May 6, 2024

If Approved, the Cost of Water in New York City Would Remain Well Below the National Average; Drainage Upgrades, Protection of the City’s Water Supply and Investments in Critical Water Delivery Tunnels will be Focus of Future Investments

The New York City Department of Environmental Protection (DEP) on Friday proposed an 8.5 percent increase in the Fiscal Year 2025 (FY25) water rate during a presentation to the New York City Water Board. While the cost of most goods and services are higher in New York City than elsewhere, the proposed rate would keep the cost of water in the city well below the national average. DEP is also hopeful that new guidance from the U.S. Environmental Protection Agency will unlock additional federal and state funding to help keep water rates affordable.

The proposed rate is subject to review and approval by the New York City Water Board. There will be a public hearing in each of the five boroughs during May and June where residents will have the opportunity to provide their input to members of the Water Board.

“Fully funding the City’s critical drinking water, stormwater and wastewater systems while keeping costs for New Yorkers well below the national average is a testament to effective management of the system and the commitment of our nearly 6,000 employees,” said DEP Commissioner Rohit T. Aggarwala. “If our partners in New York State implement the guidance EPA released last week to remove the caps on lead service line replacement funding we could keep water rates as low as possible and allow disadvantaged communities in New York City to access their fair share of this historic funding.”

Revenue

Historically, the lien sale process for water and sewer receivables has been an effective tool for managing past due water and sewer bills. However, there has been no water and sewer lien sale since Fiscal Year 2019. During the ensuing five years the balance for accounts receivable has grown to over $1 billion and this contributes directly to the need for a water rate increase. The Administration is working with the City Council on a possible reauthorization of the lien-sale. In the meantime, DEP moved ahead with a one-time amnesty program for seriously delinquent accounts in 2023. This resulted in $105 million in incremental customer payments and delivered $22 million in savings to customers through forgiven interest payments.

In addition, at the end of 2023 DEP began mailing Water Shutoff Notices to more than 600 seriously delinquent accounts. This has resulted in approximately $3 million in customer payments to date. DEP is also partnering with outside counsel to collect large unpaid balances from multi-family properties.

Unlocking New York City’s Fair Share of Water Infrastructure Funding

Last week, the Biden administration announced the availability of a new portion of a total of $15 billion in Bipartisan Infrastructure Law funding for the replacement of privately owned drinking water service lines that are made of lead, as well as a new memorandum that clarifies how states can use this funding and ensure its equitable distribution. In New York, the State Environmental Facilities Corporation is responsible for distributing money from federal and state sources such as this to municipalities including New York City. Thus far, New York State has imposed population and dollar caps that have significantly limited the amount of grant funding that New York City is eligible for, especially in relation to smaller municipalities. As a result, New York City has received just single-digit percentages of various state and federal water infrastructure grants controlled by New York State, despite accounting for 44 percent of the State’s population, 59 percent of its disadvantaged communities, and nearly 60 percent of the State’s tax revenue.

In contrast, the EPA’s new memorandum, dated May 1, says that “States should also review their… program requirements to ensure they do not unintentionally deter disadvantaged communities from participation,” and “state caps on the amount of additional subsidy a recipient can receive, may make it more difficult for disadvantaged communities with significant numbers of lead service lines to carry out an effective [lead service line replacement] program.”

Capital Investments

Large-scale capital improvements that will continue to be funded by the proposed increase include the ongoing construction of the following projects: the $1.6 billion Combined Sewer Overflow Retention Tanks for the Gowanus Canal, the $1 billion repair of the Delaware Aqueduct, the build-out of a $2.6 billion comprehensive drainage system for Southeast Queens, the construction of thousands of additional Green Infrastructure installations, and the excavation of the final shafts for the Brooklyn/Queens leg of City Water Tunnel No. 3.

Rental Payment

As indicated in the administration’s preliminary budget, and as has been historical practice pursuant to the terms of the Water Board’s lease of city water and wastewater infrastructure, the city has requested a “rental payment” of $145 million in FY24 and $289 million in FY25 from water rate proceeds. Similar requests are projected for FY26 – FY28.

