Hearing on Filter Blasting Tonight

Community Board 7 and its adjacent boards (8 and 12) will hold a hearing tonight at Lehman College to discuss the Department of Environmental Protection's controversial plan to blast at the Jerome Park Reservoir. The meeting is from 6:30 to 8:30 in the Lehman Faculty Dining Room in the Music Building. For more information, call CB7 at (718) 933-5650.

News Roundup for July 31

Apparently the United Nations is just as problematic a construction project as the Croton Water Filtration Plant. After some false starts, the Swedish construction firm Skanska AB, one of the contractors involved in the filtration plant, was selected by the UN to manage the renovation of its headquarters in Manhattan. Reuters has the details of the $7 million initial contract that could yield $1 billion for Skanska over time.

Gotham Gazette has a feature by a high school student from New Youth Connections , about efforts to expand mental health services and counseling in the public schools.

The New York Post looks at Joel Klein's five years as schools chancellor and his accomplishments so far. None of his predecessors has lasted that long since the post was created in 1970.

A Daily News story reports on another uninhabitable city-subsidized apartment. Tenant Steven Berry was forced to move his asthmatic kids out of the Valentine Ave. apartment because the power was cut off and he can't plug in the kids' nebulizers. Councilman Joel Rivera is calling for the Department of Homeless Services to withhold rent in situations like this.

And Bob Kapstatter reports in his Bronx Boro News (supplement to the Daily News) column (not on-line yet) that Bronx District Attorney is running unopposed again, at this point, and that Adolfo Carrion has been fined $6,875 by the Campaign Finance Board for campaign finance violations.

Filter Plant Finally Gets Full Tabloid Treatment

We've got a story in the print edition of the Norwood News that hits the streets tomorrow about the escalating costs of the filtration plant and Assemblyman Jeff Dinowitz's calls for an investigation of the project. But Juan Gonzalez has the story, too, in today's Daily News.
It's a full-page story on p. 8 with a giant photo and dramatic X-ing out of $1.3 and $2.1 billion projected price tags. "The $2.8 billion Hole?" the headline blares. (The Web version of the headline just doesn't get the message across the same way -- it leaves out the 1.3 and the 2.1.)
Almost all filtration stories in the Daily News over the past several years have been relegated to the "Metro" page, buried in the middle of the paper, that only outerborough readers get to see. The play they've given Gonzalez' column today, however, is likely to make a few waves.

Daily News Digs into Filter Plant Bid Fiasco

Bill Egbert of the Daily News does some digging and finds more details on why a deal with a consortium to build the filtration plant in Van Cortlandt Park went sour. Cost was not cited as a factor in a letter from Consortium leader Perini Corp., but rather "attendant circumstances." According the article, filings with the Security and Exchange Commission show that Perini is the subject of an investigation relating to "its contracting with disadvantaged, minority and women-owned businesses ..."

One question: Why does the Daily News consistently relegate hard news like this to its "Metro News" page, which often isn't available to Manhattan readers, and even some of the other boroughs? The filtration plant is hardly just a local issue. Croton water supplies parts of Manhattan and more in times of drought. And all city water rate payers are footing the bill for the mounting fines the federal government is levying on the city for failing to seal the deal on a plant construction contract by the Feb. deadline.

NYC's Water Woes

Also published on the Drum Major Institute Blog

11.5% in July; 11.5% next year; 11.4% the year after that; and 11.3% in 2010. Compounded annually, the 54% increase in water and sewer rates in New York City that the Water Board is projecting over the next four years will mean more maxed-out homeowners going into foreclosure, more affordable housing managers struggling to keep their buildings afloat, and (since all costs trickle down) higher rents for the millions of rent stabilized tenants, many who already pay half of their income on rent.

Why the large increases? According to the Water Board (appointed by Mayor Bloomberg) there are three main reasons: $23 billion in capital costs (about half of which are state or federally mandated) that are paid out of rates; the plethora of billing errors that prevent the Department of Environmental Protection (DEP) from enforcing collections resulting in more than $600 million in unpaid water bills; and the simple fact that water usage is down (they still need to collect a certain amount, so the more water we conserve, the more they’ll charge us for it!).

Add to this the fact that DEP will pay the City $135.9 million this year (and $154.8 million next year) in rent for use of land and infrastructure to deliver the water to City residents. So rate payers (and eventually tenants) pay more and more to DEP to pay the City rent to make sure we have a good chunk of that $4.4 billion dollar surplus the Mayor announced the other day. Does this make sense?

