The Tide Is High

When it comes to new york city water bills, the tide is high – and the tidings aren’t good. On the governmental level, water rates went up 11.5 percent in July, the largest annual increase since 1992. And now, the city is threatening to raise rates another 18 percent in January – a mid-year increase, something so rare it also hasn’t occurred in over a decade. Add the fact that even though the city’s water agency, the Department of Environmental Protection (DEP), readily concedes it has poor billing procedures and records, the DEP is currently arguing for the right to sell non-payment liens to outside buyers – who could then sue building-owners over incorrectly billed amounts.

Board presidents Angela Hirsch (of a 100-unit Queens building) and Jerry Sherwin (of a 115-unit Manhattan property) are concerned enough about these developments to ask their management companies to look into water use in their co-ops and make estimates of what kind of costs they can anticipate.

“We have to stay ahead of the wave,” says Sherwin. “For budgeting reasons, we have to anticipate costs. Our two biggest concerns are fuel and water.” Adds Hirsch: “We’ve heard that water costs will be increasing. We are worried.”

They should be: the city’s Byzantine water bureaucracy is confounding. When boards try to see how much their buildings owe, they find that water bills aren’t online, while trying to get accurate figures has historically been difficult. Companies have sprung up specializing in auditing city water bills, with one of them, MyWaterMeter, saying plainly on its website without fear of slander that the DEP “constantly makes billing errors...We find overlapping bills, estimated bills, and bills for meters that don’t exist.”

(For more on water meters and monitoring, see “Hotline: Drowning in Bills,” Habitat, July/August 2007.)

“The city is saying that collections are off, that an increasing number of people are refusing to pay their bills, and that it’s necessary to give the DEP a water-lien sale capability,” says Councilman James F. Gennaro of Queens, chairman of the Environmental Protection Committee. Currently, the DEP’s main enforcement tool option is to place a lien on a deadbeat’s property – which has no practical effect until that owner wants to sell or refinance, so the DEP has asked the City Council to let it sell scofflaw liens. That means, Gennaro says, “that the person who buys the lien can compel a property owner to pay the water bill, even if the property ends up being foreclosed.”

(Some industry professionals say that the DEP is playing a deeper game. Hershel Weiss, project engineer at Ashokan, a water-waste consulting firm, argues that the DEP is threatening the mid-January increase as a bargaining tool to get permission to sell the liens.)

There’s one problem with the scofflaws argument: what the DEP charges and what a building’s water bill should actually be often don’t exist in the same universe.

“Does the DEP have an accurate enough billing system to allow the council to feel comfortable giving them this increased enforcement capability, which could result in people losing their property, losing their homes?” Gennaro asks. “Obviously, we don’t want water bills to go unpaid. What we’d like is a situation with more inducements [for building owners] to pay their bills, and more enforcement capability – but only when the agency has demonstrated it’s gotten its act together and created an accurate billing system.”

Conversely, existing buildings sometimes don’t receive a water notice for years. That’s not good. “If they haven’t billed you for ten years and suddenly bill you all at once, where did they get the number?” asks attorney Steven Wagner, a partner in Wagner Davis. “If you get an outrageous bill, you should check immediately whether the amount of water reported to have been consumed is anywhere close to typical. You have to challenge it promptly, since once the decision is final, there’s a very limited time to challenge – four months from date of final determination.” And those four months include any time you spend trying to negotiate a realistic figure. “If you’re negotiating,” Wagner cautions, “you have to make sure you’re not using up your time.”

If negotiations aren’t promising, the board can file an “Article 78” lawsuit, which lets you challenge actions by state and local government agencies; the judge reviewing the case has the power to prevent the agency from taking action until the issue is resolved.

Two options on the road map so far are a new dispute-resolution form and an online payment option, both at the DEP website (http://www.nyc.gov/html/dep/html/home/home. shtml). “We’ve revamped our customer service, since there were a number of problems about exactly the kinds of things you’re talking about right now,” says DEP spokesman Michael Saucier. “There are ways to resolve these things, and it all starts with a phone call. The wait time,” he adds, “has been improved dramatically.”

The DEP has also mailed incentive offers to more than 8,000 residential accounts – you may have received one – offering to drop late charges if the account is settled immediately. It also offers to cut off water service in 90 days if it isn’t. The mayor’s office says this won’t happen to residential buildings – it’s an issue of hygiene and public health, with a spokesperson having said “it often hurts innocent tenants and has no effect on those who don’t pay the bill.” But the DEP, regardless, has been busy rattling the pipes.

In a pilot program begun August 7, the agency issued 30-day service-termination notices to 11 residential water and sewer customers who had defaulted on payment agreements. Ten more were added shortly afterward and all 21 paid their bills, says Saucier. Then, on October 17, the DEP went after 39 business owners owning a combined $728,457 – a drop in the bucket compared to the $589 million in outstanding water bills the city says it is owed, but a move the DEP says it made to “refine collections procedures for overdue accounts.” The city went so far as to mark where incisions would be made in the streets near the scofflaws in order to shut off water to those who hadn’t paid by October 29.

A few days before that, the results were “encouraging,” reports Saucier. The city has occasionally cut water service to commercial users, mostly as a high-visibility warning to others.

So, whither water bills? Up and up, most likely. The city estimates that the capital improvements needed to maintain the city’s water supply system will cost $16 billion between 2005 and 2015, and the water board (the seven-member Municipal Water Finance Authority operated by the DEP) is mandated to charge water and sewer rates “sufficient to pay the costs of operating and financing the system.”

Unfortunately, says Gennaro, “the administration diverts scores of millions of dollars every year to the city’s general fund from the water and sewer revenues. In fiscal year 2007, which ended in June, $60 million in water and sewer fees paid to the city by the water board went to the city’s general fund, which is not something we should be doing. The figure will be $76 million this year. Some of the payments go for legitimate water-related stuff, but a growing component does not.”

In other words, be prepared to spend money like water. Just don’t swallow the first billing figure you get.