Eye On Riverdale

Watergate II; The Cost of Complacency

By on November 12, 2014

Beware of little expenses. A small leak will sink a great ship.
Benjamin Franklin

Did you think that the water billing issue in Riverdale was over?  If so you’re not alone. One would assume that, when an error of that magnitude is discovered, swift action would be taken to correct and prevent future losses and errors. Unfortunately for Riverdale residential water customers, this is not what has happened.

It was first identified in May of 2014 that most residential water customers in Riverdale had been over-billed by more than $500,000 (see Watergate). How were residents over-billed? In an effort to cover shortfalls in the water budget, the Mayor and Council opted to raise water rates (3 times in the last 5 years) rather than conduct an audit of the town water billing records. Luckily the folks at the Borough of Butler, who recently took over Riverdale’s water billing, were able to spot errors in just a few short weeks. A quick analysis revealed that some customers, almost all commercial, were under-billed by over $500,000 leaving residential customers to make up the difference in the form of higher rates.

When the news first hit the street, many residents turned out at a council meeting in fear they may have to repay the town for mistakes in their water bills. What they didn’t know was that on the initial review, there was only 1 single-family residence identified as being under-billed. They also were unaware that they had actually been paying for the water usage of many of the businesses and residential associations that line the Route 23 corridor. So where are where are we now?

The billing errors are reported to have been corrected; however, financial losses continue to amass for Riverdale water customers. At the June 2nd meeting, Borough Attorney Robert Oostdyk advised the Mayor and Council that legally, the borough could only go back 6 years when trying to collect unbilled water usage. He cautioned though, that whatever was decided, all water customers must be treated equally.  Councilman Ted Guis suggested that Riverdale request a price from Butler to complete the audit.

At the June 16th meeting, Mayor Budesheim handed out a spreadsheet summarizing the water and sewer billing shortfall, a copy of which can be found here (Water Billing Analysis). He cautioned that this was a work-in-progress and the results would be updated as the investigation continued. To date there have been no updates but, based on the initial findings, Councilman Guis motioned that Riverdale should look to collect for all 6 years allowable by law, offering the following options to those affected:

  1. 5% discount for a single lump sum payment within 30 days.
  2. Full amount due with amortization of up to 6 years.

The motion passed unanimously with the understanding that details would need to be worked out based on the results of the audit and legal constraints. If they acted swiftly, the town was looking at recouping over $300,000. That was over 4 months ago.

So what has transpired since?

  • At the July 21st meeting, the Mayor distributed handouts for discussion in the next meeting. Councilman Guis reiterated to the Mayor that he felt that it was imperative that a proper audit be conducted to ensure that the current billing is correct. Over the next couple of months and several council meetings, when asked for updates on the progress the Mayor responded that Butler was still working on the project.
  • At the August 18th meeting, the Mayor stated that the Council was still deciding how far back to go based on how it affected some residences. It was later revealed that it was the Mayor who actually requested that the Council reconsider its already passed motion of collecting the full 6 years, and to only go back 1 year; a move that would cost the town over $275,000. Councilman Guis reiterated the necessity for a proper audit and the Mayor said he would get quotes.
  • At the September 3rd meeting, Council Guis reiterated for the 3rd time, that he wanted an independent audit to ensure that the water billing going forward is correct. The Mayor reported that he spoke with the Butler auditor who he claimed said that an auditor would not have been able to identify the mistakes; funny, an auditor who is tasked with reconciling our water billing is telling the Mayor that an auditor would not be able to identify the errors that lead to the under-billing. He further expressed that he was confident that Butler is now correctly billing all of Riverdale’s water customers. This is just one example of why it is a problem to have the Mayor acting as the Borough Administrator; this complete disregard for the Council’s wishes would not be tolerated.

Here’s where it gets interesting:

In an effort to protect the town and ensure fairness, Councilman Guis requested that, since Butler’s water department are the recognized professionals, they should provide Riverdale with a document validating and supporting the numbers being presented by Mayor Budesheim. While clearly not happy with this, the Mayor reluctantly agreed to comply. One would think that if the Borough of Butler had already performed the audit then a letter-of-certification would be a quick and painless formality. One would think!

After several more weeks and a couple more council meetings, the borough still had not received the letter certifying the results the Mayor presented. Finally, frustrated with the delays, Councilmen Carelli and Guis decided to meet with the folks in Butler. It turns out that the delay was because Butler was never asked to validate the numbers presented by the Mayor; in fact their investigation only began when the request for the letter-of-certification was made. While Butler is working diligently to complete this audit, they have advised Riverdale that this is a very arduous, complex, and time consuming task.

Remember the 6-year collection limit mentioned earlier?  At the October 20th Council Meeting I asked if this period was based on the time the issue was identified, or from the time when customers were notified and presented with the reconciled statements. Unfortunately it is the latter; which means these unexplained delays have caused the borough to lose 2 more billing cycles that could have been recouped and thus have shrunk the collectible arrears from 6 to 5 ½ years. It is hard to say exactly the value of this but it could be as high as $50,000.  Since Butler has essentially just started, we’re likely to lose another billing cycle or two before we can stop the losses and begin the collection process. By law, the money to be collected can only be used for the needs of the water and sewer budget. There are some known infrastructure expenses coming up which may be in excess of $300,000.  Monies received will most certainly offset future rate increases which are imminent.

At this point it’s unfortunate that, much to the dismay of our residential water customers, Riverdale’s water service still has a steady leak (see what I did there), and even more unfortunate is that our Mayor/Administrator appears to have no concerns about it. Each billing cycle that passes is another financial loss that is being directly passed along to the residents who rely on our public water. Eye on Riverdale is working to find you the answers you deserve to the following questions:

  • Why the complacency by our Mayor from May to September?
  • Why does the Mayor want to go back only one year in billing?
  • Why doesn’t Butler have a record of the numbers the Mayor offered to the council as their final results?
  • When will we finally have a resolution?

Join us at the next council meeting on Monday, November 17th at 7:30pm at Borough Hall to try and find out the answers to these and many more questions that remain unanswered.

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