H2Owe

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Archie McDaniel remembers the good old days 25 years ago when he and his fellow tenants took over their Harlem building, eventually turning it into a low-income co-op. Back then, they had the money to install a working elevator, replace the plumbing and refurbish the apartments. Now the building dips into the red more often than not. And needed roof repairs may be impossible before winter arrives, he sighs.

A major culprit is the city’s ever-increasing water and sewer bills. Over the past year, the 47-unit co-op’s bills tripled from $4,000 to $12,000. “It’s like the building’s on fire and no one is going to throw water on us,” McDaniel says.

Across the city, low-income housing is in jeopardy as rising water and sewer costs strain already thin budgets. Roughly 20 percent of the city’s limited-equity cooperatives–properties landlords abandoned, the city renovated and tenants now own–are at risk of default on their tax bills because of the cost jump, according to a coalition of cooperatives. And many private landlords face mounting debts in neighborhoods where incomes cannot support higher rents. Housing advocates fear the inevitable result will be renewed abandonment and foreclosure.

The problem has been setting off alarm bells for five years now, yet solutions are no more apparent today than when City Limits first broke the news in October 1992.

Water and sewer charges have run well ahead of inflation for nearly a decade. Water bills increased 6.5 percent last year, 6.5 percent this year and will be 7.4 percent higher next year. That’s lower than the exorbitant increases of a few years ago–rates rose 24.3 percent in 1990 alone–yet the city’s Water Board estimates that, by 2002, the average water bill will have increased another 45 percent.

“All of a sudden a monster came to take away what we worked hard to create,” says Dalma De La Rosa, an activist with the Bronx Water Alliance and a staff member for a Bronx low-income housing group. “This monster is water and sewer bills.”

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Mayor Rudolph Giuliani and leaders in the City Council, the state legislature and key city agencies each admit the skyrocketing water bills are a problem. They each also blame the structure of the system. In 1984, the state legislature set up the Water Board to set rates and the Water Finance Authority to sell bonds to pay for system improvements. The city’s Department of Environmental Protection (DEP) uses revenues from ratepayers and bonds to maintain and improve the system. The rest goes to the authority to pay off its debt. Each year, policymakers note with chagrin, the DEP and Water Finance Authority have been able to count on the Water Board to rubber-stamp their requests, passing along all additional costs to the general public.

The system, widely criticized for being out of control, has few defenders. Yet no one in power seems willing to take on the challenge of reform.

Mayor Giuliani appoints all seven members of the Water Board and could demand accountability for rate hikes. But he punted responsibility to the Department of Housing Preservation and Development (HPD) about two years ago, telling it to form a task force to study the issue with the DEP and nonprofits. Apparently, HPD has done nothing since. “We’ve had a lot of personnel changes and a new commissioner, so I don’t even know what the deal is with that task force,” says HPD deputy press secretary Cassandra Vernon.

For their part, City Council leaders insist that reform must come from the state legislature, which created the independent authority in the first place. “I am very much concerned about the rates, but it’s out of our control,” explains Stanley Michels, chairman of the Environmental Protection Committee.

Meanwhile in Albany, even Assembly Speaker Sheldon Silver, who has sought to secure his image as pro-tenant and pro-affordable housing, has shown no inclination to put the water issue on the agenda. “The speaker was aware of it and troubled by it and was planning to look into it,” says Silver’s spokesman, Skip Carrier. “That’s about all he has to say on this.”

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Low-income housing advocates have won a few concessions over the years. In 1993, the Water Board established an annual cap–$750 on the first apartment and $500 on each additional–for buildings taking conservation measures.

The DEP, which does the billing, has also forgiven extraordinarily high bills resulting from leaks once the problems have been fixed. There was also a rebate program promoting the installation of low-flow toilets. And buildings where water meters have just been installed can continue to be billed under their former, often cheaper, flat-rate formula for two years.

But since the Water Board views each of these programs as transitional, advocates must rally each year to extend them. And even with such concessions, rising costs are still strangling buildings in which landlords and co-op boards are unable to pass along the increase in rents or maintenance fees.

To deal with the immediate crisis, both landlord and housing advocacy groups have been lobbying the Water Board to simply lower the maximum amount that anyone can be charged.

And for the long term, two ideas have emerged to solve the problem. One is to end a state-imposed rule that bans discounts for any one type of ratepayers, such as buildings in low-income neighborhoods or limited-equity cooperatives.

