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S&WB and USFilter settle dispute -- Firm to get paid, repair two plants

Friday October 17, 2003

By Martha Carr
Staff writer

The Sewerage & Water Board of New Orleans has approved a settlement with USFilter in a three-year dispute about the company's operation of the city's two wastewater- treatment plants.

The water board agreed Wednesday to pay the company $2.6 million it had been withholding in exchange for USFilter agreeing to repair and maintain the two plants according to contract specifications.

Among the issues in dispute were numerous illegal discharges of sewage into the Mississippi River, violations that the company claimed were caused by the board repeatedly postponing capital improvements to the plants.

The settlement was urged by Mayor Ray Nagin, who is board president, and was voted on without discussion.

Despite its long-running argument with the water board, USFilter has expressed interest in bidding on a much larger privatization contract being contemplated. The proposed contract, which would cover operations of the city's entire water and sewer systems, would be worth about $1.5 billion
over 20 years.

The board was scheduled to discuss the larger privatization proposal Wednesday, but deferred the issue because of a lack of information. Last month, Nagin asked the board's financial consultants to determine what it costs the agency to run its water and sewer systems separately, to explore
whether it would be prudent to split the massive project into smaller contracts.

Nagin said this week that the consultants had not finished preparing that analysis, and that the board could not proceed without it. In August, he had said he hoped to have a final bid proposal approved in October.

Also at Wednesday's meeting, the board unanimously voted to ask the City Council to roll back the millages it collects for 2004, then roll them forward, letting the agency collect more tax revenue as a result of a rise in property assessments. All local governments that collect property taxes must reduce their millage to offset rising property values, after which they have the option of returning to the higher millage by a two-thirds vote of their governing body. Many local governments choose not to roll their millages forward so residents won't be burdened with higher taxes every time their property increases in value. Residents are currently charged 22.59 mills for drainage services provided by the water board.