More money, governance overhaul likely to top S&WB task force recommendations

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The need for vastly more money and a quick fix for a beyond-broken billing system headline a string of recommendations members of a task force will make to Gov. Jeff Landry and the Louisiana Legislature on how to address myriad issues with the Sewerage and Water Board.

Cash flow problems are particularly acute, given that the utility cannot currently borrow any additional money without an additional stream of income. Its immediate drainage system needs alone top $110 million, and the Sewerage and Water Board is $40 million short of that amount, S&WB director Janet Howard said.

The 14-member volunteer panel Landry created will sum up its advice in a report due to him and lawmakers next week. Much of it has been discussed publicly during three public hearings, the final one taking place Thursday at University Medical Center.

There is a strong consensus among members to revamp the governance of the Sewerage and Water Board, a legislative-created quasi-public agency. Its directors include the mayor and a representative of the New Orleans City Council, an arrangement Howard said needs to be “depoliticized.”

Since the council was given rate-setting authority over the Sewerage and Water Board in the 1960s, its members have been gun shy to suggest increases out of fear of political consequences. City council members also regulate their electricity provider, Entergy New Orleans, and have a staff of employees who analyze every rate increase the company requests.

There are no such experts in the Council Utilities Regulatory Office for the Sewerage and Water Board, and its rate requests often go ignored, Howard said. As a result, the utility has been underfunded for decades.

Howard, who was a proxy at Thursday’s meeting for fellow S&WB director Poco Sloss, said in the past 70 years, customer rates have only been increased 40 times. She and other task force members suggested linking rate hikes to the consumer price index, similar to how Jefferson Parish and other water systems handle their rate adjustments.

Task force appointee Paul Flower said a long history of sporadic and insufficient rate increase are largely behind the mess that the Sewerage and Water Board finds itself in today. The money to operate day to day comes at the cost of long-term investment and leads to added expenses.

“You have to steal from maintenance. You have to put off capital investment to the point where it’s gonna cost us 10, 15, 20 times what it would have, had we done it correctly,” Flower said.

Billing and the trust factor

Any effort to charge more for Sewerage and Water Board service is certain to land with a thud for customers, many of whom have battled fruitlessly to address inaccurate overbilling. Ratepayers are challenging bills that total $32 million, according to figures the utility provided. The task force is expected to ask the governor to provide funding for a “strike force” to immediately set up a system to address customer billing complaints.

Hilary Landry, a New Orleans attorney advising the task force, said she has been reaching out to retired judges who could preside over bill challenges. Her “pie in the sky” strategy would place 20 jurists at locations throughout the city to chip away at a backlog of some 4,500 contested bills. At a pace of handling five customers a day, the judges could work through the challenges within 40 to 50 days, said Landry, who is not related to the governor.

Landry said a billing system remedy is critical before the Sewerage and Water Board switches over to smart meters, which won’t have to be read in person.  Replacement of the existing 140,000 meters is underway and expected to conclude by the end of 2026.

“You don’t want to bring this albatross into your new system,” Landry said.

The $32 million in challenged bills is a little over one-third of the $90 million in outstanding payments owed to the Sewerage and Water Board, according to the utility.

Catch basins, stormwater fees

From the onset, the task force has voiced support for moving the upkeep and cleaning catch basins from the city’s public works department to the Sewerage and Water Board — along with money to pay for the work. The city council approved $10 million two years ago from the federal American Rescue Plan Act, but the Cantrell administration has left the money largely untouched while trying to secure contractors for the work.

The $10 million allocation would cover only half the cost of addressing all 72,000 catch basins in the city, and it wouldn’t provide money needed for ongoing maintenance. The public works handoff would also include roughly 1,600 miles of 36-inch pipelines that channel water from the catch basins to larger culverts and drainage canals. Crews often report breaks and clogs in the smaller pipes are why streets don’t drain properly.

The task force widely agrees a new stormwater fee is needed to provide a steady and adequate source of money to pay for the city’s drainage system repairs and upkeep. Ideally, it would replace a property tax the Sewerage and Water Board collects devoted to drainage to avoid charging taxpayers twice and ensure every property owner in the city pays for the service.

The tax-exempt status provided to nonprofits, which include universities, hospitals and churches, means roughly 40% of property owners in the city do not have to pay property taxes, according to figures from the Orleans Parish Assessor, and therefore enjoy drainage for free.

State-owned facilities, such as the Superdome, would also be charged a stormwater fee, although all property owners could earn credits toward the fee for measures that retain runoff or allow it to be absorbed into the ground.

“It’s unsustainable and needs to be fairer,” Flower said regarding the current drainage funding structure.

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