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Palm Coast Approves 17.6% Water-Rate Hike, Pleasing Bond-Holders More Than Residents

| February 19, 2013

Might want to start counting drops. (Emran Kassim)

Might want to start counting drops. (Emran Kassim)

Despite–and in front of–an overflow crowd of residents on Tuesday, most concerned about rising costs, the Palm Coast City Council approved a scaled back plan to increase water and sewer rates 16 percent over the next three years, including 8 percent starting this April, another 4 percent in October, and an additional 4 percent in October 2014.

Monthly bills for a residence using 4,000 gallons of water a month would rise from $54.64 to $64.26 a month – a 17.6 percent increase by the end of the two-year plan, adding $115 a year to residents’ bills. In future years there would be annual increases for inflation.

Residents jammed the City Council chambers for the 9 a.m. meeting, although many left during the lengthy staff presentation which lasted about two-and-a-half hours. A majority of the crowd showed displeasure about rate increases with comments and applause, but some said the increases were the right thing to do.

Most of the City Council members agreed on the need, voting 4 to 1 to approve the scaled back plan that eliminates $24 million in capital improvements, mainly for a new wastewater treatment plant. Council member Bill McGuire was the lone dissenter. The rates that were approved will fund $54 million in needed repairs, maintenance and projects to comply with regulatory agencies. A $78 million plan was originally considered. The previous plan would have increased rates 22 percent in three years.

In hopes of avoiding a rate increase, some citizens asked the City Council to delay action. “I would encourage council to delay raising rates until you have opportunity to digest all this information,” Diane Lang said. No delay was necessary, said Councilman James DeLorenzo.

“This is our sixth time we have met about this, several times with public comment,” DeLorenzo said. The council debated the matter in three previous workshops, when the public is not given a chance to participate, and at three meetings (including today’s) where the public could address the council. “I believe we need to make these improvements. If we continue to wait, that’s just going to put further pressure on ratepayers.” He said the city should put off the new wastewater treatment plant, proposed to meet new but as-yet unrealized growth, to wait and see if growth actually comes. New construction, should it happen, would help pay for future expansion, easing the burden on current ratepayers. The city’s existing wastewater plant is operating at 70 percent capacity, more then enough to meet existing needs.

Lack of growth was one factor sparking the rate increase proposals. Flagler County was one of the fastest growing counties in the country before the recession, with water utility accounts growing 11 percent a year. Now, water utility accounts are growing less than one percent a year. The city has more than 42,000 water accounts and more than 35,000 sewer accounts. As fewer water utility accounts were added, current ratepayers have been saddled with all the expenses, and the city’s debt burden, now topping $200 million. Bond holders have forced Palm Coast’s hand, demanding that the city have a mechanism in place to ensure that debts are paid. Palm Coast’s bond rating has already been downgraded by two of the nation’s three major rating agencies, adding pressure (and costs) on the city to raise rates, existing customers being the only sure source of new revenue.

Normal maintenance and repairs also fueled the rate increase, as did the need to comply with federal clean water standards, such as the $10 million project to eliminate discharge of treated wastewater into rivers and waterways, but instead to re-use that wastewater. In addition to eliminating discharges into the environment, re-using water will reduce the city’s need to pump fresh water from underground sources.

Mark Galvin, the city’s financial adviser, said a new rate structure was needed to avoid yet another bond rating downgrade, which could increase the cost of the city’s debt service for two water bonds by more than $500,000 a year. “I would hope if you have the rates proposed, that should make the rating agencies comfortable,” Galvin said. Mayor Jon Netts added, “We’re asking people to invest in our water utility, they want reasonable assurances that they’ll get their money back.” But nothing, not even the new rate increases, guarantees that the bond rating agencies won’t downgrade the city’s rating again.

But the city is readying to borrow much of the $54 million for the utility. By revising the rate structure, the city might also be able to use $6.2 million in reserves for the utility project, reducing the amount that has to be borrowed, without reducing the city’s bond rating, Galvin said. He also noted that this is the time to issue bonds because interest rates are at historic lows.

