Owners should prepare for another increase in water and sewer charges, although the proposed hike for Fiscal Year 2026 is smaller than in recent years. The Department of Environmental Protection (DEP) has put forward a 3.7 percent increase, which, if approved by the NYC Water Board, would go into effect on July 1, 2025.

This proposed adjustment follows last year’s 8.5 percent increase—the steepest in the past decade—and represents a notable shift toward more modest rate-setting. DEP officials credit strong revenue collections, improved enforcement tools, and long-term planning for their ability to keep this year’s rate lower. Still, the additional funds are needed to sustain major infrastructure upgrades and comply with growing environmental mandates.

Public Review Ahead of Final June Vote

Under the city’s rate-setting process, the Water Board must review and approve the proposed changes following a round of public hearings. These hearings are scheduled to take place in all five boroughs between May 27 and June 3. Owners and residents who wish to weigh in can attend in person or submit written testimony by email or regular mail. The final vote on the FY 2026 water and wastewater budget is scheduled for June 6.

One of the main drivers behind the rate increase is the ongoing capital investment in the city’s aging and overburdened water infrastructure. Projects like the construction of sewer overflow retention tanks along the Gowanus Canal, the repair of the Delaware Aqueduct, and the expansion of a modern drainage system for Southeast Queens are all moving forward and require sustained funding. Together, these efforts represent multi-billion-dollar commitments designed to reduce flooding, prevent pollution, and ensure long-term system reliability.

In addition to construction costs, DEP continues to face increasing expenses for day-to-day operations. From higher energy prices and rising labor costs to more stringent regulatory requirements, the agency’s expenses have grown even as overall water consumption has declined. That drop in usage—largely due to conservation measures and high-efficiency plumbing fixtures—means the cost per gallon must rise to maintain service levels across the city.

There’s also the issue of rental payments that the water system must make to the city’s general fund. These payments, which are based on the Water Board’s lease of city-owned infrastructure, are expected to total more than $300 million in FY 2026 alone. Although these transfers have drawn criticism from some advocacy groups, they remain a built-in component of the system’s financial obligations.

What Owners Can Expect If the Rate Is Approved

For building owners, the proposed rate translates into modest but noticeable increases. A typical multifamily unit on metered billing would see an annual charge rise from $877 to $909, which works out to an additional $2.67 per month. And because wastewater charges remain pegged at 159 percent of water charges, the real impact can be more substantial when sewer costs are factored in. For example, a building currently paying $10,000 annually for water service could see total combined water and wastewater costs increase by nearly $1,000 under the proposed rate, bringing the total to about $26,858.

With the proposed changes on the horizon, owners are encouraged to begin reviewing their water usage and meter data now. Understanding the structure of combined charges, especially the effect of wastewater multipliers, can help inform budgeting decisions for the coming fiscal year. Participating in the Water Board’s public review process—either by testifying at a hearing or submitting written feedback—offers an opportunity to raise concerns or support policies that prioritize fairness, affordability, and long-term sustainability.

As always, proactive planning and informed engagement remain the best tools available to owners navigating utility cost increases in New York City. While the 3.7 percent rate hike may not be as dramatic as last year’s, it’s part of a broader trend that’s reshaping how water is priced and paid for in the five boroughs.

Recent Rulings Reinforce Water as a Required Service

As some owners explore ways to recover rising utility costs, recent rulings from the Division of Housing and Community Renewal (DHCR) offer a clear reminder that owners of rent-stabilized buildings in New York City may not charge tenants separately for water.

In Matter of Sydney Leasing LP, the DHCR held that both hot and cold water constitute required services under rent stabilization rules. Even though tenants in that case had signed lease riders agreeing to pay for water, the agency ruled in January 2025 that water service must be included in the rent and cannot be billed separately. The DHCR further concluded that any charges collected in violation of this rule amounted to rent overcharges. The owner has appealed that decision, but the underlying ruling remains in effect.

The Sydney Leasing order follows closely on the heels of another similar decision [Matter of Brisbane Leasing Limited Partnership, December 2024]. In that case, the DHCR also found that an owner violated rent stabilization rules by collecting separate charges for water usage and ordered corrective action.

Both rulings reinforce the DHCR’s position that, while submetering is allowed for certain utilities like electricity, owners cannot pass along the cost of required services such as water to rent-regulated tenants, regardless of any lease provision to the contrary.