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Electric Service Tax Is Back As Part of Proposed Options to Rebuild Palm Coast’s Public Works

| January 28, 2019

Palm Coast government says its public works plant on U.S. 1 is in dire need of expansion and upgrades. (© FlaglerLive)

Palm Coast government says its public works plant on U.S. 1 is in dire need of expansion and upgrades. (© FlaglerLive)

In late 2016 Palm Coast City Council members toured the city’s 7-acre public works facility off U.S. 1 to see firsthand what the city administration says is in dire need of expansion, upgrades and reconstruction. At the time the city paid a consultant $89,000 to analyze how to modernize the facility, on the assumption that it would be a $6 million, five-year project.

The cost since rose to a projected $21.5 million, though the figure is still fluid. The question then and since has been how to pay for it, with not disagreement from council members that, as the city describes it, the facility “does not meet current operational needs and is deficient in safety, technology, capacity, traffic flow, and workflow.”

Council members again toured the facility late last year, and in October discussed adding a public service electric tax or an electric or utility franchise fee to customers’ bills to pay for the public works facility expansion and for what the city considers to be a large backlog of unfunded street improvements that could cost around $3 million a year.

Both taxes were considered almost seven years ago, drawing staunch public opposition and forcing the council to back down. When the council discussed the taxes again last fall, the same thing happened: residents rose in opposition. The council tabled the proposal and asked its staff to come up with alternatives, both to phase the project and to to find different ways to pay for it.

“We’ve been presented with a very serious need in our city,” Mayor Milissa Holland said at the time, “not only having to do with safety issues, but efficiency issues, and one not up to code and ADA requirements and everything like that. But I think everyone can agree the facility needs to be built. It’s just how we go about finding the money to do it.” She said the need will compel finding “a different revenue source.”

The city administration Tuesday returns to the council with alternatives, though those alternatives are not significantly different from the core proposals in October. While the franchise fee has been dropped altogether (it had no support from any council members last fall), two of three phased options again call for an electric public service tax as a source of revenue. In the current proposal, the service-tax approach would cost residents either $1.87 or $3.12 a month more (or either $22.44 or $37.44 a year more), less than what was projected last fall.

“We’re putting all the options forward,” Interim Manager Beau Falgout said. “We’re not making a strong recommendation on what option.” That’ll be up to the council, as “This one is sort of a big long-term policy budget policy decision.”

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Two of the council members were not on the council when the panel last discussed the issue–Eddie Branquinho and Jack Howell, neither of whom has yet experienced the sort of raw reactions elicited by some issues. This could be their baptism.

The administration’s proposals are straight-forward. Option A would undertake the whole public works project without a phased approach, with construction taking place in 2020 and 2021. It would be funded through debt, with the public service tax as an option to finance the debt, which has to be backed with a solid revenue source. Some $11.5 million would have to be financed the first year, $8.5 million the second year. That’s assuming the city would still maintain its other capital-improvement projects at parks, paths and city facilities.

Option B would be a two-phase project, with improvements to the fleet side of public works first (with a new building and a wash-down station for city vehicles), followed by improvements to its operations side. It would require a combination of debt and pay-as-you-go approach. The administration is proposing the service tax as an option for that approach as well. The administration cautions that the phased approach would result in costs about 15 percent higher given the two smaller projects as opposed to one large project. Over time, the cost of construction increases as well. Going that route, the administration proposes delaying some planned capital improvements in trails and parks projects from five to seven years, while using the public service tax to finance $5 million each of the two years of construction.

Option C would also be two-phased and have that estimated 15 percent added cost, but would all be pay as you go. It would be paid for through existing revenue sources such as the ongoing capital improvement fund, which generates money through the property tax, and by shifting and delaying parks and trails projects up to a dozen years, among them the planned development of the Long Creek Preserve, which has been awaiting a visitor center for several years. (Impact fees are not considered to be an option, Falgout said.)

While the administration is not recommending one option over another, it is recommending against an electric franchise fee (which, unlike the electric service tax, does not allow for exemptions and locks in the city in a very long-term contract with Florida Power and Light). It is recommending against a fire service assessment fee–much talked about by opponents of the electric taxes last fall–because such an approach would not fund capital projects directly. It would fund the fire services and enable a large shift in property taxes to capital projects. But it cannot be used to leverage debt, the city says, and would result in “higher impact to residential taxpayers,” according to the city’s presentation. The administration is also recommending against raising the property tax to fund the public works expansion, as that would not diversify the city’s revenue sources, among other reasons.

In sum, the options are specific but few, and differ in details, but not in the main, from the discussion in October. The estimates of how much the new tax would cost a typical rate-payer are also tailored strictly to the public works project. But there is another large unfunded burden on the city’s horizon: street improvements, which will also be discussed at Tuesday’s meeting.