In casting the only vote against increasing the water rates, McGuire said the city should cuts its overall budget and pay for the utility project with property tax dollars. “I’m not sure we’ve exhausted the ability of staff to take out more costs,” he said to applause from residents sitting in the back row of the room. But the staff presentation showed that property tax income only accounts for about 11 percent of city revenue, at least when conflated with the utility’s budget. Property taxes pay for police, fire, street and park maintenance, with a small portion for capital improvements. Mayor Netts opposed using tax dollars to fund the water utility, which he said should operate based on rates paid by those who receive the service.

“The prudent decision at this time is to support continued excellence of our water utility system,” Councilman Bill Ferguson said. Ferguson said about $60 a month wasn’t too much to pay for clean water and toilets that flush. Mayor Netts added, “At this point it would be irresponsible not to have this rate increase.”

Some comments from residents showed criticism of the rate increase, sometimes mixed with misconception of how local government works, but other residents came forward to support the scaled back option.

Greg Hanson was one of several residents who criticized more than $5 million loaned from the water utility fund for expansion of Old Kings Road. “Is it possible that money will be repaid?” he said. Dennis McDonald, reprising a speech he’d made to the council two weeks ago, accused City Manager Jim Landon of mismanagement and also targeted the mayor. “You’ve made a mess out of our beautiful community and it’s time to clean it up,” McDonald said. “Recall is in play, gentleman.”

Landon responded that the $5 million was earning 5 percent interest on the money loaned for the road while the city has begun assessing property owners to get the principal repaid.

Staff presentations noted that the city property tax has not been increased in the past couple years, but one woman said her taxes had gone up. However, staffers pointed out that tax bills also include taxes from other agencies such as the county and schools, in addition to city taxes. School taxes have gone down significantly in the last two years. The city’s tax rate has, in fact, gone up, and for some residents, the rate increase outstripped property devaluations, resulting in a net tax increase on property bills. But the majority of residents would not have seen such an increase, especially in light of the steeper declines in school taxes. The county tax rate has gone up in each of the last two years, too.

“This morning, you proved to me that you are nowhere ready to make a decision by the nature of your questions,” resident Vincent Liguori said. The City Council members appeared to know the answers to the questions they asked, but asked the questions intentionally to inform and hopefully sway residents. Some were swayed.

Louis McCarthy urged the city to send out more information to residents, to help people understand why the rate increases were needed. “The decision is yours,” he said. You know what the facts are. They don’t.”

Another resident, Alan Peterson, who served on both the Palm Coast City Commission and, until November, on the County Commission, said this is the time to refinance. “I’m convinced that we need the bond issue,” he said. “There are new regulations. We’re going to have to meet them.” He also agreed with the lower rate increases, putting off a new wastewater treatment plant to wait for more new construction and new water customers. “Those who benefit from growth will pay for growth, rather than having existing residents pay for growth that may not be needed,” Peterson said.

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32 Responses for “Palm Coast Approves 17.6% Water-Rate Hike, Pleasing Bond-Holders More Than Residents”

  1. DP says:

    So where do I sign over the deed to my house and property? It’s getting harder and harder to provide for my family. The city council appears to be Penny wise and Pound foolish, as we continue to landscape mediums, with lavish shrubs and landscaping, raise this, raise that, the citizens/tax payers are deaf, dumb, and blind, and will do what we want to. Why do you people keep voting in these fools, I can say I didn’t? We need change, without it, Palm Coast will become an over taxed, landscaped lavish ghost town of some dumb council members, and an over paid city manager. Adios Palm Coast, time to move!!!!!!

  2. Nurse Pam says:

    Time to hire a plumber to add a CUT OFF valve from my outside hose outlets to inside my garage. Because I can see my “poor” neighbors getting their hoses ready to steal my water when I’m at work.
    Thanks Palm Coast , it just keeps getting better and better by the day !!!!!

