NYC Water Board's 2017 Rate Increase and One-Time Credit Annulled

Landlords sued the NYC Water Board after the board approved a one-time $183 credit for 664,000 owners of one-, two-, and three-family dwellings. With this rebate, the board increased charges by 2.1 percent for fiscal year 2017 for owners of apartment houses and co-op and condo buildings. Landlords claimed that the board overstepped its authority and violated the state Public Authorities Law because owners of apartment houses and co-op and condo buildings paid a disproportionate amount of the cost of supplying water services in the city. The court ruled for landlords and suspended the water bill rebate.

The Water Board appealed and lost. The appeals court agreed that water rates for 2016-17 should continue to be frozen for all, rather than increased for multifamily customers so that single-family homeowners could get a credit, and upheld the lower court's ruling.  Landlords had argued that the Water Board’s actions, in this case, were beyond its authority, but even if they were not, the rate increase adopted and credit issued to some, but not all, of its customers were without a rational basis and, therefore, arbitrary. The appeals court stated, "We agree, however, with the trial court's assessment that the one-time credit adopted for some, but not all, water customers at the same time the Water Board needed to increase overall water rates to fund a projected budget shortfall for that particular year, has no rational basis." One judge disagreed with the appeals court’s decision, finding that the rate increase and one-time credit to small residence owners was neither ultra vires nor arbitrary and capricious.

Prometheus Realty Corp. v. New York City Water Board: 2017 NY Slip Op 01263, 2017 WL 628338 (App. Div. 1 Dept.; 2/16/17; Friedman, JP, Moskowitz, Gische, Kahn [dissenting], JJ)