For the fifth year in a row, Flagler Beach residents are looking at a double-digit water and sewer rate increase that, combined with the stormwater fee, would add an average of $83 to annual base rates.
The city is proposing a 12.5 percent increase for water and sewer rates and a 12.8 percent increase in the stormwater fee. That’s after water and sewer rates went up 25 percent this year, 34 percent the previous year, 20 percent in 2017 and 13 percent in 2016. The city commission is set to approve the increase at its meeting tonight, starting at 5:30 p.m. at City Hall.
Flagler Beach City Manager Larry Newsom says The reason for the steep increases: For a decade in Flagler Beach, and with one exception, water and sewer rates were relatively low and didn’t change much. The combined monthly base water and sewer rate was $12.17 in 2005. For the next 11 years, it increased only to $19.59, a $7.42 monthly increase that averages out to 5.5 percent a year–still nearly triple the rate of inflation over the period, but not enough to keep up with the utility’s required upkeep, according to Newsom.
But there’s another reason the rate increases are not really a choice: debt. Creditors must be paid. If they’re not, the city’s credit rating would plummet, its borrowing costs would increase, and it could go into default. So the decision is not really in commissioners’ hands as much as it is being driven by their lenders.
Rates began rising steeply in 2016. The monthly increase that would result from the latest increase would be nearly $7, combining water, sewer, stormwater rates and tax. More increases are projected in coming years.
“It’s not a Larry Newsom decision, it’s the information coming for me from engineers that say, Larry we’ve got to do A, B and C and D or we have a chance of failure,” Newsom said. He cited Flagler County’s issues with the notoriously troubled Plantation Bay utility, also seen on the verge of failure. The county is borrowing heavily and depending on some state grants to make the required improvements. Flagler Beach is also borrowing. “Trust me I’m not exempt, I have to pay the same utility bills as every citizen in Fagler Beach. At the end of the day it’s not what we want to do, it’s what we have to do.”
Newsom says if the city had adopted a rate-increase schedule of 10 percent a year since 2005, the shocks would have been lessened, and the bottom-line cost to rate-payers would have been nearly identical to the one the city is seeking with its latest increase. Averaged out that way, “it’s really not that much of an increase,” he said. “When I came in, I’m looking at our infrastructure to make sure we can provide potable water and wastewater. I was looking at it and going holy cow, we haven’t done anything all these years, how are we supposed to catch up.”
The original plan earlier this summer was to increase rates 25 percent. City commissioners rejected it. City commissioners discussed and largely approved the 12.5 percent plan during a budget workshop in late summer, and adopted a capital improvement plan that calls for improvements costing $2.25 million in addition to $1.5 million in ongoing capital improvement projects. Commissioner Rick Belhumeur has generally been in dissent, and still is.
“We have a lot of crumbling infrastructure in this city and that needs to be addressed. Sewer pump stations need to be rehabilitated. We have had several sewer main breaks as a result of deteriorating pipes. Old, leaking fire hydrants need replacing. We need upgrades to our antiquated waste water treatment plant. Periodically, new wells must be drilled, and much more,” Belhumeur said. “My contention is that these issues must be resolved, but not all at once. The large number of planned projects are (in my opinion) a little ambitious, but now some have been scaled back in an attempt to minimize the planned increase. These perpetual increases need to be kept to a minimum without letting our systems fail leaving the city with the challenge of balancing that scale.”
Commissioner Eric Cooley, who owns the 7-Eleven on State Road A1A in the city, acknowledges the toll the recurring increases have been taking on rate-payers. “As a business owner any increase to a expense (such a the proposed water rate increase) at this time of year is extremely unfavorable. We have had a multi-year sales decline due to hurricane damage to the beach and A1a. Many owners are hanging on by a thread and some locations have gone out of business,” Colley said in a text. “However as a business owner I also understand that when equipment breaks, needs upgraded, or no longer functions as it should, that it needs addressed and not pushed off. We as a city have done a sub-par job over the last 15 years staying on top of the upgrades and maintenance of our infrastructure and it is at a point it must be addressed. To let any items go further will be doing a disservice to the city. If I have to chose between a higher utility bill and a potential costly emergency other areas close to us have seen, I would prefer to see the city be proactive.”
“An amount over $ 16 million dollars will be necessary to fund the scheduled Water and Sewer Items and pay 5 years of debt service,” a Newsom memo to the commission states. The city intends to seek grants and other sources of money to defray the costs to customers, but it “needs to maintain adequate reserves to secure these types of revenues.”
The memo continues: “The City entered into a Utility Service Area agreement in 2007 establishing the district that we provide Water and Sewer Services to. Future growth in this area will financially impact our Facilities, Infrastructure and Customer Service needs.” To residents, that sort of wording suggests the city is positioning itself to have its water and sewer utilities serve big developments such as the proposed Gardens development along John Anderson Highway, which is in the city’s service district. Newsom said that’s not the case. “At best we had capacity for Phase 1. At best,” he said of the development in mid-September. (The development itself has run into a new set of roadblocks with county planners.)
The city got a loan in 2007 to build a water treatment plant and is required to pay $465,750 a year to service the debt. It is seeking an additional state loan that would push annual debt payments to $1 million a year between the two loans. The city could defer repayments on one of the loans, but at the cost of additional interest.
