Northeast Queens Council Members, Community Leaders Call on Mayor to Honor Commitment to Cease Gouging Taxpayers with Water Rates

NEW YORK (TIP): Northeast Queens Council Members and community leaders, on Thursday, March 20, called on Mayor Bill de Blasio to honor his pledge to cease gouging taxpayers with excessively high water rates — a practice that the Mayor decried as “wrong” and a “stealth tax” during his campaign.

The Council Members, Rory I. Lancman, Mark S. Weprin and Paul A. Vallone, released a letter to the Mayor at a press conference held in Fresh Meadows, Queens, following Lancman’s demand for action at a City Council Environmental Protection hearing held last week. Water rates are set annually by the New York City Water Board, which comprises seven members appointed by the Mayor. The revenues in part pay the debt service on bonds sold to build the City’s environmental infrastructure (water tunnels, filtration plants, etc.) issued by two sources: (a) the New York City Water Finance Authority (WFA) (comprising seven members, four of whom are appointed by the Mayor), and (b) the City itself prior to the Water Finance Authority’s creation in 1984.

The bonds are repaid through rent installments to the City for leasing its environmental infrastructure to the Water Board in an amount either (a) equal to the City’s annual debt service obligations on the City’s bonds, or (b) 15% of the Water Finance Authority’s annual debt service — whichever is greater, although the Mayor has the authority to seek the lesser amount in his annual payment demand to the Water Board. Prior to 2005, the City had always secured the former sum from the Water Board; payment equaled the debt service on City bonds. Starting in 2005 however, the City started demanding the latter sum at 15%, which had become greater than the total represented by the city’s general obligation for water and sewer debt service.

Since then, water rates have exceeded the cost of the City’s debt service. The prior Mayor refused to lower the City’s annual rent demand to the amount necessary to pay only the City’s water and sewer-related debt service. What resulted were astronomical water tax increases that have been used to prop up the City’s general fund. Despite the City’s water and sewer debt gradually shrinking over time, by 2012, the gap between the 15% figure and the City’s water debt had grown rapidly due to increases to the WFA debt service. Although payments were capped at the FY11 payment (given the rate of inflation), in many of the last ten years water rates have increased by double digits, and have cumulatively increased by an incredible 78% since 2005:

Fiscal Year          Increase
2014                   5.6%
2013                   7.0%
2012                   7.5%
2011                   12.9%
2010                   12.9%
2009                    14.5%
2008                   11.5%
2007                   9.4%
2006                   3.0%
2005                    5.5%

This fiscal year, for example, the City owes approximately $50 million in debt service; however, the Water Board is expected to pay an approximate $205 million in rent. In other words, water users will be overbilled $155 million. During his 2013 campaign, then-Public Advocate Bill de Blasio condemned the city’s practice of using water rates imposed on middle class homeowners and small businesses to divert money into the City’s general fund: “For decades, the water system only charged customers what it needed to cover its costs. But now, anyone who pays a water bill is sending more and more of their money into the city’s general budget.

It’s wrong and it has to stop.” — Public Advocate Bill de Blasio, April 16, 2013 “I’m urging the Mayor to honor his commitment to eliminate these hidden taxes and not charge residents for a cost greater than what the system’s infrastructure requires,” Lancman said. Council Members Mark Weprin and Paul Vallone joined in penning the letter demanding an end to the inflated water tax. “We need the mayor to stop this back door tax once and for all,” Council Member Weprin stated. “Anyone who has lived in New York City for the past decade can tell you that water and sewer rates have risen dramatically,” said Council Member Vallone. “I’m proud to stand with my fellow Council Members in asking our Mayor to stop overcharging the Water Board for rent so that excessive billing doesn’t fall onto the backs of our City’s taxpayers.”

Some of the community leaders in attendance at the press conference included Bob Harris, President of the West Cunningham Park Civic Association; Yolanda Delacruz-Gallagher, board member of the Fresh Meadows Homeowners Civic Association; Jennifer Martin, Co-President of the Kew Gardens Hills Civic Association; Harbachan Singh, Vice President of the Queens Civic Congress; Rosa Chong, Board Member of the Fresh Meadows Homeowners Civic Association; and Jackie Forrestal, Board Member of the Hillcrest Estates Civic Association. Homeowners voiced their outrage over the exorbitant increases in water rates.

“It’s impossible for us to survive these increases,” said Ms. Delacruz-Gallagher. “The simple gift of sustenance is a right, one we need to survive. Years ago, you paid thirty to fifty dollars. Now, you have to watch every drop that comes from the faucet.” Harbachan Singh spoke on behalf of the Queens Civic Congress: “Rising water rates has been the cash cow of the Mayor for too long. These funds are being used to bridge budget gaps and fuel other projects unrelated to water service.

Water is a precious commodity and a basic human right; this policy is totally wrong.” Residents stressed the everyday strains they faced because of water woes. Ms. Chong decried being unable to afford using basic appliances such as dishwashers and sprinklers, hand washing dishes and using rainwater collected in barrels to water her garden instead. “Every little bit helps when the cost is so high.” “Progressive government means fair and transparent taxes,” said Lancman, “and as the Mayor acknowledges, our water rate system has been neither for too long. He has all the authority he needs to change that, and I urge him to do so this year.”