Truesdale Lake  

South Salem, New York

Tax District FAQs

Proposed Truesdale Lake Improvement Tax District

Frequently Asked Questions & Answers

Note: as of 2007 this project is no longer being updated and it has not been moved forward. Essentially the tax district idea is dead and unless it is revived this page will not be updated. 

We want to make every effort to answer all of your questions and to structure this tax district in a way that provides controls where they’re needed. Please register at the http://www.truesdalelake.com site with your email address so that we can stay in contact with you about this project as it continues to unfold. Fundamental Question: Why does Lake Truesdale need restoration work and how much will it cost? Please click here to read the letter to all prospective tax district members, sent out in June 2006. This letter answers questions about the history of the Lake, expert studies and plans, and costs.

Logic behind Dam repair:
- No dam, no lake
– once we became aware of the structural & repair issues, should anything go wrong our liability is increased. There is no way to ‘unknow’ this and expect it to go away.
Logic behind stormwater management projects:
- slow the sedimentation of the lake
– reduce the flow of nutrients into the lake
– reduce the chemical treatments used currently to control the aquatic vegetation growth
…in order to delay, as long as possible, the inevitable dredging of Lake Truesdale.

BASIC STRUCTURE OF TAX DISTRICT

1.What is a Lake Improvement Tax District?

A Lake Improvement Tax District is a legal structure set up to collect funds from all those properties within a lake community who benefit from the health of the lake. Tax Districts were created for cases like ours: land or service that requires consistent funding for common community benefit that supports everyone’s property values BUT for which no current financial collection is in place.

2.Are Tax Districts common?

Yes, tax districts are set up for water (like in Vista), for fire departments (like in every hamlet of Lewisboro) and for lakes (like Peach Lake and Candlewood Lake in North Salem). See articles on Peach Lake and Candlewood Lake.

3.How do Tax Districts work?

The town takes out a low interest loan on our behalf, for which we make tax deductible payments back to the town. The town tax collector is responsible for collecting the payments, as any other tax. The town then acts as administrator and the money is managed according to the tax district’s budget, approved at the time the tax district is established, and then reviewed annually. Please see more under the Q&A section Management of the Money below.

4.What is the procedure for setting up a Tax District?

Our lawyer draws up the papers specifying the type of district, any requested changes in typical structure, and budget. This then must be signed by at least 51% of the assessed value of the homes within the proposed tax district (we would aim for more). Then town board reviews at a meeting, holds a public hearing, and then decides whether or not to approve.

BENEFITS OF TAX DISTRICT

5.Why a tax district?

  • Ensures proportional investment of all property owners that benefit from lake health
  • Individual continued enjoyment in healthy lake – swimming, boating, fishing
  • Access to low interest loans available only to the town
  • Quicker approvals on annual lake treatments
  • Political force of one voice:
      1. With homeowners – preventative measures we can all take
      2. With health department – failing septic systems and runoff from farms
      3. With town – stormwater runoff and catch basin cleanings, raising awareness of lake issues
  • Tax deductible
  • Continuous insurance against future degradation of lake
  • Better access to grant funds mostly available only through town
  • Continued and consistent monitoring and management of lake health

PROPERTIES

6.What properties are to be included in the tax district?

A total of 305 households/owners are included in the proposed tax district (see proposed map here, a draft unvetted by the legal counsel). 150 of these are from the Truesdale Lake Property Owners Association (TLPOA), 130 from the Truesdale Estates Association (TEA), 8 households in the Vreeland/Lovecross development, and another 10 lakefront properties that are not a part of an association or development.

There are certain households with more than one tax lot so the total number of lots included is greater than 305, perhaps as many as 400+ lots including the TEA and TLPOA-owned lots like the beaches and boat storage areas. Certain lots have no house on them but are still included in the district since they carry deeded lake rights from TEA or TLPOA. Before the petition is circulated, we will have a precise listing of tax lot and block numbers included in the proposed district.

