Town discusses proposed water utility rate changes
The Fort Myers Beach Town Council and other Town officials listened to a presentation and a committee report before discussing the implementation of a 2010 proposed rate increase in water utility at a work session of the Beach’s Public Works Services, Inc., Thursday.
Florida Rural Water Association’s Tom Gustafson began the session with a rate analysis presentation for Fort Myers Beach. Gustafson gives managerial and financial help through the non-profit organization which is funded through state and federal agencies to provide technical assistance throughout Florida.
“When we start a rate case, we ask the city to send us the pertinent information which is income, expenses and how many connections you have,” he said. “When I first drove onto the Beach, I noticed all the condos and asked, ‘Do you charge on a per unit basis for this’ and the answer was no.
We decided to look at that because the per unit charge is a fair way to spread your base cost across the community. With that being said, we now went from a unit charge for 3,160 service connections to 9,182 which significantly impacts your base rate.”
Gustafson recommended to implement an annual rate increase based on the Consumer Price Index and a block rate structure which recognizes water usage to combat a 23 percent deficit the Town water utility system currently has. This study has determined that the cost per thousand rate is $5.23.
“This is the fairest way to go,” Gustafson said. “Raising your rates a minimum of 23 percent is needed. If you go with the block rate, which is implementing a per unit cost for the multi-families, you can see a raise in needed income. It is the most equitable.”
The Town’s Water Utilty Ad-hoc Committee Chairman Alan Mandel listed reasons for action, recommendations and conservation tips among other points during his report. The Town is in a default of a loan covenant with its bank and has a legal responsibility to provide safe and reliable drinking water to residents and visitors. Extensive repairs and refurbishment of the utility infrastructure have been recommended.
The report’s recommendations include rolling over the existing debt; adding $100,000 to the water utility administration budget for system improvement financing; establishing rates to meet projected expenses, including operations, debt and contingency; and evaluating government funds and loans for systems improvements on the Federal, State and County levels while using existing referendum as basis for new financing.
“We accept the findings of the consultant and agree with the consultant’s recommendations to do the block rate,” said Mandel. “But, we want to add to the consultant’s plan to include a contingency for the work that has to be done and especially this loan that’s going to be difficult to come by because the money is not out there.”
Town officials weighed the pros and cons of the findings and concluded a rate increase will not be budgeted for the fiscal year 2009/10, but it is expected to be implemented by Jan. 1. The time line includes a petition on a water rate increase by the water utility to the Town council to be heard at its next meeting at 6:30 p.m. Wednesday, Sept. 9, and at least 30 days notice to the public for a hearing on the implementation.
“Based on the preliminary time line that I prepared to meet all the legal criteria, the earliest we can implement it would be Nov. 20,” said FMB interim Public Works Director Cathie Lewis. “That would be without running one month of a parallel billing, and I would recommend not doing that. I think another reason we are looking at Jan. 1, is it has been pointed out on multiple occasions that the condominiums do their budgeting in the fall for implementation at the beginning of the year. We wanted to take that into consideration as well so that they would prepare for it and account for it.”
According to Interim Town Manager Jack Green, who maintains close ties to his former Public Works Department, a notification requirement to all water users would be mailed out in all the billings after the petition is made to the council.
Past condo and duplex water fees
Councilman Tom Babcock asked about further discussion for any attempt to correct any past rate questions that dated back to 2002. Green, who was the Public Works Director at the time of the May report, answered.
“Based on the documentation which we received from the County, the assumption of the same billing method and the fact that there was no discussion in 2002 with the rate increase defining what a multi-family unit was and not distinguishing that it included condos, we have nothing to correct,” said Green. “The billing was in accordance with the rate structure.”
Green explained the previous, current and future billing methods. The proposed method mainly affects multi-family/condominium units.
“When the Town took over the water utility from the County, condominiums were considered commercial and they were charged by the meter size,” said Green. “We continued to bill by meter size and that has continued to date. We just assumed that same structure and billing method. Some point in between, the County switched the definition of condominium to multi-family, and they went to the unit charge. The Town never made that change. So, therein lies some of the discrepancy that has been discussed in the past.”
Long-term borrowing
Concerning long-term borrowing, the Town is not in a position to take a loan beyond 36 months. It has rolled over its current loan twice and is expected to do so again.
FMB Mayor Larry Kiker believes there should be a process in place before seeking other avenues to borrow money.
“We need to identify (a process), define it and agree to it,” he said. “One of the pieces of that is, obviously, going to be referendum or validation on whatever is available. Hopefully, we can make a case that we can go to the state of Florida or somewhere else and say, “We may have knocked on your door before, but we need some money.” We should be able to state a case, and we need to do that with facts. We need to have a plan.”
Referendum vs. Validation
Concerning referendum versus validation hearing, Vice Mayor Herb Acken says the Town needs “decision points” and “language for a referendum” if it is one of the options chosen.
“In my opinion, that will be the crucial point,” said Acken. “If anybody still wants to do a referendum, we should work backwards from there. What information are we going to need and how long is it going to take to get that?”
According to Town Attorney Anne Dalton, a referendum would have to be approved during the Town Council’s second meeting in October in order to meet the next election in March.
“Having the ability to borrow long term to rehabilitate the water infrastructure will be an overall benefit and cost efficient to the customers,” said Lewis.
(BOX)
Town’s Income vs. Expense for 2008-09 water utility
n Income – $2,390,445
n Expense – $3,143,220
n Deficit – $752,775
Conservation ideas* (requested by the ad-hoc committee)
n 1. A three-person household can save 675 gallons of water a month by simply turning off the faucet when brushing teeth and shaving.
n 2. Save 530 gallons of water an hour with a shutoff nozzle to a garden hose.
n 3. Rain shut-off devices can save an additional 30 percent when used with a timer system.
n 4. Save 870 gallons of water per month by replacing older toilets with new low-flow models.
n 5. Limiting showers to five minutes and installing water efficient shower heads saves 690 gallons per month.
n 6. Save 390 per month by replacing conventional clothes washers with new water efficient models.
n 7. Save 30 gallons per day by repairing a dripping faucet.
*Source: Florida Wildlife July/August 2009