On June 14th, the City Water Board approved the City Department of Environmental Protection’s (DEP) recommended water rate increase of 2.31% for Fiscal Year (FY) 2020. The rate increase will go into effect July 1, 2019.
When DEP presented their rate proposal to the Water Board in April, they defended the proposed rate increase by stating that it would be the lowest increase in over 16 years and was necessary in order to secure funding for future investments into the water system and would allow DEP to keep future rate increases relatively low.
RSA criticized DEP’s justification for a rate increase during public testimony on June 4th by citing DEP’s own justification to eliminate rate increases during the FY 2018 rate proposal. At that time, DEP recommended to the Board that a rate increase was not necessary because the system was “in strong financial condition” as a result of the elimination of the rental payment with nearly $1.1 billion in cash savings expected to go into the City’s water system through FY 2021.
If the system continues to be in such strong financial condition as a result of the elimination of the rental payment, any rate increase is not justified for at least another year. RSA cited Mayor Bill de Blasio, who said while running for mayor in 2013 that if the rental payment, a “hidden tax” imposed on water rate payers, was eliminated, there would never be a need for another rate increase.
Furthermore, RSA strongly objected to a proposed Backflow Prevention Plan Review fee of $350 and a Backflow Exemption Approval fee of $100. DEP already requires property owners to maintain, inspect and test all approved backflow prevention devices installed in their buildings. By imposing fees onto owners for DEP to review a backflow prevention plan, as well as a fee for any exemption from the backflow prevention plan requirement, owners would be burdened with additional building operating expenses (for more information regarding Backflow Prevention Devices, see page 9 of the July/August 2019 RSA Reporter).
Despite acknowledging RSA’s arguments and concerns, the Board ultimately approved the rate increase and the Backflow Prevention Plan Review and Exemption Approval fees. At this point, the only positive that could ultimately result from another water rate increase after last year’s 2.36% increase is the effect it will have on next year’s Price Index of Operating Costs (PIOC) calculated by the City Rent Guidelines Board (RGB). With property taxes continuing to rise, as well as other building operating costs considered by the Board, we are certain that a rate increase will result in an even higher PIOC. Should this be the case, it will give RSA greater leverage when we advocate for higher rent guidelines.