The second is to develop a billing system, similar to those used in other large cities, that spreads the cost of the system more evenly.

Currently, some three-quarters of the city’s buildings are metered and are billed based on how much water they use. But buildings in low-income neighborhoods tend to use more water because families double up, take few vacations and have people at home for greater parts of the day, explains John McCarthy, executive vice president of the Community Preservation Corporation. These buildings also tend to have older, leaky plumbing, and the owners have less cash available to fix chronic problems. As a result, McCarthy says, these buildings are paying more than their fair share to support a system everyone uses. “That’s the inequity,” McCarthy says.

Advocates want the Water Board to move to a two-part rate system, currently used in cities like Los Angeles, Detroit and Denver, that couples a metered fee with a flat one to better distribute fixed costs. Though it remains to be seen whether the system would result in lower rates, advocates say that it would, at the very least, be more fair.

Members of the Water Board claim to be studying these ideas. Yet they have been on the table for more than three years without any action. Now the question has been put into the hands of consultants.

When will the board act? “I really can’t tell you,” replies recent Water Board appointee Susan Millington Campbell. “I don’t even have a ballpark.”

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Nothing’s happened because no one is willing or able to hold the system accountable for what appear to be runaway costs, critics charge.

The City Council tried to tackle rising rates three years ago by passing legislation giving itself final approval of the DEP’s budget before the Water Board set the year’s rates. Council members unanimously supported the measure, but Giuliani vetoed the bill, writing in a letter to the council that it “is without authority to legislate in this area.”

Instead of attempting to override the mayor’s veto, council leaders settled for a voluntary resolution from the Water Board pledging to hold off setting rates each year until the budget passes. It takes effect next year. The impact of this, says Councilman Sheldon Leffler, “remains to be seen.” Nonetheless, Leffler says he hopes the oversight will force water rates down. “The DEP will have to justify its spending to an elected body–the council–and that hasn’t happened since the creation of the Water Board.”

There is no doubt that the cost of providing water and sewer services has increased substantially over the last decade. Stricter environmental laws, including a ban on dumping sludge into the ocean and tougher water quality standards, have come along at a time when federal and state support has all but disappeared. As a result, total costs between 1987 and 1994–including maintenance and debt service–increased consumer water bills by almost 200 percent.

“That’s a heck of a load to place on such a vital commodity,” notes Councilman Archie Spigner, chairman of the Housing and Buildings Committee. “Imagine having the transportation system paid for exclusively by the fare payers. It would be four bucks a ride.”

Yet the fact remains that, by design, the system’s agencies are responsible to no one. State legislators, when they took the water system off the city’s books in 1984, purposely buffered the Water Board from outside rate-setting regulation in order to protect the Water Finance Authority’s bond investors. The idea was that any cost increases could be easily passed along to the system’s users.

Consumer advocates argue that this privilege has been abused. “It appears the DEP decides how much it’s going to spend and the Water Board sets the rates accordingly,” says Suzanne Mattei, author of a 1995 study on the water system’s billing and customer service for Public Advocate Mark Green. “There is very little cost consideration, and they can do things in very expensive ways.”

The DEP pays 5,600 of its 6,000 civil service employees out of money collected from city water bills. It is also currently facing accusations of accepting “unbalanced bids,” which if true could mean the agency is being bilked out of millions of dollars.

An audit earlier this year by City Comptroller Alan Hevesi posed serious questions about the agency’s contracting practices, noting that in four contracts alone the DEP paid $79.3 million more than the city’s recommended fees. In one case, the agency paid a joint venture involving two engineering firms $58.1 million to oversee the construction of eight sludge dewatering plants. This fee was 12.5 percent of the final construction cost; the city’s Office of Management and Budget recommends that government agencies pay only 3.5 percent for this type of consultant work.

DEP officials respond that OMB’s guidelines are often inappropriate for the kind of consulting contracts the agency lets out. Still, they admit they aren’t pressing the city to update its guidelines and have yet to develop their own, as Hevesi’s audit recommends.

“The authorities are hard to control, hard to change. They’re designed to be that way,” Mattei says. She argues that the Water Board should have at least two consumer representatives, including one from a low-income building.

Despite these institutional challenges, though, advocates like De La Rosa remain determined to succeed.

“If we can’t win, we might as well pack up all the poor people onto a barge and leave,” she says. “But we haven’t won anything in a year. It takes a long time.”