  3. palmcoastpioneers says:

    1972 – ‘…An Approach to a New City: Palm Coast…’ by Dr. J. Norman Young and Stanley Dea:
    Page 131- 133:

    Water/ WasteWater Treatment plan for ‘The Palm Coast Project’ origin:

    ‘…In the order of priorities, therefore, it has been incumbent upon environmentalists to control first those critical factors that lead to unfavorable alteration of surroundings, wholly or largely as a byproduct of man’s actions. In the Palm Coast Project, major consideration has been given not only to preventing impairment of the air-water-land resource for beneficial human uses, but also to enhancing their properties as well. It has been management’s philosophy and objective to provide the public with property in a quality environment, supported by highest-calibre engineering and design capability. To that end, many significant studies and action programs initiated at the inception of the project have been carried out to establish the feasibility of environment controls on development. The first task is to foresee a potential problem, then study the alternatives, and then establish a control. The below problems have been studies, and solutions thereto have been proposed in a ‘first generation’ effort toward this new form of city
    A. Wastewater Treatment and Disposal
    Study: A thorough analysis was made of Florida regulations and policies concerning wastewater treatment and discharge of treated effluent into surface water bodies ( rivers, streams, lakes, etc.) as well as into marine water bodies. Results of this study recommended 95% biochemical oxygen demand (BOD) reduction in secondary wastewater treatment and disposal by one of the fol-
    lowing methods: (1) percolation, (2) spray irrigation, (3) evapo-transpiration ponds, (4) chemical treatment and mixed media filtration, or (5) drainage wells.
    Solution: Based upon these considerations, a tertiary quality central treatment plant has been designed and constructed using the percolation or recharge method for disosal. three beneficial environmental effects of this practice will be (1) to eliminate discharge into surface bodies and therby prevent eutrophication. (2) to recharge the saline water table and form a fresh water baarier to reduce salt water intrusion, and (3) to recycle waste effluent in order to form a reservoir of non-brackish water which will be a potential water supply source for future needs. In all canal areas now being sold there will be no septic tanks from which effluent seepage could potentially cause sutrophication in canals. A centralized sewer system is now being built to conduct wastes to the treatment plant.
    B. Improved Wastewater Collection
    Studies: Flat topography and high ground water tables necessitate higher construction costs for conventional gravity sewers and pumping stations. Very recent technology indicates that two alternate systems may be economically competitive, namely vacuum and pressure systems.
    Two major analyses have been completed of an existing vacuum sewerage collection system installed and operational in a Virginia Project. A detailed study of the equipment, controls, and materials show that they are of a type whose reliability, length of service, and maintenance requirements are well established. Research, conferences with manufacturers, and independent calculations and studies of construction procedures confirm the expectation of satisfactory performance of alll elements of the system. The resulting diagrmas, bibliography, and cost studies, establish data for consideration of this system on the Florida site.
    Studies similar to those for the vacuum system are currently in progress for pressure systems. These studies will be comparatively evaluated against gravity systems in order to determine technical capital-cost, and operating-cost feasibility.
    C. Wastes from Watercraft
    Study: A state of the art study was performed to determine the characteristice of sanitary wastes from watercraft, treatment, …’

  4. Angry says:

    Always have to have more don’t you Palm Coast? We all get hit hard with taxes… So many are without a job.. People are being forced to get health care.. Gas prices are through the roof and raise more each day. And then to top it off the city of Palm Coast figured hey… Lets take some more of what people don’t have by raising utility rates. Good job… Run us all into the ground

  5. Reality Check says:

    Its a part of life, costs go up; the council does a crappy job at all most every issue they cover, but when a bond rating changes downward that is a real problem. I do not want my rates to go up but I do understand why they need too, my problem is why such a steep increase? Maybe if these fools we have elected got off their asses and actually looked at problems pro-actively instead of reacting they would have seen this issue sooner. Why didn’t they just have a steady 1or 2 % increase each year to steadily cover the rising cost, avoiding the bond decline issue all together? Because these council members cannot make a real business decision, if they were a private company they would all be on the unemployment line. Oh and Mr. DE Lorenzo and his wife the new Flagler county power couple, he has no idea what people who actually have to work for a living go thru, this is one of the first morons we should vote out the door. He is the worst of the politicians; he is in it for the extra paycheck and looking at nothing more than trying to further his political career. How is it not a conflict of interest to be the head of the builders association and a City Commissioner? Next he will want to be a lobbyist and a congressman so he can bribe himself!!

