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Sewerage & Water Board urged to reform before voting on rate hikes

By Clare Galofaro
The Times-Picayune

In an effort to influence the Sewerage & Water Board’s vote on the latest rate hike proposal, the Bureau of Government Research issued a statement Tuesday suggesting that the board is dealing with its issues in backwards order: Before it decides on a drastic price hike, it needs to address the “dysfunctional governance” that led to the need for one in the first place, the watchdog organization urged.

“For ratepayers, the prospect of paying more for sewerage and water service will always be unwelcome,” BGR’s statement reads. “In light of the S&WB’s weak performance as a steward of the systems it oversees, the increases are particularly difficult to accept.”

The Sewerage & Water Board will meet Wednesday to further discuss the proposed plan, which calls for a 10 percent jump in water and sewer rates every year for eight years. The matter will likely come up for a vote at the board’s meeting next month, said Ryan Berni, spokesman for Mayor Mitch Landrieu. If it’s approved, average monthly residential water and sewerage bills would climb from $52.50 to $86.36 by 2016.

The latest rate plan is a concession: the board had originally proposed a hike much steeper over a shorter, 5-year term until Landrieu this summer asked that the board make it more palatable to the public.

If the water board passes the measure, it moves to the City Council and Board of Liquidation for approval.

Even BGR concedes the hikes are necessary and long overdue. The city’s deteriorating network of sewer and water pipes needs an estimated $3.3 billion worth of repairs over the next 10 years. By 2020, the increases would generate an additional $582.6 million to meet those needs.

The S&WB’s executive committee voted earlier this month to send the price hike to the full board, which will consider the committee’s recommendations and likely pass them along to the mayor’s office Wednesday, Berni said. The proposal should come back to the board for a vote by November’s meeting.

Instead of requiring significant governance reforms to go along with the hike, as BGR had encouraged, the executive committee asked the agency’s staff to schedule a series of meetings later to debate ideas for restructuring the 13-member board.

Janet Howard, president of BGR, called it “kicking the can down the road.”

“It is perfectly reasonable for the public to expect – indeed to demand – serious governance reforms before it injects hundreds of millions of dollars into a troubled agency,” BGR officials wrote. “Otherwise, that massive investment will be at risk.”

Marcia St. Martin, executive director of the Sewerage and Water Board, said the board has addressed several of the governance concerns raised by BGR and continues to work with the organization. But they have to move forward with the rate hike, she said.

“The Board’s first and foremost responsibility is to serve our customers with the best sewerage, water, drainage and power systems and in so doing assure that those systems are properly funded,” she wrote in a statement.

A year ago, BGR issued a report, called “Making the Waterworks Work,” that detailed substantial bureaucratic reforms that would have to take place within the agency if it’s to be trusted to function properly.

The 109-year-old Sewerage and Water Board has been structured the same since its birth: of the 13 members, one is the mayor and three are City Council members. In the past, council members have voted for rate hikes while on the water board, only to kill the same hikes in the council chamber.

In short, BGR states, the board has historically wasted its time on political posturing and awarding contracts, while “giving short shrift to critical functions, such as financial oversight, strategic planning and the evaluation of executive management.”

It suggests that the board, before passing any rate hike, reform its own house, including removing the mayor and City Council members from the board – reducing the number from 13 to nine members — setting term limits, and giving the board the authority to make small, incremental rate increases on its own, without City Council approval. Corresponding legislation, which would have to be endorsed by both the City Council and state legislature, could feasibly be passed within the next year.

In the meantime, BGR suggests, the S&WB could raise rates only so high as to support the federally-mandated consent decree improvements to the sewer system. Further increases, their release says, should be contingent on governance reforms.

“The S&WB has for years been characterized by inertia,” the release states. “Time and again, it has returned to customers, hat in hand, for major rate increases after long periods without any. And during those years, as its systems have deteriorated, public confidence in a once-proud agency has deteriorated as well. Tying rate increases to substantive reforms would give citizens confidence that this time will be different.”

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