City to charge non-profits for water
January 6, 2012

By Miriam Y. Cintrón

Spending cuts, layoffs, and new revenue sources are among the many efforts the City of Chicago has undertaken to fill the City’s $635.7 million budget deficit. Also among those measures is the phased-in elimination of fee waivers for water, sewer, and other City services for non-profit organizations and private sector businesses, with Mayor Rahm Emanuel explaining late last year that the City can “no longer afford” to provide such services for free.

By doubling water rates for Chicagoans over the next four years and charging non-profit organizations for water, the City says it will generate millions of dollars that will be used to rebuild the City’s aging water infrastructure, including replacing 900 miles of water pipes and relining 750 miles of sewer lines.

Many not-for-profit organizations are concerned about what having to pay for water will mean for the services they provide and for their very own survival. “We’re already holding on by our teeth,” said the Rev. Donald Craig of Bridgeport’s St. Mary of Perpetual Help Parish at 1039 W. 32nd St.

Exactly how much the tax will be still is uncertain, as the City plans to increase the water tax over the next few years. Fr Craig noted that for some parishes, the cost could potentially fall somewhere between $10,000 and $30,000. Having to pay water taxes, which Fr. Craig explained nonprofits in the City have not had to do for generations, will likely affect how they operate. “The impact is going to be devastating,” he said. “This puts a big cloud over the future of so many non-profits.”

Fr. Craig said the fallout could be far-reaching if non-profits are forced to close their doors at a time when so many people are turning to them for help. Non-profits throughout the city provide a variety of services for the homeless, elderly, disabled, children, and low-income families of all ages and ethnic groups, he explained.

“Are they all going to go to City Hall for food or housing or clothing?” Fr. Craig asked. “I think not.”

He also noted that non-profit organizations provide these services at no cost to the City. Fr. Craig questioned the City’s priorities, noting that by voting in support of the budget, aldermen expressed that non-profits are not a priority and revealed a lack of support for the work non-profits do. “Is this the kind of city we want to be?” he asked.

Rev. Donald Craig, pastor of St.Mary of Perpetual Help, said the fallout could be far-reaching if non-profits close because of the water tax. (Photo by Troy T Heinzeroth)
Meanwhile, the City is giving Sara Lee as much as $6.5 million in tax increment financing funds for bringing its headquarters to Chicago. “The City goes out of its way to lower taxes on businesses and out of its way to increase taxes on non-profits,” Fr. Craig said.

The water tax is expected to have a wide-sweeping effect on the Roman Catholic Archdiocese of Chicago, which has 643 water accounts for parishes, schools, and other facilities. In testimony to the City Council, Jimmy Lago, the chancellor for the Archdiocese of Chicago, said the estimated total of the 643 water accounts is more than $2.1 million, and the financial burden on parishes and schools within city limits will increase an average of about $10,000 or more with the water and sewer fees.

“Adding these additional taxes and fees would have a very harmful impact on many inner-city parishes and schools and the other struggling schools and religious facilities that surround them,” Lago testified. “For some parishes, these fees could range to more than 20% of their annual revenue.”

Staff at the Benton House, located at 3052 S. Gratten Ave., share those concerns. Luke Wojtaszek, administrative coordinator for the non-profit organization that provides social services to Bridgeport residents, said that while the group hopes to avoid shutting down any of its programs, having to pay the water tax will undoubtedly make a difference. Most of the organization’s budget already goes toward paying bills, and he is concerned the tax will make it redirect even more funds away from their programs. Pay cuts are not an option for the all-volunteer staff, so they plan to turn to fundraising, which may prove hard to do during such difficult economic times.

Kristina Tendillia, the food pantry coordinator at Benton House, was among the representatives from local churches and community centers in Bridgeport who hand-delivered signed petitions to the office of Ald. James Balcer (11th Ward) prior to the vote. She said that while he acknowledged their position, he expressed his support for the effort to balance the City’s budget.

Kevin McCullough, director of operations at Cathedral Shelter of Chicago, 1668 W. Ogden Ave., which has always paid for water, said any increases in water rates would need to be planned for carefully, especially at a time when donations are down and federal funding is being cut. However, he noted that any increase would not affect the group’s operations or programs. “We are continuing to do the work we need to do, even when revenue is hard to come by,” he said.

For their part, local aldermen acknowledge the difficulty this may cause, but they note the difficult decision needed to be made. “The City just couldn’t afford to give away free water and sewer services to non-profits,” said Ald. Will Burns (4th ward). “If we could afford it, we’d do it.”

Burns added that he was initially against the original proposal that called for non-profits to pay the full tax amount beginning in the next budget year, but aldermen were able to negotiate a stepdown approach in which non-profits would gradually begin paying the tax, receiving a discount over the next three years. He said the approach should give nonprofits more time to budget and prepare for paying the full amount in four years. Smaller non-profit organizations with assets of less than $250 million will receive a 60% discount in 2012, reduced to 20% in 2014.

Whether the City will ever reverse or minimize the decision depends on what new revenue it might bring in, Burns explained, but there would have to first be discussion about how new revenue, if any, would be spent. He highlighted that the choice was a difficult one tomake, but said that he is trying to ensure that the City gets on a pathway to solvency that does not rely on short-term solutions.

Ald. Walter Burnett (27th) echoed the hope that economic conditions will improve and allow the City to revisit the issue in the future. “By the time the four years are up, maybe something will give and we can change that,” he said. He added that while he has not heard much on the matter from his own constituents, he noted that they likely “understand the reality and that this is a challenge for everyone.”

The unanimous vote in favor of the budget did not mark the end of the fight, however.

Fr. Craig and others vow to bring attention to the matter and push for the fee waiver to be reinstated. Wojtaszeknoted said that it is important for Chicago residents to contact their aldermen to express their support for non-profit organizations.

“We will continue to do what we can,” said Fr. Craig. “We intend to keep pressing the issue and hope the administration will have a change of heart.”

Despite repeated efforts to contact the Mayor’s office, no City official from the executive branch would comment on this story.