Peoples Water boondoggle coming home to roost

Ascension Parish should NEVER have bought Peoples Water Company, not for the $5.9 million paid or any amount at all.  Since taxpayers are stuck with it, President Clint Cointment and a parish council with six new members (out of 11 seats) have some tough decisions to make as major upgrades are necessary.  Four members of the Council Utilities Committee voted to seek approval of a federal grant on Tuesday with Aaron Lawler objecting because “it’s premature.”

The parish has to come out-of-pocket nearly $10 million before that grant is available.

“We inherited this situation,” recognized Donaldsonville Councilman Alvin “Coach” Thomas.  “We need to fix it…and do the best we can moving forward to serve our people.”

The “people” being served are Thomas’ constituents on the west bank along with a sliver of Councilman Joel Robert’s district.  Parish Utilities of Ascension (PUA) was created in 2017 to subsume Peoples Water, combining parish water efforts with Ascension Consolidated Utilities District (ACUD) #1.

West bank citizens are also constituents of President Cointment who tasked his number-crunching Chief Administrative Officer John Diez to address the committee.

“We don’t think it’s prudent, or something we should do this year,” Diez opined.  “The federal government is waiting for us to tell them how we’re going to pay for this.”

Debt service on the initial loan would come to $375,000 per year with another 10% required by USDA as a reserve to ensure repayment.  USDA has to sign off at the outset, then Ascension must expend/repay the loan prior to Ascension accessing the “free money” in the form of a $7.5 million grant.  Does the full council want to incur that long-term indebtedness; is it even legal to do so?

Parish Attorney O’Neal Parenton, apparently unintentionally, threw a monkey wrench into the equation.  Addressing the parish’s longstanding subsidization of sewer treatment on the east bank, Parenton concluded that it is unconstitutional to divert General Fund dollars to make up the annual shortfall ($4.2 million in 2019) faced by ACUD #2 east of the Mississippi River.  General Fund money cannot, according to Parenton’s argument, be devoted to a separate Utilities District like ACUD 2, or its west bank counterpart, ACUD#1.

USDA monies would, arguably, go toward subsidizing both ACUD #1 and PUA customers.  Parenton’s legal opinion was intended to force the council’s hand with regard to approval of a sewer treatment agreement proposed by Ascension Sewer/National Water Infrastructure.  No doubt in favor of any west bank expenditure, he may have been hoist on his own petard (Parenton was scheduled to address Utilities on Tuesday but had a rare nighttime conflict according to Chairman Corey Orgeron).

For nearly two years former Infrastructure Director William Daniel withheld these pertinent facts, his successor clearing things up on Tuesday.

“Approval of the grant application would require a budget amendment to access the loan before the grant is available,” explained Ken Dawson succinctly.  “We need a funding mechanism to satisfy USDA loan requirements.”

William Daniel also withheld the fact that Louisiana’s Public Service Commission had already approved a 63% rate increase for Peoples Water to “operate and maintain” its dilapidated system with an industry standard 8.3% profit margin.  CAO Diez brandished the company’s memorandum evidencing the approval issued prior to Ascension’s September 2016 purchase of the company.  There is plenty of blame to go around since negotiations predate Daniel’s brief existence on the parish’s payroll, as well as former president Kenny Matassa’s tenure.

The years’ long subterfuge can be traced back to Tommy Martinez’ administration with former councilman/Utilities Chairman Benny Johnson playing a key role.  Johnson signed off on the acquisition of Peoples Water even as the company was under a Consent Decree from Louisiana DEQ and a series of boil advisories warned customers against consuming Peoples Water water.

In 2015 parish auditors called for a 33% rate increase to sustain parish operations without massive subsidization.  Only recently did the council approve any rate increase, doing so twice this year for a total 42% rate hike.  But faulty meters, according to the Cointment administration, fail to accurately gauge water consumption leaving an unknown amount of money un-billed and un-collected.

“We agree, this needs to be done,” CAO Diez conceded.  “This is an old, outdated system but, with all the problems we’re having with all our utilities systems, this is not the time.”

There is also a question about how much necessary system upgrades will cost…

Daniel estimates $25-30 million to replace PUA pipes; federal grant could fund the worst of it

The CAO discussed various engineering reports, one of which estimated those upgrades at $10.8 million.

 

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