  6. Joe says:

    Elections have consequences, vote em all out!!!

  7. Polly says:

    What a sham that meeting was! They feed the citizens a planned, elaborate presentation asking questions that made them look good. Also to use up more than two hours in hopes the citizens would get tired and leave. It became a joke! My heavens, who voted in Lewis! He doesn’t even make sense. Everyone realizes that monies are shifted in government but from a water utility they should not be used for anything else. I believe water is a necessity of life guys! That is the problem with giving elected officials power – they lose their sense of right! At this point in time, all Americans are learning to cut back in order to stay out of debt. We balance our checkbooks. We know where our money is, how much and use it on necessities. But not Palm Coast City Council – they have spent in times when they knew the economy was in serious trouble. I think we need a new city manager, mayor and several city councilmen in town and quickly! The present ones are dysfunctional and we are an “average” community on our way down.

  8. Popeye says:

    Rain barrel sales are going to grow. People filling them up from public restrooms and water fountains.
    I can see it now: Fresh water for sale..$10.00 a gallon !!!

  9. Stevie says:

    Isn’t it strange that money can be found to widen roads that don’t need widening and to pour into pet projects that just sit because no one wants to open a store in Palm Coast?

    Here is how it works. Three votes on the city council can tell the city manager to find the money. They can’t tell him how to do it, but they can set up a committee to aid the city manager with suggestions. If the city manager can’t convince the council there is no money to be found anywhere, then they have the option to fire the city manager and get someone who will.

    This is what private companies do. They get their managers to perform, or out they go.

    It is that simple MAYOR.

  10. tulip says:

    I watched the council meeting on Tuesday and it was then I learned that the Federal Gov’t. EPA and the state of Florida are involved in all the water systems everywhere. Apparently the State owns the water in the aquifer and the EPA requires utilities to make sure wastewater discharge does not pollute the environment. Palm Coast was discharging wastewater in such a way that it could end up in the Intracostal.

    Palm Coast is required to fix this problem, which obviously cost millions of dollars. While I don’t like having to pay out more money, After learning about how the government is involved with their rules and regulations, I guess I don’t mind paying $50 a year more for water and keeping the environment safe. Plus, if it’s not done PC could be sued and might lose their right to pump water. I’d rather have PC control our water, NOT the government.

    Perhaps the higher cost of water will make people conserve water more by not over irrigating their lawns, etc.. A lot of us have wells for irrigation, but the water comes from the same aquafer that our household use water comes from.

  11. Magnolia says:

    Hey developers, if you need a cheap loan, go to the City Council, and fleece the pockets of the good citizens of Palm Coast. Somehow in this debate most missed the fact that Mr. Landon and the Council have been using OUR MONEY to loan to developers WITHOUT our permission.

    THAT is why the fund is short.

    The big land owners here will continue to receive multimillion dollar payouts at the expense of the seniors and unemployed here. Our water fund has been their piggy bank. And now that we have the lobbyist for the builders and developers on our council, you may expect lots more of that.

    I wonder what Mr. Netts and Mr. Landon received?

    Did anyone notice they did not respond to the request to ELECT a body of citizens to run the water company?

  12. Magnolia says:

    And by the way, the bond holder is paid a percentage of the money he lends and not a set fee. See how this works?

  13. Brighton Beach says:

    I buy about $70.00 worth of bottled water per month, because PC water tastes awful.
    It’s so bad that I wonder if showering with this water will hurt me one day.

    Maybe I should bathe in bottled water too.

    Fill a glass with PC water, let it evaporate. Look at the crud left behind in the glass.
    The crud costs extra, hence the 18% hike.

    It’s bullshit.