7.What qualifies a house to be in the tax district?

A property is included in the proposed tax district if it has deeded rights to the lake, and/or if it is a lake front property. All members of both associations have deeded rights to the lake.

8.What about public beach members of TEA that are not in the association (TEA associate members)?

If the property doesn’t have deeded rights, or lake front, it is not included in the proposed tax district. The formation of the tax district will in no way be an opportunity for undeeded neighbors to “buy into” Truesdale Lake rights.

MONEY TO BE RAISED

9.How much money is needed to do the projects?

A formal budget is currently being drafted. But, estimates on Land Tech (pdf file) and HTE (pdf file) projects are $700,000 collectively, plus $75,000 paid-to-date, interest, liability insurance, permit fees, and legal fees, we are probably looking at the need to spend over $1,000,000 on the lake and dam. In addition, there will be annual maintenance costs which will be a part of the operating budget. We do not have firm estimates of these costs yet.

10.  Can’t we just raise association fees to pay for the projects?

There are currently no means to collect fees from all the members of the Truesdale Lake community. TLPOA has means to collect funds because it has a community well system for all its members and so the dues are tied to the water bill. TEA has no such collection enforcement option because each family has individual wells. TEA currently has 70% response to its annual dues collection. In addition, there are properties on the lake that are not in either association, and therefore are not regular enforceable contributors to lake treatments and maintenance.

To a bank lending money, this situation is fraught with risk and any loan made (if it is made at all) will have a significant risk premium (i.e. very high interest rate) to compensate for this substantial risk of not being paid back. The establishment and operation of a tax district minimizes the risk that the lender will not be paid back by ensuring the stream of repayments with a tax lein on the properties in the district. This results in an interest rate for the loan that is much lower, closer to the risk-free rate.

11.  What about getting grant money?

Grant money is a good option for offsetting some of our costs. So far, we expect to receive at least $62,000 from a grant recently given to the town from the Department of Environmental Protection (DEP). Further opportunities for funds being pursued include grants from the Department for Environmental Conservation (DEC), adoption by the DEC projects budget, further assistance from the town under HTE supervision, and other grants through the town’s grant consultants.

12.  Couldn’t grant money cover all the costs?

Grants are very specific by definition: They only cover certain types of work, and therefore can’t pay for some of what needs to be done. They also cover capital projects and not maintenance, like lake treatment and upkeep. A tax district will be necessary for this.

13.  Why can’t we raise the money ourselves, without setting up a formal district through the town?

We can, but it is not our best option. An audience member asked the question and made the statement “Why don’t we just double our dues? That would work and I’d be willing to do that.”

First, we can’t borrow money on our own at a reasonable rate with no collateral or guarantees to put against the loan, so we would have to raise the full capital amount from members of the lake community (about $1 million) before starting any work. Besides the benefits of a tax district already mentioned above, we want to begin the work next year (2007) and to complete it in the most cost effective way possible. With no way to enforce contributions by everyone, we would likely have to go through years of fundraising to accumulate enough to even consider one project, let alone all those being proposed.

Delays in starting the work risk increased costs because of inflation and because doing projects piecemeal causes the fixed set-up, contracting, and bidding costs to be re-incurred each time a project is started. In addition, the condition of the lake would continue to degrade in the unknown number of years it would take while we attempted to raise the capital for one or more of the projects. Another factor is the dam. Since we now know that there are problems that need to be remedied, any downstream damage caused by our collective inaction may put additional liability in our laps. We can’t ‘unlearn’ those facts now that we have learned them.

13a.  Why can’t we just collect a large one-time assessment and get it all over with at once and not have to deal with this tax district stuff?

