New York City Council Committee on Environmental Protection
Fiscal Year 2014 Preliminary Budget
March 11, 2013
Testimony of Carter Strickland,
Commissioner, New York City Department of Environmental Protection (DEP)
Good afternoon Chairman Gennaro and Members. I am Carter Strickland, Commissioner of the New York City Department of Environmental Protection (DEP). I am joined today by Steven Lawitts, DEP’s Chief Financial Officer; Joseph Murin, DEP’s Assistant Commissioner for Budget; and other senior managers. Thank you for the opportunity to testify on the Fiscal Year 2014 Preliminary Budget and the Preliminary FY 2013 Mayor’s Management Report (MMR).
Since my last testimony on the Preliminary Budget, Hurricane Sandy brought tragic consequences to the City. At DEP, the storm caused approximately $95 million in damages at ten of our wastewater treatment plants and 42 of our 96 wastewater pumping stations and disrupted an essential project to replace the backup water supply for Staten Island. Through the efforts of our staff and our contractors DEP was able to restore treatment for 99% of the City’s wastewater flow within three days of the storm. And New York City’s drinking water remained safe and reliable the entire time.
Sandy notwithstanding, in the past year DEP has achieved a number of goals, highlighted in the 2012 Progress Report on our strategic plan. Issued two years ago with Mayor Bloomberg, Strategy 2011-14 identified 100 distinct initiatives that will help DEP fulfill its core mission to protect public health and the environment by providing clean drinking water, managing stormwater, treating wastewater, and regulating air, asbestos, and noise pollution. At the plan’s mid-way point, 57 initiatives have been fully achieved, 30 are on track to be completed on schedule, and the remaining 13 are in the planning and design phase. That 2012 Progress Report was released last week and can be found on our website at www.nyc.gov/dep.
There are a number of performance metrics in the Mayor’s Management Report (MMR) and other documents that are closely related to the core goals and functions to which our capital and expense budgets are directed, and are of interest to our customers and your constituents. After reviewing those metrics and some other milestones of the past year, I will review highlights of the expense and capital sections of the FY14 Preliminary Budget, and finally I will review the capital investments in each borough.
In the last decade, DEP has implemented technologies and procedures to shift from reactive to proactive sewer maintenance. That shift has led to significant improvements in three key metrics:
- a thirty percent (30%) decrease in the amount of time it takes to resolve sewer backups;
- a nineteen percent (19%) decrease in the number of sewer backup complaints; and
- a fifty percent (50%) decrease in the time it takes to resolve a catch basin complaint.
These improvements are the results of a number of specific changes we have made in the way our Water and Sewer Operations personnel do business. Last November, DEP released for the first time a report called “State of the Sewers 2012” in which we documented some of the important changes in how we maintain and improve the system for collecting and conveying stormwater and sanitary waste. For example, we restructured with a focus on borough-based management and accountability and we created the Capacity, Management, Operations and Maintenance (CMOM) section to employ the most up-to-date strategies in areas that would benefit most from proactive interventions like increased cleaning. To support this section and improve service, DEP enhanced our use of geographic information systems and computers in the field; developed procedures and guidelines for field personnel; expanded tracking data on customer service requests related to sewer back-ups; deployed “smart” manhole covers to detect high elevations, and built the first ever field training facility with live sewers and water mains.
Our effort to improve sewer service also benefited from the work of our Sewer Operations and Analysis Program, which analyzes trends in data and investigates areas that have a high frequency and density of confirmed issues. Analysts create maps of reported sewer backups to better identify segments and neighborhoods that have recurring problems. Once DEP identifies the likely factors behind confirmed backups or other service issues, we develop a remediation plan that can include degreasing, regular cleaning, and repair or replacement of infrastructure. Although we can’t prevent sewers from surcharging during storms that exceed the design capacity of the sewer, we can deploy resources more efficiently to make sure that the existing system consistently meets the criteria for which it was designed.
Another key metric where we have seen dramatic improvement is water main breaks. In the period covered by the most recent MMR (July to October 2012), DEP reduced the number of water main breaks by over 26 percent, to just 65, the lowest number of breaks in any comparable four-month period in the last ten years. In all of 2012 there were 347 breaks in the city’s network of nearly 7,000 miles of water mains, down from a high of 632 in 2003. This year DEP averaged less than six breaks per 100 miles of pipe, well below the accepted industry average of roughly 23-25 breaks per 100 miles annually.
