As a response to a comment by a loyal reader on a previous post, I would like to briefly explain what’s known as “the lease agreement.” This will hopefully help readers understand why it is such a hot-button issue (Jim Tripp resigned over it) and even why the DEP and Water Board charge so much for water.
The reservoirs that serve New York City belong to the city. The city has authorized the DEP and various other bodies (the Water Board, the Municipal Water Authority) to distribute water throughout the city, collect payments for the water used, perform capital improvements on the infrastructure and, most importantly, to borrow money to pay for the capital improvements (what each body does in this scheme is not that important and is, frankly, pretty complicated). In order to do all of this, the DEP (for simplicity’s sake, from now on when I refer to the DEP, I mean the DEP and the other bodies that deal with water) needs to use the reservoirs. The city has allowed the DEP to use the reservoirs, but for a price.
This is where it gets complicated. Instead of charging the DEP a fixed amount to lease the reservoirs, the city charges the DEP a percentage of the amount of money that they (the DEP) borrow for capital improvements.
The outcome of all this is that as time goes on and the DEP needs to sink (no pun intended) more and more money into capital improvements just to maintain a decent quality (and quantity) of service, the amount of money that they are paying to the city for using the reservoirs goes up and up. Therefore, our water rates go up to help pay for the increasing capital improvement and they go up some more to pay for the increasing price of the reservoirs’ lease.
The further injustice of all this is that the city then takes this money and uses it for whatever they want. They get the money from the DEP which gets it from those of us that use water in the city. They get the money from us and the DEP specifically for the water infrastructure. And then they turn around and use it for whatever else they want.
At this point it is just another way for Bloomberg to get money without raising taxes. It seems like a good deal: the city gets money and since our taxes don’t go up, we think we’re not paying for it. But anyone who has seen their new water bills knows that we definitely are paying for it – to the tune of $5.98 per hundred cubic feet of water.