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On Sunday, we received this press release from New York City Comptroller Bill Thompson 's office:




-Thompson Calls Water Board Failure to Complete Comprehensive Rate Study "Unacceptable"-

As New Yorkers confront another looming water rate increase, New York City Comptroller William C. Thompson, Jr. today proposed changes to the New York City water system to spare water ratepayers steeper future costs while ensuring the safety of the region's water and sewage systems.

"It's been a year since the Department of Environmental Protection (DEP) commissioner stood before the New York City Water Board and vowed to conduct a million-dollar study to devise a better way to calculate water and sewer charges," Thompson said.

"Even though that commissioner has since left and despite promises to the Board, to my office, to the City Council, and - most importantly - to the public, that review has not been completed in time to inform this year's rate-setting process - and yet the Water Board is about to announce yet another hefty hike. One could only imagine that if it were done in time, and released early enough, we could have devised a way to cut down on these costs. This is unacceptable, and outrageous. Where has that million dollars gone?"

This Friday morning - April 3rd - the Water Board will meet to consider raising rates for local water consumers. Last year, the board approved a 14.5 percent increase and predicted that this next one would be another astounding double digit increase as well.

Standing with New York City Council Member David Weprin - who has advocated changes to spare New Yorkers sizeable water and sewer rate increases - Comptroller Thompson championed solutions that the Board should strongly consider to help New Yorkers who are already faced with rising subway and bus fares, utility bills, and grocery prices.

"New Yorkers are facing tough times," Weprin said. "They are losing their jobs and their homes; they are paying more for less across the board - enough is enough. It is time for the DEP to be accountable to the residents of New York City. We must make changes to our water system, at the same time ensuring the safety of our drinking water, but not on the backs of struggling working families. I will oppose any attempt to increase water rates, especially a year after a double-digit increase and water lien sales authority, in order to protect our City's working families who are struggling."

The Water Board leases the water and sewer infrastructure from the City. The Board's rental payments to the City are based on a formula that, until recently, simply reimbursed the City for water-related debt service on bonds issued before the Water Authority was created.  Since 2005, however, the formula has led to rental payments in excess of the underlying city expense. 

Thompson charged that this formula is forcing water ratepayers to subsidize the City's General Fund, because "excess rent" flows into that fund and is used as general revenue. In Fiscal Year 2009, such "excess rent" will total nearly $123 million, and this is predicted to swell to more than $207 million by Fiscal Year 2012.

Over the last two years, Thompson proposed rebating the excess rent back to the Water Board to offset the cost of running the water system. In Thompson's plan, the excess rent would have been split equally for two purposes: ½ for pay-as-you-go capital spending, which reduces costs over the long term, and ½ for other water system expenses, which would lessen the need for rate increases.

"In light of the turmoil in the financial markets over the past year and its impact on our City's budget, rebating all excess rent now would create a gap," Thompson said. "Instead, I propose that the City cap rental payments at Fiscal Year 2009 levels. In the short term, such a cap would stop the growth of 'excess rent' to the City. As we move out of the current economic downturn, we should consider reducing rent payments further."

Additionally, Thompson identified another source of revenue for our water system that might prevent water rate increases: federal stimulus money. Under the terms of the stimulus bill, the New York State Revolving Fund will receive approximately $432 million for clean water projects and $82 million for drinking water projects. However, only half of that money currently is slated to be distributed in the form of direct grants or similar deep subsidies.

In a letter just sent to Governor David Paterson - which you can read at www.comptroller.nyc.gov -, Thompson asked that the State support direct grant allocation of all of this stimulus money in the face of overwhelming needs of the water systems operating throughout the State, and the New York City Municipal Water Finance Authority in particular.

"A direct grant program to the Authority would have an immediate and lasting impact on New York City's rate base," Thompson said. "For every $100 million that is granted rather than loaned, debt service costs of more than $5 million per year will be put back in ratepayers' pockets. This program also will fund capital repairs that translate into new work and new jobs, not only in the City, but throughout the watershed region."

Thompson further stressed that another means of bringing savings to ratepayers would be to require that the DEP reduce its operating budget by five percent. Because it relies on water and sewer rates instead of tax revenue, the DEP has been exempted from making the same belt-tightening reductions that have been required at other city agencies.

Thompson further proposed that the State must more strongly regulate and enforce proposed gas drilling in the Marcellus Shale formation, a portion of which sits below the City drinking water supply west of the Hudson River.

"Drilling in or near the watershed potentially threatens to contaminate New York City drinking water and necessitate the construction of a water filtration plant whose cost could well exceed $10 billion for construction alone, further increasing water rates," Thompson said.

The proposed method of gas extra extraction, known as hydraulic fracturing, involves large quantities of highly toxic chemicals and waste water. The State's Environmental Impact review process must ensure that no permits are issued where there could be contamination of our drinking water, and that any issued for drilling be coupled with sufficient regulatory controls to protect against the risks of these chemicals and waste water produced as a result of the drilling.

Last December, Thompson submitted recommendations to the State as part of its environmental impact scoping process.

"I will continue to closely monitor and participate in the review process to protect our watershed and ratepayers," Thompson said. "In protecting our drinking water, we protect our ratepayers precisely at a time when they are feeling the squeeze of the current downturn. Our water system cannot continue with business-as-usual in the face of tremendous economic and environmental threats."