Contact: Colleen Roche (212) 788-2958 or David Golub (718) 595-3516
First Deputy Mayor Powers said: "This audit simply misses the point. The Toilet Rebate Program has worked, saving millions of gallons of water and potentially billions of dollars in infrastructure that hasn't had to be built. Amazingly, the auditors recognize this success, and even admit that their focus is on only peripheral issues. The auditors ignore the clear benefits of the program to make inflated claims about a project they fail to comprehend."
The Toilet Rebate Program (TRP) is a consumer-oriented water-conservation initiative designed to save landlords and tenants money while helping the City stretch its capital construction budget. Since the program began in 1994, the TRP has installed more than one million toilet fixtures, cutting water use in the City by about 60 million gallons a day (MGD). These savings allow the City to avoid the high costs of building new water supply and wastewater treatment capacity, which helps keeps all water bills low and provides particular support the City's affordable housing sector.
Deputy Commissioner Ostrega said: "A line-by-line review of this audit has revealed a web of flaws and dubious statistical assumptions that calls into serious question the value of this report. The program's established track record demonstrates that there is no substance to the highly exaggerated charges made by the audit."
The audit acknowledges the very high degree of success that the TRP and Residential Water Survey have achieved and the fact that these programs are achieving close to or all of their stated claims. The audit notes only in passing that these programs have led to major declines in daily water consumption. In trying to establish wrongdoing, the auditors make a series of logical and statistical errors that reveal the baselessness of the audit's assertions. The City's extensive analysis of the audit provides a clear accounting of the Comptroller's errors.
The Comptroller's audit critically confuses the goals of the Toilet Rebate Program and those of the Residential Water Survey. The audit alleges a wasteful overlap between the two programs that was actually a necessary and effective policy choice. By looking only at the installation of showerheads and aerators, the auditors miss the fact that the RWS has identified millions of gallons worth of leaks worth millions of dollars per year to ratepayers.
First Deputy Mayor Powers said: "The water savings achieved through residential conservation demonstrate the essential irrelevance of the audit. Despite many grandiose claims, the auditors seem to recognize the very tight controls that have been placed on these initiatives, both in terms of inspections to confirm work status and quality, and in terms of the City's payment policy."
For instance, while noting that 1% of apartments were missing toilets, the audit fails to mention that DEP itself fails 1% to 2% of inspected units because claimed toilets have not been installed. In other words, the audit confirms the stringency of the TRP inspection process -- a process which governs 98% of the program's costs. With one million toilets installed, this exceptional record is a testament to the effectiveness of the program's controls.
The audit makes sensational and unsupported claims about "fraud" and "schemes" allegedly uncovered in these programs, but it is unclear that the audit's claims will merit further investigation by any enforcement agency. Indeed, the auditors so mistake the function of DEP's conservation programs that they offer recommendations that would actually have resulted in higher costs and reduced water savings had they been implemented.
These initiatives are key elements of one of the most successful water efficiency programs in the Nation. The residential conservation programs have, in conjunction with other programs, reduced the City's use by almost 150 million gallons a day, with total savings to be expected from the TRP approaching 90 MGD by program end. (end of calandar year). Conservation has helped to preserve the City's affordable housing stock, helped protect water quality and allowed the City to avoid potentially billions of dollars in costly system expansions and modifications.
The Toilet Rebate Program works this way: Property owners contract with private plumbers for the installation of "low-consumption" toilets using no more then 1.6 gallons of water per flush, and the City "rebates" the costs of the work -- with a rebate value of up to $240 for the first fixture in each unit and $150 for the installation of a second fixture. Where possible, low-flow showerheads and faucet aerators were also installed as part of the program.
The TRP has received accolades from numerous sectors, including national environmental organizations and affordable-housing groups, and has been successfully implemented in businesses, office buildings, hotels, housing complexes and private homes. Having received applications sufficient to achieve its change-out goal of approximately 1.3 million toilets, the program ceased accepting applications in April 1996.
The Residential Water Survey (RWS) is a service offered by DEP to provide free leak detection in order to help residential customers save money by saving water. The purpose of the survey is to identify leaks and other sources of water waste and to provide a written report to property owners. As part of the survey, low-flow showerheads and faucet aerators are installed where possible. Two phases of the survey have been implemented since 1991, with the second phase coming to an end in December of 1995. To date, leak surveys have identified nearly 5.3 MGD in water waste, worth over $7 million per year to ratepayers.
