By DANIEL SUDDEATH
The Sewer Board should present its opinion on a proposed 70 percent rate increase before the New Albany City Council takes any action, Council President John Gonder said Friday.
Due to debt and a gap between the utility’s expenses and revenue, a representative from the Indianapolis firm Crowe Horwath told the sewer board Thursday the city should raise rates by 70 percent immediately.
The council will meet at 7:30 p.m. Monday, but there’s no work session or vote scheduled regarding sewer rates.
“The ball is in [the sewer board’s] court at the moment. They need to decide how they’re going to come forward with their recommendations,” Gonder said.
Sewer board members said Thursday they wanted to wait until meeting with the council before voting on the proposed rate increase, which would equate to about a $25 monthly hike for the average sewer customers’ bill.
New Albany serves Floyd County residents as well, and those customers pay a higher rate than the average.
Since the sewer board manages the utility’s operations, Gonder said it’s practical to let its members form a plan before the council weighs the matter.
The council has to OK a rate increase before it takes effect.
“It may be premature to meet to talk about it until they’ve decided what their stance is going to be,” Gonder said.
But Councilman Dan Coffey isn’t interested in waiting. He said he doesn’t trust the sewer board and wants a private review of the utility.
“The sewer is nothing more than a cash cow and we need a full blown audit to see where this money has went,” he said.
Coffey voted against a three-phase, 8 percent sewer increase in 2006 that passed 5-4.
In 2008, Mayor Doug England proposed a 22 percent rate increase that would have removed the annual $870,000 Economic Development Income Tax pledge from the sewer fund.
It was based on analysis provided by Crowe Chizek, which is now Crowe Horwath.
The council never voted on the proposal, but now stands to have to tackle a rate increase of more than three times the amount suggested in 2008. According to Crowe Horwath representative John Skomp, the city must raise the rates to secure backing for outstanding sewer debt. The utility has also missed four payments to an interest synching fund, which will keep it from being able to remove the EDIT pledge from the sewer budget.
Due in part to the missed payments, New Albany must make a payment of $960,000 by March 1 to the interest synching fund or risk violating agreements stipulated by the Indiana Wastewater Revolving Loan Program.
Coffey said the board should have come before the council and asked for money to make those payments.
“They have run that sewer with autonomy. There’s not been even a remote trying to be open about it where people could see what’s going on,” he said.
“We went through this same crap 12 years ago. [Former mayors] Regina Overton and James Garner got it straightened up.”
The sewer board used to have council representation on it until 2008 when it was reduced to three members, all appointed by the mayor.
Mayor Doug England said he trusts his sewer board, all of whom have engineering experience, to crunch the numbers and make appropriate recommendations.
He said he didn’t know why the payments had been missed, but expects the board will get to the root of the problem.
“There’s nothing there for anybody to be fighting about,” England said. “I think there’s a lot of confusion, but I think the council and sewer board will come together and work together.”
England added that while he was surprised by the amount, he anticipated Crowe Horwath would report that a rate increase is needed.
He said it should have been expected since other cities, including Jeffersonville, are paying similar rates. There are state and federal demands regarding infrastructure projects that have to be met, England continued.
“This didn’t start because of us going back into office,” he said.
At the meeting
• While there isn’t a sewer rate ordinance on the agenda, the council is scheduled to vote on hiring a full-time council attorney at $40,000 a year.
It’s also scheduled to take the final vote on a measure that will keep the majority of speeding ticket fines local. The ordinance passed on first and second readings earlier this month.
The final reading of a $2 million EDIT request for the police and fire departments has been tabled until the council can meet with England Feb. 6 to discuss the proposal.
Gonder said at the Feb. 6 meeting, he expects there will be discussion of how the sewer situation may impact any EDIT requests.