Several reasons:

  1. Not everyone can come up with the approximately $6,000 – $10,000+ (depending on your property’s assessed value) at once, nor may they want to.
  2. The same problems with enforcement of collections comes up (see question #10 above). What happens if a special assessment is made and only two-thirds of the benefitting group comes up with the money? The lake residents will become deadlocked and the needed work will be paralyzed.
  3. The benefits of these repairs are spread over a long time horizon. It is fair and reasonable to spread the payments over the long term as well so that today’s homeowner is not stuck with a bill for the whole amount and then moves away one year later, never having seen his or her investment pay off. Conversely, if a new resident moves in 10 years after the work is done, they will not have to directly pay for it but will still get the benefit if everything is paid upfront.
  4. Part of the expenses of the district are for ongoing maintenance of the capital projects we are putting in place. The district budget will be partially repayment of interest and principal, and partly ongoing maintenance, insurance, and other ongoing expenses. An established tax district makes sure that these essential items are funded each year. There is not much point in putting a lot of work into the lake and then failing to maintain it properly and have to do it again in later years.

14.  So about how much will this cost me?

We are aiming to keep the cost per family as minimal as possible. With the proposed tax district, we would divide the cost proportionally among the 305 lake families. Our target is to have costs below an average of $300 per family per year. The invidual homeowner’s tax will vary based on the assessed value of their properties since we are leaning towards an ad valorem tax calculation (see #15 below).

While a final budget of costs and possible further grant funding can still change this amount, our ultimate goal is to preserve our lake & our property values for as low a price as possible.

15.  Will the cost per household be per a flat rate or by assessed value (ad valorem)?

The TEA and TLPOA boards are leaning towards ad valorem because (1) undeveloped properties have less negative effect on lake health and shouldn’t have to pay as much and (2) because over time property values change. Ad valorem covers both of these issues without constant policing and overview of the rules.

16.  If the tax assessment is based on assessed property values, will our properties be reassessed by the town and perhaps subject to tax increases in addition to those required for the lake improvements?

The creation of the District should not trigger a re-assessment of all properties within the District. Arguably, the establishment of the District will work to increase property values on a long term basis (or at least prevent a potential decrease in property values if the lake continued to deterioriate if we do nothing). A Town may reassess a specific group of properties benefited by changed circumstances, but it is unlikely that the Town will authorize a reassessment of the Truesdale Lake properties without reassessing the entire Town.

MANAGEMENT OF THE MONEY

17.  Who will manage the money?

After the public meeting of March 28th, it was very clear that community involvement in the management of the money to be spent on Lake Truesdale was imperative. TLPOA & TEA are currently researching with our land use lawyer, Don Rossi, two viable ways to involve lake residents in the management of the money within the tax district: (1) a citizen’s advisory committee and (2) the passing a legislative act to establish a board of commissioners.

18.  What’s a citizen’s advisory committee?

The advisory committee would be a small group of volunteers from the tax district community who would advise the town on spending the tax district money within the confines of the budget already set in place. The town would have its own committee, made up of Town Board members, to oversee the tax district.

19.  What’s a board of commissioners?

The board of commissioners would be a small group of elected representatives.

20.  What are the benefits & drawbacks of the advisory committee and board of commissioners?

The citizen’s advisory committee:

Benefits: Already a common option in setting up tax districts; leaves all the paperwork to the town; much less responsibility on the shoulders of residents.

Drawbacks: Direct town control in how the money is spent, though still limited by the budget and parameters of the tax district. No municipal powers or any way to bind the Town Board.

The board of commissioners:

Benefits: Direct and total control of how the money is spent; no association with political publicity and divisive commentary.

Drawbacks: A special act is needed to create the tax district for this purpose (state legislature); representatives would have to be elected, adding time and effort. Requires D&O liability insurance to cover those managing the money.

21.  Which way are the Boards leaning — towards the citizen’s advisory committee, or board of commissioners?

Board of Commissioners, with 5 representatives elected from within the tax district. Gives most control and responsibility to lake residents. However, if commissioners mismanage district, town can initiate process to take over district (requires a majority vote of district residents to abolish the offices of the commissioners – see this site and search for Town Law – Article 12, Section 206). Lake District residents must be vigilant to ensure this does not happen.