The administration projects that city streets will need $2.5 million this year. That’s taken care of. But to keep roads from deteriorating, the bill rises to $3.1 million next year and keeps rising to $3.9 million by 2023. The funding gap will be $1 million next year, then $1.9 million in each of the following two years, rising to $2.2 million by 2023. The administration in this case offers as options raising the property tax, cutting the budget, or using the service tax as part of the new funding to pay for streets–again essentially renewing the proposals made last fall.

The discussion on public works and roads is part of a lengthy workshop agenda for the council Tuesday, starting at 9 a.m. at City Hall in Town center. The presentations on roads and public works are below.

Utilities Plant and Roads (2019)

12 Responses for “Electric Service Tax Is Back As Part of Proposed Options to Rebuild Palm Coast’s Public Works”

  1. Buried treasures says:

    A forensic audit will be all that’s needed and when heads start rolling the rats will start jumping ship and the city then will learn what they will claim they never knew!!! Call for a forensic audit now!!!it will be worth the cost!!!!

  2. Jack Howell says:

    I want to go on record and tell our citizens that I will fight this proposal of the FPL tax tooth and nail. I don’t believe that this is the way to do this. Furthermore, I believe if this tax is approved, we will never, ever get rid of it. I believe that the Public Works facility is in need of upgrade. However, I believe the best method is to pay as we go (Option C).

  3. atilla says:

    GO Jack!!!!!!!!!!!!!

  4. palmcoaster says:

    I agree with Jack Howell. Option C would be the fair thing to go with for the residents as what could ever reassure us that only $1.87 only will end up being the total suggested will be the end of this increase?
    The problem we have in the city of Palm Coast is that we pay almost double in taxes to the county of what we pay the city (;look at our annual homes and that is wrong because the county just provides us with the Court system, Property appraiser, Tax collector, Supervisor of Elections and part of our Sheriff services and on top we contribute additional 3 or 4 millions a year for the sheriff.
    In comparison my taxes for a property I own in Daytona Beach, I pay the county same I pay the city with the additional that the city has its own police Department. I see here in Flagler that we pay the County almost double when provides us only with maybe the most 30 % of the services if so versus the city the other 70%. That will have to be addressed one day as is what afford the county the wasted millions in funding the failed Ginn Hangar (still paying for the loan) the millions wasted in the purchase and remodeling of the contaminated hospital for the sheriff, the waste of the Cakes Across America funding location at the airport, funding of the $750 a month of private businesses like the Captains BBq, the double pay to Sally Sherman county ad., assistant, the purchase of the no longer working Plantation bay utility benefiting developer Housenei and many more waste yet than that.

  5. Agkistrodon says:

    Both Buried treasure and Jack Howell have very valid points. Lets just dispatch with the talk and get a forensic audit underway, I think there will be some very enlightening information will be revealed. And possibly a few criminal actions will also surface.

  6. MRC says:

    I can’t believe that the city still has not listened to public concerns. Forget the darned trails!!!!! We NEED street lights and sidewalks! Please oppose this “plan”. I am angry that my tax dollars would be spent in this way. After seeing the community opinion poll, it was obvious what the city council wants to do. Half of the questions concerned parks and trails. Catch a clue, we can find alternative sources to pay for parks and rec. We do not need to make it a priority while the infrastructure is crumbling. Oppose, Oppose, Oppose!!!

  7. tulip says:

    Why is it that Palm Coast most always starts out with one figure for a job that somehow manages to cost a much much larger amount? 5 million to 21 million dollars is a HUGE jump and I question why. Also it was mentioned about money for the roads. If I remember correctly, all the traffic camera money went to roads and safety features etc. Now we’ve lost that revenue so now we pay out some more money.

    They certainly had no problem finding the money for the sun shades at Holland Park, when it would’ve cost far less money to have hire residents, or city workers, who would like some extra money to build pergola type shading and it would last longer. Oh, I forgot, it’s the Mayor’s pet project so money is no object.

    I can’t remember the last time the city council, including past ones, was actually fiscally sane, and thoughtful how they spent the money.

  8. John dolan esq. says:

    Bad idea from a bad Mayor. No money to build? Just make up another bogus rip off tax.

  9. James says:

    This proposal is a disgrace. First a hike in our water bills and now a charge to our electric bills???? Give me a break already. Holland must go!

  10. Robjr says:

    Oh boy.
    New city hall.
    High dollar community center
    Golf course
    Tennis center

    Wonder why there is no money for necessary physical plant.
    And last week they were talking about ball fields.

    And now they are planning to hire a Landon recommended town manager.

  11. TheTruth says:

    Thank you Mr. Howell for watching out for us taxpayers, we did not like this when the news came out prior and we don’t like it now. This is the one of the many reasons I voted for you, you are for the people. Thank you again for going to bat for us, we appreciate it.

  12. Shark says:

    If they would do things right the first time they wouldn’t have to do this. They dug up my swayle three times and it is still a swamp. The same thing on Cottonwood Court.

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