Water rate hike hoses homeowners

Despite a public outcry and pleas from the city’s top financial officials, New York City Water and Sewer rates are going to rise by 11.5 percent on July 1, and the Water Board will not do a thing to stop it.
They can’t, according to a confidential source close to the city’s Department of Environmental Protection (DEP).
For months since the obscure group of seven mayoral appointees, who held its last meeting in downtown Manhattan on Tuesday, June 19, announced the double-digit hike, elected officials and advocates have been calling the Water Board to task, demanding that they take action.
City Comptroller William C. Thompson, City Council Finance Committee chair David Weprin and other Councilmembers have called for the board to cut the rate increase, retain over $63 million in rent payments to the city, or wait for the city budget to be approved before setting water rates.
However, the law that created the Water Board in 1985 dictates that they administer the system, and mandates that they must set rates high enough to pay the rent charged by the city on the infrastructure and interest on bonds that have been issued, as well as other expenses. By law, they must do this independently of the city budget, and pay the rent on time - on July 1.
The city owns the water infrastructure - the reservoirs, surrounding land, pumping and filtration stations, and the pipes. The New York City Municipal Water Finance Authority issues bonds to pay for capital expenditures like the ongoing Water Tunnel No. 3 project — a nearly $6 billion venture to augment the city’s water supply; it would run from Astoria to Yonkers.
According to a statement released by Anne Canty, deputy commissioner of the DEP, “The rental payment is consistent with the practice of many water utilities around the country. … Any interference with this independent rate setting is likely to be determined an interference with the Water Authority’s obligations to its bondholders.”
A misstep could cause a downgrade in the Authority’s bond rating and potentially cost millions in higher interest payments - and lead to even higher rates, according to Canty, who also said that New York’s water rates are lower than the national average.
Canty confirmed that the members of the Water Board receive an honorarium “which hasn’t been raised since the board was created” and expenses, and that the meetings are held in Manhattan instead of DEP headquarters in Queens for the convenience of the seven members, four of whom are from Manhattan and three from Brooklyn. “They’re not avoiding anyone,” she said.
Laura Rivera, speaking for Thompson, said, “there are two parties to the lease, the city and the Water Board, and both would have to agree on new lease terms.”
According to Rivera, the Comptroller’s proposal is for the portion of the rent left over after the bond interest is paid. “The Comptroller wants to protect credit structure and ratings but has found ways to benefit ratepayers with a combination of short term rate relief and increased ‘pay as you go’ capital which pays dividends over time,” she said.
City Councilmember James F. Gennaro, who chairs the Environmental Protection Committee - which oversees the DEP - said, “The rate increase is outrageously unfair, because the city has $4.4 billion in surplus by the most conservative estimate and will be taking millions from ratepayers to use on non-water projects.”
Gennaro, who also sits on the Finance Committee, continued, “At our hearing, we forcefully made our case to mayoral budget director Mark Page and he flatly declined.” Gennaro continued, “To be fair, Page doesn’t set policy, the mayor does.”
Weprin observed, “The property tax rebates that homeowners have been able to enjoy for the past four years equate to very little financial relief because of the increased water rate. After all the hard work we put in with the administration to hammer out the property tax cut in the new budget, it’s a shame that homeowners won’t feel like it’s a real break. We can’t put money in their hands one minute and take it away the next.”
The DEP suggests that much of the need for the rate increase rests on the shoulders of property owners who don’t pay their bills - more than 21,000 property owners owe for two years or more, according to published reports.
Ray Orlando of the mayor’s Office of Management and Budget supports the DEP’s view. “Water and sewer charges are below average and the city pays about $52 million a year in water and charges. They pay rent because, unlike other utilities, they don’t pay property taxes.”
“Between 10-15 percent of total water bills go unpaid, and that puts pressure on the Water Board to raise rates.” Orlando continued, “The city and the DOE are seeking to empower the agency to sell liens against delinquent water and sewer bills, but the Council refuses.” He also said, “They allowed the current law, which enabled the Water Board to attach water and sewer liens to property tax liens, to expire.”
Gennaro reacted strongly when informed of the administration’s comments. “That’s nonsense! We [the City Council] offered to extend the existing law but the mayor’s people refused. It was better than nothing.”
He explained, “Under the old system, when there was a property tax and water lien, even though the city would only sell the property tax lien, people often just paid off both to avoid possible foreclosure by the new lien holder.”
“The DEP billing system is out of control. There are thousands of users who have bad or no meters, who don’t have their meters read and get estimated bills or don’t even get water bills at all. Until they get their act together, there’s no way we’re going to let them have that kind of leverage over property owners,” he said.