Wednesday, December 14, 2016

Water, Hudson, and Colarruso: Some History

At the beginning of the 1960s, the Northeast experienced a five-year drought that jeopardized the water supply to New York City and inspired an attempt at cloud-seeding to induce rain. On July 27, 1964, three years into the drought and the same summer that cloud-seeding was attempted, Mayor Sam Wheeler convened a special meeting of the Common Council to address what he called Hudson's "naked water problem." What Wheeler told the Council on that occasion suggests that more than just the drought was contributing to the water crisis in Hudson in 1964. The following is quoted from Common Council minutes:
While our differences have been many, our agreement is complete in that the health and welfare of our citizens are our prime concern. . . . We cannot, in good conscience, continue the present conditions and expect an already long-suffering citizenry to endure still more. . . . 
My spirit of personal compromise is based on my fervent desire to release our citizens from the almost annual binds of water bans and the resultant personal discomfort, loss of income, damage to motor vehicles, and loss of flowers, shrubs, lawns and young trees.
Wheeler made four recommendations to the Council, the first of which was: "Securing an additional and plentiful supply of water for the future."

Five years later--and three years after the final year of the drought--the City did secure "an additional and plentiful supply of water for the future" when it acquired the 354-acre Lone Star quarry after Lone Star Cement ceased operations at its plant in Greenport (now the location of ADM). Speaking of the acquisition in October 1969, Wheeler told the Council: "It is believed that the purchase of the Lone Star Quarry, with its enormous water supply and great land usage potential, will prove to be the wisest venture the City of Hudson has ever undertaken." Fast-forward to 2002.

In June 18, 2002, the Common Council authorized the issuance of bonds, not to exceed $7.8 million, to finance the construction of a new water treatment plant on Mt. Ray, at the top of Rossman Avenue. Two months later, the Common Council was discussing how the City would pay off those bonds: a lease agreement with A. Colarusso & Sons, worked out by Mayor Rick Scalera, for all but 14.5 acres (those being the actual site of the water source) of the former Lone Star quarry. Colarusso would pay the City of Hudson $200,000 every year for thirty years, then $100,000 a year for another ten years, for the right to mine the quarry, and at the end of the forty years, they would own the property.

There was considerable objection to the deal at the time. In discussion of the lease agreement, recorded in the minutes of the Common Council for August 20, 2002, citizens voiced their concerns. Jack Harrell called the deal "a huge disservice to the citizens of this town." He asserted that the land could become a huge income producer for the City of Hudson and noted that the 354-acre parcel had not been addressed in the City's Comprehensive Plan, which had been adopted earlier that year, in April 2002. He suggested that a feasibility study be done to determine the possible uses for the land and told the Council that, in 1969, when the quarry was purchased, a professional planner had identified nineteen possible uses of the land, none of which had been explored by the City.

John Flynn, the former city engineer for Hudson who had negotiated the purchase of the quarry, questioned why the City was spending close to $10 million to clean up the water coming from the Churchtown Reservoir instead of utilizing the water from the quarry site as its primary water source. "That is what we bought it for," he told the Council.

Mary Hack asked why there were no competitive bids for leasing the land, suggesting that "by failing to offer [the land] to the public, you don't even make the pretense of avoiding the appearance of impropriety." Ned DePew called the land "an extremely valuable asset" and pointed out that the lease agreement was actually a sale agreement. He told the Council, "It is incumbent on this body to go the extra mile, the extra five miles, the extra ten miles, to exhaust the research for alternatives."

No further research was undertaken, and no alternatives were explored, One month later, at a special meeting on September 20, 2002, the Council passed a resolution authorizing the mayor to enter into a lease agreement with A. Colarusso & Sons. The only alderman who did not support the lease agreement was Rob O'Brien, who represented the First Ward.

In  1969, Wheeler predicted the acquisition of the quarry would "prove to be the wisest venture the City of Hudson has ever undertaken." After deacccessioning the quarry, no one had anything eloquent to say about the significance of that action for the future--at least nothing that ended up being quoted in the minutes of the Common Council. Two years later, however, at a special meeting to present the proposed budget for 2006, Mayor Scalera said this: 
Our brand new water treatment plant costing 10 million dollars (2 million was granted to us) leaving an eight million dollar debt to the taxpayers. This debt service is over $250,000 a year but we are extremely fortunate to have $200,000 in revenue coming in each year from the Colarusso Quarry Agreement. However, to make up the difference along with an increase in operating costs we are forced to raise water rates by $2.00 per quarter from $41.00 to $43.00.


