The risk inherent in cutting proposed utility rate increases proved too high for Port St. Joe city commissioners Tuesday.

The risk inherent in cutting proposed utility rate increases proved too high for Port St. Joe city commissioners Tuesday.

 But once the window of risk is past, commissioners suggested they would take another look.

Against the backdrop of refinancing the city’s long-term debt, commissioners backed away from making any changes to an ordinance setting utility rate structures that was approved several years ago.

Under that ordinance, water and sewer rates are due to rise another 5 percent in October, following previous hikes of 39 percent and 8 percent the past three years.

For a 3,000 gallon a month user, a 5 percent increase will translate into $3.60 per month.

For a 4,000 gallon per month user – 60 percent of the city’s customers use 4,000 gallons or less per month – the proposed 5 percent will increase rates $4.11 per month.

Commissioner Bo Patterson, who previously said he could not vote to approve a 5 percent increase or to “stay the course” on rate increases, was never placed in a position to vote as the commissioners’ option was to amend the ordinance.

No one made that motion.

Not that the temptation to provide some relief to water and sewer customers, who have experienced the rapid increase of rates while the city is plagued by chronic and widespread water-quality problems, wasn’t urgent.

“I don’t like any of the options,” said Commissioner Rex Buzzett. “I don’t want to raise the rates.”

The obstacle to bringing down rates stems from the refinancing of the city’s long-term debt.

The rate structure put in place following a rate study several years ago was established to provide the revenue needed to meet the obligations of that debt, some $16 million and accruing.

Maintaining that revenue stream, without dipping into reserves, is the recommendation from staff and the finance committee to provide the strongest possible fiscal picture as the city refinances the debt before a 2015 balloon payment becomes due.

“From a legal standpoint, you want to be in the strongest position possible with (the bank),” said city attorney Tom Gibson.

Regions Bank, which carries the note, is currently offering an interest rate, 3.09 percent, on the refinancing that commissioners like. However, the loan’s term is 15 years.

“We just can’t swallow that 15-year amortization,” said Mayor Mel Magidson.

The finance committee has recommended and staff has gone back to regions asking for 30 years, with an eye toward bringing it down to 20-25.

The difference would be substantial, a difference of at least a quarter million dollars in annual debt payments.

That margin is the line between the city having to dip into reserves, tap and grinder pump fees, or being able to absorb a reduction in revenue that would come with lowering utility rates while meeting debt payments.

The numbers are also muddled by unknowns, such as growth projections on the water and sewer system.

Buzzett said commissioners could revisit the lowering of utility rates at any time; but now was not that time.

“We are negotiating a long-term loan,” Buzzett said. “If we don’t get favorable financing we are in trouble.”

Also looming over the discussion was the issue of water quality, which arose again when resident Ann White spoke about myriad problems she and others had experienced with the water over recent years.

“Do we have any hope of getting good water any time soon?” White wondered. “When are we going to get decent water? This is getting ridiculous and expensive.”

The timeframe for securing the long-term financing is unclear and commissioners expressed a desire to revisit the issue after the terms of refinancing are set.

Cape San Blas Lighthouse

The city took formal possession of the Cape San Blas Lighthouse, two keepers’ quarters and oil house through a quit-claim deed from the Department of the Interior and National Parks Service.

The deed comes with some restrictions – signage that they were donated by the Dept. of the Interior; the city can not sell, lease or dispose of the structures other than to another government entity; and the city must submit a biennial report on use of the structures – but clears the way for relocation.

The project is out for bid, with a pre-bid meeting next week. The deadline for submitting bids to relocate the structures to George Core Park in Port St. Joe is Aug. 29. The city should award the project next month.

Interlocal agreement

Commissioners expressed frustration with the slow pace of negotiations with the Board of County Commissioners over proposed changes to the interlocal agreement concerning the annexation by the city of WindMark Beach.

 The city allowed the Port St. Joe Redevelopment Agency to relocate from the county Welcome Center at the county’s request as a “good faith” effort to speed up resolution of issues such as the St. Joe Fire Tax disbursement.

The county since requested the city deed over the Welcome Center and assume fire-fighting coverage in Oak Grove.

Gibson suggested maybe progress could be made by breaking the issues into pieces for separate negotiations and said feedback from the county was that one commissioner – Commissioner Joanna Bryan – expressed a desire to keep the interlocal agreement in place.

Other commissioners, city and county, want to terminate the agreement after resolution of outstanding items, Gibson added.

“We took good faith action on their request for the (PSJRA) to move,” Buzzett said. “We did our part. To me, they haven’t done theirs.”

County Commissioner Tan Smiley, in attendance on another matter, said he would try to push the issue to resolution with the BOCC.