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On-ground water storage tank (photographed Wednesday, Jan. 3, 2018) of Parish Utilities of Ascension, which serves the city Donaldsonville, is one of the storage facilities overwhelmed by high demand that caused a water outage in the city, due to recent sub-freezing temperatures. The former Peoples Water Service Company was purchased last year by the parish.

For more than a year, Ascension Parish government's 3,400 water customers in the city of Donaldsonville have been paying higher rates intended to finance $17.5 million in upgrades for their aged system.

But top officials with the administration of Parish President Clint Cointment say those new fees, which imposed double-digit increases on residential and commercial customers beginning in June 2019, aren't enough to pay off a $9.7 million federal loan that would help pay for the work and maintenance and operations at the Parish Utilities of Ascension.

Administration officials have put the capital improvement plan on pause — even as customers continue to pay higher rates — while they decide whether to commit to a 40-year loan with the U.S. Department of Agriculture.

The plan is among $44 million in capital projects budgeted by the previous  administration that the Cointment administration put on hold March 30. One major factor is how the novel coronavirus pandemic affects parish finances.

Council members from the west bank and those who oversee public utilities have questions. Councilman Alvin "Coach" Thomas, in the first term of a second stint representing the Donaldsonville area, took administration officials and Cointment to task earlier this month for a lack of communication.

"If there is no plan to carry out this project, tell me, why are the residents paying a higher rate, or user fees," he said in a recent committee meeting.

Thomas asked if parish officials intended to lower rates "and scrap the project."

Administration officials have been given 60 days to come up with a plan. So far they say they remain committed to upgrading the Donaldsonville water system for the health of its residents but say the parish must make sure the Parish Utilities of Ascension water system can be run more efficiently before committing to the USDA loan.

"What we don't want to do is buy a car and not be able to pay the note and have it repossessed," John Diez, chief administrative officer for the parish, told council members recently.

Monthly rates for the average customer have climbed 39%. A customer using 6,000 gallons per month now has a bill of nearly $46. Commercial and industrial customers saw even higher increases.

In the fall of 2018, USDA Rural Development awarded the administration of then-Parish President Kenny Matassa $17.5 million in a loan-and-grant deal to refurbish the old Peoples Water system, since renamed Parish Utilities of Ascension.

Tony Matlock, Rural Development community programs director, said that a $9.68 million loan and $7.86 million grant were formally set aside, or obligated, by the federal agency on Sept. 28, 2018.

The USDA money will help pay for 21 miles of new distribution lines, upgrades to the water plant and all new meters, which administration officials at the time suggested were so old and inaccurate they were likely under-calculating customers' water use.

"This is a huge water project," Matlock said. "It's one of the bigger ones we've ever done."

Under the terms of the deal, the parish must spend all the loan, which will have an interest rate of no higher than 2.37%, before the local government can access the grant. When asked on Friday, Matlock said the deal has not be finalized and the parish retains the ability to withdraw.

The Matassa administration bought the private Peoples Water system in the fall of 2016 for $5.9 million, following through on a concept first proposed by his predecessor and old boss, former Parish President Tommy Martinez. Both parish leaders said the purchase could supply water to a parallel parish water system along the outskirts of Donaldsonville and poise that region for growth.

After the Matassa administration took control of Peoples Water and created PUA, the private system's problems with inexperienced staff, leaking pipes, poorly performing water meters and mysteriously unpaid-for water came to light, perhaps most notably through an unanticipated loss of water service during a severe cold snap in early 2018.

A previously confidential due-diligence report commissioned by the Martinez administration before that 2016 sale also emerged then. Obtained through records requests, that report highlighted big upgrade costs the parish would face if it bought the system and that the subsequent USDA program has been aimed at addressing.

Several sitting council members at the time The Advocate obtained that report, which had valued the system at nearly twice what the parish paid for it, said they had never seen the report before they agreed to buy the system.

While the Matassa administration made strides in hiring certified staff to operate the system, addressing leaks and narrowing down the scope of the unbilled "missing water" problem, the big infrastructure and financial problems have remained.

In May 2019, when Matassa administration officials were pitching the proposed rate increases to Donaldsonville residents concerned about the impact on the city's poor and elderly, those officials claimed the fees would be able to pay off the loan and help the system's finances overall.

Cointment administration officials have openly questioned whether the higher fees would cover the annual debt payments of $375,000.

William Daniel, Matassa's infrastructure director who helped shepherd the USDA grant application, said the revenue modeling for the fee increase was reviewed by USDA and a national water system association and showed the fees would cover the debt service, but Diez said Friday the trouble is paying off the debt and also having enough money to operate and maintain the system.

Diez said parish officials plan to meet with their auditors, perhaps, to find ways to pare down the USDA project and find efficiencies at PUA. 

One way to help fill the financial hole may be to replace all the old meters, as USDA proposes. Diez estimates that if the old meters are 20% off, new, accurate meters would generate an additional $405,000 annually without an extra rate increase.


Email David J. Mitchell at dmitchell@theadvocate.com

Follow David J. Mitchell on Twitter, @NewsieDave.