In The News › Mitch Landrieu asks S&WB to address key issues regarding rate increase

Mitch Landrieu asks S&WB to address key issues regarding rate increase

By Michelle Krupa, The Times-Picayune
July 18, 2012

With the Sewerage & Water Board scheduled to vote Wednesday on rate increases that would nearly double customer bills by 2016, Mayor Mitch Landrieu has asked the agency’s board to delay its decision to give officials more time to figure out how to ease the blow to customers’ pocketbooks.

In a letter sent Monday, Landrieu, who serves as S&WB president, tells his fellow board members that he’s “concerned that (the) proposed rate increase as it currently stands is not structured appropriately.”

“I agree with the S&WB’s expert consultants, the citizen’s task force, the Bureau of Governmental Research and others: A rate increase is necessary and inevitable,” Landrieu writes, referring to independent groups that have weighed in on the revenue jumps.

However, Landrieu says he wants the S&WB to analyze options for making the increases less steep, possibly by spreading them over a longer period or reducing services. Low-income and elderly residents, as well as business owners, have howled at the prospect of seeing their bills for water and sewer services jump more than 80 percent in the next four years, as the current plan proposes.

Landrieu also wants the S&WB to identify planned customer service improvements, to quantify the number of new jobs that proposed capital projects would create, and to identify “the consequences and the action plan if the proposed rate increase does not become a reality,” the letter states.

The mayor wants water board members to report back on the four matters within 30 to 60 days. Landrieu said that although he usually sends Deputy Mayor Cedric Grant to S&WB meetings in his stead, he plans to attend today’s session.

‘A political problem’

Landrieu in an interview Tuesday called the rate issue “as much a political problem as it is a financial one.”

“It is also one of really balancing the level of effort that the citizens can partake in in order to cure this problem,” he told The Times-Picayune. “We want to do as we have to do but not more than we can. And I just don’t feel comfortable yet that it’s where I want it to be.”

Citing his administration’s success since taking office in 2010 in shaking loose an additional $125 million from FEMA to repair S&WB assets damaged in Hurricane Katrina, Landrieu said he thinks the impact of the rate proposals can be softened, though he admitted he’s not sure how.
“I think that we all want to make sure that we can tell the citizens that we’ve at least done everything we can to try to analyze this and to make it as easy as we possibly can under difficult circumstances,” he said.

Top S&WB administrators called Landrieu’s request for additional information “reasonable and appropriate,” spokesman Robert Jackson said.

“A delay of 30 to 60 days would delay implementation of any new rates but would not result in an increase in the amounts needed,” he added.

Several board members — including City Council members Jackie Clarkson and Jon Johnson — did not respond to requests for comment about the mayor’s letter.

‘A premature step’

Councilwoman Stacy Head said she was the only member to vote against the proposed rate increases during a recent S&WB Finance Committee meeting.

“I believe it is a premature step given the current inefficiencies within the Sewerage & Water Board, which, if remedied, would result in significant cost savings,” she said. Head long has made similar complaints, though she has offered only vague details to support her contention.

Board member Flo Schornstein said she shares Landrieu’s concern about the impact of rate increases on residents who have seen virtually every household expense, particularly the cost of insurance, balloon since Katrina.

“This is a really hard time for a lot of people,” Schornstein said. “I think there is some lack of understanding on the part of the public and not understanding the dire need for the system. If we don’t make these repairs, we are all in jeopardy.

“Now, can we make any of them less expensively? Can we time it differently so the impact is not as felt as much? I think that’s something we have to look at,” she said. “But it is extremely important for the public to understand that the system is really disintegrating under our streets.”

Wave on rate increases

As proposed, customers would see their water rates jump by 12 percent a year through 2016 and their sewer rates increase by 13 percent a year over the same period.

The combined water and sewer bill for a typical homeowner would jump from about $52.50 a month this year to $94.92 a month by 2016. The estimates do not include the $24 monthly residential sanitation fee that is tacked onto S&WB bills, then remitted to City Hall.

Midsize businesses would see their water and sewer rates rise from an average $2,956 a month today to $5,334 a month in 2016. If the water board approves the increases, the issue will go to the New Orleans City Council and the Board of Liquidation.

In addition to financing daily operations and construction projects, the rate increases would help the agency rebuild a cash reserve equal to 200 days of routine expenses, a key threshold that would improve the agency’s bond rating and its borrowing ability. The water board also wants to hire more skilled workers for all aspects of the operation, to install automated water meters, to repair its in-house power plant and to perform more inspections and maintenance of fire hydrants.

The water board meets at 10 a.m. at the agency’s main office at 625 St. Joseph St. in the Warehouse District.

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