NYC Water Rates are Below the Average of Large U.S. Cities

NYC water rates are approximately 21 percent below the average for the thirty largest U.S. cities, as measured using typical single-family residential water usage of 70,000 gallons/year.

What the Proposed Rate Would Mean for an Average Customer

If the 8.5 percent water rate increase is adopted by the Board:

• A typical single-family homeowner will see an increase from $1,088/year to $1,181/year for water and sewer bills—an increase of $7.71/month (based on an average consumption of 70,000 gallons of water per year).
• A typical multi-family unit with metered billing will see an increase from $808/year/unit to $877/year/unit—an increase of $5.73/month (based on an average consumption of 52,000 gallons of water per year).

Keeping Our Water Affordable

DEP is focused on maintaining a package of rates and billing policies that keep costs at a reasonable level for customers facing affordability challenges. A number of billing policies emphasizing rate affordability are included in the proposed package of rates and policies for FY25:

• The Home Water Assistance Program would be reauthorized and provide a bill credit of $145 to up to 96,500 low-income households. Customers do not need to apply or take other action to receive the credit, since DEP and the Water Board work with other governmental entities to identify eligible properties.
• The Multifamily Water Assistance Program, which provides a bill credit of $250 per affordable residential unit, would be reauthorized and made available to up to 66,000 units located in multifamily properties with at least fifteen years remaining on a rental affordability agreement with either the NYC Department of Housing Preservation and Development or the NYC Housing Development Corporation. The revised ranking formula that allocates credits by assigning a preference to the most affordable units, based on area median income, would continue to be used under the FY25 proposed package of rates and programs.
• Freezing the minimum charge. Customers who demonstrate highly efficient levels of water use, typically senior New Yorkers, would continue to be billed at an unchanged minimum water and wastewater charge of $1.27 per day. For customers billed at the minimum charge, the annual water and sewer bill is $463.

Rate Hearings

The Water Board is responsible for considering and adopting water and wastewater rates following the proposal and subsequent public hearings. The Water Board will be holding in-person public hearings in each of the five boroughs on the proposed rates:

• Tuesday, May 28 at 6:00pm: Staten Island (Bernikow JCC, 1466 Manor Road)
• Wednesday, May 29 at 2:00pm: Manhattan (NYC OMB offices, 255 Greenwich Street, 8th Floor)
• Wednesday, May 29 at 6:00pm: Queens (JFK Jr. School, 57-12 94th Street)
• Thursday, May 30 at 6:00pm: Bronx (Mercy University, 1200 Waters Place)
• Tuesday, June 4 at 6:00pm: Brooklyn (Saint Francis College, 179 Livingston Street, 5^th Floor)

The public is welcome to submit written testimony or comments to the Board by email at nycwaterboard@dep.nyc.gov, or by mail to NYC Water Board, 59-17 Junction Blvd., 8th Floor, Flushing, NY 11373. Following the public hearings, the Water Board is scheduled to meet on June 13, 2024 at 9:15 a.m. to consider and adopt an FY25 budget and water and wastewater rates; the new rates would become effective on July 1, 2024.

DEP manages New York City’s water supply, providing approximately 1 billion gallons of high-quality drinking water each day to nearly 10 million residents, including 8.5 million in New York City. The water is delivered from a watershed that extends more than 125 miles from the city, comprising 19 reservoirs and three controlled lakes. Approximately 7,000 miles of water mains, tunnels and aqueducts bring water to homes and businesses throughout the five boroughs, and 7,500 miles of sewer lines and 96 pump stations take wastewater to 14 in-city treatment plants. DEP also protects the health and safety of New Yorkers by enforcing the Air and Noise Codes and asbestos rules. DEP has a robust capital program, with a planned $29 billion in investments over the next 10 years. For more information, visit nyc.gov/dep, like us on Facebook, or follow us on X, formerly known as Twitter.