By DANIEL SUDDEATH
Daniel.Suddeath@newsandtribune.com
NEW ALBANY —
The dozens of overhead slides, hours of testimony and stack of handouts the Sewer Board presented Thursday basically boiled down to one message — wastewater revenue is falling far short of expenses.
In 2009, sewer costs including a contract with Environmental Management Corp. and debt service payments equated to about $10.7 million, while revenue only totaled $9.1 million.
To mend the gap, the board has passed a rate increase plan still to be weighed by the City Council.
A 36 percent sewer hike would be levied immediately, followed by a 19 percent increase on that raise in 2012. A cost-of-living increase of three percent annually would then go into effect from 2013 to 2016 .
The rate hike was the basis of the sewer board meeting and a subsequent public hearing held by the council. The presentation featured sewer board members and engineers detailing the recent history of the sewer utility and attempting to answer the question asked by many residents — where’s the money?
“There’s no bad guys to point to,” said board member Ed Wilkinson, who showed graphs depicting how inflation has put a dent on the utility without adequate rates.
But the $49.6 million in sewer funds spent since 2003 for infrastructure projects designed to curb overflows has produced positive results, engineer Wes Christmas of the city-hired firm Clark-Dietz said.
Clark-Dietz works with the sewer board to implement its capacity assurance plan, or CAP, which is required by the Environmental Protection Agency. New Albany must submit and adhere to its CAP because its been held to a EPA consent decree based on numerous sewer overflows since 1992.
According to Christmas, CAP projects have eliminated 97 percent of the volume of sanitary sewer overflows, or SSOs, in the system since implemented.
“So there’s been tremendous progress,” Christmas said.
New Albany can be fined for SSOs that occur during a storm or weather event that should be handled by the city’s drainage and wastewater system.
With EPA approval, the system was designed to handle a five-year storm. A five-year storm means there’s a 20 percent chance an equal or greater rainfall will occur each year.
In 2002, there were more than 180 SSOs reported. While the number of overflows dropped until 2007, they began rising against the last two years. Christmas said it was mainly due to heavy rains, especially the floods of 2009.
The Aug. 4 flood of last summer dropped six inches of rain in some areas of New Albany, and was labeled a 100-year storm. The five-year storm design is meant to handle less than four inches of rain in a 24-hour period.
Christmas said 66 percent of the SSOs in 2009 came from storm events dropping rainfall into the system beyond its designed capacity.
Another factor in SSOs, according to Christmas, is that more than 70 percent of New Albany’s lines are clay and susceptible to infiltration from rainwater.
While the sewer board feels its been effective in limiting SSOs by funding CAP projects, the EPA mandate is that 100 percent of overflows beyond the design capacity be eliminated.
The board is in the process of getting an amended CAP plan approved by the EPA, which will free-up capacity in the city and among other projects, will allow Grant Line Industrial Park West to tap-in to the system.
But Christmas added the amended CAP plan requires funding for the construction improvements, which is built-in to the rate increase. If the projects aren’t completed, the city runs the risk of EPA fines and other penalties, he continued.
Sewer attorney Greg Fifer said if New Albany’s sewer system was in its current condition in 1992, EPA oversight would likely have been avoided.
John Skomp of the financial agency Crowe Horwath informed the sewer board of the need for a rate hike in January. His initial report, as requested and paid for by the board, called for an immediate 70 percent rate increase.
It was needed, according to Skomp, to meet debt requirements controlled by the State Revolving Loan Fund program and private companies that also hold New Albany bonds.
Since then, the state has agreed to re-finance some of that debt and offered New Albany a low-interest loan to pay for two years of EPA-related projects. Skomp said there’s no way the utility could take on any more debt without the state’s help.
On first vote last month, the council did not amend the ordinance to reflect the new state offer and unanimously defeated the 70 percent rate increase.
Skomp again went over the numbers with the council, sewer board and public Thursday, and said the state would like to see action on the proposal as soon as possible.
“They are looking for us to move the ball forward,” he said.
Upon request from the council, Skomp provided information comparing New Albany’s rates to other second class cities in Indiana. The city has some of the highest sewer rates for a city its size in the state, but that’s because it’s ahead of the curve in dealing with EPA mandates, Skomp said.
“I would say you’re going to be high now but in a few years, you’re going to be competitive,” with other cities, he said.
A 36 percent increase would mean a hike of about $3.60 a month for the minimum sewer user in the city and a little less than $13 a month.
Mayor’s take
Mayor Doug England did not attend the meeting, but Deputy Mayor Carl Malysz distributed a memo from England regarding the sewer raise.
He hailed the sewer board and council for attempting to educate the public on the rates, but the big news was his declaration that’s he’s attempting to end the city’s contract with EMC early.
New Albany already bought out EMC for stormwater service, and England said continuing to privatize the service maybe too costly.
“As negotiated prior to becoming mayor, the current terms, costs and length of the EMC operating contract make it difficult for the utility to operate within tolerable fiscal constraints,” England stated in the memo.
The EMC contract started under former Mayor Regina Overton, and was renewed by former Mayor James Garner to last until 2012. The company is paid $300,000 a month, which equated to $3.6 million in 2009.
That payment includes costs for gasoline, insurance for labor and other overhead expenses.
Malysz said an agreement wouldn’t be reached overnight, but added initial estimates show the city could see substantial savings by brining the operation back in-house.
Public reaction
The sewer meeting and public hearing were well attended by residents, though only about 10 people signed up to speak.
Nancy Morgan is a recent transplant to Floyd County, and she pays the county rate for sewage. She explained any increase is a hardship for her and many other customers.
“We don’t know how to cut the bill down anymore,” she said.
Clint McDaniel was at the opposite end of the spectrum.
He said he’s been living in New Albany for 30 years. It always takes a dire situation before the local government will agree to properly fund a program or utility, McDaniel said.
“The first act of patriotism is paying our fees and our fines,” he said.
“One way to ensure a project’s success is to over fund it. One way to ensure its failure is to under fund it.”
The public hearing was required by the state before the council can pass a rate increase. The final two votes on a sewer hike could come next week, at the March 18 regular council meeting.
HISTORY OF PROBLEMS
• 1979: Sewer problems were initially documented
• 1992: EPA issues initial consent decree against New Albany
• 2001: City has CAP plan approved, reduces $16 million in EPA fines to $180,000.
• 2001: EPA agrees to amended consent decree.
Source: Clark-Dietz
