How a ‘Hidden’ $1.4 Billion Tax Will Make N.Y.C. Water Bills Rise

Mayor Eric Adams is resurrecting a budget gimmick and charging rent to the city’s Water Board, which will pass on the costs to ratepayers.

It is a problem bedeviling local governments nationwide: How can they pay for city services at a time of limited funds and rising costs?

In New York City, Mayor Eric Adams has found an answer: resurrect a funding mechanism that has been called a hidden tax on New Yorkers.

The city plans to charge its own Water Board more than $1.4 billion in rent over four years to lease its water and sewer systems from the city, according to budget documents reviewed by Rahul Jain, a New York State deputy comptroller.

The city’s Department of Environmental Protection, in turn, is now proposing that the Water Board raise its rates for homeowners and landlords by 8.5 percent this year, according to a proposal reviewed by The New York Times and set to be released Friday by the board.

The proposed rate increase — which, if approved, would be double last year’s rate hike and the highest in 14 years — would only pay for a portion of the rent charges. Some of the rest are likely to come from funds that typically finance capital upgrades to the water and sewer system, potentially leaving the city more vulnerable to critical breakdowns.

The funding gimmick had been used by New York City for decades, but was discarded in 2017 (only to make a temporary, partial reappearance during Covid before it disappeared again). The mayor at the time, Bill de Blasio, said the city was “righting a wrong” — which would suggest that Mr. Adams is now attempting to wrong a right.