DUNEDIN — After more than an hour of digesting figures provided by staff and consultants, city commissioners are preparing to raise utility rates.
Commissioners discussed water, sewer and solid waste rate studies Nov. 17, leading to a decision by consensus to authorize staff to move forward with preparing ordinances on the proposed new rates.
According to Stantec Consulting Services, a fiscal year 2015 study forecast of 4.75% annual water and sewer rate increases through fiscal year 2025 is not sufficient to fund the system’s identified requirements beyond fiscal year 2024.
The expected closure of Coca Cola's Minute Maid plant in fiscal year 2022 is projected to result in reduced revenues of $455,000, or about 2.7% of the total revenue.
An estimated $3.8 million of the $22.7 million cost for the construction of the new city government center will be funded by the city's water and sewer fund, the consultants' study said.
Also, $70 million of the system's capital needs through 2030 have been identified, said Eric Gau, a principal for Stantec Consulting Services Inc., a Jacksonville firm.
Through fiscal year 2025, $59 million of that $70 million has been programmed.
"A lot of that capital is right on us now for the next five years," he said.
In the next five years $25 million alone is projected for a new water treatment plant.
Rate adjustments are also necessary to maintain the 25 percent reserves, the consultants say.
Consequently, commissioners by consensus agreed to a plan, called scenario 1, presented by Stantec that calls for a water and sewer rate increase of 4.50 percent in January, increasing to 6 percent in fiscal years 2022 through 2026 then dropping back to 2% in fiscal years 2027 through 2030.
Grau noted that other local governments in the area are implementing increases on an annual basis.
"Since 2010, the city has done a good job of funding all its requirements, and doing so while raising rates to their customers at a pace slower than the rest of the country," Grau said.
Under an alternative plan that was discussed, scenario 2, rates would not be raised in fiscal year 2021 but then increased by 7.75 percent for the next five fiscal years before dropping back to a 2 percent increase in fiscal years 2027 through 2030.
Commissioner John Tornga favored looking at a scenario in which the proposed rate increase is zero to 3 percent at the onset, noting, among other issues, the impact of the coronavirus.
"We have some folks … who are in business and have homes here that are going to have some trials and tribulations," he said.
Commissioner Deobrah Kynes was opposed to scenario 2, saying it's not fair to anybody to have huge spikes in the rates.
Commissioner Jeff Gow said scenario 1 gives "us hard dollars, a little more relief to residents in future years."
Mayor Julie Ward Bujalski and Commissioner Moe Freaney also spoke in favor of the scenario 1.
"We all know the finance board. They are not shy. They looked at this and they feel comfortable with scenario 1, which gives me a lot of comfort," Freaney said.
The ordinances pertaining to the rate increases may be presented to the commission in December.
Costs also prompt proposed higher solid waste fees
A rate study on solid waste was conducted in 2017 by Kessler Consulting. At the time the system's reserve fund balance was less than the city's minimum reserve policy target and recycling, collecting and processing costs were set to increase with new vendor negotiations.
As a result of Kessler's study, city commissioners adopted a plan of annual rate adjustments, starting with a 10 percent increase effective Oct. 1, 2018. The most recent rate increase of 2 percent took effect Oct. 1, 2020.
Grau said there have been some key updates on solid waste that warranted staff to allow Stantec to update the analysis.
Significant increases projected for the cost of garbage disposal are driven by the county’s recent plan of landfill tipping fee increases of 6% per year, which is expected to continue for the foreseeable future, Stantec's report said.
Other costs are projected to increase by 3% as rates are negotiated with haulers every three years.
Kynes said a materials recovery facility, a plant that receives and separates recyclable materials for further use, is needed in the county.
"These tipping costs are out of control until we really work this. How long have we talked about the MRF in Pinellas County?" she said.
Market surveys show that the city's typical residential and commercial monthly solid waste fees are well-positioned compared to those charged by other entities in the surrounding area.
City officials are asking that commissioners adopt one of two scenarios pertaining to solid waste rates.
Commissioners indicated their preference of a scenario calling for a 4% increase in the fees beginning Oct. 1, 2021. The same applies for each fiscal year through 2025.
The Finance Board also recommended that scenario.