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Flagler County Readies to Approve $6 Million Fix of Plantation Bay Utility, Borrowing $3.8 Million

| May 20, 2019

The Plantation Bay utility has been a problem for the county since it acquired it for $5.5 million in 2013.

The Plantation Bay utility has been a problem for the county since it acquired it for $5.5 million in 2013.

The Flagler County Commission this evening will consider approving a $6 million bid to build a 500,000-gallons-a-day reverse osmosis water treatment plant, expandable to 1 million gallons in the future. The measure potentially cures one of the thorniest county issues since Flagler government bought the utility from a private developer for $5.5 million in 2013 (not including additional, generous development credits), knowing it was in very bad shape, and knowing that at least $3.9 million in repairs were needed. That figure has long since been eclipsed.

In 2011, a state agency had recommended the utility sale price to be $1 million.

Sawcross Inc. of Jacksonville was the lowest of three bidders, by a shade. To finance the project, the county would seek a $3.8 million bond. The rest of the cost would be paid through impact fees and grants.

County officials say the entire cost will be borne through Plantation Bay’s utility system and its rate-payers, without affecting county taxpayers at large. County Administrator Jerry Cameron said he’d work to solve the Plantation Bay problem “without raising their rates.” He said Friday that, in fact, rates will not go up to pay for the repairs. “I think there’s going to be a rate reduction” in the future, he said. He did not explain how.

The term of the loan is 14.3 years, at a fixed interest rate of 2.99 percent. Closing must take place by May 31 for that rate to stick.

Interest on the loan will total $927,000, bringing the total amount the county will pay by 2033 to $4.73 million, doing so in annual installments of around $300,000 to $330,000.

“The 2019 bond will be payable solely from and secured by a pledge of gross revenues derived from the operation of the Utility System after payment of operation and maintenance expense,” Jay Glover, managing director of PFM Financial Advisors, tells Lorie Bailey Brown, the county’s finance director, in an April 24 memo. The county hired PFM to be its financial adviser in the Plantation Bay matter.

PFM issued a request for proposals to six local, regional and national banks. Sterling National Bank offered the lowest, 2.99 percent rate. The loan is to be issued on what’s called a “non-bank qualified basis,” which,, in effect, raises the interest rate. Bank-qualified loans are cheaper because the bank deducts interest expenses, but the county isn’t going that route on the Plantation Bay loan because the county will be seeking other, steeper loans this year (think about the construction of the sheriff’s district office in Palm Coast, expected to cost $12 to $15 million). But local governments are limited to $10 million in bank-qualified loans in any calendar year.

A six-page, single-spaced timeline of the Plantation Bay utility history, prepared by the county’s Julie Murphy, accompanies tonight’s item, and for the first time with that much detail traces the history of the utility back through its earliest development days as a Development of Regional Impact, or DRI. As early as 1985, the developers at the time signed a development order “that gave Flagler County the right to acquire the utility at a lower cost than the $5.5 million eventually paid in 2013,” the document reads.

The original developer transferred the DRI to Mori Hosseini’s ICI Homes between 1991 and 1992. Hosseini through his various companies would become a generous campaign donor to several county commissioners over the years. In the mid-2000s, then County Administrator David Haas attempted twice to acquire the utility for the county but failed. (Haas then went to work for Hosseini’s ICI.) Two successive negotiations failed, though it remained the county’s aim to acquire the plant.

In 2011, the Florida Governmental Utilities Authority “produced a report that listed significant owner liabilities including Occupational and Safety Hazards Act violations,” according to the timeline. “The Authority estimated then the $3.9 million in improvements were needed. The Authority noted that the problems existed because of ICI’s deferred maintenance of the system. The FUGA recommended to the county that no more than $1 million be offered to ICI for the utility.”

Then-County Administrator Craig Coffey negotiated a $5.5 million purchase of the utility, briefly using Bunnell government as a partner to facilitate a certain kind of loan that only the city could secure. The Purchase price did not include a credit for 150 prepaid single-family residential connection impact fees valued at just under $700,000. That’s $700,000 not currently or potentially available to defray the cost of utility improvements or lower loan costs. The sweetheart deal also capped the cost of subsequent impact fees. The deal was arranged even though the county was aware of state Department of Environmental Protection orders against the utility for not providing continuous monitoring.

In February 2013, the County Commission in a 4-1 vote approved the deal in a late-night meeting even though three commissioners at the time–George Hanns, Charlie Ericksen and Barbara Revels–were uncomfortable with it. Only Hanns dissented. Nate McLaughlin, who was replaced by Joe Mullins, also approved the deal after lobbying for it alongside Coffee at public hearings, as did the late Frank Meeker. The utility’s 1,600 customers were not necessarily placated. The county soon started spending additional dollars, and early last year began repairs to the sewer plant, only to discover more grave, structural issues. issues.

