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Board structure and independence at the New York City Water Board

September 12, 2011

The New York City Water Board isn’t a particularly large or newsworthy public authority, but it’s been getting a lot of attention in the legislature lately. Seven different bills relating to the Water Board have been introduced in the state legislature this year, and they illustrate how small changes in public authority governance regulations can affect public authorities’ autonomy and independence.

First, some background: the Water Board’s primary responsibility is to set the fees and rates for water use in New York City, and to collect payments from residents and business owners. These revenues pay for the cost of operating the city’s water and sewerage infrastructure, which includes payments to the city for leasing its land and reservoirs and payments covering the debt service on bonds issued by the Municipal Water Finance Authority for new infrastructure projects. This limits the Water Board’s authority to act independently in setting water rates, giving a large measure of control to the city and the Municipal Water Finance Authority.

The Water Board has struggled to keep annual rate increases down for a long time, and two of the bills introduced this year aim to prevent steep annual increases that have become common over the last few years. One of them, A2672/S4369, would prohibit the water board from increasing rates by more than 5% per year. But without the ability to raise revenues, the bill could cause a lot of trouble for the Water Board as its costs continue to rise. A3302A presents a more suitable approach to the problem—instead of capping the Water Board’s annual rate increase, it would cap the amount of debt that the Municipal Water Finance Authority could take on each year. Less debt would then translate into less pressure to increase water rates and fees.

Four of the other Water Board bills relate to a completely different issue—the composition of the authority’s board. The mayor currently has the authority to fill all seven seats on the Water Board’s board, but two of the proposals would change that: A3725/S1394 would give three to those appointments to the speaker of the city council and one to the city comptroller, and A3342/S1527 would leave the mayor with four appointments and give one each to the city comptroller, the public advocate, and the speaker of the city council. Splitting up the Water Board’s appointments would probably benefit the authority, as it could reduce the pressure on board members to support the mayor’s priorities. (Another pending bill, A1922, would require at least one member of the Buffalo Water Board to be designated by the common council.)

The other two proposals regarding the authority’s board membership focus on qualifications rather than appointments, although they’re also intended to increase the board’s independence. A3310 would prohibit the mayor from appointing city employees to the Water Board, given that they might feel more pressured to make particular decisions due to their employment status. A2479 would similarly prohibit the appointment of city employees, but only to five seats, which would be reserved for private citizens from each of the city’s boroughs.

Finally, A3316 would create a comprehensive complaint review procedure for the water board, which has had significant billing problems in addition to its problems with high rate increases. Under current law, residents who want to dispute their water and sewer bills have no right to an independent review of the decision, but the bill would change that and require a  special  appeals  process before an  administrative  law  judge. While customer service might not seem all that relevant to rate increases, the sponsor’s memo points out that customer service is actually “a matter of deep concern given  the  fact  that  the Municipal  Water Finance Authority identified it as an issue for disclosure to bond purchases.” Accordingly, the bill is intended to “promote agency credibility” in addition to providing meaningful recourse for residents.

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