Harahan Mayor Tina Miceli has proposed increasing the city’s sewer rate by 83 percent on residential bills and by 75 percent on business and institutional bills, saying it’s necessary to satisfy the requirements of a $4 million federal loan to repair and maintain the city’s antiquated sewer system.
Some City Council members, however, say the increase is too much to put on residents all at once and that the city should instead put a property tax millage proposal on the ballot to allow voters to make the decision on how to raise the money.
Action on the proposed rate increase was deferred last week as council members seek more information and consider their options.
Miceli said she has no problem putting decisions in the hands of voters and understands the financial constraints and concerns of Harahan residents, many of whom are on fixed incomes. But she said the city must act quickly to get into compliance with the terms of the loan to avoid being penalized or having its financial health put at risk.
“I don’t want to raise rates,” she said. “But I’m tasked with administering the city’s finances and following the laws and paying our loans back.”
Harahan residents' sewerage bills now amount to $2.50 per thousand gallons for 85 percent of the water they use each month, with a minimum monthly charge of $7.50. (It is assumed that 15 percent of a household's water does not go into the sewerage system.) Under the mayor’s proposal, this would increase to $4.57 per thousand gallons, still figured on the basis of 85 percent, with a minimum monthly charge of $8.58.
Businesses and public institutions now pay $2.75 per thousand gallons on all the water they use, with a minimum fee of $9 per month. That would increase to $4.82 per thousand gallons with a minimum bill of $10.42
The increases in the minimum charge — paid by those who use less than about 2,000 gallons a month — would not be quite so pronounced: about 14 percent for residents and 16 percent for businesses and institutional users.
The general argument for increasing the monthly fees is that residents would pay based only on what they use. Adding a new millage would mean they would pay based on their property values.
Harahan is hardly the only municipality struggling with an antiquated sewer system. Kenner is only now emerging from a decade-plus overhaul that tapped the federal loan program a handful of times.
But Harahan has only recently managed to begin chipping away at its problems, which include sewerage back-ups into homes and streets in some areas during heavy rainstorms. It has spent $1.2 million of the $4 million loan so far.
And it doesn't help that in 2012, under the previous administration, Harahan let a 1.77-mill sewer construction millage lapse because the city didn’t meet a deadline to advertise the renewal, an oversight that cost it upwards of $200,000 a year.
Miceli said that while the city has tapped the general fund to help make up the difference, Harahan is collecting only about a third of the money specifically dedicated to the sewer system that it was receiving in 2012, which it does through the fees and a .88-mill sewer maintenance tax that it collects.
Municipalities participating in the sewerage loan program are required to have dedicated funds equal to 110 percent of whatever the highest amount of principal and interest on the loan is in a given year. For 2015, Harahan’s debt-coverage ratio was only 84 percent, according to the state Department of Environmental Quality, which administers the loan.
In order to secure the loan, the previous council increased sewer fees in 2013. That ordinance included a provision that allowed for the fees to be reviewed each year and raised by another 5 percent a year if more money was needed to meet the terms of the loan, though those reviews have never been done.
Council members Carrie Wheeler and Craig Johnston are among those who feel catching up with those authorized annual increases — possibly to the tune of 15 percent — is a good place to start, followed by a millage vote.
“I don’t think that the citizens should be hit with … such a large amount because of something that should have been done annually before,” Wheeler said.
“I think service fees should be a last resort, because that’s not putting it in the citizens’ hands,” Johnston said.
Wheeler and Johnston agreed, however, that the terms of the loan will have to be met somehow.
“If it’s voted down, then yeah, we might have to look at raising the service fees,” Johnston said.
According to DEQ, the city may have a little time to sort things out.
Jonathan McFarland, administrator of DEQ’s business and community outreach and incentives division, said Harahan would not be subject to fines, but that the loan gives the department the right to take over the sewer system or call the loan due in full, though he stressed that is unlikely.
“We’ve never defaulted a loan,” McFarland said. “We’ve always worked with municipalities to help them get back into compliance.”
Of Harahan’s situation, he said, “We are going to work with them as much as possible.”