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Readying for Showdown With Residents, Palm Coast Nudges Slightly on Water Rates

| February 14, 2013

Pumps at Palm Coast's newest water plant, chugging for more. (© FlaglerLive)

Pumps at Palm Coast’s newest water plant, chugging for more. (© FlaglerLive)

Palm Coast residents will see significant increases in their water bills beginning in spring. The increases may not add up to 22 percent over the next three years, as the Palm Coast City Council first proposed a few months ago. But it’ll be close to that—perhaps 16 percent—and what charges are not levied immediately will then be levied more heavily in subsequent years.

That’s the consensus of the council as it heads toward decision day on Feb. 19, when the council is scheduled to approve one of two options setting the course for water and sewer rate increases for the next few years, with the understanding that whatever the council approves next week, it can and likely will renegotiate (with itself) in a couple of years. The Feb. 19 meeting, at 9 a.m. at the Palm Coast Community Center, could, despite being held in the morning, be one of those contentious affairs that draws out a crowd. Opponents of the city’s rate increases have been organizing, and talking about possibly holding a rally to pressure the council to scale back its water-utility’s $78 million five-year plan.

That plan entails heavy borrowing at steeper costs (although interest rates remain low), refinancing of existing debt, maintenance, expansion, and repairing and replacing various aspects of the city’s utility, which has been in Palm Coast ownership for 10 years.

The city is in something of a bind because of a combination of problems, including inadequate financing plans in the past that displeased bond holders and rating agencies that are, in part, an indirect result of the housing crash: Palm Coast had bet on continued growth to sustain the investments it needed to make in its plants. When the growth stopped, the bills (and debts) didn’t. And the city carries heavy debt: Palm Coast’s utility owes $207 million on two bond issues that mature in 2033 and 2036.

The city’s rating was downgraded by Moody’s and Fitch, two of three major credit-rating agencies, thus raising Palm Coast’s borrowing costs. They did so, a city financial consultant told the council, because “they’re concerned about the debt service coverage and the liquidity position back in 2010.”

The city has taken steps to stabilize that position since, and the steps it’s about to take next week are a further effort to placate bond holders. But it’s doing so at rate-payers’ expense, because rate-payers are the only sure source of revenue right now. The city can’t bet on growth resuming—at least not for the dollars due bond-holders. Ironically, the city is betting on growth resuming as it projects a need for a new wastewater treatment plant, a colossal cost that accounts for close to a third of the $78 million five-year plan. The plant isn’t needed right now. But the city’s existing plant is at around 70 percent capacity, triggering the normal planning for a second plant.

Meanwhile, Palm Coast may even invite ratings agency officials to visit the utility to set their minds at ease. But the city’s consultant also said that nothing the city does now guarantees that its rating will improve—or, indeed, that it won’t get worse. “I don’t want to sit here and say you get downgraded it’s the end of the world, you can’t finance new debt,” the consultant said. “You can. It’s just going to cost you more money, higher interest rates.” And again, it’ll be rate-payers who’ll bear that cost.

With all that in mind, the city had endorsed a study showing the need for that $78 million five-year-plan, as well as the way to pay for it through rate increases: 8 percent next year, 7 percent in each of the two years after that, then 2 percent increases in the last two years of the five-year plan. The average homeowners’ water bill would have gone up $55 the first year, and up an additional $50 in each of the subsequent two years. The city has 42,720 water accounts and 35,102 sewer accounts.

The plan triggered an outcry that hasn’t abated. Earlier this month, the council faced a chamber-full of residents angered by the projections. More than a dozen spoke to the council, some of whom subsequently met with Richard Adams, the utility director, with questions and proposed alternatives.

The city administration worked up eight such alternative options and presented them to the council on Tuesday. But in the end, only two of the eight (specifically, Option 2 and Option 4: see below) were acceptable to council members and the administration. Either would only slightly reduce the rate increases. But they would not change the way the utility is run, they would not change the essence of the five-year plan beyond perhaps delaying the construction of the second sewer plant, and they would not change the formula by which rate-payers are the totality of the city’s revenue source. One of the plans opponents had proposed was to bring utility rates under the city’s taxing authority: residents would then pay their utility costs as if they were paying taxes. They could then write-off the cost. But that proposal went nowhere.

