S&WB task force highlights agency’s financial crisis, calls for drainage fees

By Jeff Adelson

January 28, 2019

The New Orleans Sewerage & Water Board is in desperate need of money for critical infrastructure projects and should start charging a new stormwater fee to pay for longer-term upgrades to the city’s drainage system, a report from a state task force said Monday.

The task force, created after the August 2017 flood that put the S&WB’s failing infrastructure on dramatic display, issued its final report after months studying how to fix the operational and financial problems plaguing the beleaguered agency.

Among the recommendations, which included improving the S&WB’s communication with the public and potentially tasking the agency with some duties currently handled by the Department of Public Works, the report detailed the need to plug short-term funding issues as well as reverse the long-term deterioration of the city’s drainage system by raising fees or locating other sources of funds.

“This legacy of chronic underfunding and unpredictable revenue streams has crippled (the S&WB’s) and the city’s ability to invest in capital projects, forced deferment of regular infrastructure maintenance and led to an almost wholly reactive, emergency-based maintenance protocol,” according to the report.

The report notes that the S&WB is continuing to burn through cash reserves amid what some observers say is a financial crisis. The utility used up more than $80 million in emergency spending after the 2017 flooding and cash reserves tumbled through much of last year.

Even before its recent financial troubles, the report notes, the S&WB couldn’t afford to keep up with the required maintenance and upgrades of its equipment and pipes.

The recommendations in the report add to the steady drumbeat of calls for more money for the agency from officials including Mayor LaToya Cantrell and S&WB Executive Director Ghassan Korban.

“I don’t think I could be more in alignment with what they came up with,” Korban said of the task force before it adopted the report on Monday.

Korban sat on the task force, and Cantrell was represented by her infrastructure chief, Ramsey Green. The group also included Councilman Jay Banks as well as representatives from the Business Council of New Orleans and the River Region, New Orleans & Co., the Louisiana Engineering Society and the Board of Liquidation, City Debt.

The report didn’t specify where the needed short-term funding should come from. Green said after the meeting that no specific plans are in place.

On a longer timeline, the report calls for an overhaul of the way drainage operations are funded.

Currently, the S&WB’s drainage system is paid for by property taxes, but the report calls for imposing a stormwater drainage fee that would account for how much water runs off a property.

That would be attractive to S&WB officials because it would create an incentive for property owners to reduce the amount of water from their properties that makes its way into the drainage system.

Various groups, both inside and outside city government and the S&WB, have argued for years that a drainage fee could be a solution that would bring in more money and could be imposed on government and nonprofit properties that are currently exempt from property taxes and therefore pay nothing for drainage.

A 2011 study by the Bureau of Governmental Research found that about 43 percent of the city’s tax base was exempt from property taxes.

Green said after Monday’s meeting that such a fee would likely not come until the end of this year or the beginning of next year. The goal would be to come up with a formula that would avoid adding additional fees to those already paying into the drainage system through property taxes.

The report also recommends that responsibility for more parts of the city’s drainage system be consolidated under the S&WB. Currently, the S&WB is responsible for the large pipes and the pumps that push water out of the city, while the city’s Department of Public Works is charged with maintaining the catch basins and smaller lines that feed them.

The difficulty of coordinating the two agencies’ work schedules has been a source of frustration for city officials.

The task force was also charged with determining if the S&WB could be reorganized in a way that would provide more reliable services for the city. It is currently a public agency that operates separately from the rest of city government. Several options were proposed and then rejected, including the possibility of privatization.

“I think there may have been some expectation that there would be a radical change in governance,” said Poco Sloss, a member of the task force representing the Board of Liquidation, City Debt. “We took a look at that and realized it was not practicable at this point in time.”

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