The auditors admit that their intention is not the evaluate the TRP in terms of its stated goals, but to examine peripheral issues related to the program's administration. Indeed, the audit acknowledges the very high degree of success that the TRP and RWS have achieved and the fact that these programs are achieving their stated claims. The audit notes only in passing that DEP's programs have led to major declines in daily water consumption. In trying to establish wrongdoing, the auditors make a series of logical and statistical errors that reveal the baselessness of the audit's assertions.
Based on DEP's review, flaws which critically undermine the audit include:
By claiming that any Residential Water Surveys undertaken on buildings which participated in the TRP should not have been performed, the audit considers the RWS to be unnecessary. The audit claims that no overlap between the two programs should have existed, when, in fact, the programs were intended to be highly complementary. The illusory "loss of savings" being claimed in the audit are largely due to this erroneous assumption. In fact, the majority of leak savings identified by the RWS were identified in economically fragile buildings that benefitted from surveys and the installation of low-flow toilets.
DEP ended the overlap between the two programs for programmatic and contractual considerations long before the Comptroller's audit began. The audit ignores this fact. While the audit claims that some surveys were accepted from TRP participants after that date, it fails to mention that they were exceedingly few and that DEP has already made a claim against the RWS contractor for those fees.
The audit's sampling methods are not supportable. The audit's assumption that the building population is uniform and that a review of 488 units out of 1,000,000 (0.0005%) is representative is indefensible. Intrinsically non-representative sampling was employed in the selection of residences, and the audit stated no sampling theory to support this choice. Compounding this error, the audit states inexplicable "confidence limits" for this non-random data in an effort to provide legitimacy to this clearly flawed analysis.
Of the audit's sample, 57% represent licensed plumbers who account for only 15% or less of the entire TRP. Indeed, the audit's sample is so flawed that one plumber included in the Comptroller's sample was associated with less than 0.6% of the TRP work up to early 1995 and had actually been dead for two months when the Comptroller conducted his survey.<P>
The audit's complaint of quality problems with some low-consumption toilets is undermined by serious confusion about customer preferences. The audit's data show that 77% of survey respondents reported they never had any problems. Another 10% who said they occasionally had problems also had problems with their old toilet or only occasionally have problems with their new toilet. The audit sets up a consumer satisfaction standard that no consumer product meets, and then declares "major problems" based on a complaint rate of less than 15%.
The audit provides no basis for its claim that survey responses about one toilet model were significantly different than another. The survey was biased by its reliance on responses concerning one particular model (Mansfield) which appears four times more frequently in the audit than it does in rebated dwelling units. The audit also fails to show that problems with individual toilets were defects and not installation flaws, consumer abuse of the fixture or individual "lemons."
The audit claims a savings "penalty" for a small number of new toilets tenants reported to them as leaking -- about 1% of the total sampled according to DEP's analysis. While a "penalty" was imposed for these leaks, no water-savings credit was applied for the 7% to 15% of leaking toilets eliminated as part of the change-out process. Those savings were not included in the original 90 MGD estimate.
The original estimate was based on an average population density of 2.5 people per dwelling unit, even though DEP intended to market the TRP to higher-density low-income housing. The actual average population density for TRP projects is about 2.63 people per dwelling unit, 5% higher. This means that the base savings projection is about 5 MGD higher than the 90 MGD estimate.
Moreover, and contrary to the confusion underlying the audit's analysis, the original 90 MGD estimate did not include water savings from the installation of faucet aerators, adding to the estimate's conservatism. In summary, a base savings estimate corrected for these factors ranges from 101 to 110 MGD.
Deputy Commissioner Ostrega said: "The Comptroller's audit is so riddled with misstatements, errors of fact and computation and obviously slanted reasoning that its value in assessing the Toilet Rebate Program is negligible. The auditors' overblown conclusions are drawn from flimsy surveys that represent only a minute fraction of the value of DEP's residential conservation programs. The sweeping and often inflammatory style which characterizes this audit is truly inappropriate for a reasoned discussion about an important public policy."
Further, the audit ignores the strong consumer protection DEP has taken throughout the course of the TRP, including placing restrictions and even bans on a number of contractors, referring specific problem situations with licensed plumbers to the City Department of Buildings and in one case, to a District Attorney.