On Tuesday, council members rallied around their preferred options, defending the city and warding off criticism that would suggest that the city is in this spot because of past mismanagement.

“But it was not true mismanagement on the part of the city or the utility,” Mayor Jon Netts said. “It was something over which had no control.”

A highlight of the council’s meeting on Tuesday, which straddled their lunch break, was novice council member David Ferguson’s near-outburst (it got his colleagues urging him to “calm down”) about suggestions that the city could somehow make do without its five-year plan, and its associated costs.


“I don’t want to pay more for water. No one does,” Ferguson said, his voice rising. “But you don’t want to pay more for gasoline. You don’t want to pay more for cable television, or whatever else. Everything is going up. Everything. Water is pretty important to my household, as it is to everybody, and it’s just going to be more expensive no matter what we do with it, if it’s $4.32 more per month or if it’s $3.90 or if it’s $3.70, it’s going to go up. That’s the story. I mean—I don’t mean to get emotional about it, but we spend a lot of time talking about how we’re going to sell this. You know, I was a citizen long before I was responsible for explaining why other citizens have to do what the government does, but I’m just going to plan to pay for more, simple as that. If you want to have low water, go to New York. Or go to Colorado.”

Netts added: “It’s unfortunate because any rate increase here goes hand in hand with an increase in gasoline, increase of bread, increase of everything else. I cannot solve all the other problems of the world.” The mayor then essentially patted the council and the administration on the back for taking on suggestions, analyzing them, producing options and ruling them out. “It very responsible for city council to look at the options that have been proposed,” Netts said. “It would be irresponsible not to look at them. It would be equally irresponsible not to choose the one that made the best fiscal sense for our city.”

When Netts asked Chris Quinn, the city’s finance director, what option would be best for the city, Quinn picked Option 2, which mildly scales back some capital costs (the sewer plant) but leaves everything else in place as previously planned. “This to me would be the bare, bare, bare minimum, and it probably isn’t the best thing from an overall financial perspective,” Quinn said. “No matter what we pick, we need to come back in two years and look at this again, because if we do have an unbelievable spurt of growth or something happens, it allows us to deal with it.”

All the options will again be presented at the Feb. 19 meeting—not for debate, however, but for public consumption. By then, the administration will have drafted one or two resolutions for the council to vote on, incorporating one or both of preferred options. That vote, based on Tuesday’s discussion, is already cast but for the roll call. And the public’s outcry, which council members are calculating will be an unpleasant couple of hours they’ll endure to ensure the five-year plan’s viability as they see it.

Council member Bill McGuire summed up the council’s manifesto for next Tuesday: “We need to show that all of the things that the voters are up in arms about have been considered in an honest fashion, that there’s a reason why we’re not going to kill the tennis center, there’s a reason why we plant plants in the middle of Belle Terre, because the alternative just doesn’t help us any. We need to say it.”

Palm Coast Water Rate Study and Alternative Options, February 2013

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20 Responses for “Readying for Showdown With Residents, Palm Coast Nudges Slightly on Water Rates”

  1. maria says:

    Are you kidding me? Of course we do not expect the city council members or the mayor to solve the problems of the world!!! You only need to be concerned with the problems of PALM COAST!!! Which, obviously you are not! There has got to be a way to make this a win-win situation. There have to be ways to cut costs first before raising rates. Raising rates is the easy way out and definitely shows that you are failing to do your job!

    Furthermore, for Ferguson to suggest that if we do not like the high cost of water here, then we should move to NY or CO….hello? Perhaps, many residents will take him up on that and abandon their homes and lowering the rate base. And McGuire has got to be crazy to think that he can come up with a good reason that they spent money to re-landscape the medians on Belle Terre in this economy.

    There is definitely a big problem when our water bill is higher than our power bill and we are not living in the desert!

    • Magnolia says:

      FYI, they are once AGAIN in the process of re landscaping Belle Terre Parkway. Who’s getting the payoff from the city?

      How many times has that been now? Let’s use some of the Manager’s salary. He makes more than the Governor, more than 90% of Governors. Why is that?

