New York property owners may get hit with an 8.5% increase on their water bills, the biggest hike in nearly 15 years, in large part because of huge fees charged to the city’s water board by the Adams administration.

Public hearings on the rate hike, which would take effect July 1, begin Tuesday and continue into next week, ahead of the New York City Water Board’s vote later in June.

The average residential customer in the city will see their bill rise by $93 annually, according to Department of Environmental Protection (DEP) figures.

Typically, water rates cover the cost of operating the boroughs’ vast water system, from drinking water to sewers. But this year, covering a “rental payment” the Adams administration is imposing is one of the biggest drivers of the hike; some other factors include inflation and capital plan-related debt service. The mayoral administration has the right to request the rental payment as part of leasing its sewer and water system to the Water Board.

The Office of Budget and Management included over $1.3 billion worth of rental payments to be paid by the Water Board to the city between Fiscal Year 2024 and Fiscal Year 2028 in the current proposed budget and forecasts.

The cost of covering the rental payment means some of what customers pay on their water bills will be routed to the city instead of going back into the water system. 

The revived budgeting practice, which former Mayor Bill de Blasio had ended in 2016, has raised concerns among fiscal watchdogs in the City Council.

Councilmember Justin Brannan (D-Brooklyn), who chairs the finance committee, during a Wednesday budget hearing, raised some of those concerns.

“The return of this payment will require the water system to divert funds from its own operations and debt service to pay the city for things completely unrelated to the delivery of clean water,” he said.

“If money were not spent on the rental payment, we could only either spend it by reducing the rate hike or investing in water infrastructure, but that's theoretical,” DEP Commissioner Rohit Aggarwala told THE CITY.

The looming rate hike comes just as DEP calculated what it’d cost to make the areas of the city most vulnerable to flooding from heavy rains more resilient: $30 billion. At current funding levels, that could take three decades.

In that time, New York City may receive as much 14% more rain each year because of climate change, according to estimates by the New York City Panel on Climate Change. By the end of the century, annual rainfall could increase 30% compared to rates today and there could be about 1.5 times as many days with more than an inch of rain.

Leaky Budget

The city charged the Water Board a rental payment just twice since Fiscal Year 2017, when de Blasio said he’d end the practice.

The City Council, which must approve or reject the budget, is “concerned about the administration’s move to extend this beyond a temporary action into future years’ budgets that will only leave water customers with increasingly higher rates,” a spokesperson said.

Jacques Jiha, director of the mayor's Office of Management and Budget, told the council requesting the rental payments is necessary because of the city’s “precarious” financial situation. He framed the years of not collecting the rent payment as a “subsidy.”

“The city cannot afford to subsidize rich landlords when we have a lot of programs that are under fire, under pressure,” Jiha said, “so therefore, at this point in time we cannot afford to give up those rental payments because we need them to basically save many of the critical programs that need to be funded.”

Homeowners and landlords of all income brackets pay for water. The latter may just as well pass on the costs on to their tenants.

“Thanks to effective planning, we are investing billions of dollars in large-scale capital improvements over the next decade to enhance our water and sewage systems and make drainage upgrades, all while making sure that New Yorkers — particularly low-income and senior residents — pay affordable rates,” said City Hall spokesperson Liz Garcia in an email.

Some environmental advocates say the funds raised by water rates should go only to upkeep and improvement of the system and have urged for a permanent end to the rental payment collections.

“The water rates go to serve an important function: it’s providing water, it’s sewer and stormwater control services, it’s mitigating flooding,” said Mike Dulong, an attorney for the environmental group Riverkeeper, which is a member of the Stormwater Infrastructure Matters Coalition. “There's an important role here, and a lot of need in the system just for upkeep, let alone improving conditions.” 

Can’t Stand the Rain

The DEP is working to improve stormwater resiliency in the hopes of lessening the impact of flooding on very rainy days.

The concrete jungle doesn’t absorb much water, and much of the city’s sewer system is on average designed to handle just 1.75 inches of water per hour. In 2023, there were five storms that dumped about that much rain on the city. Hurricane Ida in 2021 poured more than 3 inches per hour on the city. The deluge last September was similar.

The “enormous” price tag of $30 billion to lessen flooding impacts in the most flood-prone parts of the city applies to a “relatively conservative target” for storm resilience, said Aggarwala, the DEP commissioner: about 2.1 inches of rain per hour. That means the efforts DEP is pursuing won’t entirely flood-proof the city.

“It’s a really positive step to understand how much it'll cost,” said Amy Chester, managing director of nonprofit Rebuild By Design, which is spearheading an initiative to enhance the city’s stormwater resilience. “It's incumbent upon all of us to figure out who’s going to pay for it and how.”

The DEP is working to expand nature-based interventions that absorb, retain or convey water to prevent flooding — like rain gardens —as well as construction projects to increase sewer capacity. The agency is also pursuing new projects that can handle massive amounts of water, such as a sunken basketball court project in Jamaica, Queens, and contemplating installing more Bluebelts throughout the boroughs.