The Greenburgh Town Board will be holding a public hearing tomorrow evening (Tuesday) at 7:30 PM at Town Hall on the proposal to increase water rates. I asked the commissioner of public works, Victor Carosi, to prepare a memo detailing the reasons. The district is not supported by taxpayer dollars—is self sufficient (meaning that water ratepayers pay for the water they use). In recent years NYC increased rates and we made a mistake (in my opinion) by not passing along the rate increases to the consumers as our rates were going up. We are catching up. In the future we will pass along rate hikes when our rates go up so there will be less dramatic increases.
I am also asking the Citizens Budget Commission to review our past practices and to consider a proposal to create a Citizens Water District Advisory Commission to help review water district policies and infrastructure plans.
GREENBURGH CONSOLIDATED WATER DISTRICT
PROPOSED WATER RATES FOR 2012
DID YOU KNOW THAT SOME RESIDENTS OF GREENBURGH ARE PAYING $2.93 PER THOUSAND MORE THAN OTHER GREENBURGH RESIDENTS FOR WATER? IF THE PROPOSED RATE HIKE GOES INTO EFFECT THEIR RATES WILL STILL BE $2.20 LESS THAN THE UNITED WATER RATE.
Most residents are provided water from Greenburgh water (a town managed water department). In the southern section of town, some residents must purchase their water from United Water. Residents of Greenburgh who are in the United Water district pay $7.03 per thousand gallons for water with additional surcharges for high usage. The residents of unincorporated Greenburgh who purchase their water from Greenburgh water currently pay $4.10 for the same quantity of water. Unfortunately, due to a variety of reasons (see below) rates have to be increased. If the rate hike goes into effect you will still be paying $2.20 less than residents who get their water from United Water.
The Town of Greenburgh Consolidated Water District serves a population of approximately 45,500 people within the unincorporated Town of Greenburgh, and a small portion of the Village of Irvington, as well as some customers in Mt. Pleasant, Yonkers and White Plains. The District delivers approximately 7.9 million gallons of water per day, through our distribution network of nearly 130 miles of pipes. In 2010, over 2.4 billion gallons of water were treated and distributed. The District purchases all of its water from the City of New York, Department of Environmental Protection – Bureau of Water Supply. Currently, the District purchases water from NYC at the rate of $1,213.84 per million gallons, and at a rate of $4,237.97 per million gallons when the allowance quantity authorized per §24-360 of the Administrative Code of the City of New York is exceeded. The cost to the District to purchase water from New York City, treat the water and deliver the water through the distribution system is currently exceeding the annual revenue the District receives from the sale of this water to our customers. In 2011, total expenses to operate the District are expected to exceed revenue by $1,538,344 reducing the District fund balance to $5,484,621 according to current budget forecasts and estimates.
The District must increase the rates charged for water to provide satisfactory revenue to meet current expenses, to repay past deficit obligations, and to satisfactorily plan for necessary and important system improvements into the future. Projects under consideration include a modern automated meter reading system that will combine smart meter technology to transmit the meter reading to a centralized collection system, upgrades to the main pump station to improve motor and pump efficiency, and major repairs to all six water storage tanks.
Currently, the District charges our customers for water consumption through a combination of three rate blocks or consumption categories with an increasing rate as consumption increases. This rate structure is established to encourage conservation and to recover the rate surcharge imposed by NYC whenever the District consumption exceeds the allowance quantity. Water is billed either quarterly or monthly depending upon the average consumption. Customers with high average consumption are billed monthly. High consumption is considered usage greater than 3,333 gallons monthly. The base rate is $4.10 for each 1,000 gallons used up to 10,999 gallons within a three month period. This rate escalates to $4.47 for consumption up to 50,999
gallons to a top rate of $4.65 for consumption in excess of 51,000 gallons in the three month billing period.
To meet current costs and address the increasing maintenance needs of the system, rates must increase. It is proposed to increase water rates for 2012 as follows:
In District Rate
Price Usage in Gallons
$4.83 up to 10,999 for quarterly customers or 3,333 monthly
$6.05 from 11,000 to 50,999/ quarterly or 3,334 to 16,999/monthly
$7.20 greater than 51,000/ quarter or greater than 17,000/month
Price Usage in Gallons
$9.66 per 1,000 gal all usage, all customers out of district
The average quarterly customer using about 17 units will see their bill increase from $71.92 to $89.43, a 24% increase. For a larger customer with consumption of 60 units, the quarterly bill will increase about 35%, from $265.75 to $359.93.
It is projected that the proposed rates will provide sufficient revenue to meet projected costs and begin to repay the debt obligations, based upon conservative consumption demands. The 2012 District Budget includes and $18,000 interest payment on the outstanding debt. Any possible operating profits at the conclusion of the year could be credited to pay down debt obligations. Future District budgets can be prepared to include a specific debt repayment figure. Debt repayment is a concern. To understand how future debt repayment obligation could be structured into the water rates, a calculation was made to show what proportional additional increase to the rates could generate in excess revenue. Using the same budget projections and consumption figures used to create the current rate structure, the calculations show each additional 1% increase in rates could generate an additional $130,000 in revenue. Doing so would further increase the average bills previously referenced to $90.33 and $363.53 respectively.
Reinvestment to the infrastructure is important to maintain a sound water system and control future costs. The proposed rates will provide funding of $1 million for Capital projects. Currently, projects under consideration include a water meter upgrade program estimated at $4.25 million dollars and a long-term capital program to rehabilitate all six water tanks, with costs currently estimated of approximately $2 million dollars per year over the next 10 years, and continued long-term maintenance and upkeep costs of $400,000 annually. Using the current budget assumptions, 9% of each rate block reflects approximately $1 million. To fully fund the near term capital projects, rates would increase an additional 18%, providing approximately $3 million dollars in capital revenue in total each year.
Future costs are almost certain to increase. Prudent management must examine fixed and controllable costs. Modernization to the mechanical systems within the pump stations may enable reduction to future electrical operating costs perhaps as much as $100,000 annually and reduce unscheduled high cost maintenance repairs. Other operating costs, such as personnel must also be examined. An option with new meter technology could enable meters to be read automatically, drastically streamlining the meter reading process. Employing this new technology could conceivable lessen personnel costs by over $350,000 annually alone. Fully automating the billing process, including using automated payment or on-line electronic payment transfers could both provide ease to district customers while further reduce costs involved with bill payment processing.
Water is becoming a costly commodity. The NYC Board of Water Supply expects to continue upward action on the rates to force conservation and meet long-term capital needs. It is conceivable that rates charged to the District could be as high as $5,000 per MG in 2018, as they are projected up 18% in 2013. The District must continue aggressive proactive action to our rates and act on cost control measures to temper costs not within our direct control. Looking toward 2013, rates to the District customers are projected up 10% to meet future projected costs. While such rate increases are difficult for any property owner, reinvestment into infrastructure must occur and rates must also meet increases imposed by NYC.