-district property situated in another town with its own sewage plant.
“That being said, we have had productive conversations with the County, and it is my hope that we can resolve this dispute without further litigation or appellate practice,” he said.
