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Palm Coast Council Heavily Criticized Over Planned 22% Water Rate Hike

| February 6, 2013

It takes maintenance. (© FlaglerLive)

It takes maintenance. (© FlaglerLive)

The Palm Coast City Council Tuesday evening weathered a verbal barrage of questions and criticism from 15 people upset at the city’s plan to finance $78 million in water and sewer charges over the next five years, in part by raising water rates 22 percent in the next three years. But little change is expected.

Palm Coast has three water plants and one sewer plant. The water utility, which the city acquired in 2003 for almost $100 million, has been a mixed blessing. It has generated huge revenue for the city, enough to enable the utility fund—ostensibly a fund separate from the city’s general revenue—to “lend” or “invest” money in the Old Kings Road widening project near State Road 100. The loan did not pay off, exactly: the loans to the Old Kings Road project was at 5 percent interest, but has yet to be paid back.

(Note: A previous version of this story incorrectly lumped together various transfers from one city fund to another, attributing all such transfers to the utility fund. In fact, the utility fund has lent money only to the capital fund for the widening of Old Kings Road–not to the Town Center CRA, which got a loan, now paid back, from the general fund, nor to the tennis or golf course funds, which were also subsidized by the general fund.)

The utility has large loans of its own. But absent the money it lent, and especially absent the growth the city banked on to spread the cost of its maintenance and growth of its utility, the city now finds itself facing bond holders who are demanding certainty that their money will be paid back. The city cannot risk to jeopardize its bond rating, otherwise the cost of its loans could go significantly higher, adding yet more costs to ratepayers overall. Without new customers to tap, the city’s only option is to raise rates.

“The reality is, we’re not collecting money simply for the sake of collecting money, we’re collecting money to do projects that have to be done,” Palm Coast Mayor Jon Netts said Tuesday evening.
A water-treatment plant, for example, has reached 70 percent capacity. It’s well away from 100 percebt, but the mayor said the 70 percent threshold requires the city to begin planning for a new treatment plant. Once another threshold is passed, that treatment plant must be built. The city is not growing at the moment: it hasn’t grown significantly for several years. But Netts said the city cannot gamble on the assumption that it won’t grow. Rather, it’s basing its growth projections on those of the University of Florida’s Bureau of Economic and Business Research.

Based on last spring’s estimates, those projections see Flagler County growing to 101,000 people by 2015, and 114,500 people by 2010. But the bureau also notes that actual growth has been slowing down significantly: in April 2010, Palm Coast had a population of 75,180. In April 2012, it had grown by 1,270, to 76,450—still better than any other place in the county, where population has been flat, but nowhere near the growth rate of the decade before the Great Recession, when Palm Coast’s utility projections were calculated.

On Feb. 12, the council will hold a workshop to discuss alternative options to the rate increases. But the public is not allowed to participate at workshops. The city council is scheduled to vote on the rate increases at its next hearing, when the public can again speak, on Feb. 19 (at 9 a.m. at the Palm Coast Community Center).

Tuesday evening, Vince Liguori, the tea party leader who successfully led the battle against the council’s utility tax proposal in June, was first to address the panel Tuesday evening, ending with a request for a referendum (but it wasn’t clear on what). Liguori said the utility’s five-year plan is equivalent to a $2,400 burden per household. “There’s no question in my mind that this must be subject to further examination, review and options prior to voting on this issue,” he said. “Gentlemen I have this: how and why did we get to this point?” He provided a long and rapid list of alternatives, including the creation of a five-member Palm Coast water authority that would include the city manager, two water utility employees and two residents, a proposal echoed by a few other speakers after him. “We the citizens have to manage our money,” Liguori said. “We need a clear picture of what you do with our money. Do not make decisions by how much public attendance you obtain on any subject, because Palm Coast residents have shown that they are apathetic about voting and civil matters. A referendum is needed.”

Liguori was followed by Tom Lawrence, another tea party leader and a former member of the council. “Let me be clear: A rate increase of 24 percent in 22 months seems excessive and is unacceptable,” Lawrence said. He proposes minimizing rate increases even if it means taking on more debt, among other options (including reviewing the way long-term projects are financed, and enacting an annual savings mechanism equal to each year’s inflation).

Eighteen more speakers followed, 13 of them addressing the water utility, at times by relying on outlandish figures, such as one speaker’s claim that there’d been 324 rate increases since the city acquired the utility 10 years ago (not so: city Finance Director Chris Quinn said there was a rate increase of 12.5 percent in 2008, and an average rate increase of 1.7 percent a year since, as inflation adjustments). Another speaker noted the level of poverty in the county, and the 62 percent of students in the community on free or reduced lunch, to whom additional water costs would be intolerable.
Dennis McDonald, a county commission candidate last year who also identifies with the tea party, has been appearing before the council repeatedly since, in something of a crusade to unseat Netts and to demand the resignation of City Manager Jim Landon (he calls it “the Landon-Netts fiefdom.”)

