Increase in rate are to help with significant infrastructure investments.
Monday, January 23, 2012
By Michelle Krupa, The Times-Picayune
With dire warnings that New Orleans' aging drinking water, sewer and drainage systems face "serious risk" without significant infrastructure investments, Sewerage & Water Board officials today will begin trying to build public support for a plan that would more than double customer rates by 2016.
The proposal, which includes rate increases starting in July for water and sewer services, also calls for implementation beginning next year of a monthly parcel fee to support the city's colossal drainage system, including new pump stations at the 17th Street, London Avenue and Orleans Avenue canals and a massive flood gate on the West Bank.
The revenue proposal varies only slightly from the blueprint presented in October by Raftelis Financial Consultants Inc., which the water board hired in 2009 to review its operating and capital needs for the coming decade.
Under the new plan, the combined water and sewer bill for a typical homeowner would jump from about $52.50 a month this year to $103.69 a month in 2016, plus an additional drainage fee that would top out at $23.61 in 2020.
Mid-size businesses would see their rates rise from an average $2,956 a month today to $5,831 a month in 2016, with the drainage fee reaching $27.91 by 2020.
The estimates do not include garbage fees collected on monthly water bills and remitted to the city's Sanitation Department.
Raising water and sewer rates would require approval of the S&WB's board of directors, the City Council and the city's Board of Liquidation. The council and voters citywide would have to sign off on the drainage fee.
Public meetings on S&WB rates
The Sewerage & Water Board today kicks off a series of public meetings on its proposal to more than double customer rates during the next five years.
All sessions begin at 6 p.m. with a 45-minute presentation, after which at least 45 minutes will be allotted for questions and comments.
The meetings are:
- Monday at the Dryades Street YMCA, 2220 Oretha Castle Haley Blvd.
- Thursday at the City Council chambers, City Hall, 1300 Perdido St.
- Jan. 30 at the Lindy C. Boggs International Conference Center, University of New Orleans, 2043 Lakeshore Drive.
Additional neighborhood meetings are expected to be announced this week.
The consultant's report that serves as the basis of the revenue proposal, as well as the rate-proposal presentation, will be posted this week at the S&WB's website, www.swbno.org.
S&WB officials, in presenting their proposal Friday to The Times-Picayune, stressed that the agency in recent years has shaved spending to the bone -- exhausting its emergency reserve in order to drain the city after Hurricane Katrina and restore water and sewer service within weeks, cutting its workforce by nearly a fifth, eliminating training programs and deferring routine maintenance.
At the same time, the agency has secured nearly $1 billion in grants and low-interest loans from federal and state agencies to pay down existing debt and to cover capital projects. The sum includes $200 million and counting from FEMA for Katrina-related repairs, officials said.
But those strategies have not made up for the fact that the S&WB in recent decades has invested far less in its infrastructure than experts have recommended, mostly because requested revenue hikes were rejected, Deputy Director Bob Miller said.
"We've reached a tipping point," he said. "The board cannot continue to defer necessary operating and capital initiatives without seriously and adversely affecting its ability to deliver reliable, sustainable and necessary services.
"We're hanging on by our fingernails," Miller said.
Mayor Mitch Landrieu, who serves as water board president, has not weighed in on the revenue proposal.
His deputy for infrastructure, Cedric Grant, in a prepared statement Friday ticked off a long list of federal funding sources that the administration says it has helped secure to bolster the S&WB's coffers. However, the income largely already has been factored into water board officials' accounting in the revenue proposal.
A notable exception is Grant's assertion that the federal government -- not the S&WB -- should pick up the tab for overseeing the three new outfall canal pump stations and the West Bank facility.
"We are working with the U.S. Army Corps of Engineers regarding the payment of operating and maintenance costs for the future permanent pump stations, which at approximately $16 million annually, represents a cost we believe is the federal government's obligation," he said.
In addition to hamstringing day-to-day operations, S&WB leaders said that without additional income, their ability to borrow money to finance major capital upgrades will grind to a halt.
Adoption of the revenue increases, they said, would allow the agency to "fully fund" a bricks-and-mortar program that includes the city's share of more than $2 billion in federal drainage projects. Among the work is construction of nearly six miles of underground drainage canals Uptown.
The S&WB also would use the additional income to rebuild a cash reserve equal to 200 days of routine expenses, a key threshold that would improve the agency's bond rating and thus its borrowing ability.
Other plans include hiring more skilled workers to repair and maintain machinery at the agency's in-house electrical plant and water treatment facilities; hiring more employees to repair busted pipes and valves; installing automated water meters; and performing more inspections and maintenance of fire hydrants.
Additional revenue also would allow the S&WB to repay nearly $22 million that the city's Public Works Department fronted for emergency utility repairs, as well as to settle legal claims worth almost $21 million, officials said.
S&WB members at a meeting last week seemed to anticipate the uphill trek in winning support for the proposed revenue increases.
Board president pro tempore Ray Manning asked the staff to stress in its presentations that the agency's customer base has shrunk to 125,000 customers since Katrina, about 20,000 less than before the storm. Because the city's physical size hasn't changed, however, the S&WB must maintain the same expanse of infrastructure.
"We have less customers, and we have system that's in disrepair," Manning said.
Board member Beverly Wright said administrators should be clear that the S&WB "is not a profit-making entity. The perception is that the Sewerage & Water Board is making a lot of money."
City Councilwoman Stacy Head, a water board member who is vying for the council's vacant at-large seat, said that before the water board requests a rate increase, it should more aggressively target residents who have hooked up to the water and sewer systems illegally.
She also harped on the volume of free water and sewer services that the S&WB provides to public entities, including city agencies and public schools. The giveaways, which amount to about $5.5 million annually, largely are required under decades-old state laws, S&WB Executive Director Marcia St. Martin said.
Head also advised the water board to replace costly third-party contractors with in-house employees, and she suggested the agency charge City Hall a nominal fee for collecting sanitation fees.
"We need to fix our own house with the recognition that even if we fix our own house, we are still going to have some serious money problems," Head said.
Meanwhile, board member Glen Pilie said the staff "should be prepared to answer why our rates are so much higher than Jefferson Parish." The difference owes largely to the fact that the suburban government supplements water and sewer fees with property tax revenue, whereas the New Orleans systems rely almost entirely on user fees.