Warren C. Liebold is the Director of Universal Metering for the New York City Department of Environmental Protection (NYCEP), New York’s water/wastewater utility. His title and organizational association are mentioned for reference only. This blog represents the author’s personal opinions and does not reflect the policy or opinions of the city of New York, its agencies, officers or employees. The author can be contacted at wliebold@earthlink.net

I was sitting next to one of our region’s most innovative developers on the “Water, Water, Everywhere” panel at Building Energy NYC as he described a new project he was developing in nearby Yonkers that would include submetering each apartment’s water use. Water submetering has been discussed as an academic issue for many years in New York, with people asking, “Why don’t we meter apartments?” or “How can we get real water savings until tenants are responsible for their water use?” Appropriately piped small condominiums (“condos”) are individually metered by NYCEP and a few other small condos are privately owner submetered. This new project involves rent-regulated rental housing and therein lies a major difference, regulated rentals versus individually-owned condominums. While it does not involve a development in New York City itself it presents a pilot project that may well carry over into NYC. The long-term impacts are worth discussion.

 

The impact of user responsibility on water use is pretty well demonstrated. Studies from several cities and smaller communities have demonstrated pretty consistent 10 – 20% reductions in water use resulting from metering of either individual homes or apartments, compared to flat-rate unmetered billing.

The Physical and Institutional Setting

New Yorkers are fond of listing the many things that make our home unique but the first one that is truly important for water/energy policy is that most people live in multiple dwellings.

Where New Yorkers Live

Private Homes 579,299
Unregulated Rentals 849,800
Cooperatives 322,682
Condominiums 112,960
Regulated Rentals (Includes Public Housing) 1,322,834 (41.5%)

Most of the “Unregulated Rentals” are apartments in two through five unit buildings.  The Cooperatives are all medium-large apartment buildings and most of the condos are clusters of one- and two-unit attached buildings although high-rise condos have become increasingly common in the last decade.

A second major factor is rent regulation.  Rent regulation is a complicated and controversial system in New York.  On one level it is an ideological issue between owners (who see a violation of private property rights) and tenants (who seek economic protection in a limited housing market and asserted rights to “affordable housing”). On a practical level it’s a complicated set of rules and regulations by several city and state-level agencies.

From the perspective of water submetering the essential point is that the provision of hot and cold water is considered a base service included in rent.  The cost cannot be allocated by bedroom or directly passed along to tenants.  Tenants do not pay less or more depending on how much water they use. To the extent that a building’s water/sewer costs are greater than average, the owner sees a loss.  If a building’s costs are less than average, the owner may see net income from those reduced water/sewer costs.  This uncertainty has made some owners nervous about meter-based billing and led the city to offer a flat-rate alternative billing designed for high-population density housing 1 in return for conservation actions.

Challenge Number 1: Rent Regulation

To succeed water submetering needs to reach some accommodation with the system of rent regulation and there is a precedent for success with this challenge.  When the state of New York first enacted an Energy Conservation Construction Code it required apartment buildings to install individual apartment electric meters any time the building upgraded its electrical distribution system: wiring and circuit breakers.  Since electrical upgrades were common in the 1970’s onward to accommodate window air conditioners, meet current Codes or for general rehabilitation, most apartment buildings, whether rent regulated or unregulated moved to individual electric meters.  Public housing is the primary exempted group.  In response, the New York State Division of Houses and Community Renewal (NYSDHCR) developed a schedule of base rent reductions2 that apply to buildings installing individual electric meters.  DHCR could do the same thing for water submetering, although there isn’t a moving force like the Energy Code driving a process in this case.

Challenge Number 2: Redefining Piping Design

Apartment buildings in the US are almost always designed using a system of vertical water distribution pipes (“risers”) along which all of the kitchens and bathrooms are arranged in a vertical line in the building such that one riser pipe supplies all of the kitchen sinks, another supplies all of the water closets for a set of apartments, another all of the bathroom lavatories, and so on.  Submetering requires a design that has one, or perhaps two, water connections for each apartment covering everything so that one cold water, or perhaps one cold and one hot water meter can be installed in an accessible location.  This does not require Code changes but simply having plumbing contractors willing to try something new.  It will be interesting if an alternative entry design costs more or less than traditional construction and whether that can be seen in the first local project.