  2. confidential says:

    If there is no growth, then NO EXPANSION needed and scrap that additional waste water plant…we don’t need it! Also “the consultant hired to threat us with undermine of our utility credit rating and bond holders default , who is that guy…and who is paying him?” PC bought the utility for 89 million plus 60 million up front loan for improvements since 10 years ago and owns now still 207 millions? Wow. That means that PC utility borrowed more that the original 89 plus 60 =149 millions. When that additional 58 million borrowing took place? Maybe around the time of the Town Center CRA project? This is why I say all those millions wasted in the Coquina Desalt Plant, Town Center CRA,, Super Walmart Old Kings road infrastructure and God knows how many consultants at at least 75,000 a pop, plus a myriad of other projects that we are not aware off and city should have not engaged in most of them. I don’t borrow based in potential salary or bonuses increases, why then the PC utility and city done it?
    Regarding (appointed by council) Mr Ferguson’s comments I do not agree with, as we are plagued by increases and gouging that we have no courage to demand a stop to, like the gas price from these all time high earnings thieves multinational oil barons, but if we can stop our local gouging we do have the right to do so. Just in case Mr. Ferguson forgot that Flagler County has still the highest unemployment rate, in spite the fact that his highness comfortably retired consultant, has recently moved in, among us.

  3. Sherry Epley says:

    Is drinking water the next oil? The Bush family is investing in an important aquifer! This from the leftwordpress.com in 2006:

    Prensa Latina reports:

    An Argentine official regarded the intention of the George W. Bush family to settle on the Acuifero Guarani (Paraguay) as surprising, besides being a bad signal for the governments of the region. Luis D Elia, undersecretary for the Social Habitat in the Argentine Federal Planning Ministry, issued a memo partially reproduced by digital INFOBAE.com, in which he spoke of the purchase by Bush of a 98,842-acre farm in northern Paraguay, between Brazil and Bolivia.

    Another rumored land deal involves the the U.S. military and Paraguay.

    Five hundred U.S. troops arrived in Paraguay with planes, weapons, and ammunition in July 2005, shortly after the Paraguayan Senate granted U.S. troops immunity from national and International Criminal Court (ICC) jurisdiction. Neighboring countries and human rights organizations are concerned that the massive air base at Mariscal Estigarribia, Paraguay is potential real estate for the U.S. military.

    The timing of the U.S. military operation into Paraguay and the Bush family’s land acquisition in Paraguay cannot be an accident.

    Also, Jenna Bush’s recent 10 day visit to Paraguay may have less to do with her work for UNICEF (as reported) and more to do with finalizing the land purchase for her family.

    The UK Guardian reports:

    Rumours of Mr Bush’s supposed forays into South American real estate surfaced during a recent 10-day visit to the country by his daughter Jenna Bush. Little is known about her trip to Paraguay, although officially she travelled with the UN children’s agency Unicef to visit social projects. Photographers from the Paraguayan newspaper ABC Color tracked her down to one restaurant in Paraguay’s capital Asunción, where she was seen flanked by 10 security guards, and was also reported to have met Paraguay’s president, Nicanor Duarte, and the US ambassador to Paraguay, James Cason. Reports in sections of the Paraguayan media suggested she was sent on a family “mission” to tie up the land purchase in the “chaco”.

    Please read this from the Daily Beast in 2010: http://www.thedailybeast.com/newsweek/2010/10/08/the-race-to-buy-up-the-world-s-water.html

    • Paul says:

      If I had the money and health, I would move to Paraguay or Argentina. Nice place to retire if you can afford to BUY your way in down there. Maybe I will put and ad out to exchange my “wonderful” home here in Palm Coast for a nice 30 hectares and a little bungalow down there.

    • Magnolia says:

      Nice to know someone is still obsessing over the Bush family. However, I don’t think the citizens of Palm Coast will be going to that council meeting to discuss water issues in Paraguay. Feel free to go down there and investigate.

      Where’s the money, Mr. McGuire? Your power point presentations are not going to be nearly enough this time. If this debt isn’t criminal, it should be.

      Let’s see your books, gentlemen. ALL OF THEM.

  4. Lin says:

    Hard to know where to begin here – so much arrogance & incompetence to comment on.

