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

Landlords sued the NYC Water Board after the Board approved a one-time $183 credit for owners of one-, two-, and three-family dwellings. At the same time, the Board increased charges in 2017 for owners of apartment, co-op, and condo buildings. Landlords claimed this violated the Public Authorities Law and imposed disproportionate charges on the building owners. The court ruled for landlords and suspended the water charge rebate.

The Water Board appealed and lost, but then appealed to New York's highest court and won. The court ruled that: (a) the Board's decision to provide credit to some, but not all, customers based on their tax class wasn't arbitrary or irrational; (b) the Board's decision to increase rates system-wide while also providing credit to some, but not all, customers was not arbitrary or irrational; and (c) the Board's system-wide rate increase while also providing credit to some, but not all, customers, didn't amount to an impermissible tax. The court found that the city's water and sewer rates may be determined in accordance with public policy goals, not just economic goals. The Board could balance rate-setting with other needs and goals. 

Prometheus Realty Corp. v. NYC Water Board: 2017 NY Slip Op 08801, 2017 WL 6454306 (Ct. App., 12/19/17; Judges Fahey, Stein, Garcia, Wilson, Feinman, Rivera [dissenting], DiFiore [Ch J, dissenting])