Did Palm Coast Council Agree To Condition Any Future Electric Franchise Tax Proposal on a Referendum? Yes.

As they look for new revenue sources with just a touch of emerging desperation–they’re now considering easing borrowing restrictions–members of the Palm Coast City Council are trying to figure out if they are free to enact a utility franchise fee or a public service tax, or if they have handcuffed themselves to doing so only if they ask voters’ permission in a referendum first. 




A passing mention of the two taxes during a discussion of the city’s budget at a council workshop today triggered what turned into a briefly tense debate over that question. The question was deferred to a future meeting later this month or early next month. 

But it illustrated how governance in Palm Coast has become a knot of contradictions between mounting pressures to pay for services and lagging capital needs on one hand and pledges of fiscal restraint on the other, all further complicated by election-year grandstanding. 

Almost 90 percent of Florida cities have either an electric franchise fee or a utility tax, often both. One adds a cost of up to 6 percent to a customer’s bill, the other adds up to 10 percent. The money is passed through the utility to the local government. Bunnell and Flagler Beach have those fees. Palm Coast doesn’t. Every time one or the other is proposed in Palm Coast, a small rebellion follows. There’s been four such rebellions since 2011. 

The last time that happened was last July and August, when the City Council attempted to lower the property tax in exchange for a utility tax. The city ended up with just a lower property tax, and less revenue than the administration needs to meet substantial needs–roads are deteriorating, the city needs to pay for a new public works complex, parks have their own wish list. 




The franchise fee, the public service tax, an increase in the sales tax–that would have to be done by the county–or an increase in the artificially low property tax would all provide new revenue. 

The property tax is artificially low because it is propped up by a series of “fees” that mask how much the effective tax rate actually is in the city, while disparities in the way the property tax is levied further depresses the amounts paid by the homesteaded, whose services are disproportionately subsidized by the non-homesteaded like renters and businesses. Elected officials are reluctant to increase that tax since it exacerbates those disparities. They keep looking at alternatives. 

Finance Director Helena Alves had barely spoken the words “franchise fee” and “utility tax” today, just as a matter of information, before they brought down the wrath of City Council member Ed Danko, whose voice rang out by phone from a land far away. 

“I just want to stop right there,” he said. He was participating by phone from the location of an out-of-state trip scheduled months ago. “This council went through this Florida Power and Light franchise fee thing last year, and we gave our city manager direction, we gave consent to come back and make sure that if any Council including this one ever attempted to again, it would have to go on the ballot. I would like to ask our city manager,  where are we with that?”




Alfin reminded him that the slide in front of the council at that point was only about revenue sources the city was not drawing on. But Danko insisted on getting an update on his question. The resolution he was referring to,  Interim City Manager Lauren Johnston said, was under legal review. 

Had there been such a consensus? “I don’t remember the specifics on the consensus,” Council member Theresa Pontieri said. “I remember that when this initially came up, I made a motion that if this were to be applied, it would be via referendum. I don’t specifically recall whether or not we got consensus to tie the hands of any future council on implementing a franchise fee.  I could be wrong. I don’t know.” She asked for the records “so that we can make sure that we’re moving forward in the right direction.”

Pontieri’s point was twofold: setting the record straight on the council’s latitude, but also leaving the door open to the imposition of utility fees or taxes in the future. Council member Nick Klufas also did not recall  “there being consensus for us to pass something where all future attempts at this would be put onto the ballot.” 

Danko wasn’t satisfied. “We did reach a consensus that any future attempts to do this would go on a ballot,” he said. “That was back when this thing happened last year, and it is currently being slow-walked and I think it’s time to stop slow-walking it and bring it to council as quickly as possible.” He insisted for a date when the council would vote on the resolution. 




In fact, both Pontieri and Danko remembered correctly. They just remembered different meetings. But ultimately, Danko had it right. 

On July 18, the council took two key votes. The first was to set the maximum property tax rate possible that year at rollback, or less. Then Pontieri made a motion to add an electric franchise fee pending a non-binding referendum that would have left it to voters to determine how much they’d tax themselves. They could choose between 0.5 percent and 6 percent. (The city was looking for about $3 million to pave roads.) 

The motion passed, 3-2. The vote was conditional on the legality of such a referendum, because Palm Coast alone would not be involved in the fee agreement. Florida Power and Light would have to agree. On July 25, then-City Manager Denise Bevan informed the council that FPL had  vetoed the condition, and then-City Attorney Neysa Borkert confirmed it at the Aug. 1 meeting.  

So Pontieri’s motion and the vote never got to a second reading. She withdrew her motion anyway, and won plaudits from Danko. Then Danko said: “What I would like to do I think if this was ever to come up again, I’d like to make a motion that this would have to go on a public referendum and voted on by you the people before–” he was briefly interrupted by applause from a large crowd, then continued, “before a council would even consider a  franchise fee.”

He then spelled out the motion, which would be effective immediately: “Any future attempt by this council or another council would require a public referendum voted on by the public. That’s pretty simple. And again, I realize another council could come back and revoke that, but that would be a pretty steep political hill for any other council to come back and revoke.” 

He specified later that it would be “across the board franchise fees,” specifying the FPL fee–not garbage fees or other types of fees. 




The city attorney said it’s “virtually impossible” to bind future councils. She also said that the motion would have to be “memorialized” with proper language that would specify that the referendum would take place before entering into an agreement with FPL. That then sidesteps FPL’s presumption of a veto. Mayor David Alfin asked the attorney to bring it back in the form of an ordinance “so we’re not smoking mirroring the process.”

“But do we have a consensus that this makes sense to move forward with this?” Danko asked his colleagues. 

“I’m fine with that,” Pontieri said. “I don’t think there’s any issue with that.”

“Yeah, I would also like to see any additional revenue sources go on to a city ballot,” Klufas said. 

“So you have consensus,” Alfin said. 

Danko went further: “Please bring it back to us.” He asked for it at the next workshop, “and then a business meeting but I want to see us deal with this as quickly as we can.” 

That was 10 months ago, though in the interim the city attorney resigned and was replaced with a different firm and the city manager was fired.  

“I don’t want the public to think that this is purposefully being slow-walked,” Pontieri said today. “I don’t think that our current acting city manager should fall on that sword, nor do I think legal counsel should.” Danko didn’t disagree. 

The full discussion is viewable below at the point where the video begins.