New Orleans City Council passed sewer and water increases of 10 percent per year for the next eight years, doubling New Orleans Sewerage and Water Board (S&WB) bills for customers by 2020. The rate hike passed 5-2, with City Council President Stacy Head and District E Councilman Ernest Charbonnet as the dissenters.
Council members amended the original bill, tying it to S&WB governance reform initiative that will include the elimination of three City Council slots and one mayoral appointee on the governing board and reduce terms from nine years to four years.
The rate increase was supported by Mayor Mitch Landrieu, the Bureau of Governmental Research (BGR), the hotel and lodging industry and the New Orleans Chamber of Commerce.
Head and Charbonnet said they weren't opposed to the rate hikes themselves, acknowledging that the city's sewer and water infrastructure is in need of more than $3.3 billion in repairs. Both, however, questioned how the money will be used, the public's trust in the S&WB and what they characterized as a negotiations-to-approval process that didn't give the public enough time or information.
"Yes, we have unity of the governmental community, unity of the business community. What about the people?" Charbonnet said, asking for the issue to be pushed to the next Council meeting on Dec. 20, giving council members and the public "a couple weeks to properly vet this."
A number of speakers from the public agreed.
"I firmly believe the Sewerage and Water Board should have to make its case directly to the public ... Convince us. Tell us why this money is needed and how it will be used," said Meg Lousteau. "The pipes are not going to burst tomorrow if we don't vote on this today."
Council members who supported voting today, however, argued that city government had "kicked the can down the road" long enough.
"We can't keep waiting, ladies and gentleman, members of council," said Kristin Palmer, adding that the S&WB is under a federal consent decree with the Environmental Protection Agency to improve the water system, and risks fines and loss of federal funding if misses current deadlines set by that agreement. "We cannot risk the loss of hundreds of millions of federal dollars if we do not have this as a match."
The increases will generate about $583 million in additional revenue for the S&WB. Of that, only about $100 million will go directly to pipe and water system upgrades, as the Lens first reported. Another $100 million will go to toward a bond issuance expected to generate more than $600 million for upgrades. The nearly $400 million remaining is planned to be used for day-to-day operations, S&WB debt and shoring up its reserve fund. Even BGR president Janet Howard, who supported the increases overall, expressed some doubt about how the money will be used.
"Less than half of it will go to infrastructure ... Very little is going to the pipes and water system," she said. "Having said that, I reiterate BGR's support of the rate increases."
Landrieu and S&WB officials estimate that the work could lead to more than 25,000 temporary construction jobs and 200 permanent jobs.
"By the mayor's count, there will be 25,000 or so jobs to come out of this," said Bob Brown, managing director of the Business Council of New Orleans and the River Region. "This could be for New Orleans what the Hartsfield Airport was for Atlanta."