Water System Critics Opposed to More than the Rate Hike
May 8th, 2008

To help limit increases in water and sewer rate hikes, a number of people are calling for changes from the city, and it is coming from more than just those who are running for office, as Mayor Michael Bloomberg has scoffed. Among the changes critics say are needed are: a new rental agreement between the Water Board and the city for the use of infrastructure, a review of capital spending to ensure efficiency, and reforms to the water system that will protect affordable housing and conserve water use.

The most widely desired option for reducing rates is changing the rental agreement. The Independent Budget Office estimated that limiting rental payments could trim the proposed rate hike from 14.5 percent to 11 percent. The Water Board pays rent based on the amount of debt service it incurs, but critics say that excess rent could be put back into water infrastructure without endangering bond ratings. It would, in fact, lower debt service, they say. Since those rent payments are put into the city’s general fund, some are calling it a backdoor tax.

“Instead of the city taking all this money for rent, they should take a fixed fee thats closer to their actual costs and allow the Water Board to keep the rest of the money for their own needs so that they dont have to keep raising water and sewer rates,” says the Water Watch Blog.

“Some critics of the excess rent rebate proposal have suggested this would hurt the Water Authoritys credit ratings,” the comptroller’s testimony at a City Council hearing read. “That is not the case. As the Citys chief financial officer, Comptroller Thompson would not be advocating for an idea that did not protect and even enhance the Authoritys financial health.”

Although construction costs and needs have risen significantly, detractors say that the water system is insular and not subject to appropriate oversight. Noting that the system was not subject to recent budget cuts, a report by the Citizen’s Housing and Planning Council pointed out that, “The efficiencies and innovation that can actually come from budget cutting exercises are largely absent from this process.”

One project many have used as an example is the soaring costs of the Croton water filtration plant being built in the Bronx. Referring to comments by the mayor that the Department of Environmental Protection spends its money efficiently, Gregory Lobo Jost opined in the West Bronx Blog that, “The mayor probably wasn’t thinking about the filtration plant where costs have skyrocketed when he made his ‘reasonably efficiently’ comment.”

Housing advocates also point out that the system of funding water needs through usage rates paid by homeowners is unfair, and that the burden falls disproportionately on low income neighborhoods. “Households in low-income parts of the city not only pay more to support the water system, but pay a much higher percent of their income to do so,” a report by the University Neighborhood Housing Program points out.

“Many existing [affordable housing] projects will struggle to meet the bottom line with the rising cost of water,” the report continues. “Operating expenses will claim a larger share of an already slim budget that includes other competing needs for maintaining quality housing and preserving affordability for low income tenants.”

The way rates are charged may also stifle the goals laid out in PlaNYC to reduce water consumption, critics point out. By charging for usage, conservation would be met by increased rates to make up for the loss in revenue. “For rate payers, reducing water usage has not decreased costs,” the housing council reports says. “This is a serious flaw in the effort to conserve water.”

Today is the last day for public hearings and the new rates, if adopted, will go into effect on July 1.

By on May 8, 2008, 4:28 pm
In category: Economy,Environment,Housing,Public Finance | 2 Comments »

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2 Responses to “Water System Critics Opposed to More than the Rate Hike”

  1. Thursday Headlines: Ga. Sewer Project Reaches Completion « Water News Update Says:
    May 8th, 2008 at 11:22 pm

    […] Rate News New York, New York Richfield, Ohio Richmond, […]

  2. Gotham Gazette - The Wonkster » Blog Archive » Reforming the Water Board’s Capital Budget Says:
    January 21st, 2009 at 7:10 pm

    […] Many of the arguments laid out in the article gained publicity during last year’s water rate hike debate. […]

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