Impact fees will also be rising in the future, though not before the city conducts a utility impact fee study, as required by law before any increase may be approved. The impact fee is a one-time levy on development intended to defray the cost of development on a government’s infrastructure, whether it’s roads, parks or utilities. The one-time utility impact fee for a residential home in Flagler Beach currently is $5,800. “We can do a study, and we’re going to look at it, because it has to go before the board anyway, but when it comes to new development, that’s the key, should they pay an impact fee,” Newsom said. “If development paid their impact fees it’d be less of an impact on the homeowners.”
For all that, the 2019-20 difference between revenues and expenses adds up to a $1.6 million deficit this coming fiscal year, and a $4 million deficit over the next three years. That means the city will not be able to pay for all its needed improvements. “The negative numbers indicate the shortfall in funding to accomplish the Operations and Capital Projects in the forecast,” a city analysis reads. “The total deficit for the forecasted three years is close to $ 4 million even with 25% increases to base fees and use of restricted impact fees for those qualified projects. IF we can secure the [State Revolving Fund] loan there will be a decrease of roughly 2.8 million of expense for the [sewer plant] since we will have a funding source, the loan, to offset. That still leaves $ 1. 2 million in projects that need to be moved out to the future years, if possible.”
Newsom said the city isn’t projecting the plan to make money, like a private utility. “They’re in it for the profit. We’re not. I’m not focusing on the city making a dime more than what we need,” he said. “So if the residents are really against it, trust me, I’m against it. I’m against paying more in utility bills. It comes out of my pockets. It comes out of my employees pocket, so it’s not something I enjoy doing. I really don’t.”
Concerned Citizen says
So the City Commision can’t manage it’s finances and makes everyone pay for it. Sounds about right.
When will the City Commision be held responsible for it’s rash of irratic behavior? IE Commisioners drinking and driving and others beating folks up?
Need to remember these issues come next election.
Knows Jack says
So how is that NO NEW DEVELOPMENT working out for you all in Flagler Beach? Your choices are clear, keep the no growth mindset and pay for it all yourselves or spread the burden over new development.
Why not clean up the city center and encourage pedestrian friendly spaces for visitors to come to the city to eat, shop in the boutiques and spend money. Having an environment catering to those who drive thru Dunkin Donuts, visit the beach and retreat back across the bridge is limiting our commercial tax base and thus grossly leaning on the backs of homeowners to fund the budget. I’m not calling for more traffic, simply shifting our focus to attract a spending clientele. A few more white color businesses like Ripple and Tee Times would bring revenue 52 weeks a year and help our merchants during low tourist months. These professionals enter the city in the am and ghostly move back across the bridge early evening before the dinner crowd comes to town. With the right plan we can raise the percentage of our commercial tax base and maintain the low key lifestyle we all love. Nothing stays the same, costs go up and cities move forward or they decline. Let’s get a well balanced plan to address the future of our town where businesses other than CBD providers want to serve our residents. We need to work toward a greater commercial verses real estate tax base for the health of our city where we don’t have to depend on utility increases to fund necessary infrastructure improvements.
Why on earth are new developments not imposed an annual CDD fee to every new home built to cover any cost for infrastructure improvements or construction. The fee is usually a 25 or 30 year fee that pays off the bond or loan for the improvements…..
We are willing to pay if you are also. says
Pay ourselves! Charge to use the beach already! Allow Flagler Beach residents to pay for it and charge for the beach.
Ben Dover says
That is because they are over populating our city , the greed of our city counsel has no limits, they destroyed this once nice quiet community , changing the zoning to suit their greedy pockets , section 8`s used to be confined to duplexes, but they changed that, put them in all the foreclosed on houses destroying property values and making PC a dangerous , crime ridden dump , ( Have they caught the AK-47 shooter yet?)they change it to put slum housing in good neighborhoods, my water here in Pine Lakes smells like the canal on Belle Terre , and when you complain , it then smells like Chlorine…they are fighting with St Johns County over water rights because neither county can deal with all the greedy building going on , the building needs to STOP !!, we are FULL UP!!.the roads are jammed and dangerous , we are like cockroaches crawling all over ourselves in stores , ENOUGH , you`ve all ripped us off enough , and fix these GOT damn traffic lights like ya`s promised after ya`s stole 175.0o0 for a study , all you have to do is put them back to original settings before the RED LIGHT SCAM CAM mode, 95% of my gas is wasted at lights, am sure they are getting kick backs from gas stations , but that needs to stop too, WE NEED TO VOTE THESE GREEDY RETHUGLICAN`S OUT!!!
Hello, we are talking about Flagler Beach.
Lifetime resident says
Once again, it is ridiculous that they would hurt the lifetime residence with such outrageous increases.
If things are that poorly managed they should certainly start with the do precious law-enforcement covering the area. There is no need for city police when we have such a large sheriffs office compared to most counties within the state. If they simply did away with the city police they could decrease everybody’s utility bills as opposed to increasing them. The Hyatt utility bills of any single town within the state. Pitiful
So the bottom line here is, the city has over spent their budget and NOW WANT the voters and citizens to pay for their inept management of funds by taxing the citizens. Sounds like Tallahassee needs to get involved. Our the citizens can talk legal action in court.
Pier is a Money Pit says
How much do we waste every year on the %^&*()_ pier for insurance, maintenance, etc.? Sell it to the highest bidder. Let them manage, squeeze users for admission fees and pay for hurricane repairs.