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Water rates to rise.

The city's Water Board is expected to approve an approximately 4 percent rate increase in water rates that would be effective for usage after July 1st. But along with the rate rise, the Board is proposing technical changes to the metering transition and other programs, some of which the real estate industry opposes.

"We are very concerned," said Debbie Ginsberg, president of Refund Consultants, who reviews water bills for property owners, of some of the proposals.

Jack Freund, executive vice president of the Rent Stabilization Association (RSA), said while this year's rate increase is projected at just under 4 percent, and is more moderate than initially proposed, it is still four times the rate of inflation in the city.

"The out-year increases are projected at 6 percent for each year," noted Freund. "So we see very significant rate increases imposed on owners, and projected out infinitely."

One change proposed by the Water Board would reduce the amount of time for challenging the veracity of a water bill to only 18 months, and would require customers to complain to either the borough office or customer service call center before appealing to the Bureau of Customer and Conservation Services (BCCS) Deputy Commissioner.

"Are the time-lines realistic and can they process it within what they are suggesting," wondered Marilyn Davenport, senior vice president of government affairs with the Real Estate Board of New York (REBNY), who, along with the others interviewed, intend to make numerous comments at the public hearings.

Ginsberg said, "If they can bill you back two years for residential and six years for commercial, and say on the flip side, 'You only have 18 months for us to correct the record,' that just isn't fair."

She feels most of the water billing errors still stem from the computer billing switch-over that occurred in 1995, when water was taken out of the development of the Finance Fairtax system and officials created their own water billing system.

"There are still unresolved errors and this plan would preclude the owner from going over the entire record," Ginsberg said.

She has found errors where the Department of Environmental Protection (DEP) has wrongly billed an "actual" meter reading, Ginsberg noted, but would have remained as fact if she hadn't been examining years of records.

A Water Board official explained there are customers still challenging bills issued in 1992 and 1993, and this would compel them to review the bills in a timely manner.

On the other hand, the Board is proposing to extend the amount of time that interest charges could be waived.

If an actual bill covers more than a year because there was no earlier reading, the board now waives interest for six months to give owners more time to pay.

The Board is proposing a sliding scale for the interest payments on bills covering more than one year, although the owner would still have one year to pay the charges without interest, an official said. Estimated payments would also be counted towards the bills.

For a one-year bill, there could be a waiver of six months of interest; a two-year bill could get a waiver of nine months of interest; a three-year bill could get 12 months of waived interest; and so forth up to 18 months of waived interest.

The sewer rate is expected to remain at the ongoing 159 percent of the water charges.

Robert Grant, director of Diversified Property Management, whose company manages several city cooperatives that lie on several acres of land, says the concept of paying sewer charges based on what comes out of the pipe just isn't fair to those that water lawns, which absorb water, but then still must pay for the disposal charges.

For one project, a water saving analysis projects a $3,000 to $6,000 savings per month if a separate meter is installed on the irrigation system, and not billed the 159 percent of water usage towards sewer charges.

While such a meter can be legally installed, the city's Department of Environmental Protection (DEP) won't allow it to be billed without adding on the sewer charges.

Grant is working with counsel now to file a class action suit against the city. Since there are thousands of small property owners that water tiny patches of lawn all over the city, and suburban owners that water big ones, the city is expected to vigorously defend against any such litigation.

On the flip side, another Water Board proposal would change legal language so Con Edison can be billed to pay for steam condensate discharges to the sewer system.

Most commercial buildings that use steam for heating and cooling place meters on the cooling tower lines so they do not have to pay sewer charges for evaporation, and it is unclear how the billing of Con Ed for condensation that enters the sewer line will affect these customers, or if Con Ed can pass along such costs.

The city is currently fighting lawsuits filed by upstate counties over the way it tallies the population on which their water billing is based. Generally, the upstate counties say the entire population should be counted for the per capita allowance, but the city says only the residents living in areas that border on the reservoirs should be counted towards the per capita usage allowance. The county rates are heavily surcharged once usage goes over this allowance.

Beginning July 1st, the Water Board is proposing the upstate rate will be increased to approximately $385.13 per million gallons. But the usage "in excess of allowance quantities" will be billed at a rate equal to the in-city meter rate of approximately $1,737.97 per million gallons, a substantial difference.

