New Orleans water and sewer rate would rise more slowly under latest staff proposal

Posted on: September 19 2012

Richard Rainey, The Times-Picayune By Richard Rainey, The Times-Picayune
September 19, 2012

Facing political pressure from Mayor Mitch Landrieu to draft a rate plan he can justify to the public, the staff of the Sewerage & Water Board has scaled back its proposed water and sewer rates for a second time since asking to double its fees a year ago. The latest plan, handed to board members on Tuesday, calls for a 10 percent annual jump in sewer and water rates for eight years. The staff originally proposed increasing both sewer and water rates 15 percent every year until 2016, but it trimmed that in May to a 13 percent jump for sewer and a 12 percent jump for water over five years.
s&wb_water_meter_cover.jpgEliot Kamenitz, The Times-Picayune archive

The New Orleans Sewerage & Water Board has once again trimmed back its rate hike proposals for sewer and water service.

The latest cutback could make the rate increases an easier sell for S&WB members to the City Council and Board of Liquidation, which have the final say on their implementation. But the reductions also mean the agency will have to get by with $32.8 million less than what the plan's second rendition would have brought in.

To adjust, the staff's proposal delays its schedule for future capital projects, designed to tackle years of deferred maintenance and help meet time-mandated federal standards for reducing existing wastewater safety hazards.

Under the latest proposal -- requested by Landrieu, who serves as president of the water board -- average monthly residential water and sewer bills would climb from $52.50 to $86.36 in 2016, or $8.56 less than most recently projected.

Residents receive a single monthly bill from the water board that covers sewer and water service as well as trash pickup. Although sewerage rates and water rates are independent of each other, the amount of water a customer consumes is used to calculate sewerage use.

S&WB President pro tem Raymond Manning asked his fellow board members to collect public input before their Oct. 5 meeting, when the board will consider the staff's recommendations. Historically, sewer and water rate increases in New Orleans have been political hot potatoes, often failing to pass the council as the city's notoriously leaky pipes steadily deteriorate. Asking residents, many of whom lived on fixed incomes or fall below the poverty line, to pay more for basic utilities is hard enough. But an odd quirk in the membership of the 109-year-old S&WB shoves another wrench in the works.

Three members of the City Council also sit on the S&WB. To pass a rate increase, those members must first vote to send the proposed changes to the full council. Then, as council members, they must vote to approve the increases. In the past, those members have approved sending the increases to the council, then killed them.

It's a governmental Catch-22 that has several groups, including the Bureau of Governmental Research, calling for the ouster of elected officials from the board.

Hoping to avoid such a stalemate, Landrieu asked the S&WB in July to take two months to comb through their latest proposal one last time. He also asked staff members to answer several questions to help prove their case.

"In my experience in government, I have found that if you're forthright and the people really understand it, notwithstanding how hard it is, we'll find a way to get it done," he said at the time.

Landrieu didn't attend the board meeting Tuesday, but Deputy Mayor of Capital Projects Cedric Grant sat in his stead.

In his questions to the S&WB, the mayor sought to partly shift focus away from the cost to customers and toward potential benefits, including new jobs, improved customer service and a more efficient agency.

Officials say the rates are necessary to pay for a $3.3 billion plan to repair the city's fractured water and sewer systems over 10 years. State and federal agencies have promised to help with the cost, but service rates will have to cover more than a third of that amount, according to the staff report.

Beyond building a new system, Infinity Engineering Consultants estimated that the renovations will add almost 27,000 construction jobs.

The S&WB's own work force stands to benefit as well, according to the report. The agency had more than 4,000 employees prior to Hurricane Katrina, but its numbers have since dwindled to less than 1,000, Superintendent Joseph Becker said Tuesday. And almost a third of those still working will reach retirement age within the next five years, accentuating the need to attract younger skilled laborers.

The rate increases will allow the staff to add 74 new permanent positions next year and another 112 by 2020, according to the report. Several new jobs will focus on reducing the amount of free water the S&WB gives away to municipal agencies.

Tuesday's report also calls for new electronic meters to be installed and another customer service center to be opened.

After championing the rate increases, the S&WB staff report also painted a dire picture of what could happen without them. It was those scenarios Landrieu specifically asked the board to elaborate upon.

Without an increase in revenue, service interruptions will increase and the likelihood that the whole system could fail will shoot skyward, the staff told the board.

"And the worst-case scenario is a catastrophic failure of the water system that could result in the need to evacuate the city pending the reconstruction of the failed infrastructure and the lengthy recertification of the drinking water system," the report stated.

The S&WB also could fail to meet the deadlines set by its 1998 federal consent decree, according to the report. As a result, The U.S. Justice Department or the Environmental Protection Agency could order the agency to increase its rates. So could the city's Board of Liquidation, which monitors the S&WB's debt service.

It could also take a hit to its credit rating and cash reserves set aside for emergencies and natural disasters.

As the staff's results were handed around Tuesday, S&WB member Loyce Wright had reservations.

She criticized the process for not seeking more input from the public, even though the water board has received independent reviews of the rate proposals from BGR, the Business Council, and an assembled group of engineers, architects and attorneys known as the New Orleans Citizen Sewer, Water & Drainage System Reform Task Force.

"It may require more time to bring more groups up to speed, but I do believe we need to have a conversation with a larger group that what is referenced in this document," she said.