The commission meets at 5 p.m. at the Government Services Building. It is discussing Plantation bay matters at 6 p.m.

Plantation Bay Utility Timeline

12 Responses for “Flagler County Readies to Approve $6 Million Fix of Plantation Bay Utility, Borrowing $3.8 Million”

  1. Jane Gentile-Youd says:

    Here we go:
    The users of the utility are currently in debt over $6million for the overpriced purchase of the dump plus almost $900,000 in consultant fees.

    * Not one repair mandated in the April 26, 2013 Consent Order issued by the Florida Dept. of environmental Protection ( FDEP) has been made in over 6 years yet our bills have more than doubled. ( Ours from $45-48 a month to now $95-$105 a month-2 adults hubby works at KSC gone from home 70 hours a week)…
    *If additional loans are not going to cost us users any more increases in our monthly bills ( or special assessments) then it must be made a written part of the motions/resolutions and binding upon the county or the promises are well intended by meaningless and unenforceable. I am not wiling to take that risk. The commissioners voting will have to make that promise.

    **Most importantly – and overlooked by our county attorney to this day is the fact the FDEP rules do not allow a Consent Order to be transferred to a buyer nor closed without the mandated work being done and approved. FDEP illegally closed the original Consent Order to Plantation Bay Utility April 26, 2013 and issued a ‘second’ new Consent Order naming Flagler County and extending the time to complete the repairs 3 times to date!! Their own rules allow the sale of a utility but clearing state that the Order mandate remains with the original Respondent and is not transferrable. Al Hadeed should have known this, FDEP should have never approved what they are not authorized to approve and our attorney should be compelled to get back the millions that the illegal transfer of way overdue Consent Order is going to cost.
    *Two of us filed petitions to FDEP to stop any further permits for wastewater discharge and reminded them that the current builder is the original respondent who is getting permits to cause more strain on our overstrained systems..(see articles by Flagler Live)

    The commissioners are obligated to protect us and the only fair vote this evening should be to force the county attorney to demand FDEP obey their own rules and collect the total costs needed for the wastewater plant from the original owner and approve any loans only upon condition that under no circumstances will we , the users ever be responsible for repayment which they cannot do simply beause the loan for $3.8 clearly states ” Loan will be repaid FROM THE GROSS REVENUES OF THE UTILITY LESS OPERATIONAL AND MAINTENCE COSTS”. ( no mention of the $6million already owed by us)

    I think the world of Jerry Cameron – his heart and soul are in the right place but I will not accept being given false hopes as I was in 2013. The county could and should have never paid a dime above original appraisal of $2.5 million…. and rumor has it that FDEP could have taken the franchise away from the former owner and the county could have gotten it for under a million dollars……. so here we are almost $7million in the hole with not a damn improvement but more than double the cost.

    A yes vote must come with a written guarantee as well as a demand to make FDEP hold Plantation Bay Utility 100% as per their own law for the cost of wastewater repairs. Or vote to table until FDEP replies no later than 30 days from now on what legal basis they had to stick us with the cost of millions of repairs illegally

  2. Robjr says:

    These county politicians and administrators sure know how to put money in other people’s pockets and at the expense of the taxpayer.

    They dove head first to buy the dilapidated plant instead of holding the developer’s feet to the fire to fix it. And they thought they saw dollar signs, so they bought it with Bunnell. Bunnell bailed out.

    People who sell properties to Flagler county seem to laugh all the way to the bank.

  3. PB says:

    I wish my rate would go down. After being gone the month of May with my water off, i still got a $90+ dollar bill! Ridiculous!

  4. Outsider says:

    So the county paid $5.5 million for a system worth $1 million? That sure must have left plenty of money for “commissions” for every one involved. We need a federal investigation of this whole county, going back 20 years.

  5. ASf says:

    Isn’t at least part of Plantation Bay considered to be part of Volusia County–not Flagler County? Is Volusia County sharing in the costs of the repairs?

  6. Outside Looking Out says:

    Don’t fool yourself Robjr. These county politicians and administrators sure know how to put money in their OWN pockets as well and they too, laugh all the way to the bank.
    Flagler county is the most corrupt county in the state.

  7. Jason says:

    Another scam by palm coast politicians!

  8. We are not idiots says:

    Come again BOCC!

  9. palmcoaster says:

    I wholly agree with Outsider and Gentile Youd. Our taxes are being dilapidated in favor of these developers and also our quality of life is also taken away in their favor . This is the way the county and Palm Coast promote and welcomes businesses and commercial enterprises with the excuse never complied of creating jobs! The biggest bull sold to all the hard tax earners of Flagler County and Palm Coast.

  10. thomas says:

    Does anyone care about Flagler taxpayers?

  11. palmcoaster says:

    By the way lets be very aware that if not for Flaglerlive these shenanigans and waste of our hard earned taxes will never come to light! Thank you FLive..

  12. Thomas says:

    AMEN Palmcoaster

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