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It’s getting chilly in here: Albany Alderman Dominick Calsolaro.Photo: Joe Putrock

Where Credit Isn’t Due
Critics blast a Niagara Mohawk proposal that would assess security deposits to customers with compromised credit ratings

At a public hearing earlier this week, Albany residents resoundingly rejected a controversial proposal that would allow the region’s largest utility provider to assess a two-month security deposit to new customers whose credit ratings fall below a designated score.

Approximately two dozen people gathered at City Hall in Albany on Tuesday (Aug. 5) as New York’s Public Service Commission sought public opinion on a request by Niagara Mohawk for authorization to assess security deposits averaging $150 to new customers based on credit scores. The deposits would be held to recoup potential losses from defaulted payments. The PSC—which regulates various utilities throughout the state—could make a decision later this month on NiMo’s policy, one that has been blasted by politicians and citizen advocates alike who claim it will disproportionately affect renters and people with existing financial difficulties.

NiMo’s proposal would allow the utility provider to assess a security deposit based on a customer’s credit and past payment history. Homeowners, people over age 62, and those who are blind, disabled or on public assistance would be exempt from the security-deposit policy.

The PSC currently allows utility providers to assess security deposits based on past payment history and other conditions, but NiMo believes that credit-based deposits will be a better way to avoid some of the financial losses the company has suffered due to unpaid bills.

NiMo—which provides gas and electric services to approximately 1.5 million customers throughout New York—says it has lost an average of $65 million in unpaid bills over each of the past three years.

“We’re acting in the interests of all of our customers who pay their bills in a timely manner,” said NiMo spokesman Alberto Bianchetti, “because they are the ones who bear the burden of maintaining our infrastructure so that we can continue to provide all customers with our services.”

In March, the company enacted a similar policy for collecting security deposits from customers based on their ability to prove responsibility for a bill or long-term tenancy. During the following two months, 8,200 new customers were required to front a two-month deposit, and 1,000 people were denied service for failing to submit a security deposit, NiMo told Syracuse’s Post-Standard on June 18.

“On the surface, I think [charging security deposits for utility services] is an awful idea and it sets a terrible precedent for a number of reasons,” said Russ Haven, legislative counsel with the New York Public Interest Research Group, who testified at Tuesday’s hearing. “Obviously the loss of money hurts NiMo, which means they can’t run as efficiently as possible, but we’re talking about an essential service here. This isn’t about whether or not you can get an American Express Platinum Card, this is about whether consumers can get hooked up to essential gas and electric services to light your lights and heat your home.”

Haven and others say that NiMo’s proposal will unfairly target younger and poorer renters with little or no credit histories, and does not take into account a tenant’s willingness to pay his or her bills.

“NiMo is saying that [credit ratings] will be reflective of how customers will pay their utility bills, but intuitively I don’t agree with that,” said Charles Brennan, with the Public Utility Law Project. “I think people will pay to keep the lights on before they pay the credit card.”

Both Brennan and Haven agreed with the number of speakers at Tuesday’s hearing who provided anecdotal evidence that credit ratings are notoriously inaccurate. Haven pointed to a study released on July 31 by Congress’ investigative body, the General Accounting Office, that notes the GAO’s inability to determine whether credit reports were accurate or not since credit bureaus do not provide adequate information about how they create a credit score.

But Bianchetti said that using credit ratings to determine the guidelines of a service contract is a perfectly acceptable business practice.

“That brings us in line with a number of other vendors throughout the country—mortgage providers, providers of car loans and credit cards,” Bianchetti said. “[Credit ratings are] part of doing business in America today.”

Whether NiMo’s security-deposit proposal is a sound business policy or not, Monique Marshall, of United Tenants of Albany, said the company’s idea is poor public policy. Marshall, who spoke at Tuesday’s hearing, noted that whether families have utility services or not, they’ll have to keep on living.

“You can’t put a price on the potential of a child coming home to a house with no lights and meals eaten out of cans,” Marshall said. “We should not leave our children in the dark.”

Albany’s Common Council agreed, passing a resolution in opposition to NiMo’s security deposit proposal at its meeting earlier this week. The resolution was sponsored by Alderman Dominick Calsolaro (Ward 1), who along with NYPIRG’s Haven requested that the PSC hold a public hearing on the issue in Albany.

“Census numbers show that somewhere around 70 percent of the city’s residents are renters, and those are the people who are going to be affected by this,” Calsolaro said. “I’m glad we had so many people show up in opposition.”

