Your Palm Coast water and sewer rates would go up 20.6 percent over the next four years, starting in October, if the city council approves a rate-increase plan submitted to the council today.
According to figures provided by the city in a presentation, the average monthly residential bill for water and sewer, based on 4,000 gallons of consumption, is $65.76. It would rise to $69.70 later this year, $73.88 next year, and $79.33 by 2022, when the average annual bill will be $163 higher than it is now.
The proposed increases reflect the mix of an actual rate hike (6.7 percent over the next two years) in addition to the annual, automatic rate increase indexed to inflation, which is projected to be 2.9 percent this year and 2.4 percent each year after that, through 2022. The inflation increase may be higher or lower than that projected.
The increases are recommended in order to afford a planned $130 million in utility infrastructure expansion to serve new growth and to maintain the existing system, which is aging. The plan would also limit the amount of money the city would have to borrow to keep up with infrastructure needs, and to maintain its current A+ credit rating. The proposal was submitted to the Palm Coast City Council during a workshop this morning. The city administration had withheld the presentation’s powerpoint until today when the meeting started, and did not honor a FlaglerLive request for the presentation on Monday.
Aside from ongoing annual rate increases pegged to inflation, the city last increased utility rates in 2013. The 17.6 percent increase was spread over three years and had been scaled back from an initial proposal of increasing rates 22 percent. As required by law, the council had to hold a public hearing before approving the increase. The hearing drew a more-than-capacity crowd in the council room at the old Community Center (the administration had scheduled the hearing at a 9 a.m. meeting rather than a 6:30 p.m. meeting, presumably hoping to limit the size of the crowd). Most spoke in opposition to the rate increase, some spoke in favor, and the council approved the increase 4-1. Not a single member of the council then is on the council today, but based on today’s discussion, there was scarcely any opposition to the proposed rate increase that would kick in with October’s bills.
“We can talk about parks all day long,” Palm Coast Mayor Milissa Holland said. “One of the most important things we do as a council is to make sure we’re maintaining our infrastructure. This is one of the key components to doing that.” The mayor sees the plan as getting ahead of the city’s needs in a pay-as-you-go approach that would not eliminate the need for further debt, but diminish the need for it. For residents, “it’s important to state the value that’s coming out of that discussion,” Holland said.
“We’ve got a new city with an older utility system and that means we’ve got to be able to spend money if we’re to keep it up to standards,” Council member Bob Cuff said. Law enforcement aside, he said, “I can’t think of a single public service that we’re providing to our residents that’s more important than water and sewer.”
The council would have to hold a public hearing soon to adopt the proposed rates and have them go into effect by October.
A rate study completed this month pegs the increase in the annual operating expenses of the utility at 4 percent a year. That increase is reflected in the city’s plan to add seven employees to its utility workforce of 137 in the coming year.
The plan is based on some assumptions, namely that growth will continue at a rate of 700 new customers per year, and that wastewater plants will continue to expand capacity. Impact fees, the one-time levy on new construction that defrays the cost of development’s impact on the city’s infrastructure, is projected to generate $20 million.
Palm Coast government bought what used to be Florida Water Services on Nov. 1, 2003, for $82.3 million, a purchase financed with debt and justified on the promise that by owning the utility, the city would have more control over its water and sewer systems, both to provide services and to limit rate increases on residents and businesses.
The city’s utility now has assets of $270 million, according to the city’s 2017 audit. The utility’s revenue is just over $42 million a year. Nearly $26 million of that is devoted to capital improvements in next year’s proposed budget. The utility in 2017 had operating expenses of $29 million. The city’s utility has $179 million in long-term debt, roughly split between loans and bonds.
Though the Palm Coast utility is part of the government–and run by government–its budget is a separate-self-sustaining operation: the government may not use utility revenue to pay for general government operations.