Charges for Services – Eliminate Subsidized Water and Sewer Usage for Non-profit Organizations

Revenue: $15.2 million

Under the City’s Municipal Code, the City has the option to not charge water usage fees to properties that are owned by non-profit, religious, and educational institutions.[1]  Additionally, the City can choose to not charge these same institutions for the first $1,000 of fees for use of the sewer system.[2]  The basic requirement that a property must meet in order to qualify to avoid these fee reductions is that “such property as is owned and used in the immediate conduct of carrying out the purpose of any charitable, religious or educational institution.”[3]

In 2009, the City waived $12.55 million in water usage fees and $2.68 million in sewer usage fees to these institutions. The table below shows the 25 largest accounts in terms of the size of the subsidy.

Under this option, the City would rescind this benefit and, assuming the value of the subsidy is the same today as it was in 2009, raise an additional $15.2 million annually.

Proponents might argue that a large portion of these benefits goes to the City’s largest cultural and educational institutions, such as the City’s museums and universities.  These institutions often have large endowments and receive a number of other City benefits, such as property tax exemptions, and thus do not need this benefit.  Additionally, from an environmental standpoint, by not charging these institutions for water and sewer usage they are not incentivized to conserve their water and sewer usage. Opponents might argue that these institutions perform important public services that provide significant value to society and waiving these fees enables them to spend money on programs and services for City residents.  They would point out that three of the four largest subsidies go to institutions that provide medical or rehabilitative services and if the City were to impose these fees, these institutions may have to cut back on some of the services they provide or raise their fees.

 

Discussion and Additional Questions

There are several options short of eliminating the entire subsidy.  For example, the City could target the subsidy to smaller organizations based on annual revenues, or it could target subsidies based on the type of service the institution provides.

Budget Details

Fund: Water and Sewer Fund, 0200 and 0314 Type of Revenue: Water and Sewer Rates
The appropriation is located on pages 19 and 20 of the 2011 Annual Appropriation Ordinance.

http://www.cityofchicago.org/content/dam/city/depts/obm/supp_info/2011BudgetOrdinance.pdf

 

 25 Largest Water and Sewer Subsidies by Account

Customer Name

Address

Water Fee Reduction

Sewer Fee Reduction

Total Reduction

 Misericordia Home 6300 N Ridge Ave

$289,167

$1,500

$290,667

 Heart Of Mercy Village 1955 W Devon Ave

$211,529

$1,500

$213,029

 University Of Chicago Henry Crown Field House C02 1100 34 E 56th St

$182,654

$1,000

$183,654

 Children’s Memorial Hospital 707 W Fullerton Pkwy

$165,322

$1,000

$166,322

 University Of Chicago South Steam Plant F02 6051 S Blackstone Ave

$127,765

$1,000

$128,765

 Northwestern Memorial Hospital 221 E Huron St

$107,646

$1,000

$108,646

 Holy Name Cath School 751 N State St

$91,866

$1,000

$92,866

 Mercy Hospital 2520 S Prairie Ave

$86,290

$1,000

$87,290

 Columbia College Chicago 606 S Michigan Ave

$80,702

$1,000

$81,702

 Rush Presbyterian St Luke’s Medical Center 1750 W Harrison St

$79,110

$1,000

$80,110

 Northwestern Memorial Hospital 221 E Huron St

$78,124

$1,000

$79,124

 University of Chicago Power Plant 6061 S Blackstone Ave

$75,205

$1,000

$76,205

 Rush Presbyterian St Luke’s Medical Center 1750 W Harrison St

$72,220

$1,000

$73,220

 Northwestern Hospital #100 245 E Chicago Ave

$71,391

$1,000

$72,391

 Holy Cross Hospital 2716 20 W Lithuanian Plaza Ct

$68,256

$1,000

$69,256

 The Art Institute of Chicago 201 S Michigan Ave

$65,763

$500

$66,263

 University of Chicago Hospital 950 E 59th St

$64,435

$1,000

$65,435

 St Mary Of Nazareth 1120 N Leavitt St

$63,922

$1,000

$64,922

 Illinois Masonic Hospital 834 W Wellington Ave

$61,858

$1,000

$62,858

 Mount Sinai Hospital 2759 W 15th St

$59,254

$1,000

$60,254

 Moody Bible Institute 820 N LaSalle Dr

$58,912

$1,000

$59,912

 Rush Presbyterian St Luke’s Medical Center 1650 W Harrison St

$58,106

$1,000

$59,106

 St Joseph Hospital 2934 N Lake Shore Dr

$56,306

$1,000

$57,306

 University of Chicago Admin Building D20 5801 S Ellis Ave

$56,137

$500

$56,637

 Illinois Institute of Technology Research 3424 S Dearborn St

$55,256

$1,000

$56,256

Total

$2,387,196

$25,000

$2,412,196

Source: Department of Water Management

 

 

 

 


[1]City of Chicago. Municipal Code. Section 11-12-540 (American Legal 2011)

[2]City of Chicago. Municipal Code. Section 3-12-020 (American Legal 2011)

[3]City of Chicago. Municipal Code. Section 11-12-540 (American Legal 2011)