In Latest Round of County-City Water War, Flagler Now Objects to 25% Surcharge From Palm Coast

Two months ago county and Palm Coast government brawled openly and bitterly over a water-service agreement between the two sides that neither wanted to sign as proposed. The agreement frames city water and sewer service to the Flagler County Airport, an enclave of county property surrounded by Palm Coast. The county needs the agreement because it needs the water to service the south end of the airport, where several businesses and operations, among them the National Guard, are planning operations.

County and city have been haggling over the agreement for five years, going back to a short-lived demand from Palm Coast that if the county wanted city water, it would have to let its airport be annexed into the city. City Manager Jim Landon had made that condition based on the city’s practices—and state law—though in that case the city council retreated and agreed instead to provide water without annexation, but in exchange for a 5-acre county land donation, for a park, and with the understanding that a 25 percent surcharge on water costs would always apply to county bills.

That surcharge has been in place five or six years, and the county has been paying it. It would still be in place for the agreement framing water to the south end of the airport.

On Monday, county commissioners, for the first time in these five years, openly and almost angrily objected to the water and sewer surcharge. They were discussing the so-called interlocal agreement county and city have been haggling over. The item was due to be approved without discussion: it was on the consent agenda—that portion of the agenda where dozens of items are approved in bulk—until Commissioner Charlie Ericksen pulled it for discussion. And what was almost a finally done deal was again delayed.

Commissioners, on Barbara Revels’s motion, voted instead to delay approving the agreement until early September, giving Palm Coast 30 days to come up with different options. The city should “consider a reduction of the 25 percent or an elimination of the 25 percent,” Revels’s motion read, “however they would decide to handle that.”

Commissioner Nate McLaughlin repeatedly pressed County Administrator Craig Coffey to also look at other options than Palm Coast water for the long term. McLaughlin, whose district includes Bunnell and whose allegiances tilt more westward than anywhere a Landon shadow is cast, wants to explore importing water to the airport from the Bunnell utility. But McLaughlin’s wish did not make it into Revels’s motion, at least not officially. It’s not clear whether those options will be forthcoming, although Coffey said he could produce them relatively soon.

More certain is Revels’s request to Palm Coast for a cost cut.

It would be a surprise for the city to go along with that request. Beau Falgout, Landon’s right-hand man, tried to let the commissioners know where their proposal would stand with the council. “Florida statute gives us the ability to charge the 25 percent, and the thinking behind that charge is, it was quite expensive to acquire a utility, and operate a utility. And so those costs recoup those,” Falgout said. Palm Coast bought its water utility from Florida Water for $100 million in 2003. “Water is free, but to get it out of the ground is not. The other point I’d say is that our utility rate, I think we charge bulk rate, plus the 25 percent surcharge. As you’re looking at different options, I would look also at the rate, because I think you might find different rates for different utilities.”

What triggered the discussion over the 25 percent was another line in the agreement that had been in place for 20 years without controversy. The line was an import into the agreement with Palm Coast, from wording that had existed since the Florida Water days.

“It says rules and regulations subject to change as ‘approved by the city,’” Ericksen said, reading that line from the agreement. “I am opposed to us then having to go by whatever change they want, and they approve it, that we have to follow along with it. Where I’m coming from on this is, if there’s a 25 percent mark-up each and every year, what does that cost for a growing airport that’s going to have more and more employers there, and more and more need for water. What’s wrong with us taking a look at getting our own water, our own sewer in there, and saving that 25 percent each year, to pay for that particular expense.”

That’s when McLaughlin proposed the Bunnell option. “I’m struggling with the mark-up business,” McLaughlin said. “We’re talking water. It borders on immoral I think to squeeze people over water. It’s a life necessity, and to be charging a premium…”

Commission Chairman Frank Meeker, who until 2012 was a Palm Coast City Council member who happily endorsed charging the county extra for water, interrupted his closest ally and frequent policy twin on the commission: “I don’t think that’s different from what’s been being charged.”

“It doesn’t make it right,” McLaughlin retorted. “I don’t agree with it at all. I’m not going to agree to it. We have options.”

When city and county recorded the latest round in their ongoing wrestling match over the matter back in June, some commissioners and some council members, among them Bill McGuire, had suggested that the matter had gotten away from Coffey and Landon—two men with alpha-male fixations and little love lost between them—and that it was time for a joint meeting of the two government bodies. Instead, Landon and Palm Coast Mayor Jon Netts steered the proposal away from an open meeting to one behind closed doors, involving one member of each government body and staffers.