Since various water board discretionary programs have differing application requirements, the Water Board is proposing that owners must now apply for the programs within 18 months of a bill.

As the programs are "discretionary," the Board is also proposing to make buildings ineligible where there is a violation of the Certificate of Occupancy.

The reasoning behind that scheme is to give the water inspectors the ability to refuse the building if the C of O, for instance, is actually for a three-family home and the owner is applying for the discretionary program that caps bills at $500 per unit because the interior has been illegally cut up into numerous apartments and the hills are much higher.

The Board has not taken into consideration, however, Loft Law apartment buildings where obtaining a C of O can be a multi-decade process, or rehabilitation situations where an owner does not have a proper C of O.

For the initial meter bill cap, the board is proposing to delete the requirement that the flat-rate conversion credit be considered when determining the eligibility.

To encourage conservation, the leak forgiveness benefit is proposed to be reduced to half the bill, instead of the current 150 percent of the prior year's average daily consumption.

To the relief of many owners. the Water Board will once again extend the flat rate billing transition program to June 30, 2000, and expand eligibility to those buildings with six or more units with no variances needed.

The proposals still do not address the problem with owners of high density buildings that have "fallen through the cracks" and ended up on metered billing when the frontage would be more equitable, and are therefore paying much higher rates than they should, asserted Freund of the RSA.

An Innocent Owner Provision proposed this year would incorporate DEP policy into the Water Board rules, and also provide relief to owners where unbilled charges are discovered after the property is transferred and were not posted to the account at the time of the title search, provided a final reading is requested.

These readings cost $50 and should be requested at least two weeks prior to closing, officials say.

The RSA is concerned this year's changes still do not address the underlying problem: There could be six identical buildings in a row and they all could be paying under different billing schemes.

"That's the basic issue that needs to be addressed, and this year's proposals make only minor changes to the system that affect essentially similar circumstances," said Freund.

In what is apparently a major breakthrough for the Water Board mindset, officials say they are finally realizing that metered billing "just doesn't work for many New York City apartment houses."

"It's become apparent there is a role for flat rate billing in New York City," said a Water Board official, who requested anonymity. Their concern is that if metered billing is imposed on all, a number of accounts now paying $350 to $400 per unit would see bills rise right up to the $500 a unit current transition program cap. "We expect to have a cap for the permanent program, but it will be lower than $500," he predicted.

The board has been privately given a menu of proposals for special situations that affect affordable housing, and is reviewing those, but are not expected to evaluate them in detail until after July.

Owners' groups believe there will be discussions with the industry before any new items are actually adopted.

"The good news is they are aware of this issue; the bad news is that this is the third or fourth year they have said they will come to grips with it," recalled Margulies of CHIP. "We're very appreciative that they understand the problem, and have extended the transition periods until they come to grips with this, but it might have been better for everyone's peace of mind if they had done it soon. But, of course, they know more now, and could come up with a better answer than they would have earlier."

Since the beginning of the universal water metering thrust, housing advocates have argued the program is not appropriate for the dense population of New York's multifamily housing, where direct costs are not shared with tenants, who therefore have no incentive to save water.

"We welcome any proposal that would address the issues and protect owners from their tenants unabated water use," said Freund. "Unfortunately, until we get to the real proposal that addresses that issue, we will continue to get the policy changes like those proposed this year, which keep [adding to the] makeshift patch-work of programs, caps and transitions that are a result of a metering program that wasn't thought-out to begin with."

Since there are expected to be issues such as "hypertechnical violations" of the C of O that would disqualify buildings from the transition program, or other problems with some of the proposals, the Board invites owners and representatives to appear at the hearings to explain such situations.

The changes will be discussed at public meetings in each borough at various places and times starting April 22nd in Queens. The meetings will continue on April 23rd in The Bronx; April 26 in Staten Island and Brooklyn; and finish in Manhattan on April 27th. Contact Kevin Kunkle at (718) 595-3601 if you wish to testify or submit written statements.

"Life used to be simple when you had frontage (billing)," sighed Freund. "It was one bill, once a year."
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Author:Weiss, Lois
Publication:Real Estate Weekly
Date:Apr 21, 1999
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