St. Louis city and county residents will be asked to vote next year to approve nearly $1 billion in bonds to finance what has been called the largest public works project in the region’s history.
Voters also will be asked to decide whether to scrap a hodgepodge of stormwater fees and taxes throughout the region in favor of a uniform 12-cent property tax to fund stormwater services.
Officials with the Metropolitan St. Louis Sewer District say the two issues are necessary to fund a stormwater utility that can barely maintain its system in some areas and to comply with a court order to cut sewage overflows into rivers and streams.
If passed, the two proposals would affect bills for nearly every resident of St. Louis and St. Louis County.
The proposed $900 million bond issue would raise residential sewer bills by about 11 percent a year, bringing the average bill to $61 per month by mid-2019, up from the current $36 a month. MSD says rates will rise even more quickly without the bonds, although the cost over the long term will be lower.
The effect of the proposed stormwater tax, which would come due on annual property tax bills, would depend on location. MSD is seeking a uniform tax of 10 cents per $100 of assessed value, which would be added to a current 2-cent tax.
If the new 12-cent stormwater tax is approved, many customers living in St. Louis County within the Interstate 270 beltway — some of whom are already paying a property tax rate of as much as 19 cents to MSD — would see their property tax burden fall. In the city of St. Louis, the tax rate would increase by about 3 cents. And in areas of St. Louis County outside of the Interstate 270 beltway, the tax rate would rise by about 10 cents, equivalent to about $50 more in property taxes each year, according to MSD estimates.
“Our goal is to get to a consistent level throughout the district,” MSD executive director Brian Hoelscher said in an interview.
But if the idea of a tax turns off voters, most of whom probably aren’t affected by flooding yards or rainwater erosion, many areas in MSD’s service area will continue to go without money to fix those problems.
MSD officials presented the proposals Wednesday to the district’s rate commission, which will make a recommendation to the MSD Board of Trustees by August. Hoelscher said the district did not know yet when in 2016 voters would see the proposals. The MSD board will decide that question in December.
HIGHER SEWER BILLS
The bond issue would continue a $4.7 billion capital spending program, required under a 2012 federal consent decree with the U.S. Environmental Protection Agency.
The new round of bonds follows a $945 million bond issue approved in 2012 to kick-start the sewer infrastructure upgrades. Like now, MSD said then that the alternative to passing the bonds was an even faster rise in sewer rates so the district can pay cash for upgrades. If voters don’t pass the new bonds, MSD estimates average rates will rise to $96 per month by mid-2019.
Sewer bills have been rising since 2012, when the average homeowner paid $29 per month. By the middle of next decade, “it’s going to approach $100 a month,” before leveling off, Hoelscher said.
The average household rate will rise to $41 per month this summer.
Tom Sullivan, a longtime district critic, said customers were paying the price now for MSD’s decades-long failure to address pollution problems after the passage of the 1972 Clean Water Act.
“They have basically dunced around for all these many years,” he said. “Instead of addressing the problem and getting federal grants they have fought it every inch of the way.”
MSD spokesman Lance LeComb said the district “soaked up every dollar we could” of federal clean water grants when they were available in the 1980s and ’90s. And while he acknowledged MSD rates were very low for years, only in the last 15 years has the district won the legal ability to begin raising rates without public votes to pay for needed upgrades.
Even after the majority of the projects are completed sometime late in the 2020s, higher rates are likely to be the new normal for sewer service. The new money will be needed to service debt and maintain operations so MSD doesn’t fall back into the hole it found itself in five years ago, LeComb said.
“There’s going to be no big drop where it goes from $80 a month back to $20 a month,” he said.
The proposed rate increases are mostly expected because of the consent decree, said John Stein, who represents the Missouri Industrial Energy Consumers on the MSD Rate Commission.
“I don’t think there are any great surprises here,” he said.
SAME TAX RATE
Until the EPA stepped in to enforce sewer overflow reductions, MSD had subsidized its stormwater utility to the tune of $20 million a year. It tried to set up a dedicated revenue stream in 2008, adopting a so-called impervious surface fee that was roughly based on the amount of water runoff from a customer’s property.
It withdrew the fee after court challenges in 2010, and in 2013, the Missouri Supreme Court struck down the stormwater fee as a tax that needed voter approval.
The proposed 12-cent property tax would raise rates for those living west of I-270, who pay little toward stormwater services with their current rates and taxes. City residents will see a smaller increase.
The goal, Hoelscher said, in an interview, is to provide the same level of stormwater service to each customer and give the district the ability to pay for the biggest problems no matter where they are.
A balkanized system of subdistricts with varied property tax rates keeps MSD from using money in the highest need areas, many of them in territory outside of Interstate 270 that was annexed by the district in 1989.
If the tax passes, MSD will “turn off” special property taxes in certain areas so every customer is paying just under 12 cents per $100 of assessed value.
That means those living in between St. Louis’ boundary and I-270 will see the average stormwater tax bill fall to $42 per year from $62 per year.
In the city and some inner-ring suburbs, the average homeowner will pay $4 more, or about $16 per year. In West County and some South County areas, the average $10 per year homeowners paid for stormwater will rise to $61 per year.
Some rate commission members pointed out that a property tax means some of the region’s largest stormwater producers — hospitals, universities and government buildings — will be paying nothing toward the system. Hoelscher said staff thought the proposed change was the best way to guarantee revenue to pay for work throughout its boundaries.
“The question becomes, would those same entities have to pay an impervious rate if (customers) voted on it?” Hoelscher said. “We don’t know.”
He added that staff had determined that “now is not the time to find out.”
Associated General Contractors of Missouri President Len Toenjes said that whether to submit the impervious fee to a vote or go with a property tax would be a “major discussion point” during commission deliberations.
“I understand why (MSD staff is) doing it, since they got burned by the court last time,” he said of the property tax proposal.
Editor's note: MSD plans to ask voters for a $900 million bond issue. An earlier version of the story that said MSD planned a $918 million bond issue included $18 million in existing bonding authority that the district will also use to finance projects.