And don’t forget about the cost overruns at the water filtration plant being built on Bronx parkland, where the low-bid contractor has backed out because they know they can’t build it for what they had estimated. Rate payers (and eventually renters) will pay for the heavy federal fines being laid on the City each day a contractor is not in place – the amount is already over a million dollars. For the low-income neighborhood residents who already have to deal with the blasting, loss of parkland, and massive construction in their backyard, this is just another slap in the face.

So, enough about the reasons behind the rate increases; what is this really going to mean for low income households throughout the City? Most residents don’t think twice about water rates since owners pay them. But when the Rent Guidelines Board decides how much to raise rents each year for rent stabilized tenants, one of the main factors they look at is the rise in operating costs for owners. There’s no doubt that this four-year 54% increase in water (69% if you include last years 9.4% hike) will eventually get paid by renters in the coming years in a City where affordable rents are harder and harder to come by.

For owners and managers of affordable housing, the rate hikes mean an even more desperate struggle to reduce other operating costs to keep rents low while staying out of the red. As for new affordable housing projects, increased amounts of City subsidy will be necessary to defray these rising operating costs. Again, does this make sense?

And those who may be affected the most are the low, moderate and even middle income homeowners who are already dealing with volatile fuel costs, high insurance rates, and resetting interest rates on their ARMs (not to mention the victims of predatory lending). The percent of conventional homeowners (those living in a house) in New York City who pay more than 60% of their income on housing costs has jumped from 15.9% in 2002 to a staggering 19.2% in 2005. For these nearly one-fifth of all New York conventional homeowners, the projected water rate hikes could mean the difference between making their mortgage payments and going into foreclosure. How does this fit in with the City's foreclosure prevention work?

The hearings the Water Board has been holding in the five boroughs will not change any of the rate increases, and the press coverage on the overall situation and projected increases has been nonexistent. A real plan of action is to call on the City to convene a Water Summit with appropriate City leadership (including Bloomberg and/or Doctoroff) and nonprofit, real estate and lending community representatives to examine alternatives to this series of excessive rate hikes. The summit should tie into the Mayor’s 2030 planning and focus on environmentally friendly ways to reduce costs for rate payers. These should include looking to reduce capital costs or shifting them away from rate payers, and re-examining DEP’s rental payment to the City. Financial incentives for building owners who install gray water systems and green roofs should also be instituted, along with less costly incentives that can be utilized by homeowners, such as installing street trees, storm water tanks, porous pavement, and rain water harvesting systems.

If the City is really serious about preserving affordability, it needs to take water into account.

Filter Fines Pile Up

As if it wasn't bad enough that there are no takers yet to fill the gaping, yawning hole in Van Cortlandt Park, where blasting has gone on for two years, now word comes via the Post that the city has been racking up heavy federal fines since Feb. 8 for each day it fails to award the contract to build the filtration plant.

"Fines began at $11,000 per day, and go up every 30 days to a higher amount. As of today, the city will owe $1,160,500, and by May 9, $1,560,000 - when the fines reach $30,000 a day."

The water rate hearing at Lehman College tomorrow takes on added importance, since water rate payers are already being asked to shell out an addition 11.5 percent. Will rate payers have to foot the bill for the fines, too? We'll let you know.

Update: The Department of Environmental Protection's press office just got back to us with the answer to the above question: a simple and direct "Yes."

Filtration Contractor Bails Out

The water filtration plant project may be heading toward disaster.

You know that giant hole in Van Cortlandt Park where there used to be grass, trees and a golf driving range? Well, there may not be anybody around to fill it.

Yesterday, the DEP confirmed that the contractor for building the filtration plant, a consortium led by Perini Corp. that won the bid last fall, bowed out, two months after it was supposed to begin work. The New York Post first reported this on Sunday.

Our story on this is coming out in Thursday's issue. Meanwhile, NewYorkBusiness.com reported yesterday that the city's Department of Investigation was looking into the Perini consortium, which may have been a reason why they dropped out. According to the report, the DOI had "qualms about violations involving Perini's meeting targets for subcontracts with minority- and women-owned business enterprises; the company was convicted in California in 2001 of making fraudulent MWBE claims."

Any company that is awarded a city contract must make a concerted effort to subcontract minority- and women-owned businesses as per city policy.

At the very least, this means the $2 billion project will cost another $200 million.