The decrease is due, in large part, to an enhanced preventive maintenance program for water main valves and regulators that is designed to minimize the potential for water main breaks and establish proper water pressure zones. Another factor is our expanded network of remote water pressure sensors at key locations, allowing engineers to identify problems and make repairs proactively.
Other Key Initiatives
In addition to surpassing key performance indicators related to sewer backups, catch basin repairs, water main breaks, and other water and sewer-related services, there are several other initiatives that I would like to highlight:
- In March 2012, DEP finally received the official green light for the groundbreaking $2.4 billion NYC Green Infrastructure Plan, which was incorporated into a consent order with the state. The Green Infrastructure Plan will improve the water quality of New York Harbor using gray infrastructure where it is still cost effective as well as cutting-edge green technologies that not only absorb the water where it lands, but enhance the local quality of life by providing shade and beautifying the city. The Green Infrastructure Plan represents a breakthrough in how we re-envision stormwater management and I want to thank our partners at the State Department of Environmental Conservation for working with us to make it happen.
- Many Members know that there are persistent leaks in the Rondout-West Branch Tunnel, a key section of the Delaware Aqueduct. In January of this year, we began preparing for construction at the sites for the two shafts needed to accomplish a bypass of the Tunnel: one in Newburgh on the west side of the Hudson and one in Wappinger on the east side. Later this year, a DEP contractor will break ground on a shaft that will be approximately thirty feet in diameter and 900 feet deep at Newburgh, and 700 feet deep at Wappinger. From these two shafts DEP will construct a bypass tunnel that will allow us to route water around that section of the existing tunnel which has the more significant leaks. The decision to proceed with the bypass tunnel reflects Mayor Bloomberg’s commitment to critical infrastructure and is the single most important component of the City’s $1.4 billion “Water for the Future” program. The site work and bypass construction are also the subject of a Project Labor Agreement that will save the City between $16 million and $23 million over the life of the work.
- In January of this year, we announced the availability of an optional Service Line Protection Plan. The water and sewer service lines that connect homes to the City-owned water and sewer mains are the responsibility of the homeowner. Repairs to broken service lines can cost between $3,000 and $15,000 and be financially devastating to a homeowner. Under the Service Line Protection Plan, American Water Resources (AWR) will repair an enrolled customer’s leaking water service line or a broken or clogged sewer service line for a small monthly fee, currently $3.99 per month for the water service line and $7.99 for the sewer service line. Homeowners who choose to enroll in the Plan sign a contract with AWR and have the convenience of paying the enrollment fees through their water bills. In less than two months, over 47,000 customers have enrolled in the Plan. Based on historical repair rates, these 47,000 enrolled customers are likely to generate about 1,800 repair calls per year. Coverage under the Protection Plan will save these enrolled customers collectively more than $2.6 million per year.
- In the spring of this year, DEP will substantially complete the $1.6 billion Catskill-Delaware Ultraviolet (UV) Disinfection Facility, the largest facility of its kind in the world. That facility was constructed pursuant to a federal mandate that requires treatment of surface water supplies with two forms of disinfection.
- Finally, by the end of 2013 we will approach completion of the Croton Filtration Plant, which will allow the Croton supply to meet all water quality goals even during times of the year when in the past it would be taken off-line because of seasonal color variations that were aesthetically unpleasing. A consistent and reliable Croton supply is a key part of our planning to meet the City’s needs in the 21st century.
I appreciate the opportunity to discuss these recent achievements; I’ll turn now to a discussion of the expense and capital budget highlights.
The Preliminary FY 2014 Expense Budget
The projected expense budget for the current fiscal year, FY13, is $1.7 billion, which includes approximately $500 million in general funds for the Rapid Repairs program for which DEP served as the contracting entity, pending reimbursement from the Federal Emergency Management Agency. For FY14 we expect DEP’s expense budget to be $1.108 billion. That number includes an 8% reduction on the tax levy part of the agency’s budget, largely achieved by revenue increases. Although we are not changing fee schedules we are expecting additional filings from firms reporting on-line to the Right-to-Know program, and also an increase in the issuance of asbestos permits and other certifications. After considering efficiency gains from our Operational Excellence program and offsets for new needs and programs to modernize the agency, the net reduction in the preliminary FY14 expense budget as compared to FY13 is projected to be $23 million. I note that decrease is only temporary and will change as we continue the discussions leading up to the Executive Budget submission later in the year.
