As a part of the City’s effort to rescue one of Chicago’s employee pension funds, the tax increase of 30% on water and sewer usage passed on Wednesday September 14th. The hike in the cost of water will be phased in over the next 5 years. That coupled with inflationary increases already set in the City budget every June (capped at 5%) for the base cost of Water and Sewer use, means the expense will add pressure to ALL Chicago residents cost of living.
What does this all mean for PTCA residents?
FORTUNATELY, a little bit less than we originally anticipated. We will need about a 1% increase in assessments to cover the cost.
We project the building will consume about 50 Million gallons of water next year. Our work on a proposed budget for next year is underway. But after passage of the tax we sat down and ran the numbers. This years budget for water is $422,700. After considering the tax increase, and a 5% increase in June, we are anticipating a recommended budget of about $468,000 – an increase of about $45,300. This is an average increase of $66 per household. More for 2 Bedrooms, less for Studios.
For owners, this places very sharp pressure on the assessments. Obviously, the cost of something as basic as water is an inelastic expense. We MUST pay for it as we use it, and it must be funded to do so. It is also fair to consider that this will add pressure to the assessments in other ways. The cost of doing business with almost every vendor we work with will likely rise as they pass on their own increased expenses in the form of higher rates for labor and materials. The cost of water and sewer, the annual minimum wage increases and recent hikes in property taxes create a perfect storm, and at some point this will translate into localized inflation for the cost of doing business in Chicago. (And as we put together the proposed budget for next year, it is already fair to say this is happening now.)
For renters, with owners bills on the rise, increased rents may result. With this new water tax and other expenses putting pressure on assessments, coupled with property tax increases, it’s not illogical to assume landlords will want to pass on some of the expense in the form of higher rents.
There is one variable that can make a difference. Obviously water use. 50 Million gallons is an average based on the past several years. We are happy to report that this year, there has been a relatively substantial decline in our water usage. That is factored in to the 50 Million already. So, whatever is fueling that decline, as a condominium community we need to keep it up. If we continue to improve our habits related to water use, it will bring that average down and help offset the sharp increase this tax will have on PTCA’s bottom line.
Find out more on the passage of this tax, Click Here.
Although, if we don’t spend money on water, apparently that won’t be good news for the City’s plan to rescue pensions. Momentum is growing behind an effort to dramatically increase the water/sewer rates, as one way to shore up the City’s pension fund. This is after the City already doubled water rates over the last 5 years, which already put pressure on PTCA’s assessments.
A number of proposals are being floated, and it is difficult to assess what exactly this will mean for our budget for the upcoming fiscal year. But analyzing what data we can at the historical rate the building consumes water, Park Tower’s annual bill could go up by as much as $65,000.
To put that in perspective, we would need an assessment increase of approximately 1.5% just to cover the added expense of water.
ALSO, it will mean water becomes the most expensive utility on an annual basis. We will need to budget more for water than both electricity and natural gas!!
But that is if our water use remains the same as it has historically. So, next time you’re using water…please keep that in mind. Don’t let faucets or fixtures run when you don’t need them to. And call the office if you have drips or leaks. Every drop counts!
Here is a link from ABC 7 Chicago, with some more details about the effort to increase water rates: