New Bedford residents are going to experience some sticker shock in their sewer bills over the next five years. Water bills, too.
The increases are the result of EPA-mandated upgrades to the city’s wastewater and water infrastructure, and there is seemingly no way around them. But that has not stopped a minority of city councilors from dragging their feet in approving state grants and missing a state deadline for borrowing money. That could now make the increases even more expensive over the long run, city officials say.
“There’s a structural deficit in the rates to support the program,” explained Jamie Ponte, the city’s commissioner of Public Infrastructure, to the council back in May.
In other words, New Bedford’s current sewer and water rates are not high enough to pay for upgrades the city needs to comply with the federal government’s Clean Water Act.
New Bedford over the past 25 years has worked hard to meet the Environmental Protection Agency’s requirement that it stop dumping raw sewage into the harbor and Buzzards Bay. The problem is an outdated Combined Sewer Outflow (CSO) system common to many older cities. The CSO system allows storm drain pipes to dump water into the sewer during and after heavy rainstorms. When the sewer pipes are full, the outflow goes into the coastal waters.
The city conducts the CSO and other water and wastewater infrastructure upgrades, according to five-year plans. And New Bedford has already signed a general order with the EPA for the work to be done over the next five years.
One way or another, sewer rates for the median resident’s bill are going to go up $5 a month or so every year for the next five years, or some $282 over that time. The council has already approved the $5 a month Fiscal Year 2022 increase. Median water bills will also be going up an estimated $1.89 a month for that year.
Projected rise in median residents’ annual sewer bill
If city applies $3.2M from American Rescue Plan Act
The bad news is that the increases will continue long after the next five years, as the city has decades of wastewater and water infrastructure upgrades ahead of it. It is not alone; the problem is a common one among post-industrial communities in Massachusetts and beyond.
Based on the city’s good cleanup record through the administrations of mayors Fred Kalisz, Scott Lang and Jon Mitchell, Ponte says he has negotiated a deal with the EPA that allows his department flexibility in the way it does its upgrades. Besides the CSO work, the city is constantly upgrading its South End wastewater plant, its water treatment plant in Freetown, pumping stations throughout the city, not to mention replacing its environmentally hazardous lead pipe infrastructure. Ponte and the administration say the city’s record has allowed it to prioritize its own spending, instead of having to devote all its available money to the CSOs.
But with the City Council now missing two borrowing deadlines, Ponte says New Bedford is out of compliance with the EPA order. The result is that the city has lost an $11 million State Revolving Fund grant for this year’s work, and it could incur fines of up to $56,000 a day, not to mention legal costs, according to a Sept. 2 letter to the council from Ponte.
The problem is that a minority of the 11-member council, led by longtime Finance Committee chair Linda Morad and Councilor Naomi Carney, have resisted borrowing money for the project since May. The council missed the June 30 deadline to approve borrowing an additional $10 million associated with the SRF, as well as an Aug. 30 extension. Seven members of the council are in favor, but four members — Morad, Carney, Brian Gomes and Maria Giesta — have been holding it up, as a two-thirds vote (eight members) is necessary for borrowing money.
Ponte says it is critical to move this year because the city has not raised sewer and water rates since 2019, creating the structural deficit and preventing it from borrowing for work that needs to be done now.
Some $128 million — $57 million for the CSO work and another $71 million for water system infrastructure work — is now back before the council.
Ponte has been seeking the council’s approval since March 31 when he made a nearly two-hour presentation to the Finance Committee on the need for the rate hikes.
At that time, Carney dismissed the city’s warnings about even higher rate hikes down the road, and penalties and legal costs for fighting the EPA if the council does not approve the loans.
“I find it very difficult (to believe) that the EPA, a government agency that is in the midst of COVID like the rest of us, is going to start suing the city for $58,000 a day,” she said.
Morad suggested the city pause devoting money to its Community Preservation Act programs, even though Ari Sky, the city’s former chief financial officer, told her New Bedford had no statutory authority to do that. She then suggested the city begin the process to change the program.
The longtime councilor also suggested redirecting the city’s federal Community Development Block Grants to the wastewater upgrades. City officials confirmed that is an allowable purpose, although Patrick Sullivan, who oversees the program, said it would be unlikely the city would devote its entire $2.4 million budget. About 24 nonprofit organizations are dependent on that money for everything from senior citizen and summer job programs to housing initiatives.
New Bedford voters approved the CPA — which devotes a 1.5% surcharge on property taxes to preserving open space, historic properties and recreational facilities — in 2014. In order to stop the program, it would have to go back before voters and could not have been accomplished in time for this year’s wastewater borrowing. The city receives federal grants under the CDBG program to be spent on affordable housing, anti-poverty programs and infrastructure development.
Of the CPA payments, which have been used to do things like restore the First Baptist Church and rebuild Harrington Park, Morad said. “Here’s a million dollars that you are gonna have to pay anyway … we’re giving it away to all of these community projects to promote and better the city. It’s coming out of the taxpayers’ pockets.”
