Relates to the membership of the New York city water board; repealer

Summary of provisions

Section one of the bill would change the composition of the New York City water board from seven appointees, all by the mayor to four appointees by the mayor, one each by the city comptroller, public advocate and speaker of the New York city council.

Section two makes certain technical amendments.

Section three sets forth the effective date and the process and timing for the new appointments.

Justification

The Water Board leases the City's water and sewer system from the City and is required to set rates and collect revenues sufficient to cover operating and debt service expenses. Board powers and responsibilities are set forth in the statute creating the Board and the NYC Municipal Water Finance Authority ("NYW"); the Lease between the Board and the City; and the Financing Agreement among the Board, the City and NYW.

Under the current statute, the Board consists of seven members appointed to two year terms by the Mayor. The Mayor also appoints the Chairperson from among the members. If not reappointed, a member serves until replaced. Events of the past three years have demonstrated that this sole Mayoral control of the Water Board does not serve the best interests of the public.

In the FY 2008 - FY 2010 rate-setting cycles, three successive double-digit increases in water and sewer rates were imposed. Fundamental questions about the factors contributing to such increases were raised by Water Board members, civic and affordable housing organizations, and elected officials.

These concerns came to a head in the FY 2009 rate-setting process in May 2008. In response, then-DEP Commissioner Emily Lloyd committed to conduct an independent in-depth study of the overall rate structure, and to have the study completed in time to inform the Board's FY 2010 rate setting. The Water Board agreed to pay for this study out of water and sewer fee revenues.

Also in 2008, another issue emerged that drew public and Water Board attention, that of gas drilling in the Marcellus Shale formation that

underlies, in part, the Catskill-Delaware watershed. This drilling incorporates a new technique called hydraulic fracturing that involves toxic chemicals and very high volumes of water. DEP's response to this new threat to the watershed was to commission a study with an indeterminate due date. Several members of the Board expressed concern that DEP was not moving aggressively enough to protect the watershed from the risks of this drilling, which could undercut the Filtration Avoidance Determination and the hundreds of millions of dollars the City has spent to protect the watershed.

Subsequent to these two instances of Board members challenging City actions, three of the Board members who had expressed concerns about City policy resigned from the Board, one of them after having been replaced as Chairman after many years of service. Under the new Board leadership, no effort has been made to hold the DEP to its commitment to complete the rate study, which as a result was not been completed on the promised timetable and was not available in the Water Board's 2010 rate-setting process. The DEP study on gas drilling is also incomplete after almost a year.

These actions and outcomes demonstrate the inadequacy of the Water Board's current membership structure to safeguard the interests of ratepayers and the water system. With full Mayoral control and composition, the Board is merely an instrument of City policy rather than an independent actor. This affects not only the decisions of the Board but the very process by which decisions are reached - there is no independent questioning, monitoring or accountability imposed on the City.

This bill would address the Board's lack of true independence by adding appointees of other City-wide elected officials to the Board. It would not expand the Board, but rather, replace 3 of the 7 Mayoral appointees with appointees of the City Comptroller, City Council Speaker, and Public Advocate. While the Mayor would continue to appoint a majority, these new members would ensure that new and ongoing challenges would be addressed freely and impartially.

Legislative history

2009: Referred to Rules 2010: Referred to Corporations, Authorities & Commissions 2011: Referred to Corporations, Authorities & Commissions 2012: Referred to Corporations, Authorities Commissions

Fiscal implications

None.

Effective date

Immediately, with provisions.