After focusing on “the frequent failures” of the city’s Sewerage & Water Board of New Orleans, Gov. Jeff Landry’s task force released recommendations to improve the city’s water and drainage services.
“If there were a citywide confidence/no confidence vote on SWBNO, it might be 90% ‘no confidence,’” the task force wrote, referring to the March 14 public hearing and testimony from scores of residents about billing disputes and unpaid judgments.
Some recommendations, such as the threat of a two-year state-led takeover, are meant to push local officials to act swiftly on chronic problems, said Paul Rainwater, the chair of Landry’s 14-member task force, who in 2017, served for several months as S&WB Emergency Manager but is perhaps best known for heading up the Louisiana Recovery Authority, which allocated federal recovery funds after Hurricanes Katrina and Rita.
On Tuesday, Rep. Alonzo Knox of New Orleans introduced a bill that would replace the current S&WB board with a new, transitional, 11-member panel. The new panel, tasked with reforming how S&WB operates, would take over all responsibilities in January, if House Bill 941 becomes law.
Landry’s task force also supports that concept. Its report suggests several key changes for the transitional board to implement before it is dissolved in 2026, to be replaced by a permanent, re-named entity, the New Orleans Sewerage, Water and Drainage Board.
Some of the task force’s recommendations mirror ideas proposed in February by a coalition called Water Justice New Orleans — though the water-justice proposal is wary of placing more burden on S&WB’s residential and small-business customers while skipping over the utility’s significant level of tax-exempt customers who pay nothing.
Clarifying S&WB’s Confusing State-City Governance
At the heart of the governor’s recent efforts is a longstanding “ownership problem” for the S&WB. The public utility is regulated by the Louisiana Legislature and governed by a board of directors. But its board is controlled by the mayor of New Orleans, who serves as the board’s chair, while the New Orleans City Council controls its funding.
Ownership—and repairs—of its sewage and drainage infrastructure are split between the S&WB and the city’s Department of Public Works (DPW).
DPW is responsible for cleaning and maintaining the city’s estimated 27,000 catch basins and smaller drainage pipes while S&WB is responsible for pumping the water out, by maintaining pumping stations, canals, and larger pipes with a circumference of 36 inches or more.
This disparity in responsibility has long been identified as a problem but S&WB said that it does not have the money to take on DPW’s drainage work. DPW began fixing the smaller pipes in response to S&WB money shortages, after a failed 1991 S&WB millage.
But the task force recommends that S&WB take over DPW’s drainage duties. This would place all New Orleans catch basins and drainage pipes under one controlling authority, with hopes of creating a more efficient system.
If Knox’s legislation passes, putting the transitional board in place in January, the transitional officials would be tasked with determining the future governance of, as recommended, the 2026 New Orleans Sewerage, Water and Drainage Board.
Landry’s task force recommends that the new public utility be regulated either by the New Orleans City Council or the Louisiana Public Service Commission.
Landry’s task force also offers a third option, that the board could become a private entity, with the city of New Orleans as its sole stockholder. This recommendation, called the “New Orleans Water Company,” would be modeled after the Louisville Water Company, in Louisville, Ky., which describes itself as “quasi-municipal.”
Yet privatization has not been an unmitigated savior for other municipal water systems. The Water Collaborative, a local grassroots organization focusing on rights-based water management in greater New Orleans, has long opposed the complete privatization of the S&WB because customers could potentially be stuck with higher bills.
“Whatever happens, we will continue to advocate for a board comprised of local expertise,” said Rebecca Malpass, director of policy and research at the Water Collaborative.
SMART meters, touted as a fix for billing woes
Landry’s task force also recommends that S&WB appoint an independent arbitration panel to hear billing disputes. Currently, the utility employs six people to handle objections filed by customers.
The task force suggests that until SMART meters can be installed, residents should pay a flat amount equal to the average of a customer’s previous 12 months of uncontested bills. Their hope is that, by 2026, the SMART meters will correct misreading and wildly incorrect “estimated” bills.
The Water Collaborative is doubtful that SMART meters alone will solve billing problems.
SMART meters will record water usage more accurately — and sometimes that accuracy could cause higher bills for customers, said Malpass. If the city does not fix its pipes before installing the new meters, water wasted by leaky pipes could incorrectly be tallied as water consumption.
The S&WB should be required to provide free services to identify leaks and work with property owners to fix those leaks, the Water Collaborative has written. The collaborative also recommends that S&WB implement an affordability program for any customers who will be financially burdened by rate increases.
Paying for fixes, despite the city’s high number of tax-exempt properties
Though Landry’s task force suggests increasing water rates incrementally over time, the Water Collaborative says that would place the financial burden of capital-improvement projects onto residents and small businesses.
That disproportionate burden results from the approximately 13,500 “free water” properties that pay nothing for water because they are owned by tax-exempt entities who pay no property taxes, and thus no drainage fees. The city misses out annually on nearly $123 million of potential revenue due to tax exemptions, according to The Water Justice Fund.
Unaffordable bills could potentially be mitigated by the implementation of an affordability program, as outlined by the Natural Resources Defense Council. But the Water Collaborative recommends that instead of hiking rates at all, S&WB should address the root causes of water-bill debt.
To be more fair in its billing, the Collaborative suggests, the S&WB could fund large capital-improvement projects by imposing a “stormwater-management fee.” The idea of such a fee was first discussed in depth by the Bureau of Governmental Research, nearly a decade ago.
The fee is part of a larger Water Collaborative plan that calls for “the democratization of drainage,” instead of a state-takeover or privatization. In February, the Water Collaborative announced its new approach, through a coalition called Water Justice New Orleans.
The Water Justice Fund recommends that the city create a new stormwater utility, the Division of Stormwater Management, within a new department, the Department of Resilience & Sustainability. The Division of Stormwater Management would impose a stormwater fee that would be paid by everyone who uses water — without regard for tax-exempt status — to pay for the city’s traditional “gray” stormwater infrastructure along with newer green infrastructure.
Landry’s task force report also mentions a stormwater fee, as a potential solution toward creating an equitable revenue base.
“In many ways, a state-controlled takeover of the water utility somewhat bolsters our plan,” said Malpass of the Water Collaborative.
If the state were to take over the S&WB, any drainage fee would become state-controlled funding, she said. Malpass would prefer to see the drainage fee become locally controlled funding, overseen by the new city Department of Resilience & Sustainability.
“For years we’ve said that the Sewerage & Water Board needs more oversight. But it should remain local,” Malpass said. “It should be in the hands of people who understand what is going on in New Orleans.”