At a May 17 Finance Committee meeting, Ponte and former City Auditor Bob Eckstrom tried to convince the council that the city had considered the issue from every angle and that the $128 million loan order — which includes the five years of hefty water/sewer bill increases — was the best deal New Bedford could make.
“This has been very thought out,” Ponte said, explaining that the amount of money that the city is supplementing will increase the sewer bills $6 a month at the higher end of property owners, he said.
A compromise before the council, made at the suggestion of Council President Joe Lopes, involves using $3.2 million in COVID relief money from the American Rescue Plan Act (ARPA) to lower the yearly sewer rate increases, and “smooth” them out so the increase is about the same over the course of the five years.
Several councilors, however, have asked if devoting even more money from ARPA could reduce rate increases further, with Morad saying that if the city devoted $6 million from ARPA and it resulted in lowering the five-year rate jump some more, she would delay the vote past the state deadline.
“This is gonna hurt. It’s gonna hurt a lot of people,” Morad said, of the city’s fixed-income property owners.
The city is still waiting for word from the federal government about which ARPA funds could be used for sewer and water upgrades, but the parameters were expected to be clearer by this month, although Congress has missed several other deadlines.
Ponte and Eckstrom, however, said devoting more money would only marginally reduce the rate hikes. And the city, per its deal with the EPA, would still have to meet its already established rate increases in the latter part of the five-year agreement. It would also require sewer and water rate payers to pay a much bigger increase down the road.
“The structural deficit in the rate structure needs to be repaired for the long-term sustainability of (the CSO-fix) program,” Ponte said. Squeezing the balloon for the next fiscal year will just make it bigger later, he explained at the council’s May Finance Committee meeting. “The more cash we put up front, the balloon’s going down into the back end of this structure,” he said.
Carney insisted people need help now, even though the $5 hike for the fiscal year beginning July 1 has already been approved.
“Right now, we don’t know what the future of this country and financial institutes look like at this particular point,” she said. “What we do know for a fact is that people were out of work for a long time with COVID; businesses have closed down; people have not returned to their jobs,” she said.
Ponte, however, said that as a result of the default, the city has no way of knowing whether it will be able to recoup the $11 million state SRP grant next year. One solution might be for the city to apply for two years’ worth of work in the next fiscal year, if the state approves, but it’s not a guarantee, he said.
Using $3.2 million from ARPA doesn’t endanger funds in the city’s reserve (stabilization fund) needed in case there is an emergency in the sewer or water departments, Ponte said, but using more money from ARPA would not reduce the future sewer rate hikes very much.
Eckstrom, also at the May meeting, questioned the councilors’ desire to use cash to fund big infrastructure spending.
“It’s not typical to fund capital projects from cash,” he said, explaining that ratepayers benefit from the improvements for a long time and pay a gradual increase each year as the debt service is put into the sewer bills.
Eckstrom also touched upon another big issue — whether it’s the council or the mayor, or some combination of both, that will decide how the federal ARPA funds are spent. Mayor Jon Mitchell said that according to the terms of the grant, the council has no role in how the ARPA money is spent and only has a decision on whether to accept it.
Asked who the federal government gives the decision to he said, “It’s the executive.”
But that’s not political reality, he acknowledged. “As a practical matter, the City Council and the mayor work together to determine those priorities,” he said.
In response to the councilors pushing to use more ARPA money for sewer and water projects, Eckstrom said that traditionally municipalities do not use one-time infusions of cash on capital projects. “The administration is looking for other alternatives than to spend cash on investment projects,” he said.
Mitchell echoed the auditor. “One of the things I’ve emphasized is this one-time money and should have been spent on one-time items,” he said. The mayor has asked the public for ideas on how the money should be spent and some of the councilors have responded.
Mitchell mentioned planning and design of airport upgrades, and the purchase and maintenance of a camera program for police officers as things he is thinking of.
At the May 17 Finance Committee meeting, the council voted 6-3 to move the Lopes’ plan along, but three councilors — Ian Abreu, Maria Giesta, and Hugh Dunn — reversed themselves at the May 27 council meeting, and the final approval failed.
Abreu said he wanted to see if devoting more money might help lower the sewer rate increases.
After the June 30 deadline passed, the council again tried to take up the issue at its July 15 meeting, but three councilors who had been opposing approval — Morad, Maria Giesta and Brian Gomes — were all absent, and it went nowhere.
The Finance Committee did not place the spending on its agenda for August, and the city has now officially missed its deadline for both the state’s $11 million grant and the $10 million borrowing order that is necessary to obtain it.
None of the councilors opposing the deal — Morad, Carney, Giesta or Gomes — returned The Light’s phone calls for this story.
The issue is back on the Sept. 20 Finance Committee agenda and the Sept. 23 City Council meeting.
Email Jack Spillane at email@example.com.
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