“We are all here,” McDonald said, “because the management of our investor-owned utility has not been expanding the water and sewer services by billing—you have been billing it to the stockholders and rate-payers and not requiring the land developers who must have our services to expand their developments to ante up.” He is partly right: big developers who have, for example, acquired land west of the city to build potentially huge developments have not yet paid their impact fees to defray the cost of development, including the cost of water and sewer improvements, because they have not yet built the homes that generate those dollars.

But that’s not the city’s fault. And the city cannot demand that those developers pay for an impact they have not yet generated. Where the city miscalculated is in its assumption that those developments would be underway by now: the city had made a bet that growth would continue apace, or be only briefly interrupted. So far, the city, and Palm Coast’s rate-payers, have been on the losing end of that bet, because bondholders must still be paid.

McDonald went on to make direct attacks on Landon’s management, citing a $435,000 blunder over who was to provide electricity to the city’s newly acquired water wells west of the city. The city is now saddled with that cost. It was a mistake. But Landon later in the meeting wryly thanked McDonald for bringing up the matter, because, Landon said, it gave him a chance to tell the rest of the story: that the acquisition of those well-fields had once been a $4.5 million proposition from Rayonier to the city, before Landon’s arrival, but that he and Richard Adams, the utilities director, renegotiated and got the well sites “at no cost,” a savings, Landon said, of millions of dollars to the city. Curiously, Landon, who advertises even minor awards or cost-savings in his weekly review to the council, and at the end of meetings, had never mentioned that multi-million success before.

None of the 15 people who addressed the council on the water issue were supportive of the council’s current plans.

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19 Responses for “Palm Coast Council Heavily Criticized Over Planned 22% Water Rate Hike”

  1. confidential says:

    If we have no current growth and that, has been for years, why is that the utility needs expansion expenditures? I definitely agree that the resident taxpayers owners of the utility need to be made aware and have a say in the utility revenues and in what are those spent.
    I see in the city bids posted for A) electrical improvements to (Town Center) Central Park:
    and B) Loan for the Rt 100 (Town Center) CRA..?
    Regarding A) doesn’t Town Center Central Park have enough luxurious electrical installations? B) more Loans on our pockets for Town Center CRA?. Can city officials explain it? Who are we subsidizing here?
    And this was just glancing around. Wonder how much more pork in our pockets is out there. Then of course is when they want us pay an utility increase to subsidize the elite and “future growth”. Lets do not pull up the”bond holders concerns” here. They sure get paid!
    This is not why we voted our Council and Mayor for. Also one more thing how come the Golf Course is still in the red after 3 years, needing tax payers funds to the tune of 100,000/year? Yesterday I drive by and there are 60 cars parked all paying less that 30 any given week day I go by… and they need us to subsidize them…? Sorry but Kemper Sports is sucking our pockets and with green flags! Be self sufficient or be out! Enough is enough. I want to see those Palm Harbor Golf Course real financial’s as my tax dollars have subsidized them since opening. I sincerely appreciate Mr.Landon for getting the additional utilities and the Golf Course “lands” at no cost to us, but comes a time after a while that accountability and common sense should prevail.

    • Anon says:

      @ confidential
      Do not overlook the tennis center. It is and has been a losing proposition.
      Why isn’t the management contract of these public facilities put out to public bid?
      It must be similar to the selection, I mean bidding,(lol) of the trash contract.

      These so called city leaders have lobster and champagne tastes.
      The reality is that the financial health of this city is more like Red White and Blue beer.

      The council can be criticized until the citizens get blue in the face but it is like whistling into the wind.

  2. Stevie says:

    The city takes money from the utility fund and uses it to subsidize Town Center and widen roads we don’t need. All seems normal in Bizzarow land.

    Mr. Vince was a proponent of home rule and higher taxes. How is that goin for ya Vinnie? I guess the guy that gets 2500 measly votes to become mayor does have all the power and can say GFY to the folks and get away with it. Welcome to Nazi land where anything that isn’t legal will be by tomorrow if the elite council wants.

    More houses will be for sale and more businesses will move out. It’s survival.

  3. Magnolia says:

    Mr. Landon committed a nearly half million dollar mistake with an city owned utility. He tells us that we cannot move City Hall into the County Government Building because it is not inside the City limits, not legal. But he paid over $700,000 without the stockholders knowing or approving to a developer outside the City limits. This is why all those people showed up at that meeting last night. The taxpayers are stock holders in this City owned utility. The Mayor says this is “done all the time.” How are we to know? This community has been raped by major developers with the people left footing the bill on more than one occasion. Patience is wearing thin.

