Regulators in New York City have indicated that the city council is backing a bill that would complicate efforts to collect unpaid water bills from residents who are already financially struggling, often owing tens of thousands of dollars.
The Department of Environmental Protection (DEP), which oversees this system, stated that the proposed legislation may lead to increased water bills for property owners who pay their dues on time. This is to offset any revenue loses caused by the bill.
DEP Secretary Rohit Aggarwala stated, “Our water system depends on timely payments. When one person skips out, it falls on everyone else to cover the gap. Otherwise, we have to scale back investments in the system.”
The council is set to hold a public hearing to discuss several bills, including one from House Speaker Adrian Adams that aims to eliminate lien sales for unpaid water and tax debts.
A lien is essentially a legal claim against a property due to unpaid taxes, water bills, or other charges.
If any unpaid liens are sold, and subsequent taxes or fees remain unpaid, it could set off a foreclosure process initiated by the courts.
According to the DEP, even the mere threat of lien sales serves as a crucial motivator for those who are behind on their bills.
“Without a mechanism for enforcement, there’s a risk that people will simply stop paying, not solely due to inability but also because they see no repercussions,” Agarwala explained.
He even shared a scenario where property owners, despite being in arrears, went ahead and installed swimming pools. “We saw a household that hadn’t paid their water bill for years while building a pool. They only started paying when we threatened to shut off their water,” he recounted.
While DEP does have the authority to disconnect water service, they cannot do so in multi-unit dwellings where other tenants reside.
As June’s lien sale approached, city officials reached out in various ways—sending out half a million letters, making tens of thousands of phone calls, and knocking on doors 6,500 times.
Ultimately, Agarwala noted that only a tiny fraction—0.1%, or 1 in 1,000—of DEP customers ended up selling their liens.
However, the threat of property loss resulted in $374 million in deferred income, which included $180 million from payments, $172 million from payment agreements, and $22 million from lien sales, according to the DEP secretary.
“That’s the key point. The threat of lien sales effectively encourages payment, helps keep rates fair, and upholds the integrity of the water system,” Agarwala remarked.
DEP provided examples of property owners who managed to pay their debts after being informed of their placement on lien sale or shutoff lists.
The City Office of Management and Budget projected that the council’s proposed bill could lead to a decline in DEP’s annual revenue by $105 million to $150 million.
To cover this potential loss, DEP indicated it could either defer capital improvements or increase water rates across the board.
“A mid-year rate hike or an increase beyond the anticipated 7% for fiscal year 2027 might be necessary to recover the revenue risks posed by this bill,” he cautioned.
The Water Commission, responsible for setting rates, will convene next week to discuss next steps if the City Council follows through with the bill, which appears likely.
City Council members argued that this legislation is crucial for protecting homeowners from the risk of losing their properties.
“For too long, tax lien sales have unfairly targeted Black, Latino, and Asian New Yorkers, leading them to lose their hard-earned homes,” said a council spokesperson, Rendi Desamours.
They stressed that these changes address significant issues affecting the city’s economy and public safety, often overlooked by city officials. “It’s time we hold lien entities accountable to the welfare of New Yorkers instead of merely their profits,” they added.
Representatives further pointed out that tax collection and water rates could be managed without jeopardizing the financial stability of marginalized communities, which have faced historic racial wealth disparities. “This is long overdue,” they concluded, advocating for a better approach to help homeowners tackle their debts while ensuring that foreclosed properties contribute positively to neighborhoods rather than serve as liabilities.
