New Albany's proposed sewage rate increase initially would be cut in half if the city takes advantage of a revised proposal that will be presented at a special Sewer Board meeting Thursday, Feb. 18.
State Rep. Ed Clere, R-New Albany, said he worked with the Indiana Finance Authority to develop the new proposal.
"The proposed rate increase is unacceptable and unnecessary," Rep. Clere said. "It would be devastating to many households and businesses."
Rep. Clere said he has been working with the Indiana Finance Authority (IFA) to find ways to minimize the increase. Most of the city's current $52.5 million in sewage debt is financed through IFA.
"The Indiana Finance Authority has been very responsive," Rep. Clere said. "I appreciate their willingness to look for solutions."
At Rep. Clere's request, IFA has agreed to:
· Allow the city to use money from its debt reserve fund to pay off $1.4 million in short-term financing. The loan, which is owed to a bank, must be repaid by next year. IFA will allow the city to replenish its debt reserve over a period of five years.
· Refinance $1.1 million in long-term debt.
· Provide low-interest financing for $7.4 million in EPA-mandated system improvements.
The city's rate consultant, Crowe Horwath, which last month advised the city that a 70 percent increase would be necessary, will present a revised recommendation at tomorrow's meeting.
"The immediate crisis has passed, but it will take leadership and good management to make sure we don't end up right back in the same spot," Rep. Clere said. Under the proposal, an additional increase would be necessary in two years, he said.
"This solution will lessen the blow to ratepayers, but we're still facing large increases."