PSJ commissioners consider utility rate study
The question was not if, but when.
Nearing the end of a five-year utility rate structure and under criticism from residents and county officials, Port St. Joe commissioners debated how to proceed with a new rate study.
This time, however, the rate study would expand beyond residential and commercial water and sewer rates to include impact fees and wholesale water rates.
However, the cost, $41,000, proposed for the study caused heartburn for Mayor Rex Buzzett.
“We are in good shape right now, a year from now we’ll have know better where we are,” Buzzett said, in asking commissioners to consider waiting a year before embarking on the study.
The cost is not something the city budgeted for due in large measure to having never studied either wholesale rates or impact fees.
The city paid $24,000 six years ago when the original rate study was commissioned and recommendations put in place and had anticipated a simple and less costly review of that original study for the current fiscal year.
The annual rate increases that have followed the original study, which were 3 percent on both water and sewer side this fiscal year, have been aimed at meeting the city’s debt obligations.
The largest component of that obligation, under the financial management plan in place, is tied to what Commissioner Scott Hoffman called the mistake made by a prior board to build a “$20 million water plant for WindMark.”
Buzzett noted the city had never set a baseline or assessed increases for wholesale rates, an issue which arose in recent years as the Board of County Commissioners has urged the city to take over the sewer system serving Gulf Aire.
Wholesale users, of which the city has just one, should face the same rate increases as residents and businesses have absorbed in recent years, Buzzett added.
In addition, the county has been particularly critical of impact fees, arguing they are discouraging business relocation to the county.
“The main thing I hear is our high impact fees,” said Commissioner Brett Lowry. “I just don’t want to drive business away.”
Buzzett, in making the case to wait a year to undertake the study also noted the burden on staff.
Such a comprehensive study, City Manager Jim Anderson said, would take “months and months.”
And it would require considerable data providing from city staff, from financial officer Mike Lacour to the water and sewer plants, Public Works and the city clerk, Buzzett said.
“It’s a big burden for (staff),” Buzzett said.
Those folks, he continued, remain focused on FEMA and insurance claims and, at this time that work is more important for the city.
Lacour said that while he was comfortable waiting a year to undertake the study, he said the city should not delay beyond that year.
The city’s financial management plan, and the original rate study, was tied to specific revenue levels that must be hit on the water and sewer side to meet debt obligations.
The city needed to prepare for the future, particularly with a balloon payment on the city’s note due in two years.
“It is vitally important to be prepared and careful,” Lacour said.
Several options were also floated, one being putting the study out for bid in hopes of lowering the cost and another delaying full payment until Oct. 1 when a new fiscal year, and budget, began.
One way or another, all commissioners agreed, they had to have a new rate study in the near future, if only to justify what the city currently charges across the board.
“We have to be able to articulate why we charge what we are charging,” Hoffman said, adding that many city water consumers do not understand why the rates, as he characterized them, were “high.”
“You can’t defend something unless you have all the data to defend it,” Hoffman said.