Rising Water Rates Could Pump Up Rents

The New York City Water Board voted unanimously on May 14 to raise water rates by 11.5 percent, the highest increase since 1992, and it forecast similar increases in each of the next three years. The board, like the Rent Guidelines Board, is appointed by the mayor.
I think I speak for many, if not most tenants, when I ask “what does that have to do with me, and why should I care about the water rates?” While we all care if the city’s water supply is safe to drink, less obvious is the potential for serious rent increases and stress on low-income housing programs from rising water rates. The Rent Guidelines Board uses higher water rates in its determination of rent increases for the one million rent-stabilized tenants, just as it does with increases in fuel costs or taxes, and owners of unregulated buildings pass increases in water and sewer costs on to their tenants directly.
If you thought the rent-control laws were arcane and farkakte, take a look at water politics—how we get our water and how we pay for it. The current high rate increases are due to $23 billion in capital costs, $600 million in unpaid water bills, and reduced water usage (figure that one). Water fees go to the city Department of Environmental Protection so it can pay the City of New York over $100 million a year in rent for the land and infrastructure used to provide the water. The rent, which goes into the general fund, is determined by the Water Authority’s financing costs.
Unlike rural folks who get their water from wells in the ground, water for New York City dwellers is collected in reservoirs from vast upstate areas known as the Delaware/Catskill and the Croton watersheds. That water is piped down to the city at a rate of 1.2 billion gallons per day—unfiltered and untreated.
To ensure safe drinking water, the city must either protect the water at its source, by preventing pollution of the watersheds, or treat it at collection points.
The federal Environmental Protection Agency, which is responsible for ensuring quality, requires the city to filter the Croton water—and the city is currently paying millions of dollars in fines because it has not yet built a filtration plant that will go under Van Cortlandt Park. Dave Ferguson of the Croton Watershed Clean Water Coalition—who is also an advocate for low-income housing via the HDFC Council, a coalition of low-income co-ops—has pointed out that the filtration plant that DEP wants to build is unnecessarily expensive and will require vast amount of chemicals and electricity. He says a more modern membrane-filtration system would be safer and cheaper.
The Catskill/Delaware water supply is currently unfiltered, but the city may be required to filter it in the future—which would cost an estimated $12 billion. The issue infuriates advocates, such as those involved with the environmental group Riverkeeper, who claim that had DEP and the city acted aggressively to protect the watersheds in the 1990s by purchasing land to safeguard it from developers and by prosecuting polluters, the multibillion-dollar plants would have been unnecessary.
Single-family homeowners have raised an outcry against the current increases. And low-income housing advocates warn that, “these large rate hikes are taking something that hasn’t been a huge factor in housing costs, and making it just that,” as Gregory Lobo Jost put it on the Drum Major Institute blog for the University Neighborhood Housing Program, which provides affordable housing in the Bronx.
With the current increase, the cost of supplying water to one apartment will rise from $533 per year to about $600. And with the Water Board looking at raising rates by more than 11 percent annually in the next three years, tenants should brace themselves for water-related rent hikes. Or they could join the environmentalists in battling DEP and the Water Board over the years of mismanagement of the city’s water supply.