Dominick Calsolaro

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Cost of necessity going to rise

Albany raising rates for water supplied to state government, city residents

Published on 12/22/2006 by the Times Union written by BRIAN NEARING, Staff writer, Times Union

ALBANY -- Hey, state workers, you might want to stay away from the water cooler. The price of water is going up. Way up.

The city plans to increase what it charges state government for water by 50 percent next year -- a $1 million annual jump -- and also charge millions more to homeowners and large businesses.

Compared to what the state is facing, homeowners are getting off relatively easy with a 9.5 percent rate boost. Businesses that use a lot of water, like Albany Medical Center, will see rates jump 25 percent.

On Thursday, the city Water Board, which is looking for the fourth rate hike in the last six years, accepted a recommendation from an outside consultant for the 2007 changes. The increases, which also apply to Bethlehem and Guilderland's water purchases from Albany, will add about $4 million to the board's coffers.

Board Chairman Anthony Ferrara said the increases were necessary "to fund the costs to maintain, improve and protect our aging water and sewer system."

A public hearing on the proposed increase will be 7 p.m. Jan. 23 in the Common Council Chambers in City Hall. The new rates are scheduled to take effect Feb. 1.

Last year, residential rates jumped 14.5 percent. In 2003, they rose 9.5 percent, and in 2002 14.6 percent.

Next year, homeowners will likely pay $2.87 per 1,000 gallons of water, up from $2.62. That means an increase of about $46 to $516 annually for water and sewer, which are charged together.

The five-member board, appointed by Mayor Jerry Jennings, voted unanimously after a single question by member John Prenderville to accept the increases recommended by consultant William Kahn.

State offices already pay about $2 million a year for water. "This is the first we are hearing of it," said General Services Department spokeswoman Christine Burling. "We will wait until we receive notice and then review it."

Common Council member Dominick Calsolaro, who attended the Water Board meeting in City Hall, said continual rate increases were "a sign to me that something is wrong with the management ... they are bringing in $25 million a year and they can't make ends meet. I don't know where the money is going."

Both he and city Comptroller Tom Nitido questioned why the board didn't consider ways to reduce expenses before embracing another rate hike.

After the board accepted the recommendation, Water Commissioner Robert Cross said he could trim $700,000 in expenses by leaving security positions vacant when workers leave, although the 2007 budget is already in place.

Kahn said even more increases are needed for the Water Department to repay about $5 million that it owes the city and another $70.3 million borrowed in 2003.

That money was used for capital projects, including the water department's $7 million lease of Six Mile Waterworks from the city, as well as to repay the city $6.2 million for expenses it had paid for the Water Department.

At that time, Calsolaro warned the transaction was part of a strategy to obscure city financial problems by shifting tax increases from property tax bills to water bills. The city used that money to help balance its annual budgets and avoid a property tax rate increase.

Debt service on the 2003 bond is due to rise sharply later this decade. This year, the Water Department is expected to repay about $4.8 million in debt. That jumps to nearly $7 million in 2009 and stays near that level through 2016.

In September 2005, state Comptroller Alan Hevesi blasted the water system as "very poorly run" for turning a $1.8 million surplus in 1999 into a $10.7 million deficit by June 2004.

The system serves 29,000 homes and businesses.

Brian Nearing can be reached at 454-5094 or by e-mail at bnearing@timesunion.com.


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