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Water rate hike on the horizon — again

Increase comes while operating costs drop, as bills come due for big borrowing

The Croton Filtration Plant under construction in the Bronx is just one of the big water projects driving a projected rate hike. Photo: New York City Department of Environmental Protection

The New York City Department of Environmental Protection will propose a rate hike to the city’s Water Board when the board meets this Friday, Commissioner Carter Strickland told a City Council committee this week. That increase could be as high as 9.3 percent, which means a single-family home that goes through 80,000 gallons in a year will see monthly bills increase from $73 to $80.

The department needs the extra money to cover debt service on a host of federally mandated improvement projects, including new filtration and UV treatment plants, Strickland told the City Council Environmental Protection Committee in a budget hearing Tuesday. The department’s $1.06 billion operating budget, however, is actually projected to drop by $44 million this year – a detail some members of the committee said they couldn’t square with a rate hike.

“One might think that when the expense budget goes down, the rate would not go up,” said Bronx Council member Oliver Koppell.

Each year the Department of Environmental Protection proposes a new citywide water rate to the Water Board, whose seven members are appointed by the mayor. The board will formally adopt a new rate in May.

Queens Council member Peter Vallone fired back that this new increase comes on the heels of a series of “absurd” rate hikes. The rate increased 7.5 percent in 2011 and 12.9 percent in 2010. “People will pick up and leave if you continue to raise the water rates,” Vallone said.

There may be no escape, though, from escalating water bills. New York is not alone in proposing water rate increases, Strickland said, noting a trend around the country as infrastructure ages and needs repair. New Jersey is in the middle of intense negotiations over a proposed 20 percent rate hike, and at least one Connecticut city is considering a 6 percent increase to
fund capital improvements.

Increased debt service costs are helping drive New York City’s steady rate rises. This year, the New York City Water Finance Authority will pay $1.8 billion to bondholders and investors, up from $1.2 billion last year, including $400 million in commercial paper coming due in 2012. Much of the debt stems from nearly $15 billion in federally required projects, such as the Croton Water Filtration Plant and the Catskill-Delaware Water Ultraviolet Disinfection Facility. Those plants are expected to open this year and will need new staffs and funding to operate, further straining the department’s expense budget. Capital projects have added 24 percent to the water rate since 2002, increasing the average annual cost to a single-family homeowner by $169 a year.

The department has praised a new law that will boost its budget by expanding the sale of liens on properties with delinquent water and sewer bills. This year the city listed 15,449 properties for water and sewer debt, according to spokesman Farrell Sklerov. Customers can pay off their bills or enter a payment plan before the city sells the liens on May 17.

The department is still ironing out the final details of the rate increase. Last year the agency predicted this year’s increase would be 9.3 percent, but that number is subject to change. “We always try to beat it,” Strickland said.

The Water Board will meet at 8:30 a.m. Friday at 22 Reade Street.