Property owners will need more cash if the city’s Environmental Protection Department’s biggest water rate hike in nearly a decade is approved this summer.
An April DEP proposal would raise water rates by 4.9%. This would result in higher monthly bills of about $4 on average for single-family homes and $3 per unit for multi-family buildings. The public is invited to weigh in on the changes this week.
A few dollars might not make a difference for some households, but could be significant for others, especially owners of multi-family properties. The increase could also add to the unprecedented debts of those already struggling with skyrocketing water bills and other expenses.
Yet DEP is also facing inflationary increased costs with less revenue to pay, due to late payments and reduced water consumption due to the pandemic.
They are banking on raising tariffs — and reauthorizing the sale of customers’ water debt — to shore up funds, which are used to keep tap water clean, treat sewage and manage stormwater.
The New York City Water Board will vote on rates in June, and the public can comment on hearings Wednesday and Thursday.
The impact of the potential water tariff will affect different landowners in different ways.
When Cristina Gonzalez first became a homeowner about a year ago, she was pleasantly surprised to find that her water bills were manageable. For her two-story single-family home in St. George on Staten Island, the bills run to about $30 a month, she estimated. His bill would probably go up about $1.50.
She said she was not worried about the increase she might face if the Water Board approved the rate hike.
“We should all be more aware of our water use and make sure we don’t use so much, even if it’s affordable for us as individuals, and think about what that ultimately does for the environment. “said Gonzalez, 39, a political adviser. “I cut with that in mind, not so much with cost in mind.”
Meanwhile, consumer advocates warn New York water isn’t necessarily affordable, even though it’s cheaper than water in some other major US cities.
“What really matters is how are the townspeople doing financially?” said Richard Berkley, executive director of the Public Utility Law Project. “The city still has an extremely high unemployment rate compared to the rest of New York State, compared to other major cities in the country.”
While there were no rate increases in 2017, 2018 and 2021, the proposed 4.9% rate increase represents the largest increase since 2014, when rates jumped 5.6%. And these increases are relatively small: since 2002, the largest increase in the price of water has been more than 14%in 2009.
Geoffrey Mazel, legal counsel for the Presidents Co-op and Condo Council, a group that represents more than 100,000 residents, argued that while landlords were being hit with bigger increases at the time, it was a time of lower inflation and overall costs, compared to present insurance rates, property taxes, construction costs and energy bills.
“For a lot of moderate co-ops, sort of working class and middle-income class … it’s all catching up,” Mazel said. “People can’t absorb that. It’s a tough time and it’s getting worse and worse.
Co-ops and condominiums use part of their maintenance fees to pay the water bill for the entire property.
Ann Korchak, chair of the board of directors of Small Property Owners of New York and owner of two 10-unit rental properties on the Upper West Side, believes a hike would just put additional pressure on her wallet.
“It’s just one more expense that makes it harder,” Korchak told THE CITY. During the pandemic, she noticed her tenants were using more water because they were staying home more.
“My young tenants — who might have been going to exercise in the morning and shower at the gym and then go to their office — don’t do that stuff anymore,” she said.
Jay Martin, executive director of the Community Housing Improvement Program, which mainly represents landlords of rent-regulated buildings, argued that the possibly higher rates show the importance of the recent proposal for a limited rent increase from the Rent Guidelines Council on Regulated Leases, which will go to a final vote next month.
“These are input costs that owners have to absorb. In a rent stabilization system, when we have no real control over our ability to raise rents to meet these rising costs,” he said. “Something must give.”
Balancing with affordability concerns, there is the urgent need to invest in the city’s aging water system in order to maintain and improve it, especially in the face of climate change.
“There are billions of dollars worth of infrastructure that needs to be updated,” said Mike Dulong, senior counsel for Riverkeeper, the nonprofit dedicated to the Hudson and a member of the NAGE Coalition.
The DEP is in the middle of a three-year period study on how water tariff structures could change to become more affordable and equitable for customers.
Currently, customers pay based on the water they use, rather than the amount of stormwater discharged. That means large stores with massive parking lots and traditional rooftops might not pay as much as an apartment building, even though the store would likely create more runoff than the city has to deal with.
A different structure with a separate stormwater charge could incentivize the creation of green roofs, on-site water reuse, and other mechanisms that help manage stormwater, prevent flooding, and mitigate pollution.
A new rate structure could also encourage customers to save more tap water, addressing what the Citizens Budget Commission’s deputy research director, Ana Champeny, calls the “counter-intuitive” nature of the how the city sets its water rates.
Because DEP’s revenue depends on water use, “The less water you use, the more they have to charge [everybody] per gallon because many costs are fixed,” she said.
The study is expected to be released in 2023.
DEP projects its proposal will increase revenue from $3.5 billion in fiscal year 2022 to $3.7 billion in fiscal year 2023, which will pay debt service as well as maintenance and operation of the city’s extensive water system – both in the boroughs and upstate – and will cover associated capital costs.
DEP supplies more than one billion gallons of drinking water, treats 1.3 billion gallons of wastewater, and maintains more than 7,400 miles of sewer lines each day.
The DEP’s proposed capital budget is, at $10.12 billion, the city’s third-largest after the education and transportation departments. These costs cover water pollution control mechanisms, maintenance and construction of sewers, and stormwater drainage improvement projects – very significant given the flooding experienced during Hurricane Ida in fall and for the system to handle the increasingly extreme weather forecast due to climate change. .
The proposal also includes maintaining $30 million of affordability programs.
Where pandemic trends have driven down water usage across the city, residential consumption, which accounts for 80% of income, has returned to pre-COVID levels, DEP officials said. But non-residential use hasn’t quite rebounded. In total, customers consumed approximately 690 million gallons of water per day in fiscal year 2022, compared to nearly 712 million gallons per day in fiscal year 2019.
And customers owe $778 million in water payments, according to DEP figures.
“We think a lot of these situations were temporary, so hopefully as the economy recovers these people can also get back on their feet and be able to make their payments again,” Joe Murin said. , financial director of the DEP, during a Water Board. meeting in April.
The DEP hopes to recover the money owed by sending out delinquency notices – which had stopped during the pandemic moratorium on utility shutdowns – and through a lien sale, a controversial system of collecting unpaid debts on goods and water.
The city’s last lien sale was in December 2021, although it excluded debts for water and sewer bills. The license for the disputed practice expired in February and there has been no movement since.
At the April meeting, Murin said, “The administration is working to get it reauthorized with the Board. These negotiations are ongoing.
But a City Council spokesman denied this, and DEP’s Ted Timbers later told THE CITY that Murin misspoke during the hearing.
Mayor Eric Adams and City Council President Adrienne Adams both opposed the sale, in which private investors buy liens from the city.
Council member Pierina Sanchez, who chairs the council’s housing and buildings committee and has voiced the need for lien sale reform, told THE CITY there was no conversation until at the “very beginning” on possible reforms of the sale of privileges among certain members of the council. and advocates of the Abolish the Tax Lien Sale Coalition.
“We have to keep talking about it and finding the right solution for the city,” Sanchez said.