—Travis Durfee

Is This Good for BIDness?
A proposal for an expanded Central City business improvement district in Albany has derailed plans to enlarge the Lark Street BID

What’s next, the Greater Albany Business Improvement District?

That is what Alderman Richard Conti (Ward 6) is wondering now that his plans to extend the boundaries of the Lark Street BID have been eclipsed by discussions about the creation of a much larger Central City BID.

Conti’s idea was scrapped at this week’s meeting of the Albany Common Council when Council President Pro Tempore Michael Brown (Ward 3) announced the creation of an ad hoc committee to discuss the viability of combining the Central and Lark Street business improvement districts.

Conti wanted to expand the Lark Street BID to include the strip of Washington Avenue from Lark to Swan streets, and the stretch of New Scotland Avenue from Madison Avenue to Myrtle Avenue. Brown criticized Conti’s proposal, saying the expansion would exclude residents and business on Lark Street north of Washington Avenue.

“People looking to expand the Lark Street BID and ignore upper Lark are so focused on Lark Street’s village image that they are ignoring the people across the street,” Brown said. “Lark Street BID is not an island and the people north of Washington should not be treated like refugees in their own city.”

But Conti contends that if any exclusion occurred, it was merely because of the nature of business improvement districts, which by design tend to focus on the needs of commercial districts, not residential ones like upper Lark Street.

“Looking at the strength of Lark BID as an institution,” Conti said, “the goings-on at the arts center and the library on Washington could complement the things we are trying to do on Lark, and the same can be said for the businesses on New Scotland. . . . Northern Lark Street is a different area because it is a residential corridor.”

Brown contests this point, saying that nine businesses exist on Lark between Washington and Clinton avenues. He says the street cleaning and neighborhood and storefront beautification services offered by the BID could benefit existing businesses and possibly entice prospective businesses.

As nonprofit organizations, business improvement districts are given the ability to assess an additional tax on the residential and/or commercial properties within their boundaries. A BID uses the funds to market and fund events related to its specific district, and provide additional street maintenance and beautification projects beyond the services provided by the local government.

The Lark BID, for example, assesses a 0.267-percent tax on all residential and commercial properties within its boundaries, meaning that for a property assessed at $100,000, taxpayers within the Lark BID would pay $267 in taxes. The Lark BID collects an average of $55,000 a year through this tax, and with its operating budget of roughly $200,000 (the rest comes from fund-raising), finances various events like Larkfest and Art on Lark.

The Central Avenue BID, on the other hand, assesses a 0.264-percent tax only on commercial properties within boundaries much larger than the Lark BID. The Central Avenue BID, which covers businesses on Central from Lark Street to the city’s corner with Colonie, collects roughly $450,000 a year from its special tax. The Central BID helps fund events like Drive-in Movie Night at Armory Center.

Both Anthony Capece, executive director of the Central BID, and Joe Cunin, director of the Lark BID, acknowledged that a merger could create economies of scale when bidding for certain services (Web design, accounting, supplies) and lead to savings in overhead costs. But Cunin wondered how a combined BID would affect the identity of the individual districts each BID promotes.

“We try to promote Lark Street for what it is and what it provides, and that is very different than what happens on Central,” Cunin said. “If the Lark Street BID just becomes an extension of the Central Ave. BID, I don’t think we would be able to maintain our identity and the level of distinction that comes along with being Lark Street.”

The Central City BID idea has also led representatives from other neighborhoods throughout the city to express interest in seeking BID services for commercial pockets within their wards that are too small to maintain their own special business district.

Alderwoman Carolyn McLaughlin (Ward 2) said clusters of small businesses in the South End could possible utilize BID services. Alderman James Sano (Ward 11), who will head the new committee, said the same for two commercial districts further down New Scotland Avenue between Ontario and Quail streets and across from St. Peter’s Hospital.

Though Conti is willing to consider the BID expansion and is optimistic that the new committee will be able to handle the issue, he expressed concern at the sudden BID fever.

“One of the beauties about Albany is that we are a city of neighborhoods, and we have unique neighborhoods, and that is one of the things that attract people to this area,” Conti said. “[With a combined BID] you don’t know if you’re going to have a cookie-cutter, once-size-fits-all approach or if you’re going to have the individuality that makes sense for individual neighborhoods.”

Aldermen Glen Casey (Ward 11) and James Scalzo (Ward 10) join Sano, Brown and Conti on the Central City BID committee. Sano said a date has yet to be set for the committee to begin discussing the issue, but he hopes the group will be able to hold a preliminary meeting within the next three to four weeks.

—Travis Durfee

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