Council votes 5 – 2 to increase water and sewerage rates
10th December 2012 · 0 Comments
By April Siese
New Orleans’ City Council has voted in favor of an ordinance that will increase the rates for water and sewerage usage. Over an eight-year period residents will see a 10 percent annual increase in their sewerage and water bills, one that will result in an additional $582.7 million, according to reports. The additional revenue generated by the increases will be used to help fund a $3.3 billion infrastructure project to renovate the city’s 300-year-old sewerage system as well as meet EPA health and safety standards as put forth by a federal consent decree.
The 5-2 vote came after much protest from City Council President Stacy Head, who requested an additional deferment due to what she felt was a lack of public discussion as well as transparency on how exactly the revenue would be used. Of the seven council members who voted on the ordinance, the two dissenting votes came from Head and Ernest Charbonnet.
“I know the work is needed and I know an increase is inevitable but we should’ve taken more time to properly vet it to the community,” Charbonnet told The Louisiana Weekly. “We had a hearing on it the day before we voted and amendments were added. The changes were positive and that was the result of one night. Imagine if we took even just a few days. I’m sure we could have even better legislation. It’s just too much money and the bill is too important to rush through.”
Council member Cynthia Hedge-Morrell released a statement in favor of the rate-increasing ordinance, citing it as a marker of New Orleans’ progress as a thriving city. “There is no more Road Home money, no more elevation money, and we have to be able to sustain ourselves,” the statement reads, “These funds will do aspects of our decrepit sewage and water system…hundreds of street repairs that have languished on the books for years will finally be made.”
The way in which the ordinance secures such revenue by potentially doubling sewerage and water bill costs after eight years has been strongly opposed by many residents, who feel that potential expansions to the water help program are not enough to offset costs for financially vulnerable citizens.
The proposed rate hike would raise the average resident’s monthly bill from $52.50 today to $112.67 by 2020, the Sewerage & Water Board said Wednesday.
“At this juncture, rate hikes equal near-criminal extortion when those of us working in the industry can expect to remain at an hourly rate of $2.13 or, conversely, a federal wage of $7.25,” says bartender Capricho De Vellas, “A gradual increase in public utilities should coincide only with a gradual increase in federal (or state) minimum compensations.”
Others see the move as a difficult but necessary one needed to modernize one of the most basic resources a city has to offer. Destiny Chano told The Louisiana Weekly via twitter that the increase was a necessary evil. “It has to be done. The cost of everything else has gone up, including material needed to maintain the system.”
According to information re?leased by S&WB, the agency would spend the $582.7 million through 2020:
$203.7 million would pay for construction projects. Of that figure, the agency would use half (or $100 million) to fix pipes, water pumps and filters. The agency would use the other $100 million to issue bonds to borrow $643 million over 20 years to finance an array of additional infrastructure projects. Thus leveraged, the $203.7 million would generate $743 million in spending for new projects.
Part of the $743 million would upgrade the agency’s two water purification plants, repair leaky sewage pipes and modernize the agency’s power plant, Joseph Becker, the Sewerage & Water general superintendent, said in an interview. The federal Environ?mental Protection Agency has demanded the sewage pipe upgrades. The East Bank plant that generates electricity to operate sewer, water and drainage systems has failed five times, most recently during Hurricane Isaac,
In all, S&WB officials have said they have a $3.3 billion construction backlog, a figure far in excess of the projected $743 million capital infusion.
“It’s the beginning,” Landrieu acknowledged to reporters, following a luncheon speech on Wednesday. “It’s the first year of a long-term problem.”
A further breakdown of the spending plan is as follows:
• $242.1 million for the S&WB’s yearly operations and maintenance needs. Deputy director Robert Miller said the agency will need to hire more electricians, machinists, mechanics and other staff in order to fix small leaks (currently 1,200 per week) and replace old computers.
• $54.6 million to pay off debts, including $21.8 million due to the city’s Department of Public Works and $20.9 million owed to people who have won claims against the agency.
• $48.7 million to boost cash reserves, to qualify for an improved bond rating to borrow more money. The S&WB’s bond ratings are mostly junk status.
• $33.6 million to offset a loss in funding from the Federal Emergency Management Administration.
The sewerage and water board rate increase is set to take effect January 1.
This article was originally published in the December 10, 2012 print edition of The Louisiana Weekly newspaper