New York City’s Independent Budget Office (IBO)recently posted an item on its Web Blog describing the financial difficulties that the NYC Housing Authority may face as a result of increased water and sewer bills (see below).
The piece focuses on the city’s Department of Environmental Protection’s (DEP) recent conversion of the remaining frontage accounts to flat-rate billing under DEP’s Multi-Family Conservation Program. That program sets a flat-rate of $894.15 per apartment per year which, according to the IBO, is about $60 higher, on average, than previous frontage bills. Under the new billing system, the IBO calculates, the Housing Authority’s water bill will increase from $149.9 million to $160 million. Meeting the increased bills may be a challenge, the IBO says, in light of the Housing Authority’s current operating deficit.
But thousands of private owner of multi-family properties are also affected by DEP’s billing change, with many experiencing increases of $200 or more per apartment per year. These above average increases in cost were totally ignored by the NYC Rent Guidelines Board in its deliberations about setting the allowable level of rent increase for 2012.
The Housing Authority will undoubtedly be eventually bailed out of its dilemma by taxpayer funded subsidies. But private owners of affordable rent regulated properties will be hard-pressed to fund the increased costs without reducing the quality of life in their buildings.
— Jack Freund, Executive Vice President, Rent Stabilization Association
Water Conservation Program Could Cause a Flood of New Problems for the City’s Housing Authority
Posted by Doug Turetsky, August 16, 2012
With the New York City Housing Authority facing a recent barrage of critical press, it’s not surprising that a seemingly small change in how the housing authority will be billed for water has been overlooked. But what may seem like a small drip of an issue now could open a floodgate later.
In an extension of its effort to encourage water conservation, the city’s Department of Environmental Protection last month put the New York City Housing Authority into a water conservation program that requires water meters to be installed at all of the housing authority’s 334 developments. If the housing authority cannot meet the requirements of the conservation program, it may instead be billed by water meters that track the amount of water used in a building. This could result in higher water and sewer bills for an agency already struggling with budget shortfalls and has trouble with the timely upkeep and repair of its properties.
Water already comes at no small cost for the housing authority. In 2011, the water bills for the housing authority’s developments totaled $149.9 million, according to IBO analyst Justin Bland. Under the new conservation program, the housing authority will pay about $160 million in 2013. The housing authority’s five-year operating plan shows a General Fund deficit of $61.3 million this year and $63.3 million for 2013 (about 3 percent of the roughly $2 billion budgets for public housing developments in both years).
The housing authority is not the only property owner being compelled to join the conservation program, but it is the largest. All of the city’s buildings were supposed to be metered and billed by water usage more than a decade ago. Launched in 1988 following a severe drought, the metering program aimed to be universal within 10 years. A decade after that deadline, as recounted in an October 2009 IBO Weblog Post, the program was well behind schedule, with nearly 50,000 water accounts still being billed on the frontage system—fees based on building size and the number of sinks, showers, tubs, and toilets.
As of July 1, the Department of Environmental Protection required that most of the remaining unmetered residential buildings in the city take a step towards the Universal Metering Program. The department has automatically enrolled the housing authority and other owners of properties with four or more units that have lagged behind in the city’s water metering efforts into its Multi-Family Conservation Program. The program sets a flat rate of $894.15 per apartment annually for water and sewer fees, about $60 higher than the average under the previous system. But paying the flat rate and staying in the conservation program is contingent upon installing water meters by January 2014 and “high-efficiency water-using filters” in 70 percent of a building’s apartments by June 2015.
Meeting these requirements may be a challenge for the housing authority, which is already awash in a backlog of repairs and delayed renovation projects. A June 2012 City Council Report for a budget hearing on the housing authority cited a 2011 backlog of nearly 300,000 work orders for about 17,900 apartments, 10 percent of the 179,000 units in public housing developments. And recent articles in the New York Daily News have chronicled the ongoing delays in major upgrade and renovation projects at housing authority developments. The need for such upgrades is likely to grow—1,400 of the 2,600 buildings in housing authority developments are at least 50 years old.
Many New Yorkers would no doubt agree that water conservation is an important public policy goal. But as it struggles to provide its 400,000 residents with safe and livable apartments, this may be a particularly difficult time for the housing authority to take on a new challenge.