Water Rates Are Gouging New Yorkers
by NYC Comptroller Bill Thompson & New York City Council Finance Committee Chairman David Weprin
Apr 07, 2009 | 3406 views | 0 0 comments | 56 56 recommendations | email to a friend | print
The New York City Water Board met last Friday to consider raising rates for on the water supplied to New Yorkers’ homes and buildings. Potentially on tap is a 14 percent increase – the third double-digit increase in three years.

Rising water and sewer rates are gouging New York City families and small businesses at a time when they can least afford it.

Last year, the Department of Environmental Protection (DEP) committed a million dollars of ratepayer money to review how other utilities across the country structure their rates and examine ways to inject a greater degree of fairness into our system.

It’s one year later, and that study has yet to be released. Even if it is released in the coming days, it is too late to affect the rate structure and rate levels this year.

That is unacceptable. A reassessment of our rate structure is long past due.

The Water Board leases the water and sewer infrastructure from the city. The board’s rental payments to the city are based on a formula that, until recently, simply reimbursed the city for water-related debt service on bonds issued before the Water Authority was created.

However, because of the way the formula works, since 2005 those rental payments exceeded the amount needed to pay down this old debt.

This “excess rent” will be nearly $123 million this fiscal year and grow to more than $207 million by fiscal year 2012.

We say, let’s rebate the excess rent to the Water Board to offset the cost of running the water system.

In our view, the excess rent should be split equally for two purposes – half for pay-as-you-go capital spending, which reduces costs over the long term, and, most importantly, half to cut other expenses so we can give ratepayers relief from ever-escalating charges.

Using the excess rent in this way would save ratepayers over $350 million between fiscal years 2010 to 2013 while protecting our bondholders.

Another source of revenue for our water system is the federal stimulus package. Under the terms of the stimulus bill passed by Congress, our state will get more than $400 million for clean water projects and over $80 million for drinking water projects.

We’ve asked the governor to support direct grant allocation of all of this stimulus money. This is critical given the overwhelming needs of our state water system and, particularly, New York City’s Water Authority.

A direct grant program to the authority would have an immediate and lasting impact on New York City’s water and sewer rates. For every $100 million that is granted rather than loaned, we save debt service costs of more than $5 million per year.

One final means of bringing savings to ratepayers is to require that DEP cut its operating budget by five percent, as other city agencies have been required to do in this time of financial crisis.

New Yorkers are facing tough times. They are losing their jobs and their homes and they are paying more for less across the board.

At a time of belt-tightening, New York City consumers must know that they can depend on their government to find opportunities for rate relief while ensuring the prudent and transparent use of their taxpayer dollars.
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