The expense budget breaks down into the following large categories:
- The Preliminary FY 2014 budget projects $452.6 million, 41% of the total, in personal services to pay the salaries for our nearly 6,000 funded positions.
- Taxes on upstate watershed lands make up the next largest category, accounting for $153.5 million or nearly 14% of the expense budget. As the Chairman and Committee members know well, the ownership of watershed lands represents a critical investment in maintaining the high quality of NYC’s drinking water by protecting it at the source and ensuring that it does not require expensive treatment such as filtration. I am pleased to report that we have successfully negotiated agreements with upstate jurisdictions to make our tax obligations more stable and predictable and, in some cases, to reduce them.
- Heat, light and power— DEP’s energy costs—account for over $113.4 million or 10% of the FY14 expense budget. DEP is the second largest municipal consumer of electric power in New York City and our consumption will grow as we bring online new treatment facilities for both drinking water and wastewater. To control energy costs and meet PlaNYC’s goals for greenhouse gas reduction DEP is investing in projects to reduce energy needs. One of these is a cogeneration plant at North River that I mention below.
- Sludge management of 1,200 tons per day is projected to cost about $43.7 million in FY14, or about 4% of our projected FY14 expenses.
Preliminary FY2014-FY2023 Ten-Year Capital Plan
The Preliminary Budget projects capital spending of $12.2 billion between fiscal years 2014 and 2023. That number, while very large, in fact represents a balance between the need to keep water rates affordable and the need to provide necessary investment in assets which are critical to our quality of life. Last year, during testimony on the proposed Four Year Plan, I noted that DEP’s projected capital needs were, for the first time in a decade, weighted towards the non-mandated projects that are of critical interest to our customers and to the long term viability and resiliency of the water system, but are not required by our regulators, such as City Water Tunnel No. 3. The Preliminary Ten Year Plan continues that trend of the non-mandated, “state of good repair” projects receiving a much larger proportion of capital funding than mandated projects, consistent with the directive of the Bloomberg Administration to rigorously analyze whether project costs are in proportion to the value provided by the project. In 2012 DEP launched an asset database tool to track age, condition, criticality, replacement cost, and performance of various assets. That tool will be used in our Asset Management program to track critical information on various parts of our system to improve the choices we make concerning capital investments. To date we have evaluated and “scored” more than 26,000 assets and have used that information to prioritize more than 400 repair and replacement projects.
Highlights of the preliminary Ten Year Plan are as follows:
The Preliminary Ten Year Plan projects a $4.5 billion investment in wastewater treatment projects, $3.5 billion for the reconstruction or replacement of components of the wastewater treatment plants and pumping stations. The remaining $1.0 billion investment will be used to control combined sewer overflows, with $644 million for green infrastructure such as green roofs and bioswales and the remainder for grey infrastructure, such as tanks and tunnels to store wastewater. I am pleased to announce that this past January we awarded consulting contracts to three firms to create green infrastructure implementation plans for the key watersheds of Newtown Creek, the Gowanus Canal and Flushing Bay. In addition, $194 million is budgeted for the construction of a new cogeneration plant at the North River Wastewater Treatment Plant. The new cogeneration plant will use renewable digester gas produced by the wastewater treatment process to both power equipment and heat the facility. It will help us reduce our energy use and help the City meet the ambitious greenhouse gas emission reduction goals in PlaNYC.
Reservoirs, Dams, Treatment Facilities and Water Mains
The capital budgets of the Bloomberg Administration reflect the mayor’s belief that New York City’s drinking water supply system, particularly the unfiltered Catskill and Delaware systems, is one of the City’s most important assets. Over the next ten years, the Administration is proposing to invest an additional $3.4 billion in protecting the quality of our reservoirs and the integrity of our dams, providing for treatment where necessary, and maintaining and repairing the water main system conveying potable water to all New Yorkers. Two categories of projects account for more than a billion dollars of that: $383 million for the reconstruction of dams in our three watersheds and $535 million for pressurization of a two and one-half mile segment of the Catskill Aqueduct that will increase the volume of water available to the city and re-establish DEP’s ability to bypass the Kensico Reservoir when necessary to access the highest quality water. For the continuation of our current Filtration Avoidance Determination programs, the preliminary FY14–23 Capital Plan includes $163 million, covering all our capital needs for the current FAD, including $84 million for land acquisition.
