NEW ALBANY —
The New Albany City Council called on plan B Monday to address sewer rates.
The option, dubbed plan B by Mayor Doug England, calls for an immediate 23 percent rate hike followed by a 20 percent jump in 2012. It passed on second reading 5-4.
Councilmen Jeff Gahan, Dan Coffey, Steve Price and Pat McLaughlin voted against the measure. The foursome also voted against a bond ordinance that allows the city to take on a $7.4 million loan from the state for sewer projects.
Plan A called on additional Economic Development Income Tax and riverboat fund subsidies of the sewers. If plan B is passed on final reading next week, $240,000 of annual debt service will be covered with tax-increment financing.
Plan B does include additional EDIT or riverboat backing.
Most of the discussion on the rate options centered around the $7.4 million loan, which would entail a 2.67 percent interest rate for the 20-year life of the loan.
If the state had not agreed to refinance some of New Albany’s debt and offer the loan, the city would still likely be looking at a 70 percent wastewater hike, some council members argued.
“This is a gift from the State Revolving Loan Fund,” Councilman Kevin Zurschmiede said.
But the projects the loan will fund are not required to be completed within two years by the Environmental Protection Agency, Gahan countered.
The sewer improvements must be done, but they could possibly be accomplished with better financial planning as opposed to more debt, he continued.
“I’m not convinced we do need to borrow,” Gahan said. “I think we need to eat this elephant one bite at a time.”
With the vote on the loan deadlocked at 4-4, Councilman Jack Messer cast the decisive ballot in favor of the ordinance. He would go on to support the rate increase too.
Messer — who will be investigated by the New Albany Police Merit Board over allegedly racially insensitive marks he made while on duty as a police officer — said his vote was not being made to appease England, but to ensure solvency of the utility.
The council has been grappling with a sewer rate increase since January. It defeated an initial request to raise rates by 70 percent immediately on first reading.
That proposal did not include an additional loan or aid from the state to re-finance debt.
Under England’s Plan B, debt service will increase from $4.7 million to $5.2 million annually.
The interest and debt is hampering New Albany’s future, Price argued. He was also displeased with the amount of money the city is paying financial advisors and its bond counsel for the rate increase.
Ice Miller, which handles New Albany’s bond ordinance, will make $35,000 if the loan is approved on final reading. Crowe Horwath, the financial advising group hired by the city to research sewer rates, stands to make up to $85,000.
The state is also requiring New Albany to pay its bond counsel for the loan at a cost of $15,000.
Greg Fifer, attorney for the New Albany Sewer Board, said the projects that will be completed if the loan is OK’d by the council are not immediately required by the EPA.
But they are based on ending sanitary sewer overflows, and eliminating SSOs is part of New Albany’s agreement with the EPA, he continued.
The projects “are necessary if we are ever to comply with the Clean Water Act,” Fifer said.
The council is scheduled to meet again at 7:30 p.m. April 15.
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