By THE NEW ALBANY SEWER BOARD
newsroom@newsandtribune.com
NEW ALBANY — At its regular meeting on Jan. 28, the New Albany Sewer Board received a report from the accounting firm of Crowe Horwath that identified the need for an immediate rate increase of 70 percent in order to restore the Utility to a sound financial condition while providing adequate funding for additional collection system improvement projects required to achieve compliance with the Clean Water Act in accordance with the mandate of the United States Environmental Protection Agency.
Prior to the Jan. 28 meeting, the Sewer Board had requested that representatives from Crowe meet with representatives from the State in order to give them an update of the financial issues that were facing the Utility. This was important since the Utility has a significant amount of debt that is owed to the State’s Revolving Fund loan program.
Representatives from Crowe had previously met with an SRF representative on Jan. 19. At that meeting, the SRF representative stated that an offer of assistance might be available, but that those discussions could only take place after the Sewer Board had approved the Crowe report and recommended its implementation to the City Council as a demonstration of its commitment to resolving these issues. After the Sewer Board took this action on Jan. 28, additional discussions took place with the SRF representative and a proposed offer of financial help from the State was finalized on the morning of Feb. 18. While it was unfortunate that this offer could not be finalized until the morning of the City Council meeting scheduled for that date, representatives from Crowe and the Sewer Board released the details of the offer as soon as it was formally approved by the State.
In response to the efforts of the Sewer Board and Crowe, the State has now offered significant financial assistance that will hold the rate increases to the minimum amount possible. In order to accept the package of financial assistance that has been offered by the State, however, the Utility needs to generate additional annual revenue of approximately $3.3 million immediately, and then another $2.3 million annually starting in 2012. As the vast majority of Utility revenue is generated from the monthly bills that are paid by sewer customers, Crowe has calculated that the Utility’s rates must be increased by 36 percent immediately and then another 19 percent at the beginning of 2012 in order to generate the additional annual revenue that is required, and the Sewer Board has again recommended to the City Council that these increases be implemented by ordinance.
As members of the Sewer Board (and long time residents of this community), we strive to keep rates as low as possible while ensuring that there is enough revenue to properly operate the system, maintain the significant investment that has been made in our facilities to date, and reasonably enable compliance with applicable federal and state law. We do not seek to raise rates any more than is absolutely necessary to fulfill these legal obligations. For many years, the City has been diligently working to comply with the requirements of an EPA consent decree. During the significant rain events that our community has endured during the past two years, additional collection system projects have been identified as necessary to address several locations where prohibited sanitary sewer overflows remain. While past construction projects of the Utility have eliminated more than 95 percent of sewer overflows, New Albany is legally obligated to eliminate 100 percent of them (as New Albany is categorized as a separated sanitary sewer system unlike the combined systems in most neighboring communities).
The New Albany City Council will conduct a public hearing at 6 p.m. on Thursday March 11 regarding an ordinance that would implement the proposed two-step rate increase. The Sewer Board will also hold its regular meeting at 4 p.m. on that date in order to present additional information about the EPA mandated projects and the necessity of the rate increases. We invite the public to attend either or both meetings in effort to gain answers to any questions or concerns that might be raised. While it is understood that customers would rather see no increase in rates, this alternative is simply not viable. The Utility’s current annual revenues are not sufficient to even satisfy current operating expenses and debt obligations. Past due bills need to be paid, the Utility’s current financial condition must be improved, and the EPA mandated projects must be addressed. Again, because of the financial assistance that has been offered by the State, the Utility can and should implement an immediate 36 percent rate increase, with an additional 19 percent increase scheduled for the beginning of 2012. It is sincerely hoped that the public, as well as the City Council, will recognize this increase as being far preferable to the immediate 70 percent increase that was originally identified as necessary.
One final note, at public meetings held regarding this issue to date, it has been proposed that additional funds from the City’s Economic Development Income Tax or Tax Increment Financing districts be used to supplement Utility revenues in order to keep the rate increase as low as possible. First, it should be noted that the Utility currently receives $875,000 per year from the EDIT revenue (scheduled to be reduced to $570,000 beginning in 2012). Second, it should be understood that the Utility serves customers both inside and outside of City limits, but its EDIT and TIF funds are collected only from residents within the City. Finally, as the Sewer Board does not control EDIT or TIF funds, any formal recommendation for use of such funds is a public policy decision that must be made by a majority of the City Council. We again commit to working with the public and the City Council in a transparent manner in effort to fully and properly resolve the long-standing sewer issues that this community has faced.
— NEW ALBANY SEWER BOARD
Roger Harbison, Chairman
John G. Brinkworth Jr., P.E., Member
Edward Wilkinson, Member
