Quelling fears about water meters

Real Estate Weekly, Feb 24, 1993 by Derek Alger

Although the thought of water metering has many building owners running scared, Alan Rothschild, a consultant specializing in water cost management and analysis, maintains that switching from frontage to metered billing can result in tremendous savings in many instances.

Rothschild, president of Vantage Group Water Management & Analysis, based in North Brunswick, New Jersey. stressed that building owners need to find out what effect metering will have on their buildings before a meter is installed.

"Once you know that, you can make intelligent decisions on whether or not to meter voluntarily and what sort of conservation measures make economic sense," Rothschild said.

The 41-year-old Rothschild, a graduate of Rutgets University, began specializing in water cost analysis when he discovered that most developers and building owners had no idea what they were getting into due to the water metering issue. Rothschild helped out a number of building owners by analyzing their water costs as a courtesy about three years ago and saw that there was a need for a full-time specialist to help determine whether savings would be realized by switching to metered billing.

Specifically, Rothschild noticed that his Jamaica, Queens, and New Jersey buildings were saving 20 to 30 percent by water metering. While he acknowledged that not all building owners will see tremendous savings by water metering, the switch could be quite economical for others.

"Owners are very much afraid," Rothschild said. "Most people hear horror stories about costs tripling or quadrupling. The other side of the equation, however, is that many owners have cut costs in half by metered billing."

One of Rothschild's larger clients, for instance, will now save an estimated $50,000 per year because of water metering. Rothschild added that the client, whose building has 1,700 units, will approach savings of $100,000-ayear after instituting a water cost management plan.

"Water cost analysis gives people an idea of water cost management with a long-term plan, as well as savings through reduced water consumption," said Rothschild, who has thus far calculated pre-metering expenses for close to 100 clients. "There's an awful lot of savings out there, but people are afraid."

While New York City's Department of Environmental Protection insists that the water metering program will be revenue neutral and designed to produce no net gain in income other than what would normally be required to fund the water system, Rothschild noted that metered charges will shift the burden of payments toward properties least able to afford it.

Part of the problem, according to Rothschild, is that metered charges shift the burden of payments toward owners of low- to moderate-income buildings with relatively high tenant density. As a result, Rothschild emphasized that it is important for building owners to have a water cost analysis to understand where they stand vis-a-vis the water metering issue.

'The most important thing is to find out what effect metering will have on your building before the meter is installed,' Rothschild said. 'We try to do what we can, accept the reality of the situation and improve it. There are a lot of cases where there are big savings out there. '

The New York City water metering program, which started in 1988 and has a projected completion date of 1998, was created to promote water conservation and to increase the efficiency of the city's water/sewer system. Accompanied by rising water rates, the meters, city officials believe, would make owners consume less water by forcing them to pay for what they actually use. Currently, most owners pay based on the size of their building.

Owners complain, however, that, with no allowable means to pass costs on to tenants, they will be penalized for tenants who use water indiscriminately.

'The basic idea was if the city metered residential buildings, it would control use and sewage costs,' said Rothschild. 'It's a big political problem. They passed the law and never saw the impact -- that bills go up in low and moderate housing.'

Under the 'Window of Opportunity' program, co-ops and condos can voluntarily install meters ahead of the Bureau of Water Register's schedule. The voluntary meter installation program is available through June, though it is expeaed to be extended.

According to Rothschild, the city may not get to many owner's buildings for another five to seven years and if that building is going to save money by metering, it should begin as soon as possible. He noted that, regardless of the outcome of water metering, in view of past and anticipated water and sewer rate increases, building owners will benefit from a water cost analysis, which will accurately predict costs and indicate the efficiency of existing water use.

For instance, Rothschild said that Vantage recently performed a water cost analysis of 18 co-ops and determined that 12 to 15 of them will save money by water metering. Out of approximately IOO co-op buildings analyzed by Vantage, Rothschild added, it was discovered that only two would not save money by water metering.