22.  TEA and TLPOA have both contributed money to this project already, will they be paid back?

Yes. The tax district budget will include the amounts already contributed by both associations. So when the town raises the money through the District, both associations will be reimbursed.

TOWN AND/OR GOVERNMENT INVOLVEMENT

23.  Do we have the support of the town for the establishment of this proposed tax district?

Yes.

24.  Will the beach be subject to permit requirements from the Health Department as it was in the past?

There is no plan to establish any additional regulatory control of beach areas on the Lake. The beaches will continue to come under the jurisdiction of the Westchester County Health Department pursuant to Article XII of the Westchester County Health Code.

25.  Will we be subject to any additional fishing or boating license or permit requirements?

No.

26.  Will there be any further restrictions on the use of lake treatment applications?

No.

27.  What additional requirements will Lake Truesdale be liable for if we become a tax district established under (by) state law?

The establishment of the district will only result in regulatory authority which is specifically provided for in Article 12 and 13 of Town Law and the special legislation to be adopted in order to create the District.

28.  What extra state department involvement would there be?

The Department of Audit and Control would be involved at the town level in reviewing the budget and expenditures.

29.  Will the TLPOA and TEA continue to be separate entities once the District is established?

Yes.

30.  What protection will we have against being sued for public access to the lake once we are part of a public tax jurisdiction and viewed as getting public support for a private property?

We would not be creating a town wide “public tax jurisdiction” and no rights of persons outside the district boundaries would be established or implied by creating the District. The tax district would be collecting money from district residents for the benefit of district residents.

It is permissible to either limit use of a district’s facilities to residents of a district or, alternatively, to charge a fee for use of a district’s facilities by those who are non-residents. A Truesdale Lake Improvement tax district here would be analagous to the Wild Oaks lighting district or the Oakridge water district. A town resident does not gain the right to plug in to the Wild Oaks outlets or tap into the Oakridge water system simply because the town is the conduit for the money to operate these systems.

GENERAL

31. How did this all come about? What was the process followed?

Visit the comprehensive and continually updated Truesdale Lake Restoration Project timeline here. It encompasses literally hundreds of hours of volunteer time and effort spent by dozens of Truesdale Lake residents, not to mention tens of thousands of dollars spent on studies, engineering plans, and legal research over the past five years. Also, visit the Truesdale Lake Restoration Project home page for more details.

32. How can I keep tabs on this whole project?

You can register at this site and you will receive email each time there is a new news item posted. Your email address will only be used by this site and will not be posted in any public forum.

You can also visit the Truesdale Lake Restoration Project home page. This page is kept up to date with the latest information and links. Bookmark it!

33. Why Now?

If, by doing nothing now, a massive dredging project takes place in 10 years vs. taking action now and delaying it to 30 years in the future, we will have saved the residents 20 years of paying back for a dredging bill that will be many times more costly than what we are discussing for the current projects.

One year from now the difference in the lake will not be too great. However, long-time residents all agree that water quality and recreation value has gone down over time. In addition, shoreline that formerly had 4-6 foot depth now has 1-3 foot depth. Ten years from now we will be looking at progressively more shrinking of the lake if we do nothing.

34. “I won’t be here in ten years, why should I care?”

Good question… The answers are:
1) your property values will degrade over time if the situation gets worse.
2) we are spreading the costs over many years so that if you do leave after 2 years or 5 years you will only pay for the part you use. And…
3) you may still be here in 10 years!

Thank you for reading and participating in this process.

If you have any other questions, please Contact Us and we will either direct you to the answer to your question on the website or find out the answer and email you back!

Please encourage your neighbors to visit this page (http://www.truesdalelake.com/modules/tinycontent/index.php?id=31) or print it out and give it to those who don’t use computers.

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