    Mayor Netts said — “not true mismanagement on the part of the city and the utility here” “it was something which had no control” — HUH? Were you not the Mayor when these utility funds were raided to use for irresponsible loans for money-pit investments in widening of old kings (why didn’t an attorney protect us & have a clause in the contract to have the prospective purchaser pay for the widening eventually even if they didn’t build — common sense 101) and the golf course, and tennis center? Oh, yes, the City attorney represents the City Council not the residents, Mr. Mayor, who is responsible then, Mr. Landon, the other council members? Not me, I wouldn’t have put utility money down other black holes.
    Stupid me, I thought it was the water that was expensive, not the council squandering our money.

    David Ferguson — the word carpetbagger comes to mind — wikipedia definition in modern usage — now describes a politician who runs for public office in an area of the south where he or she does not have deep community ties or has only lived for a short time … also political appointees who came south. Ferguson said if you want low water bills, go to NY or Colorado . Is this why he came here, to say like my decisions or leave? Unelected arrogance.

    McGuire, sorry I voted for you.

    These council members seem to have no respect for their constituents — just hard to read these stories — but thanks again Pierre for shedding some light on this.

    And more transparency, meeting at 9am on a Tuesday. Make it really accessible for everyone to see the council pacify the residents. Just like the Flagler County Commission having a vote after a “workshop” at 10 o’clock at night with noone in the audience — but that is a story for another day.

  5. Anonymous says:

    The mayor says “It’s not true mismanagement…..”
    What is it the untrue mismanagement?
    What else would one call it but piss poor management?

    The argument that all other commodities and services are rising in cost is a weak response.
    The solvency of this city will continue to go downhill.

    Residential real estate taxes will continue to rise.
    Other fees will continue to rise, as will water rates.

    Do they think that if there were more residential homes that water and sewer rates won’t increase? It will be the same situation only on a larger scale.
    The revenue will continue to come from the residential users.

    This city has a dilemma it can’t support itself without continually raising the cost to live here and it can’t attract business other than fast foods. (The business unfriendly image of Palm Coast)
    Going down the road of self government was a huge mistake.

    The city is stuck with paying for an infrastructure that can only be supported by raising the cost of freight on its customers, the citizens.
    Anyone with any sense would combine county and city governments.

    If anyone believes that the situation will get better then they are engaged in wishful thinking. The Palm Coast Observer reported that wages in Palm Coast have decreased by 14% over the past two years. And the Town Manager has 200k compensation.

    Palm Coast business friendly, yeah.

  6. Ummm says:

    Mr. Ferguson…perhaps we all should heed your advice and get the he*l out of this horrid city. After all, there’s nothing left here for us but ridiculously high utility bills and a government that is servely out of touch with its citizens!!!

  7. Ben Dover says:

    I don t know why these crooks even bother having meetings to let the public voice our opinions , they do what the hell they want anyway, we tell them no more red light cams , even the county officials tell them no more they go ahead and put more anyway , we tell them our water bills are way too expensive as it is , too bad were raising it anyway , they blow so much money on keeping their friends in town working on projects we don t need and are done repeatedly , use money that should of been put aside for the water plant and canals upkeep, then expect us to foot the bill, they are thieving lying crooks and should be arrested for gross mismanagement of funds , they totally abuse their power in ways to screw us instead of helping us , its crazy they need to go!!!!!

  8. DWFerguson says:

    Thank you for all the kind words mentioned above.I believe most people find Palm Coast / Flagler county a great place to live whether you are raising a family or enjoying its rich retirement haven attractiveness. One must admit that such comments about how the water utility is being managed are regrets of the past and not reflective of sound utility stewardship. As a novice Councilman,,and a resident of Northeast Florida for thirty years, I suspect my roots in this area exceed the majority of the exodus of Northeast transplants that occupy many of the homes here in Palm Coast. If we are to succeed as a community, we must address the lack of quality jobs and economic stagnation–the days of how Palm Coast used to be are “Gone Like The Wind ” !My vision is to actively promote Palm Coast for business expansion and new business incubation. .Whether I can be successful is partly dependent on a Quality Water and Sewer system. If we think it wise to risk this critical component of a thriving community for $ 4/ month, I suspect we will have a poor foundation from which to build. !

