What the NYC water rate increase means for condos and co-ops

As a condo or co-op board member in New York City, staying informed about changes in utility costs is crucial for effective building management. The recent water rate increase, coupled with rising electricity costs, presents new challenges for buildings across the city. This article aims to provide you with essential information about these changes and offer strategies to navigate their impact on your building's finances and operations.

Recent water rate increase

Effective July 1, 2024, the New York City Water Board has approved an 8.5% increase in water rates. This significant hike is the highest in 14 years. To understand the impact, it's important to know the current and new rates:

Current rates (Fiscal Year 2024):

- Combined water and sewer rate: $10.79 per 100 cubic feet (CCF) or 748 gallons

New rates (Fiscal Year 2025, effective July 1, 2024):

- Combined water and sewer rate: $11.71 per 100 cubic feet (CCF) or 748 gallons

This 8.5% increase means:

- For an average single-family home in New York City, this will result in an increase of about $93 per year, bringing the average annual water bill to approximately $1,181.
- For condo and co-op buildings, the impact will be much larger, as water usage is multiplied by the number of units in the building.
- The exact increase for a condo or co-op building will depend on its size, number of units, and overall water usage.

Sometimes, condo and co-op buildings receive a single water bill for the entire property. This cost is then typically incorporated into the common charges or maintenance fees paid by individual unit owners.

The primary driver behind this increase is the city's decision to charge the Water Board over $1.4 billion in rent over four years to lease the city's water and sewer systems. 

Broader context: Rising utility costs

The water rate increase is not occurring in isolation. New York City is experiencing a general trend of rising utility costs:

- Electricity: Con Edison implemented a 4.2% rate increase in January 2024 and has announced an additional 1.4% increase for January 2025.
- Gas: After rates were increased in 2023 they’ve continued to increase - with a 6.7% increase in 2024, and another 6.6% increase coming in 2025.

These rising costs contribute to the overall increase in the cost of living in New York City, which climbed by 3.9% in May 2024, surpassing the national average of 3.3%.

Implications for condos and co-ops

The water rate increase will have several immediate and long-term impacts on condo and co-op buildings:

1. Increased operating costs: Buildings will see a significant rise in their water bills, with the rate jumping from $10.79 to $11.71 per 100 cubic feet of water used.

2. Potential fee adjustments: To offset these increased costs, boards may need to consider adjusting common charges or maintenance fees.

3. Budget reallocation: Funds typically allocated for capital improvements or other projects may need to be redirected to cover higher utility costs.

4. Increased focus on water conservation: The higher rates make water-saving measures more financially beneficial.

Budgeting and financial planning for 2025

We’ve already taken these increases into account for Daisy building budgets. For non-Daisy board members, it's crucial to start planning now for the financial implications of these rate increases:

1. Confirm H2 of 2024 accounts for the 8.5% increase in water costs and the upcoming electricity rate hike.

2. Calculate the impact based on your building's typical water usage, using the new rate of $11.71 per 100 cubic feet.

3. Consider creating a dedicated utility reserve fund to buffer against future increases.

4. Explore cost-saving measures in other areas to offset the rise in utility expenses.

5. Review your building's water usage patterns to identify potential areas for conservation and savings.

Water conservation strategies

Implementing water conservation measures can help mitigate the impact of the rate increase:

Building-wide measures:

- Upgrade to water-efficient fixtures and appliances in common areas.
- Implement smart irrigation systems for landscaping to reduce outdoor water use.
- Instead of regular maintenance checks to promptly repair leaks and faulty equipment - just install a water monitoring system to alert you if there’s a leak before it gets bad.
- Consider installing water recycling systems for appropriate uses, such as garden irrigation.

Encouraging conservation in individual units:

- Owners can also use water monitoring tools to catch leaks in their own units
- Launch education campaigns to inform residents about the importance of water conservation and the new rates.
- Implement incentive programs to reward reduced water usage.
- Provide residents with practical tips for daily water conservation, such as fixing leaky faucets and taking shorter showers.
- Make sure that your management company is properly billing back commercial unit water usage 

Check out our other article on combating rising energy costs here.

Capital improvements and maintenance

Proper maintenance of water systems is crucial for preventing waste and ensuring efficiency:

- Schedule regular inspections of the building's plumbing system to identify and address potential leaks or inefficiencies.
- When planning renovations or upgrades, prioritize water-saving technologies and fixtures.
- Consider implementing a water sub-metering system to encourage individual unit conservation and fair cost allocation.

Communication with owners and residents

Transparent and effective communication with residents is key:

- Clearly explain the water rate increase from $10.79 to $11.71 per 100 cubic feet and its impact on the building's finances.
- Share your building's water conservation plan and the rationale behind any necessary fee adjustments.
- Encourage resident participation in water-saving efforts by highlighting the collective benefits of conservation.
- Use the concrete rate information to illustrate the potential savings from conservation efforts.

Conclusion

The recent water rate increase, combined with rising electricity costs, presents significant challenges for NYC condo and co-op boards. However, with proactive planning, effective conservation measures, and clear communication, buildings can navigate these changes successfully. As board members, your leadership in implementing these strategies will be crucial in maintaining your building's financial health and fostering a culture of responsible resource use among residents.

The actions you take now will not only help manage the immediate impact of these increases but also position your building for long-term sustainability in the face of future utility cost challenges. If you need help building a plan to make your building more efficient or financially health, Daisy can help. When we onboard we build a health plan to get your building on track. Learn more here.

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