  14. blondee says:

    Well there goes my daily shower!!!!! :/

  15. sly fox says:

    Wow, they did it again. Let’s face it Palm Coast wants to be a “retirement community”. So, those moving from up north, sell their house, move to FL to save on retirement taxes they would be charged up north , buy a house extremely cheap & have a chunk of change left over, a win win situation for them. Which is great! To them our property taxes, power & water are but a small pittance. To them a raise in price is just fine. But, for us who live & work here we don’t have that luxury. My home is worth squat, my property taxes have gone up along with everything else. My husband & I haven’t seen an increase in our pay in the past 3 years. People who move here from up north, please look at the WHOLE picture, just not what you “used” to pay up north for taxes etc. look at us, the people who live & try to make a living in this community, it’s extremely hard. I can tell you 1 thing, we just won’t flush the toilet, (outhouse is sounding like a good idea) maybe take a shower every other day… or get out of this county…

  16. christina b says:

    Let this be a lesson to the 95% of the residents who stayed home when it came time to vote for these yahoos. It is time to get off your butts and get real about this expensive fiefdom. Pay attention to who’s running and vote next time. Get rid of all of them.

    And while you’re at it, complain about the chief yahoo, Mr. Landon, who is criminally overpaid. That six-figure income of his is OBSCENE.

    • Julie says:

      I wonder if we can get a petition together to vote his pay down. if someone gets the petition written up, I will definitely assist in getting the required signatures!

  17. Tired says:

    “Staff Presentation”, that’s really funny! Do you’all have any idea how many hours are spent by staff rehersing their presentation for Mr. Landon? They say exactly what he tells them to say, regardless of the facts. He manipulates each word, each slide, each detail. I’ve often wondered how much could be accomplished in Palm Coast if the practice runs for Landon were done away with and staff was actually permitted to simply work. I’m sure it would put a dent in the budget!

  18. h&h says:

    Just like the red light cameras.. Public opion dos’nt mean sguat..

  19. jc says:

    well here we go again rip offs they all have to have the new trucks to drive around looking pretty getting paid and doing nothing ———- i hate freaking palm coast moore then ever everything goes up all the time pay stays the same so we keep on going backwards always not a dime left for anything actually its never enought hate them all we pay more for water then electric they know we cant do without so they can raise the prices has much has they want

  20. Ben Dover says:

    They obviously don`t care what we say, time we start dishing out some real no`s, start looking up thier home addresses, lets go picket outside their homes, let them know we mean business, they blew the money that should of been put aside for the up keep , lets not let them make us pay for their mismanagement ,I say we bring it to their homes like their trying to bring it to ours, its the only way they`ll listen

  21. Julie says:

    Well it looks like Bill McGuire will be the only council member to get my vote and support next election!! He’s clearly the only one that desires to truly serve the people of Palm Coast!!

    “In casting the only vote against increasing the water rates, McGuire said the city should cuts its overall budget and pay for the utility project with property tax dollars. “I’m not sure we’ve exhausted the ability of staff to take out more costs,” he said to applause from residents sitting in the back row of the room.”

    • Raul Troche says:

      Actually the head of the Flagler Home Builders association is Luis Madeiros. He also is chairman of the administrative board for the county and a local contractor builder. I went to him after being railroaded at one of those kangaroo hearings that violate your civil rights to a “fair trial”. At least he did ask a pertinent question. The prosecuters, Ramona Zavasky and J. Mayer quickly blew him off. When I subsequently went to see him about the issue he told me he could not discuss it because of the sunshine laws he told me that they( the hearing board generally just went along with whatever they (the prosecutors recommended. What a joke.

  22. Magnolia says:

    Reality Check, DeLorenzo is not the head of the Builders, he is their lobbyist.

  23. tulip says:

    Reply to POLLY Regarding your comment about Lewis, he was appointed to take over Mr. Peterson’s seat when Peterson ran for BOCC. However, after that term was up NO ONE ran against Lewis, which I have never understood because there are many more intelligent people out there than Lewis is, and that candidate could have easily beaten Lewis.

  24. there are three sides to every story says:

    Remember all this next election day!

  25. Sad says:

    The poor get poorer and the rich get richer.

  26. bob says:

    lets hook up our sprinkler well to the house and call culligan watersofterns and let Palm Coast keep ther water

  27. Legally says:

    When you spend like a Democrat, you get fees and high taxes like a Democrat.

    • Anonymous says:

      I agree with the person who wrote into the Observer. Cut garbage pick up down to ONE day a week instead of two to save money and dont raise our water taxes

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