The Rondout-West Branch Tunnel and Water for the Future
Although this project extends beyond the Ten Year Plan, in the FY14–23 period the Preliminary Budget provides $560 million for the bypass itself and $113.4 million for other projects related to providing supplemental sources of water during the Delaware Aqueduct shutdown. Increasing the capacity of the Catskill Aqueduct – a project distinct from pressurization – accounts for an additional $164 million.
City Water Tunnel No. 3
City Water Tunnel No. 3 is one of the longest-running public works projects in the City’s history. When complete it will improve the reliability of our water supply and allow for the inspection of City Water Tunnel No. 1 for the first time since it came on line in 1917. City Water Tunnel No. 3 has been built in stages. The first stage—running from Yonkers to midtown Manhattan and then Astoria—was completed in 1998. To modify the chambers built during Stage I at the Hillview Reservoir, the Preliminary FY14–23 Capital Plan allots $392 million. Stage II of City Tunnel No. 3 includes a section running through lower Manhattan as well as a section running from Astoria to Red Hook, Brooklyn. Although the Manhattan leg and the Manhattan shafts for City Water Tunnel No. 3 have been substantially completed, we are budgeting $389 million in FY 14–23 for additional work related to the activation of the Manhattan leg of Tunnel 3. Later this year, the Department of Design and Construction will complete those water mains critical to activating the Manhattan leg and we can start using that section of Tunnel 3, enabling us to provide much-needed redundancy to City Water Tunnel No. 1.
The Preliminary FY14–23 Capital Plan projects $2.0 billion of spending on sewers:
- $672 million for replacement of sewers (storm, sanitary or combined);
- $915 million is for new sewers (of all types);
- Storm sewers as a category by itself (either new or reconstructed) accounts for $645.9 million of projected spending
- of which $330 million is for high-level storm sewers, including Third Avenue in Brooklyn; and
- $202 million is for both the conventional sewers and the lands necessary to create Bluebelt systems, which are also being extended beyond Staten Island to Springfield Lake in Queens, Van Cortlandt Park and the Bronx Botanical Gardens, and other locations.
The FY14–23 Capital Plan Highlights by Borough
In Queens, the preliminary Ten Year Plan shows a total of $1.89 billion allocated for projects of all types. Sewers account for $373 million. $336 million is budgeted for work on two shaft sites connected with Stage II of City Water Tunnel No. 3. $84 million is projected to evaluate, assess and restore groundwater wells in Southeast Queens for the purpose of providing additional water during the Rondout bypass construction, and during any droughts or other instances where the City’s surface water supplies are not adequate.
In Staten Island, the Preliminary Ten Year Plan projects a total of $678 million, of which $337 million is for sewers. The Snug Harbor sewer project (SE 846) is budgeted for $24 million. Repairs to the Oakwood Beach plant and to the Hannah Street pumping station are projected to cost $137 million.
I note that the Preliminary Ten Year Plan does not include the cost of repairing damage to the Staten Island siphon project caused by Sandy. The costs of the damage to that project are under discussion. Some of the costs may be covered by the contractor’s insurer. We are hopeful that the federal government will cover any uninsured costs.
In the Bronx, the Preliminary Budget projects $676 million of capital spending from FY14–23. Approximately $146 million is budgeted at the Hunts Point treatment plant, including $50 million for new centrifuges and $96 million for new digesters. Restoration of the Mosholu driving range, clubhouse and related work is budgeted for $48.9 million in fiscal years 2014 and 2016. To reduce CSOs into Pugsley Creek and Long Island Sound DEP has budgeted $72 million in FY 2016 for construction of a parallel sewer that will help divert flow away from the Creek.
