There’s no question that water and sewer rates in Palm Coast are among the most expensive in the state. That was true even before the City Council this week approved the sharpest and fastest rate increase in the city’s 25-year history.
Before the increase, the typical house using 4,000 gallons a month paid $91 a month before taxes. The average for public utilities in the state was $68 when last surveyed in 2022. It’s gone up since, but not anywhere near Palm Coast’s rate. Now we have another increase that’ll push those rates by more than a third.
So there’s no argument there. Our rates suck and are going to get suckier. But to hear some of the public outcry, you’d think the increase was due to mismanagement, incompetence, corruption and City Council inaction over the years. None of it is true. There may have been a few missed steps and a miscalculation about how much growth we would or we would not get before Covid “changed the world,” as one council member put it. (Palm Coast’s population grew by 17,000 between 2020 and 2024.)
But aside from a colossal error by the City Council in 2003, none of it would have made a substantial difference, because when Palm Coast bought Florida Water that year for $83 million, it inherited a system near ruin. The $83 million price was insane. It was 232 percent more than Florida Water had paid for when it acquired the plant from ITT’s Palm Coast Utility Corporation just four years earlier. We still owe $60 million.
If there was an original sin, that was it–along with the dubious claim by the council in 2003 that owning the utility would allow Palm Coast to control its own fate. In fairness, the city was also moving preemptively to prevent a coalition of Panhandle cities from owning Palm Coast’s utility and turning into their cash cow. So even the council’s decision at the time was not without its own justifying context.
Still, all it’s done is shift a rickety utility and its ricketier infrastructure onto ratepayers’ back. ITT was not an honorable company then (only its $400,000 bribe to Nixon’s 1972 Republican National Convention saved it from an antitrust case). The infrastructure it left Palm Coast has not been honorable since. The city has been paying the price.
But it’s not as if leaving the utility in private hands would have improved matters. Chances are the rates would have been higher still. In fact, this week’s rate increase is the highest in the city’s history, but not in the utility’s. Thirty years ago Palm Coast Utility Corp. filed for a 34 percent increase, likely because it could see what a ruin it had on its hands. The Public Service Commission stopped it. The utility sued and won, and could’ve imposed any rate hike it wished. By then Florida Water had bought the wormy potato.
What were ratepayers paying at the time? An average of $40 for water and sewer, using 4,000 gallons a month. Adjust that for inflation, and you’re at $78 a month–not that much different from what we’re paying now. The council has been increasing rates in three-to-five-year increments ever since 2003, each time with the Cheshire-smirking lie that it would be the last necessary big increase, each time not increasing them enough. The increases barely broke even with ITT’s crappy legacy. In a counterintuitive way, this week’s rate increase is closer to reality than any before it, though the council repeated its predecessors’ mistakes: it shied off the bolder approach it initially voted for. That rattling sound you hear is parts of the can the council still kicked down the road.
The city’s $615 million dollar spending plan may have been overly ambitious and indebting the city with nearly half a billion dollars more should give anyone pause: an economic downturn robbing the city of new residents will have meant yet another huge rate increase to satiate bond holders. But the package wasn’t unreasonable, given the skeletons in the ground. In the event, scaling spending back to $512 million and a smaller bond issue of just under $300 million was a pragmatic compromise, since the alternative would have been like the city defaulting on its own utility, with catastrophic consequences.
Calls for a moratorium are not illogical. Trucks impersonating icons outside City Hall aside, there’s nothing sacred about construction, just as there’s nothing sacred in any city policy. In Oliver Wendell Holmes’s famous phrase, “the life of the law has not been logic; it has been experience.” Substitute the words “ordinance,” “development” or “moratorium” for the word “law,” and we begin to dispense with dogmas in favor of the reality on the ground.
Something is amiss when you talk of a sewer plant overcapacity and under a state order to get in compliance while buildings keep going up. Slow-walking some development should have been one of the options, and judging from the dearth of new developments in the past year, that may be just what’s going on.
As things stand, an outright moratorium would do more harm than good to a local economy still too dependent on construction. Until the economy diversifies, the city will remain in unhealthy codependency with growth–which does not pay for itself, hence the perpetual ponzi chase after more growth–the way petrostates are disproportionately reliant on their fossil fuels. It’s also rich for any of us to scream and yell for a moratorium while bitching about unaffordable housing–and crucifying most apartment building projects on bogus claims of potential crime or lowered property value. Apartment buildings are the most efficient way to reduce sprawl, improve affordability, diversify our workforce and demographics and create the sort of urban density without which no mass of subdivisions can call itself a city. But that’s another story.
In any case this continuing glimmer of a housing glut will cause its own correction. As the numbers the Flagler County Association of Realtors released this week show, home sales are not where they were two years ago. It takes five times longer to get to a sale contract. The local supply of houses continues to climb steadily: Flagler County had an inventory of 250 houses three years ago. It’s now approaching 1,500. Property values are also not rising as fast.
But whatever correction is under way will be temporary. ITT in 1974 saw Palm Coast as a future city of 600,000. The ocean will claim Palm Coast before that happens. In the meantime, we might see a county of 150,000 to 175,000 by midcentury, with most of that in the city.
Too much? “Obviously” seems too ready, too pat an answer: who’s to apply the same arbitrary judgment on, say, the American population, which has doubled since a campaigning John Kennedy told a Jacksonville crowd how “a rising tide lifts your boats”?
It is also impossible to justify a moratorium regarding the remaining 7,500 vacant lots in the old ITT section of Palm Coast. That’s where the bulk of construction is concentrated. I live on one of those lots. So do most of you. We all got our dream house. Yes, my heart breaks every time another lot’s trees go down. But it’s all in-fill development and I have no moral standing to deny that future homeowner or renter a chance to live there while I’m perfectly happy to live in my block of concrete and lumber where trees also used to be. Those new homes have every right to go up.
As for those utility rates, I just give ITT a special message every time I flush the toilet.
Pierre Tristam is the editor of FlaglerLive. A version of this piece airs on WNZF.
Gene Perez says
This well thought out and well written column lays out the dilemma in a clear and understandable way. It also correctly identifies the error in 2003 that made this series of painful water rate hikes inevitable.
It isn’t clear to me that the recent approval by the City Council is sufficient to fix the problem in the near term. The costs could be higher. For example, the clay pipes originally installed all leak and all must be replaced. It isn’t just the retrofitting of the wasterwater treatment plants that must be accomplished. There are other needs as well and all cost money.
Will the problem self correct? Perhaps, but it will take more time and more money for that to happen.
Critical Eye says
Great article! Thank you!!
Dennis C Rathsam says
One of your best!