The Water Board voted this morning to approve a 12.9% increase, the third consecutive double-digit increase. While the increase is slightly lower than the proposed 14% hike announced earlier this year, there is no reason to celebrate. The skyrocketing cost of water will contribute to more foreclosures in the City, and will make it harder for affordable housing managers to run their buildings effectively.
Here is coverage from NY1, and here is the press release from Comptroller Thompson's office that sums up the situation:
“I am disappointed at the New York City Water Board’s decision to impose yet another excessive water and sewer rate hike. Although this is a very slight reduction from the increase they were originally seeking, a 12.9% hike is still outrageous. It is simply too little too late. These charges are gouging New York City families and small businesses precisely at a time when they can least afford it.
This increase will raise an average single family homeowner’s annual water bill from $571 to $903 in just four years – a whopping 58 percent increase, about five times the inflation rate. Water rate payers’ bank accounts are not an unlimited resource.
Furthermore, I am frustrated that the City continually ignores recommendations made by my office, other elected officials, advocates, and New Yorkers that would have helped to minimize water rate increases this year and in the future.
The Water Board’s plan to seek a 12% rate hike next year demonstrates that it does not intend to stop squeezing money out of the pockets of New Yorkers. It is imperative that the Department of Environmental Protection complete its promised study as soon as possible in order to inform next year’s water rate-setting process.”
Last year, the Water Board committed a million dollars of ratepayer money to review how other utilities across the country structure their rates and to examine ways to inject a greater degree of fairness into our system. Then-DEP Commissioner Lloyd promised that the Fiscal Year 2010 water and sewer rates would take into account the results of this study. However, the DEP has failed to complete the study as promised.
The Water Board leases the water and sewer infrastructure from the City. Rental payments are based on a formula that, until recently, reimbursed the City for water-related debt service on bonds issued before the Water Authority was created. Since 2005, however, the formula has led to rental payments in excess of the underlying City expense.
Thompson charged that this formula is forcing water ratepayers to subsidize the City’s General Fund, because “excess rent” flows into that fund and is used as general revenue. In Fiscal Year 2009, such “excess rent” will total $106 million, and this is predicted to swell to more than $200 million by Fiscal Year 2013.
Over the last two years, Thompson proposed rebating the “excess rent” back to the Water Board to offset the cost of running the water system. In Thompson’s plan, the “excess rent” would have been split equally for two purposes: ½ for pay-as-you-go capital spending, which reduces costs over the long term, and ½ for other water system expenses, which would lessen the need for rate increases.
Additionally, Thompson identified another source of revenue to prevent water rate increases: federal stimulus money. Under the terms of the stimulus bill, the New York State Revolving Fund will receive approximately $432 million for clean water projects and $82 million for drinking water projects. However, only half of that money currently is slated to be distributed in the form of direct grants or similar deep subsidies.
In a letter Thompson asked the Governor to support direct grant allocation of all of this money because of the overwhelming needs of the water systems operating throughout the State, and the New York City Municipal Water Finance Authority in particular.
Thompson has recommended that DEP reduce its operating budget by 5%. Most of DEP’s operations have been exempted from the same belt-tightening reductions required at other city agencies because they are funded by water and sewer rates instead of tax revenue. DEP representatives have previously acknowledged that the
agency’s Fiscal Year 2010 reductions amount to only 2% of its budget.
The Gotham Gazette also has some background coverage of the issue.