In Manhattan, the Preliminary Budget shows $930 million over the ten years between FY14 and FY23. The largest single project is the $195 million cogeneration project at the North River Wastewater Treatment Plant. The cogeneration project will replace existing equipment for recycling digester gas with a more efficient system that will allow more of the plant’s energy needs to be generated by the plant itself, thereby reducing energy costs and air emissions. Another $183 million is for several projects at the Wards Island Wastewater Treatment Plant: reconstruction of final tanks; reconstruction of the boiler complex; and, installation of new dewatering centrifuges. $128 million will fund the construction of water mains connecting two of the City Water Tunnel No. 3 shafts with the local water distribution system.
In Brooklyn, the Preliminary Budget includes $1.03 billion of planned commitments. The 26th Ward wastewater treatment plant and associated sewer work to reduce CSOs into Fresh Creek account for $359 million. $31 million for Coney Island sewer improvements is funded in FY 13. An additional $106 million is projected in FY14–23 for Coney Island sewers.
I also want to take this opportunity to remind the Committee that DEP remains concerned about unfunded state and federal mandates that threaten our ability to provide real value and services for every dollar we receive from our ratepayers. As you know, we have expressed doubt about the timing or need for certain federally mandated projects that created enormous pressure on the rates. One continuing concern is the EPA-led Superfund processes at the Gowanus Canal and Newtown Creek, which could be distorted to have DEP fund cleanups instead of those responsible for over a hundred years of industrial contamination. The Administration feels strongly that such a mandate would not be fair. We are very involved in sponsoring scientific research and in promoting sensible solutions.
In closing, I want to take a moment to highlight what this agency has been able to accomplish over the last twelve years for the citizens of New York. We have been able to extend the FAD, allowing New Yorkers to enjoy clean, world-class drinking water even in times of natural disasters like Hurricanes Irene and Sandy, and we’ve made the system strong by investing $2.8 billion in our upstate assets between 2002 and 2012. In the City itself, we have laid 159 miles of new sewers, reconstructed 143 miles of old sewers, and replaced 473 miles of water mains. That’s 775 miles of pipe, or about the driving distance between New York and Chicago (the actual driving distance is 789). While working with the City Council we have overhauled the City’s noise and air codes, including groundbreaking initiatives to promote clean fleets and clean heating fuels, substantially reducing the public health threats from air pollution. By the end of this administration, we will have constructed the Croton Filtration Plant (with the exception of the surface restoration work), opened the world’s largest ultraviolet disinfection facility, turned on the Manhattan leg of City Water Tunnel No. 3 and put in place the City’s Green Infrastructure Plan, which will forever change the way that this city deals with managing its storm water, and will have worked with the Council on much needed updates to the Air Code.
Going forward, to improve the resiliency of our infrastructure in the face of climate change, DEP is currently conducting a detailed study of the effects of climate change and population growth on the City’s wastewater and drainage systems. This study initially focused on pilot areas of the City, namely the Hunts Point Wastewater Treatment Plant, eight pumping stations and a 16,377 acre drainage area within the Flushing Bay/Flushing Creek watershed, to assess the sensitivity of DEP’s infrastructure to future climatic conditions based on projections for sea level rise, storm surge, precipitation and temperature in 2050. In the aftermath of Sandy, DEP expanded this study to identify protections for pump station, sewer, and wastewater treatment plant assets citywide based on a cost-risk approach comparing the expected cost of taking no action and the cost of implementing specific adaptation strategies. This information will be part of the Special Initiative for Rebuilding and Resiliency launched by Mayor Bloomberg on December 6, 2012 and led by the New York City Economic Development Corporation and the Mayor’s Office of Long Term Planning and Sustainability to develop wastewater and water system recommendations.
There are many more accomplishments to highlight but I also want to thank this Committee and specifically Chairman Gennaro for his advocacy on environmental issues throughout the city of New York and thoughtful approach. Though at times the Council and the Administration may have differences of opinion on policy, this Committee has been able to consider costs and benefits fairly and thus to navigate the balance between policy and operations. On behalf of the almost 6,000 employees of DEP who make a difference each and every day for our environment I want to thank the Chairman publicly for his partnership with our agency and to express our commitment to work with the Chair and this committee during our remaining days in office.
That completes my prepared statement. Thank you for the opportunity to present testimony. I look forward to answering any questions that you have.