After S&WB releases water main repair plan, attention turns to funding
After demands from New Orleans Mayor Helena Moreno and City Council members, the Sewerage & Water Board on Monday released a plan for overhauling the city’s water mains. The question is how to come up with billions of dollars to pay for it.
Old water pipes have been a known problem for decades, but other priorities like drainage and roads have garnered more resources in recent years. After water main breaks caused four floods in six weeks, the water transmission system now tops a long list of infrastructure needs.
Moreno and the S&WB executive director, Randy Hayman, have already said they would seek state and federal funds, which could help chip away at immediate needs. But the overall cost of reviving a water transmission system on its deathbed is likely to far exceed the contributions of other government agencies.
The utility for now is focused on urgent repairs and 34 miles of large water mains that are more than 100 years old, which it says could exceed $700 million alone. That represents just 2% of the system.
On Tuesday, Moreno and Hayman offered a range of ideas but stopped short of calling for increases in water rates, which have been stagnant since 2020 but could be a difficult sell to the public while Moreno is already attempting to increase the $24 monthly sanitation fee.
“The funding piece, that’s the first thing that I looked at last night,” Moreno said. “How do we start to get this funding?”
Debt financing through bond sales is the typical way to pay for massive capital upgrades, but the S&WB says it has no bonding capacity because its annual water revenue, about $120 million annually, barely covers day-to-day operations and existing debt service. Only about $3.6 million is available this year for capital water repairs.
“We’re able to keep the train moving,” said Hayman of water rate revenue, though he added that rates haven’t changed in six years. “We have very little left to do the big-ticket items that we need to do, the long-term items that we need to do.”
Moreno suggested securing bonds with more than $20 million in annual tourism sales taxes that flows to the S&WB from as part of the city’s 2018 “fair share” deal with state officials. She said that could raise as much as $200 million, which at least would pay for the most urgent repairs and get a start on the 100-year-old mains.
Asked about raising water rates, Moreno said she would prefer a new parcel fee that would be controlled by the council and would pay for a variety of infrastructure needs. Moreno pushed for a parcel fee in her first term as an at-large council member, but dropped the effort when COVID-19 pandemic struck.
The parcel fee would replace a stormwater fee proposal the S&WB has been working on for more than two years but hasn’t released. The stormwater fee is seen as a way to force nonprofit and tax-exempt property owners to pay for drainage, which is funded with property taxes. Moreno said the parcel fee is preferable because it wouldn’t be restricted to a single system.
She also said the S&WB needs to come up with its own funding solutions.
“What are their ideas now? That’s what I’m asking for. I have no problem, of course, collaborating and being part of the solution, but what are they bringing to the table as well?” Moreno said.
Hayman said he would seek support from trade associations like the National Association of Clean Water Agencies – where he serves on the board – to lobby for a new federal funding source for distressed water utilities.
“We have to try to find some type of programmatic funding that is more than just a one-time shot, that allows us to have funding over multiple decades,” Hayman said. “That may mean that we have to create something different in Washington.”
Hayman was circumspect when asked about Moreno’s ideas for pledging fair share money and a parcel fee, and said it was the first time he’d heard of the latter idea. He said S&WB was conferring with financial advisors, noting that sales taxes are not historically used to secure bonds.
Most City Council members either did not respond to questions or said they hadn’t had a chance to review the S&WB plan, which is likely to come up at a City Council committee meeting Wednesday.
District D Councilmember Eugene Green said the state should pay for the water mains from revenue generated by state properties such as the Superdome, Convention Center and City Park.
“Maybe there needs to be a new look at the way that infrastructure and operations of our City already contribute so much to our state,” Green said.
Council President JP Morrell, a frequent S&WB critic, said he was still reviewing the plan, but that it “seems to be a reaction to criticism and an attempt to shape their failing narrative that they are doing something other than haphazardly reacting to foreseeable infrastructure challenges.”
For residents struggling to pick up the pieces after water main breaks flooded homes and cars, a remedy can’t come soon enough.
BilliJo Dolton said she and her family are still sorting through what’s salvageable in their home near the corner of South Carrollton Avenue and Panola Street, which flooded after the third major rupture on March 9. Dolton woke up to calf-deep water that morning, and her frustrations have only mounted since then, as the stench of mold grows, and strangers have begun to rummage through garbage she threw out on the sidewalk.
“It’s like we can’t catch a break,” she said.
Dolton said she is “dumbfounded” the S&WB couldn’t come up with a faster plan.
“It should not take a brain surgeon or master scientist to figure this out. We are built on alluvial soil. There should have been plans to keep these pipes updated all along,” Dolton said.
Staff writer Joni Hess contributed to this report