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BRAB chief to NYC: stop runaway water costs.

BRAB chief to NYC: Stop runaway water costs

With water tax rates increasing at 15 percent to 19 percent a year during the past five years, and with some owners reporting as much as 900 percent increase in water charges under a still-new metering system, the city should act quickly to control this runaway situation, Ruben Klein, president of the Bronx Realty Advisory Board believes.

The problem of water costs will not go away, Klein observed, and he pointed out that the cost of providing water to city properties will continue to go up -- just as it has in California where water costs already exceed the cost of oil.

"The basic water-cost issue today for owners and the city is how to devise a workable and fair formula that will cover the higher costs of delivering clean water to residents of the five city boroughs and encourage conservation without driving rent-regulated landlords out of business or breaking the city's budget," according to Klein.

"There should be no question," Klein declared, "that the new multi-family water-tax system under which entire buildings are metered is unfair as a funding and conservation measure. It taxes owners instead of the tenants who use the water, and it has the potential for bankrupting many owners of rental apartment properties. The metering system for these buildings still is being implemented in the city and the full impact of it has not been experienced by most owners."

The BRAB officer noted that of the 120,000 multi-family buildings in the city, 7,000 were metered as of July, while 167,000 one- and two-family homes had been metered.

"Metering appears to encourage water conservation in private homes where the owner pays directly for water usage," Klein said. "However," he added, "the metering system being applied to city apartment buildings must prove unworkable as a conservation measure, because it doesn't tax the people who use the water."

Metering puts the entire higher cost of water on owners, and this, he emphasized, will result in increased abandonment of multifamily rental apartment buildings as costs outpace income, especially buildings in the affordable-rental range. Facts supporting both the inevitability of higher water costs and the severe impact these costs are having and will have on owners in New York City were spotlighted during a recent multi-family owners conference held on the campus of Fordham University in the Bronx. It was sponsored by Citibank and Bronx Borough President Fernando Ferrer, and several real estate organizations, including BRAB, Klein said.

He explained that Consultant Peter Judd, a former official at the City Department of Environmental Protection, addressed the conference and had cited the following reasons for the ongoing upward pressure on water costs: *The need to improve the water distribution system -- A third water tunnel is being built to bring water to New York City from upstate to enable two existing tunnels to be repaired, and the city also has to systematically replace its aged water mains. The debt service on these capital expenditures will run in the tens of millions of dollars annually. *Maintaining a quality water supply -- Funds also are required for a filtration plant needed for the Croton water system and for proposed, enhanced watershed protection for the Catskill and Delaware reservoirs to avoid filtration. *Sewate treatment -- Development of a land-based sludge removal system is necessary because of the U.S. ban on deep-sea dumping effective next year. Billing for water use includes a sewer charge which is a percent the water charge; i.e., for fiscal year 1992 it will be 136 percent of the water charge.

Klein pointed out that metering has been introduced as a tax and conservation measure for several reasons. There are the high capital costs of upstate expansion of the city's water system and the opposition of environmentalists to this expansion. In addition, though, higher water taxes and conservation are responses drought emergencies in the first six years of the 1980's, and to a 12% increase in average daily water consumption by city residents in the 1980-'90 decade.

Klein pointed out that average per capita water use in the city is relatively high: 194 gallons a day compared to a U.S. average of 176 gallons and a Canadian average of 114 gallons. In New York City, he continued, multi-family building water use has been averaging over 200 gallons per apartment per day even where retrofitting conservation measures have been taken. One of the key factors influencing apartment water use, Klein said, is the fact that high usage occurs where apartments are occupied by large families, by people who are home all day or when families share an apartment. "Thousands of apartments in the city are illegally occupied by several families," he noted, "and this increases water usage in those buildings. With immigration into the city running at a rate of 100,000 a year, water usage in multi-family buildings almost certainly will continue to mount."
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Title Annotation:Real Estate Investment Section; Bronx Realty Advisory Board President Ruben Klein
Publication:Real Estate Weekly
Article Type:Brief Article
Date:Nov 13, 1991
Previous Article:Impact Management appointed receiver.
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