The New Orleans City Council Public Works Committee on Tuesday advanced a resolution to allow the Sewerage and Water Board to issue $25 million in bonds as part of a decades-long overhaul of the city’s sewer system.
The fixes and upgrades are required by a federal consent decree that the Sewerage and Water Board signed in 1998 and which was subsequently amended three times in 2010, 2013 and 2014. The original complaint that led to the legal agreement was brought on behalf of the Environmental Protection Agency and accused the Sewerage and Water Board, City of New Orleans and the State of Louisiana of being in violation of the federal Clean Water Act. According to the legal filings, the city was releasing untreated sewage into the Mississippi River, Lake Pontchartrain and other canals and waterways.
If the plan ultimately gets the green light, the Sewerage and Water Board would take a loan from the state’s Clean Water State Revolving Fund. The fund is a federally funded project administered by the state’s Department of Environmental Quality that provides low interest loans for capital projects on publicly owned utilities.
According to Jason Akers, bond counsel for the city’s Board of Liquidation, the loan would have a .95 percent fixed interest rate. It would be paid back over 22 years at a rate of $1.4 million a year, Akers said.
“Were going to venture to say we’re not going to find a better deal than that on the market,” he said.
He added that the state Department of Environmental Quality has been working with the Sewerage and Water Board to approve the application and make the funds available. However, the application hasn’t been formally approved yet, he said.
The Sewerage and Water Board remediation plan for the sewer system breaks down the upgrades and repairs to nine different “basins.” On it’s website, the Sewerage and Water Board explains what these geographic drainage basins look like.
“The city is a series of basins connected like an inverted tortoise shell that stretches to Lake Pontchartrain,” the website says.
According to a July report, the Sewerage and Water Board has completed the remediation plan in five basins and has fully funded a sixth that is scheduled for completion in October. The remaining three basins are the South Shore, Carrollton and Mid-City basins. The consent decree requires the city to complete the entire plan by 2025, according to Sewerage and Water Board Chief Financial Officer Yvette Downs.
The $25 million loan would go toward remediation in the South Shore basin. According to Akers, this basin occupies eastern New Orleans above Interstate 10. The money will go to projects such as repairing manhole covers and replacing damaged or aging sewer lines.
There are still a number of steps before the loan is secured. According to Akers, they still need approval from the Board of Directors of the Sewerage and Water Board, the full City Council, the local Board of Liquidation and the state Board of Liquidation. He said the city hoped to have that all done by early October.
“We have a couple busy weeks to get all our approvals in place,” he said.
Downs said that with the loan would fully fund all the remaining South Shore basin projects. But it won’t cover the remaining two basins: Carrollton and Mid-City. According to Sewerage and Water Board Press Secretary Courtney Barnes, the Carrollton basin projects will cost $72.9 million and the Mid-City basin projects will cost $32.4 million.
Downs said that for those two basins, the Sewerage and Water Board is applying for the EPA’s Water Infrastructure Finance and Innovation Act, or WIFIA, program.
Similar to the state’s Clean Water State Revolving Fund, the WIFIA program provides low-cost loans for investments in the country’s water system.
“We’re hopeful we’ll be looked upon favorably if we’re invited to the next round,” Downs said. “If that does not happen, we will have a very difficult conversation because we have to do the work.”