  1. Very well researched. Thank you.

    Mr. DePew was correct, that it was a sale of the mine and not a lease. I'd add that it was a sale between cronies, which came with an interest-free mortgage.

    When you read above that "no further research was undertaken, and no alternatives were explored," you wish you could have that moment back.

    But we're surrounded by such moments in the present, and still do nothing about them.

    For example, if the mine operator is permitted to clear trees for mining operations, does that permit logging as a supplementary industry on Becraft? The lease doesn't permit that, so don't we have an argument that the lessee is stealing City-owned resources?

    If a landlord sees that his tenant is doing extensive work on a leased house, and it appears that the tenant is stripping all of the copper pipes from the house, then whose responsibility is it to find out what's going on?

    Similarly, the wood is being removed from the mountain, but to where?

    The City has a responsibility to find out where its resources have been taken, and if the loggers profited in any way from this so-called "mining operation."

    Only it turns out that the city isn't the landlord as much as it's someone's lazy agent. Now a lazy agent isn't going to do anything the actual landlord doesn't demand, so the true landlord, Hudson taxpayers, have a responsibility to demand to know what's going on.

    Otherwise this alleged theft will continue.

  2. Crony capitalism is a term describing an economy in which success in business depends on close relationships between business people and government officials. It may be exhibited by favoritism in the distribution of legal permits, government grants, special tax breaks, or other forms of state interventionism.

    what a great legacy for Mayor Scalera

  3. I'd love to be able to hear the phone calls made at that time from Mayor Scalera to the aldermen.

    1. Mayor: You're going to do this.

      Council: Whatever you say.

    2. Former mayor Richard Scalera emailed this comment to me, which I am assuming he intended me to share:

      Since there are a few that are curious how the conversation went between Aldermen and myself as Mayor please allow me to paraphrase to the best of my recollection;
      Alderman(fill in the blanks)
      The City of Hudson will soon be building a new water treatment plant costing around 10 million dollars. Debt service for this build will be annually around 250 thousand. The Scalera Administration secured 2 million in grant money toward this project leaving about 8 million left to pay over many decades. There has been negotiations with Colarruso's that will bring to the city of Hudson 7 million dollars at the rate of 200g for the first 30 years and 100g for the next 10 years for the lease to own lands at the quarry that the city owns and most important the city KEEPS for future possible use its' secondary water supply. So the scenario is simple;
      We sell the rock which was only valuable to Colarusso (and we reached out elsewhere) and offset our 8 million dollar cost of a new plant by 7 million.
      As a result the city will have a new plant built and it will only cost taxpayers 1 million instead of the initial cost of 10 million dollars. If you support this the taxpayers of the City of Hudson will be greatly indebted. Thank You
      Mayor Scalera

    3. All that we need to hear from our ex-mayor is an admission that the land was actually sold, and not leased.

      Calling it a lease is not being honest, either then or now.

  4. Glad Mayor Scalera responded. Time value of money aside and the "Rock" being of no value to anyone else aside....

    Now how about the conversations between the Mayor and the aldermen regarding the SRO for men Galloway wanted to build at Warren and 5th?

  5. Glad Mayor Scalera responded. Time value of money aside and the "Rock" being of no value to anyone else aside....

    Now how about the conversations between the Mayor and the aldermen regarding the SRO for men Galloway wanted to build at Warren and 5th?

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  8. Do we know what the city paid for the land back in 1969? If we know that, we can adjust that number for inflation up through 2002, and then present value the "lease payments" from the 2002 sale at an appropriate discount rate for 2002 (adjusting for the 14.5 acres retained by Hudson), and that will give us some vague idea perhaps as to whether or not the sales price for the land was reasonably fair, assuming land prices in that area stayed reasonably constant in real (as opposed to nominal) dollars, over that period.

    It is a good question through, as to why the land was not just put up for sale, and exposed to the market at large, if the city needed the money. Perhaps Mr. Scalera can enlighten us as to why that was not done.

    And at the time of the sale, was any appraisal done? Not that that would be a substitute for finding out what the land was worth (by exposing it to the market), but it would be better than having nothing at all, and just setting a price perhaps unrelated to market value (but presumably not higher, if one assumes that Colarusso were savvy business people, who would not overpay) that would finance Hudson's bond debt associated with its water treatment project.