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Council of New York Cooperatives & Condominiums
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Financial Issues

Published: Summer 1999

WATER BOARD INCREASES RATES
AND ADOPTS OTHER CHANGES

The New York City Water Board has enacted an increase of 4% in water rates for all metered and unmetered city customers effective July 1, 1999. Sewer charge increase also as they are assessed at 159% of the water charge.

As has been extensively reported in CNYC's Newsletter, the Universal Water Metering Program was instituted in 1987 to install water meters in every building in New York City with the goal of water conservation. Once a meter was installed, multiple dwellings were allowed a transitional year on the ‘frontage charge’ to detect and correct leaks, and then, in theory, the building was to be billed on water use as reflected in the meter reading. However, ever since 1991, although the meter installation has proceeded, the Water Board has annually extended the transition program, enabling buildings to continue on the flat-rate frontage billing if they so chose. The Water Board has renewed this transition option for another year.

The Water Board also modified its complaint procedure, effective with this billing period. In the past, customers had six years to file complaints on billings; this standard continues to apply to bills issued prior to July 1, 1999. However, for bills issued after July 1, 1999, customers must file complaints within two years of the date of the bill.

The Water Board preserved the Leak Forgiveness Program, but changed eligibility from once in 18 months to once in two years. This program enables a customer to request that the bill for the occurrence of a leak be cut in half, subject to a minimum 150% of the prior average daily consumption.

SAVINGS ONLY MINIMAL IN YEAR TWO
OF ELECTRICITY DEREGULATION

As the second year of electric deregulation unfolds in New York State, little saving is evident in the rates charged by independent Energy Service Companies (ESCOs). The savings on sales tax which is an incidental benefit of the “unbundling” of energy purchase from transmission of that energy (a service which Con Edison retains) will evaporate once the State budget for fiscal 2000 is implemented. Until the ‘stranded costs’ of maintaining infrastructure are phased out of the rates which the utilities are permitted to charge for transmission, electricity deregulation itself will not produce great savings. Rather it is through conservation that energy dollars will be saved. To this end, many ESCOs are offering a variety of conservation audits and services which will help buildings effectuate more significant energy savings.

It is anticipated that the State legislature will be reviewing the current deregulation program with a view to helping consumers effectuate more substantial savings through deregulation. All electricity is scheduled to be deregulated by the year 2002.

Past issues of this Newsletter have discussed the importance of electrical submetering as a conservation tool. Once individual apartment dwellers see and pay for the actual energy they consume, conservation is fostered. Energy engineer Herb Hirschfeld has a grant from the New York State Energy Research and Development Agency (NYSERDA) to promote submetering in multi-family housing. Mr. Hirschfeld will be conducting two workshops in the autumn, one on October 14th and the second at CNYC’s annual Conference the following month. He will describe submetering and present state-of-the-art devices for recording and analyzing energy use. His grant also includes funding to provide submetering feasibility studies for a number of buildings.

Mastermetering coupled with submetering positions a building to participate most effectively in deregulation.

SENATOR TORICELLI
TO BRING REVERSE MORTGAGES
TO HOUSING CO-OPS

CNYC added reverse mortgages to its list of legislative priorities this year. This excellent financial resource is not currently available to housing cooperatives, because they are specifically excluded in the federal enabling legislation. Senator Toricelli of New Jersey has taken the initiative of eliminating this restriction. He is working closely with the National Association of Housing Cooperative to secure widespread support for passage. A reverse mortgage is a commitment from a lender to pay a fixed monthly sum to a homeowner, collateralized by the value of the home. At the term of the mortgage, the homeowner or their heirs owe an amount to the lender equal to the payments received plus an agreed-upon rate of return (interest).

Reverse mortgages enable elderly homeowners to make use of the equity in their homes often permitting them to remain in that home longer than might otherwise have been possible. Other applications could include ensuring income during a special time such as caring for a sick spouse or relative, or taking time off to raise a child.

 
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