Ethermac|How New York City Is Getting Screwed Out of $4.2 Billion in State Green Bonds

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Expecting to see green, New York City officials are seeing red instead.

Approved by voters statewide in 2022, the Clean Water, Clean Air and Green Jobs Environmental Bond Act allows the state to borrow $4.2 billion to pay for big projects, such as stormwater and wastewater systems, green buildings, coastal protections and electric school buses.

More than $313 million has already gone from the state Department of Environmental Conservation and other state-controlled agencies to local governments. But while New York City is home to over 40 percent of the state’s population, just $6 million of the Environmental Bond Act money so far has gone to the five boroughs—under 2 percent.

In the city, destructive and deadly storms like Hurricanes Ida and Sandy have highlighted an urgent need for investments that green bonds could fund. And not surprisingly, local voters supported the Bond Act more enthusiastically than anyone else in the state, with 89 percent of Manhattan, 88 percent of the Bronx, 82 percent of Brooklyn and 78 percent of Queens voters approving.

But two years later, local elected officials who championed the Bond Act expressed dismay over New York City’s paltry share and demanded the state steer more funds to the city.

“When New York City voted for that Bond Act, we as residents expected to get our fair share,” said Sen. Brad Hoylman-Sigal (D-Manhattan), who had been engaged in talks with city officials about how to ensure the boroughs get more of the money. “It's a cruel irony that we are not getting that proportionate share of funding, given the electoral support that we showed.”

The law allocates funds based on spending categories, such as land conservation and water infrastructure, not by region. And so far, the state has relied on funding formulas that cap how much any one locality can receive. New York City, the biggest city in the U.S., is just another municipality to the state. 

For instance, the state is now seeking applications for a Green Resiliency Grant program in part funded by the Bond Act, with a total of $60 million available to cover up to 90 percent of the cost of stormwater management projects. But grants are capped at $10 million.

“If you have a $60 million pot and you say nobody can get more than $10 million, from the beginning that is unfair to New York City,” said Rohit Aggarwala, commissioner of the city Department of Environmental Protection, which runs the water and sewer systems in the five boroughs. 

Also serving as chief climate officer under Mayor Eric Adams, Aggarwala has been pushing for over a year for the state to allocate more funds to New York City. But so far, the state has not developed new funding programs for the Bond Act dollars that especially account for the boroughs.

“If the regulations and eligibility criteria are written in such a way that New York City is not going to be able to get its fair share of these funds, that's a serious problem,” said Sen. Liz Krueger (D-Manhattan), chair of the Senate finance committee. “I was out there lobbying for the Environmental Bond Act and actually asking my constituents to please vote for it. I didn't say, ‘Oh yeah, but New York City is not going to get its fair share of the money.’ That wasn't in the sentence. That wasn’t on the ballot.”

With over 90 percent of Bond Act funds left to spend, DEC said that it is developing new programs to get the money out the door so local governments across New York can apply for the funds, but did not indicate it will consider New York City any differently.

“The Bond Act is just one of many funding opportunities the city could pursue. New York State is committed to continuing to support municipalities, including New York City, statewide,” a DEC spokesperson said in a statement.

Fighting for Every Dollar

City voters had expressed high hopes for the money, handing the state a wish list that included forest restoration in Fort Tryon Park and Pelham Bay Park, charging hubs for freight, green roof bus shelters in East Harlem and salt marsh restoration at Alley Pond Park in Queens.

But local veterans of environmental battles knew they would have to fight for every dollar.

The City Council in 2022 passed a resolution calling on the state to make sure New York City “is fully eligible for all programs in the Bond Act, and that benefits accrue to the city in a manner that is commensurate with the city’s contribution to statewide tax revenue.” The Council estimated New York City to be 62 percent of the state’s tax base. (The state Department of Taxation and Finance did not respond to a request to verify this number.)

“We have no jurisdiction on the city level to compel the state to be fair, but, but they just aren't,” said Councilmember James Gennaro (D-Queens), who chairs the environmental and resiliency committee. 

Gennaro said the Bond Act should be funding projects to protect city residents from stormwater flooding, such as expanded sewers and new nature-based flood-prevention systems. DEP has calculated that it would cost $30 billion to improve resiliency to heavy rains. At current capital funding levels, that could take three decades.

“The scope and the timing of this badly needed build-out of stormwater infrastructure is going to be a function of money,” Gennaro said. “To the extent that we are denied Bond Act money, that is certainly going to have an impact.”

The $6 million New York City received from the Bond Act so far is going toward a $24 million upgrade on equipment in the Bronx to cut down on the raw sewage that flows into the East River when rainwater overwhelms the sewer system.

Funding from the Bond Act could also help realize the ambitions laid out in the citywide sustainability agenda, PlaNYC, most notably a buyout program to help property owners in dangerously flood-prone areas move. Officials have long indicated that $250 million the Bond Act sets aside for a buyout program could help kickstart it.

Local officials are also staking hopes on the Bond Act’s mandate to funnel more than a third of funding to communities considered “disadvantaged,” or disproportionately pollution-burdened and vulnerable to the effects of climate change. New York City contains about 60 percent of such areas across the state.

“For the city to fully realize the full scope of federal and state funding, it should explore adjustments to its rate structure to demonstrate that the economic benefits of any grant funding benefit residential users in disadvantaged communities,” a DEC spokesperson said in a statement, referring to the rates paid for New York City water.

But for now, New York City continues to face limits on most funding opportunities. In August, Gov. Kathy Hochul announced an additional $200 million from the Bond Act would help to fund electric school buses and charging infrastructure. The program caps the funding each school district can receive, and New York City is considered one school district, even though it is the nation’s largest.

Water infrastructure improvement grants, which draw from Bond Act funding, cap awards at $5 million per municipality annually. The city is ineligible for “intermunicipal” grants for water infrastructure improvements that involve multiple localities, which are also in part funded by the Bond Act.

“The Bond Act is this huge chunk of money right now and we should make sure that it’s done right,” said Assemblymember Alex Bores (D-Manhattan). “It’s worth us talking about it now while we still have some 90 percent left to spend.”

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