    • Ben Dover says:

      I`ve been in Palm Coast since the roads were dirt buddy, you and you gay friends better stop with that curb appeal nonsense and stop blocking businesses because you dont like their signs or they have a smoke stack or they`ll bring in more traffic , we need jobs NOW, and we want the freaking MCDonalds to stop too ,we already have 3 we dont need 4 , how bout a little variety, screw you`s and the kickbacks ya get from Ronald Mcdonald, you and fat Mayor (Netts) McCheese better do something soon or well have your heads on Pikes, go figure out another way to retrieve the money you squandered away on nonsense we didn t need

    • Julie says:

      How about Re-appropriating the landscaping funds?

    • Ben Dover says:

      @DWFFerguson, I`ve been here longer then you, had a business for 12 yrs , I lost it because scabs like you made it impossible for the little guy to own and operate a business in this town with all your rules and regulations, I lost my house, my wife, and my dignity because of this counsels inability to bring jobs to this area , and what do you people do , you bring in 52 camera`s and doctor the lights ,to try and screw us of out of what little money we have left , raise our already ridiculously high water bills to cover your mistakes, you can say what you want , but as long as your mouth is moving or your fingers are typing ,we all know your lying, so save that crap for someone with a crack running down their face, you were already given plenty of money to do the upkeep on our water system , its not our fault you`s used it on something else , own up to your mistakes , yes this used to be a nice place to live, till the counsel allowed section 8`s in all our neighborhoods , built tenements, put in ghetto fencing all up and down Belle Terre, and totally let the job market dry up , now its a dump and we can t afford to get out

  9. Joe says:

    There are consequences to elections!!!

  10. Sherry Epley says:

    A quote from the Daily Beast 2010 on the race to own all the water:

    By definition, a commodity is sold to the highest bidder, not the customer with the most compelling moral claim. As the crisis worsens, companies like True Alaska that own the rights to vast stores of water (and have the capacity to move it in bulk) won’t necessarily weigh the needs of wealthy water-guzzling companies like Coca-Cola or Nestlé against those of water-starved communities in Phoenix or Ghana; privately owned water utilities will charge what the market can bear, and spend as little as they can get away with on maintenance and environmental protection.

    The point just maybe that this is just the beginning of much higher water prices globally, and that it could be much worse if we let public water sources be privatized.

  11. Magnolia says:

    Wow, great comments. Why is Flagler Live the only media covering this? Ask yourselves that question and save yourself some money on your subscriptions to the News Journal and running those ads in the Observer.

    Most of Palm Coast doesn’t even know this is going on. Think about that. Most of Palm Coast won’t even show up to vote. Think about that. A select few put these people into office. Think about that.

    We need to do more than vent. Each of us needs to send these articles to the Governor’s office, the State Utility Commission and the FBI for a full and complete investigation of our finances here. We need to see those books. We need to hear the Manager STAND UP at a council meeting and explain to us WHY he makes more than 95% of state governors and why that is acceptable now. This must end, but we must all show up at that council meeting to see that it does.

    Please make sure your friends and neighbors are there next Tuesday. If you don’t, WE are going to be stuck with the bill. And it’s a whopper.

    [In fairness to the News-Journal, it did run a story on this latest meeting, and actually beat us to it. Ours was merely more detailed.–FL]

  12. Anonymous says:

    In this County and the City of PC I dont see why any Government empoyee should be paid more then $1.00 per resident. So If PC has some 70-80K residents the top pay should only be $70-$80K.

  13. confidential says:

    @ Sherry Epley your righteous words “privately owned water utilities will charge what the market can bear, and spend as little as they can get away with on maintenance and environmental protection. ”
    Are so true and specially reminiscent of what they are doing to us all with another commodity of primary need called oil. They allowed to gouge us at the pump while exporting our non renewable resource and contaminating our environment to satisfy their greed. Gallon of gas is 18 cents in Venezuela, 48 cents a gallon in Saudi Arabia but their government owns their oil companies and also subsidize the price of gas to keep it low for its citizens…here to maintain our wondrous “Free Trade”, we subsidize the rich oil multinationals other than our citizens gasoline consumption. Where is the humanitarian logic and patriotism of our Congress and Senate? We need change and more Elizabeth Warren’s in both houses.

  14. Sherry Epley says:

    @ Confidential. . . Thanks for also seeing the bigger picture! Your comments are right on! Having an Elizabeth Warren elected in Florida seems soooo far fetched, but we can dream. Hopefully others will be mindful of what we have brought to light here and remember these concerns at voting time.

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