The Palm Coast City Council today in a 3-1 vote approved a 31 percent water and sewer rate increase to be phased in five increments through October 2028, and to finance a half-billion-dollar spending plan to improve the city’s utility infrastructure, some of which is overcapacity and outdated.
The plan slightly scales back an earlier proposal that would have increased rates 36 percent and financed a $651 million spending plan, with two bond issues (or loans) that would have added $459 million to the city’s long-term debt. The new plan calls for one bond issue of $292 million–still high enough to triple the city’s long-term debt, which currently stands at $154 million. The city’s entire budget, including its utility fund, is $373 million.
The bond issue scheduled for next year will still be by far the city’s largest. It’ll be more than 3.5 times larger than the original $82 million loan the city assumed to buy the utility in 2003, in unadjusted dollars, and twice as large in adjusted dollars (the $82 million loan in 2003 would have been a $144 million loan today).
The first rate increase will be 8 percent on April 1, followed by another 8 percent increase in October and three successive 4 percent increases through October 2028. If the inflation rate exceeds 4 percent, the rate increase will be accordingly higher.
The rate increases are compounded, meaning that each percentage increase is calculated on your latest cost. So it’s not a 28 percent increase overall, but a 31 percent increase by the time the last phase kicks in. The typical household spending $90.73 a month for water and sewer today will be paying $118.97 when the last increase kicks in on Oct. 1, 2028, a monthly increase of $28.24, or an annual increase of $339. Those who consume more water will pay more.
Council members Charles Gambaro, Ty Miller and Theresa Pontieri voted for the new plan. Mayor Mike Norris voted against. At the start of the discussion, he’d attempted to win approval for a building moratorium on residential homes. He did not get a second. Earlier this month he had voted for the original, more expensive plan, which Pontieri had opposed. Pontieri had asked for a revised plan that eliminates one of the two big loans.
Even though he was about to vote against the revised plan Norris sounded like he knew raising the rates was essential. When Pontieri asked what the alternative was to declining any of the alternative spending plans, Norris said: “It’s not going to happen. We have to do it to get the money. We have to have the capital to fix the previous problems, just to bring us up to where we’re at now with the housing and the housing units.”
Doing nothing, Miller said, would default the city to stopping all growth–commercial, industrial, residential, on top of regulatory penalties. The city is under a consent order by the Department of Environmental Protection because of Waste Water Treatment 1, the city’s largest and oldest (it has one other), in the Woodlands. The plant is overcapacity when it rains, and near to becoming overcapacity routinely. Its expansion and modernization from a capacity of 6.83 million gallons per day to 10.83 million gallons per day will cost $169 million. It is by far the single-largest, and most urgent, of the utility plan’s projects.
“Looking at the modified plans, and we had to push to get there, but to me this is it,” Pontieri said. “I don’t know what the alternative is other than adopting one of these plans.” There’s no such thing as finding $300 million worth of cuts, she said. “There are not $300 million of salaries to fire,” Pontieri said. Changes have been made, she said, in recognition of the administrative issues. “Changes have been made. So again, we’re looking forward, and I hear everybody’s concern about–we have to keep this from happening again. I couldn’t agree more,” Pontieri said.
The city administration has taken sharp criticism from the public and council members, Pontieri included, for not planning ahead properly, especially around 2018, when residential growth in the city began to increase again very quickly, and unexpectedly. But Miller sought to temper the criticism. “There certainly was an event that was unpredictable and changed the world, quite frankly, changed costs in a very negative way for everything,” he said, a reference to the Covid pandemic (soon followed by the Ukraine war, which accelerated inflation across western countries).
“So while I understand your position and I agree with it, that you know, potentially, we should have had these horizon plans for future growth, for facilities that we need in the future, a lot of it came with because of the change that was unknown or unforeseen and nobody could have ever foreseen that.” Miller added, “Even with a plan, I don’t know if they could have accurately predicted this cost at this point in the future.”
It was a rare moment of tempered analysis in a day of strident and often misinformed criticism from members of the public, as when some suggested that the city could save its way out of the cost increases by firing extraneous staff (the suggestion Pontieri addressed with her reference to firing $300 million worth of salaries).
The second alternative plan the administration had proposed and was not approved would have scaled the rate increases differently, resulting in a 42 percent compounded increase.
Residents who spoke wanted to see more development impact fees imposed on developers. Carl Cote, the city’s engineering and stormwater director who has handled the utility rate issue since the city demoted or fired two successive utility directors since last year began his presentation today by reminding the audience that the city did increase its impact fees last year. It could not do so again, by law, until 2028.
Since Cote’s presentation was heavy on facts and figures, members of the public who spoke critically of the impending rate increase spoke generally of “poor planning” and “mismanagement.” But opposition was relatively muted, its ammunition depleted in the earlier segment of the meeting when Norris and a building moratorium were the topic of discussion. Some of the residents were supportive of the increase–and some returned to the matter of the moratorium, a word that “gets picked up in the press and lives forever on the internet,” one resident said, discouraging investment locally.
“I’m not going to flee my home with these utility rate increases,” Kaleigh Rickard told the council. “It has to be done. I may eat out a few times less, but I will adjust. Just as I pay for regular maintenance and repairs to my home, my vehicle, I expect as a utility consumer to pay for the regular maintenance and repair for the infrastructure, while impact fees pay for the capacity increases, which have also just been increased. The builders pay those.”
Palm Coast Utility Plan, Revised (2025):
palm-coast-utility-version-2-2025
Shark says
Thank you republican voters for electing the realtors who destroyed my town !!!!
THANKS ALFIN says
From now on when you pay your $200+ water bill, don’t forget to tell yourself that development pays for itself…
Ray says
WOW, Just WOW. Time to get out of Palm Coast, before it gets worse. Looking at Arizona or Navada. Warm no Hurricanes, and less rain. I like the heat.
Jim says
I commend the council on voting to expand our infrastructure to handle the current loads. It had to be done and I’m glad they had the courage to do it now.
I want to point out to many of Palm Coast’s residents that the real reason we are no facing this crisis (and it is a crisis) is because the previous city councils punted the problem down the road. If they had acted earlier, we would still have increases but they would have been spread over a longer timeline and likely have been less impact on all of us. So I am particularly glad that Alfin, Danko and Klafus are off the council. They are very much responsible for a lot of this problem and they shouldn’t escape the blame just because they ran off before it exploded (in all fairness, Alfin got run off).
I appreciate Mr. Miller attempting to give the previous councils an “out” with the Covid pandemic but I don’t agree. We were already approaching capacity then and the pandemic does not relieve the city leaders from the responsibility to plan for the future. We’ve been talking about Palm Coast expansion for years so councils during that time should not be given a pass for failure to plan for an obvious problem in the making.
But this is a rare moment in my experience with city leadership where they have actually done something that’s both painful and necessary. They should at least get commended for doing this.