Meeker, Coffey, Deputy County Administrator Sally Sherman, Netts, Palm Coast utility staffer Steve Flanagan, Falgout and Landon met and the result was the proposed agreement before commissioners Monday.

“This is one thing they kept insisting had to be done,” Coffey said of the agreement. “We didn’t think it really had to because it was just a name change for the most part. Some of the terms I don’t like either,” including the matter of the city getting to change rules unilaterally, “however it was in the 1996 agreement. It basically says as a utility company adopts rules and changes—of course that was a utility that was regulated by the Public Service Commission. Palm Coast is not, so there’s not a court of higher appeal other than the Palm Coast City Council.”

“We each said we’re sick of this back-and-forth on this interlocal agreement,” Coffey said. The original document was 17 pages long. It’s down to three pages, or two if the signature page is excluded.

If the county commission is serious about looking past the agreement to a longer-term option, Coffey said, “we can pursue that. We can loop this loop around the airport. It will cost us more money.” But it would still depend on Palm Coast for the time being. “The cost of providing our own service and providing our owns sewer is not the end of the world. The cost that would be the most expensive to do would be fireflow.” Fireflow is lingo for water to be used in fire emergencies. “That would be the challenge. That’s where the huge expense, and that’s where it becomes not economical as much. But if we got [water] from Bunnell, we could do that. Flagler Beach has wells on the east side of our airport. We could use raw water for fire protection, but we’d have to run additional lines.”

In the near term there would be a $150,000 cost to “loop” the system with the existing Palm Coast water, absent a new connection at the south end of the airport.

“I would classify us going to a different utility provider or us providing our own service as a more of a long-term play, long-term option,” Coffey said. “Short term, in order to provide proper water and sewer to the south side of the airport, we either need to go down the interlocal path, or the looping on the airport path. Either way, we will still be paying that premium in the short term until we come up with another solution long term to connect to someone else or provide our own.”

This latest struggle again illustrates the limits of cooperation between the county’s two biggest governments. Commissioners Hanns and McClaughlin spoke of the issues with the city before Bill McGuire, the city councilman who attends most county meetings, addressed commissioners.

“I stood before this body and suggested a joint meeting of the city council and the county commission,” McGuire said of his June appearance, “and somehow along the way it got turned into a meeting with some of the council, some of the county administration and some of the city administration meeting in a situation that was outside the sunshine law, and deciding how we would move forward. And I assumed that this item on the consent agenda today is a reflection on what that group game to an agreement on. Now I find out that gee, this is something that needs further review. I support and continue to support joint meetings between the city council of Palm Coast and the board of county commissioners, and I wish we had done this when I first suggested it, because I was under the impression that time was of the essence in effecting this because of potential tenants in the airport area. I don’t feel strongly one way or the other about a surcharge. I read this, and I assumed that this part of the agreement that was hammered out when members of the county administration met with members of the city administration. Obviously I was wrong, but speaking for myself I would welcome a joint meeting between the two bodies.”

When McGuire summarized the county meeting to his city council colleague the next day, he was not as magnanimous.

“A county commissioner got up and screamed about how much the city is robbing them because of the wastewater cost at the library and it went downhill from there,” McGuire said. “Barbara Revels stood up and proposed a joint meeting between the county commission and the city council and I spoke after her and reminded her that I had tried to set this up. I’m not going to beat this dead horse again. But let me just say this: we the city of Palm Coast, and I’m not pointing fingers at anybody, and the Flagler County Board of County Commissioners, do not work in sync. We don’t. And I just don’t see any reason why, since we’re all committed to a common cause, since we were all elected to serve the citizens in our communities, which is in Flagler County as well as the city of Palm Coast, why we can’t get together on things. And I’m just at the end of my rope with it. I’ve mentioned this before and I said I won’t beat this dead horse anymore. But it’s going to come up again.”

Oddly, McGuire isn’t the only council member who’d suggested a joint meeting. Jhason DeLorenzo had suggested it too, and other members were not opposed. On the commission, Revels and George Hanns were suggesting it openly, and getting no opposition. Yet that meting remains elusive.

“When we have things that are causing us a controversy or grief, we should have a joint meeting directly with the city council, and I’m sure we could resolve a lot of things between their voting body and our voting body,” Hanns said. “No offense to our administrator and the city administrator. They do what they can.”