    Yes, Mr. Landon made a mistake….a BIG ONE. I have heard that his salary is more than Governor Scott’s. If this is true, then we cannot continue to afford mistakes like this one or the salary and expenses of this very expensive City Manager.

    Finally, there is another issue here. I don’t think any of us realized that the City has borrowed well over a million dollars from this fund in the past few years to supplant for taxes and other revenues. I don’t recall hearing that last night. Mismanagement? You decide.

    I support Mr. McDonald.

    • LJR says:

      In 2010 Landons Salary was $183,000.00 + And I don’t think that includes a generous benefits package.

      • Magnolia says:

        Mr. Landon’s current salary is $168,878.00, according to the city. There are only a handful of governors who make that or or more. Florida is not one of them. Our Governor’s salary (which he does not accept) was $132,232 but was recently reduced by 2% to $130,273. My source is the Council of State Government’s Compensation information. Most Governor’s make far less than our City Manager.

        Not as high as I’d heard, but I believe we should not be paying him more than the governor. Something in the range of $100,000 to $120,000 seems a bit more reasonable. Or maybe less with an increase based upon growth.

        I hope you will share this information. It’s an eye opener. We’ve had to lay off city employees to cut the budget. We need to do the same with the Manager. He is being overpaid and people should know that.

  4. Lin says:

    I could not make the meeting last night – thanks for the report Flaglerlive.

    What a mess we are in. Here we have been paying ridiculous water rates all these years thinking we were paying for water and the City Council & City Manager was using that money to fund risky non-water related investments. These black holes will never pay off. Now the incompetents running the city want the rate-payers to pay more for water because we need it. Why didn’t they plan for this when they were spending our money like it was water? My lame attempt at humor.

    On Long Island 10 years ago, we were paying on average $35/mo for water for a family of 4 including watering grass every day in summer spring & fall. Here we pay over $100/mo sometimes as high as $200/month and we only water 2X or 1X a week depending on season and it is only 2 of us now and we use alot less water.

    The City Manager and Mayor and anyone else responsible for this betrayal of public trust should be fired if they don’t have the integrity to resign. So many mismanaged schemes by our so-called representatives — aren’t they embarrassed? Instead, they run for reelection and get reelected. I’m embarrassed by this.

    One difference with Mr. Ligouri’s suggested 5-member panel — it should be all citizens like the NYC Civilian Review board. Why have the culprits judge themselves? We need to have a recall election of the Mayor if our Mayor will not fire the City Manager and get someone who is qualified to do the job.

  5. Tim says:

    I foresee an increase in sales of BOTTLED WATER.

  6. real people says:

    let me add this one, 2010 budget $1.25mil where budgeted for possible purchase of a property on Bulldog drive. Where is this money the purchase never happened where is the $1.25mil?

  7. m&m says:

    It realy does’nt matter. They will do what ever they want like all goverments do. Then the people turn around and re-elect the same canadates and then spend the next four years complaining about them..

  8. Lin says:

    What makes you think the people complaining voted for these people? I didn’t.

  9. confidential says:

    Some of us supported and voted for some of them and once seated they turn against us with a superiority body language, like Distefano in the past and McGuire now. Lets keep it in mind!

  10. another voice says:

    Some of them ran “unopposed”, didn’t they? I didn’t vote for them either (and I voted), but here they are. Blaming “voters” is pointless.

  11. Magnolia says:

    If blaming anybody is pointless, then open your wallets and your savings because the City Council is coming for it and they don’t intend to stop and they don’t care if they do it legally because they know you are too lazy to stop them. That’s how it works. Mr. Landon has a shiny new SUV; he’s got payments to make. Do you think it’s right, with so many here strugging, to pay a City Manager such a huge salary? What’s wrong with $150,000 like most cities around here? Why is this one making a fortune, more than Congress with NO END to his contract? That isn’t even enough to get you to the polls, is it? You’d rather just complain.

    We are in this position because too many simply don’t care how bad their government is cheating them. They can’t be bothered to show up at a council meeting, much less to show up and vote.

    We have the government we deserve. “WE”. It is OUR fault.

  12. Joe says:

    Elections have consequences!!!

  13. EXResident says:

    Thank God we got out of that hell hole called Palm Coast. Every office of the government is so corrupt it’s disgusting.

  14. The leaders of Palm Coast remind me of another group some place…….let’s see…….oh yea, the US Government. A bunch of over-effin-paid leagalized crooks/thieves/robbers.

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