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Attorney: Higher water rate for non-profits OK

Reversing a quarter century of advice from the city’s legal department, Evanston’s new city attorney, Grant Farrar, told aldermen Monday that they could legally charge owners of tax-exempt properties more for water and sewer service than other customers — if some water and sewer costs were paid from property taxes.

Reversing a quarter century of advice from the city’s legal department, Evanston’s new city attorney, Grant Farrar, told aldermen Monday that they could legally charge owners of tax-exempt properties more for water and sewer service than other customers — if some water and sewer costs were paid from property taxes.

The city has tried to cover all water and sewer costs from rates charged users in the belief that was the only way large non-profits could be made to fully share in the cost burden.

Opponents of that practice have argued that the ultimate cost to consumers would be less if the service was paid for by property taxes, because property taxes are deductible on state and federal income tax returns, while water and sewer bills are not. But, because of complex federal and state tax rules, only some homeowners would actually qualify for the tax break.

Farrar said that after an extensive review of case law on the subject in recent weeks he’s concluded that as long as extra charges to tax-exempt entities were reasonable and supported by the facts they would survive a legal challenge.

Alderman Ann Rainey, 8th Ward, welcomed the change in legal advice. "The water bill, for some people, far exceeds their mortgage payments," she said. "We have to give relief to people who pay property taxes. I think the way to go is transferring sewer debt to the property tax bill and charging not-for-profits."

But Mayor Elizabeth Tisdahl cautioned against obscuring the true cost of water and sewer service by shifting the cost to property taxes.

She said that as a member of a national mayor’s group studying water costs, she’s learned that more communities are moving to bill for what water service actually costs.

"We have to have enough money to repair our water plants and not have water leaking out of ancient pipes, and need to have people conserve water — which they’re more likely to do when they know what it actually costs," Tisdahl said.

The city staff, as part of an overall presentation Monday on water and sewer funding issues, suggested that a 25 percent increase in sewer charges to the largest 25 percent of tax-exempt customers in Evanston could raise $500,000 or more in added revenue annually.

The aldermen took no action on any of the proposals Monday but directed staff to come back with more detailed information within the next couple of months.

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