Retrofit projects will be far more difficult, in part because distribution piping will need to be completely revised.

Challenge Number 3: What About Consumer Protection?

Let’s return to the historical example of individual apartment electrical meters in New York. Apartment building owners have two options for electricity submetering: local electric utility meters or a private submetering company under contract to the building owner.  Most owners opt for local electric utility meters so the residents became customers of the primary local retail electric utility.  That relationship comes with a set of established customer service processes and ultimately, a regulatory oversight agency.  Opting for a private submetering company requires the establishment of a set of equivalent customer service and complaint resolution processes approved by the state that cost time and money.

Water submetering in a rental property will not even have that choice of utility meter versus a private submetering company.  State law makes water/sewer debt a lien against the property and not a person so water utilities cannot even enter a customer relationship with a renter.  Water submeters will need to be managed by the property owner or a private submetering company so the issue of consumer protections for the submetered tenants will be a subject for much discussion.  It seems unlikely that any effort to submeter water use in rental properties will advance without action by the City Council and/or the State Legislature to define and resolve these issues, as they should be.

Challenge Number 4: What Happens with Housing Maintenance?

When water/sewer costs are the responsibility of the owner, repair of leaks and installation of high-efficiency equipment provide a financial benefit for the owner. The owner’s concern is that tenants, having little direct economic stake in the matter, will not report leaks, particularly the overlooked toilet leak.  When water is submetered, will owners lose interest and incentive to repair leaks or upgrade fixtures?  Upgrading fixtures might be a qualification for buildings wishing to submeter.  There is already a strong precedent for buildings performing energy/water upgrades as a condition of state/local housing subsidy funding.  Both the state’s NYSDHCR and the city’s Department of Housing Preservation and Development  (NYCHPD) have implemented “Green” specifications for the housing subject to their regulation.  NYCHPD’s are sufficiently sophisticated to set “MaP Test” requirements more stringent than those for the WaterSense program.  A counter argument for leak repair is that the owner is still subject to the city’s Housing Maintenance Code although depending on that enforcement mechanism will result in a significant time lag when every day costs the tenant money, and increased regulatory cost.

Challenge Number 5: What Will Be the Impact on Housing Equity?

Submetering is likely to be voluntary and some owners will want to avoid submetering. They are making net income from entire building water metering and the rent reductions they would have to implement in return for submetering water might be greater than their benefits from submetering. Those buildings will tend to be higher-rent, well maintained and with between one and three people per apartment.

Buildings with higher population density, particularly when coupled with inadequate maintenance may have a financial incentive to submeter, but it may not be a good deal for tenants or for housing policy.  New York has always been an immigrant city, and one with a sizeable low-income population as people enter the local work force. As far back as the early 1990s it became clear that here, the traditional direct relationship between income and water use is actually reversed.  Water use tends to be higher in buildings with lower-income populations because population density tends to be higher.   Moving to water submetering in these buildings would pose a barrier to upward mobility of this population.  Fortunately, most buildings in this group should be subscribed to the Multifamily Conservation Program rate largely designed for them.3

Conclusion (For now)

So far, there hasn’t been any movement toward submetering of rental properties, even ones not subject to rent regulation.  The proliferation of individual metering among small-medium condominiums may spark interest and submetering of a first rental apartment building would begin the process of confronting the institutional barriers.  Is it a good idea for New York’s housing?  How will regulators confront the issues of equity and consumer protection? Will legislators simply foreclose the option?  It’s early days.

 


Notes

  1. For a brief overview of this issue, read my presentation from Building Energy NYC 2013 and for a longer more detailed discussion, read the “Waterwise – Long” presentation. Both can be found in the Public section of my Dropbox.
  2. http://www.nyshcr.org/Rent/operationalbulletins/orao20031_updated090308.pdf
  3. See Footnote #2 above, and Page 19 of Water and Wastewater Rate Schedule:http://www.nyc.gov/html/nycwaterboard/html/rate_schedule/index.shtml

Posted December 2013

Water Submetering in New York? – Warren Liebold, US