July 6, 2018

10M Water Credit Yields Benefits for Bronx Affordable Housing

by UNHP

Dozens of Bronx buildings that had applied for the $10 million Multifamily Water Assistance Program started to receive their $250/unit rebate at the end of May. This great news is the culmination of UNHP’s work for over 30 years to highlight the need for water and sewer rate reform. The credit will help keep rents affordable and support building upgrades and improvements in these selected Bronx buildings. At their June 2018 meeting, the NYC Water Board budgeted for the continuation of the program in 2019.

It is our understanding that there were more applicants for the program than were able to receive the credit. To qualify for the credit in 2018, the multifamily housing needed to be under an executed affordability regulatory agreement containing a minimum of at least fifteen remaining years with NYC Department of Housing Preservation and Development (HPD) or NYC Housing Development Corporation (HDC). The building’s rents should be affordable to those earning no more than 60% of the area median income (AMI) for NYC – which currently is $54,360 for a family of four. UNHP proposed doubling the funding for the program in 2019 and broadening the criteria to ensure that the affordable housing that needs the credit will qualify. HPD and DEP are reviewing the qualifications for the program in 2019.

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These four affordable multifamily properties are managed by Dougert Management and were selected under the new DEP/HPD Multifamily Water Assistance Program. The credits received were channeled right back into the properties through cost-saving improvements including LED lighting in public areas, and roof insulation.

The awarding of credits and its impact on Bronx affordable housing buildings is already being felt. A quick survey of three Bronx affordable housing providers revealed that they are moving forward with improvements to their buildings that will help reduce long-term costs; using the savings to leverage the Multifamily Energy Efficiency Program with Con Edison, installing LED lighting and insulation or providing the private match for programs such as NYS weatherization. The credit frees up operating funds that were going to pay water and sewer costs and the improvements provide benefits to the low-income tenants that live in the buildings. Preserving the affordability of existing affordable housing in NYC is crucial.

UNHP has been a long-time advocate for water and sewer rate reform –We issued a report and held a Water and Sewer Rate Reform Summit in 2008, studied the impact of escalating water and sewer rates and held a Cost of Water Forum in 2015 and updated that report to call for a discounted water and sewer rate for affordable housing in 2017. UNHP and a group of Bronx affordable housing owners and managers have been a consistent presence at Water Board meetings to testify against ongoing increases and share how the costs disproportionately affect affordable housing and Bronx multifamily properties in particular. Below is an excerpt of UNHP’s comments at the May 29th, 2018 Water Board hearing in support of the discounted water rate program for affordable housing and against the proposed increase.

“I am here tonight to enthusiastically support the [Multifamily Water Assistance] program and to urge you to consider the expansion of the program and to ask the Board to consider doubling the amount of money available for the credit to $20 million. We understand that the applications for eligible units substantially exceeded the amount of funds available for the program. Changing the prioritization criteria would still mean that buildings that need help would not be able to enter the program.

I am also here to oppose the 2.36% rate increase. While I understand the increase is comparatively low and that there was not an increase in the past year, I also know that you understand that the economic pressure on both 1-4 family owners and multi-family building owners with whom we work has continued to grow. The Rent Guidelines Board Income and Expense data I mentioned earlier has data through 2016. In pre-1947 buildings in the Bronx, the cost of water in the Bronx continued to rise slightly in 2016 and according to this report, water represented 11.5% of the buildings’ expenses. The Bronx continues to be the borough with the lowest incomes and any increase has a disproportionate effect in the Bronx when compared to the rest of the city.”
- UNHP remarks delivered by Jim Buckley, 2018 Water Board Hearing Testimony

A Tale of Two Buildings: The Bronx building pays 10% of the average annual per apartment rent towards water, while the Manhattan building pays 2% of the average annual per apartment rent towards water. Both buildings need the same infrastructure to have water and sewer service. The contrast is clear and illustrates the inequity of current water rate charges.
A Tale of Two Buildings: The Bronx building pays 10% of the average annual per apartment rent towards water, while the Manhattan building pays 2% of the average annual per apartment rent towards water. Both buildings need the same infrastructure to have water and sewer service. The contrast is clear and illustrates the inequity of current water rate charges.

Looking at a sample of community controlled affordable housing buildings in the West Bronx, the percentage of the annual buildings’ expense budget paid for water and sewer charges was 13.02%. At the same time, according to Rent Guidelines Board data, multifamily buildings in the Bronx and Core Manhattan were paying 10.9% and 4.6% of their expense budgets for water.
Looking at a sample of community-controlled affordable housing buildings in the West Bronx (2007-2013), the percentage of the annual buildings’ expense budget paid for water and sewer charges was 13.02%. At the same time, according to Rent Guidelines Board data, multifamily buildings in the Bronx and Core Manhattan were paying 10.9% and 4.6% of their expense budgets for water. The community-controlled affordable housing properties that were selected for the Multifamily Water assistance program will see a significant reduction in the percentage of the operating costs towards water. UNHP looks forward to updating our research in 2019 to study the impact.

The cost of water continues to be a substantial portion of the operating costs for buildings currently providing affordable housing in New York City. Income and expense data for multi-family buildings from the New York City Rent Guidelines Board and a set of community-controlled, affordable housing properties in the Bronx show the disproportionate impact of the cost of water in affordable housing buildings. The Multi-family Water Assistance Program represents a welcome and important first step in addressing the issue in apartment buildings providing affordable housing. Thank you to Citi Community Development for their support for our work to address water and sewer rate reform. UNHP looks forward to updating our research in 2019 to study the impact.

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