BEACON PHOTO/AL EVERSON
New infrastructure — These water lines await installation along North Normandy Boulevard, which is being widened to four lanes between Saxon Boulevard and Firwood Drive. The City of Deltona proposes to raise its water and sewer rates to provide more capacity for its populaton.
By Al Everson
posted Sep 14, 2008 - 8:30:35am
To catch up with rising costs, Deltona leaders plan to raise water and sewer rates by big percentages.
The City Commission has tentatively agreed to increase the rates by double-digit proportions later this fall.
If they adopt the formal measures recommended by a consultant, billings for water and sewer will go up by more than 17 percent. The hike will be the first in more than a dozen years.
"We're getting a little short of cash to keep this operation going," Deltona Public Works Director Dave Denny said.
The utility rates have not changed since 1995, when the city's water and sewer systems were privately owned. The former owner, Florida Water, later sold them to another company, Allete Inc., which, in turn, sold the systems to the City of Deltona in 2002.
When Deltona bought the water and sewer systems from Allete, city officials promised residents the rates would remain unchanged for at least five years.
Now, six years later, Deltona's leaders plan to make up for lost time by increasing the rates sharply. The city hired a consultant, Burton and Associates, to analyze the financial condition of the water and sewer operations and determine if more income is needed and, if so, how much.
Andy Burnham, an analyst with the St. Augustine firm, said the Consumer Price index, the official federal measure of inflation, has risen 44 percent since 1995, while the expenses of operating the utilities and the costs of expanding them have also climbed steadily.
"Without a rate increase, there will be annual operating losses, starting next year," Burnham said.
Burton and Associates said many basic costs have risen — especially fuel, electricity and chemicals — without adequate billings to cover them.
Without a rate increase, the operating loss during the 2008-09 fiscal year may be as much as $1.75 million, according to Burton and Associates, and the utilities' fund balances — a cushion of cash for unforeseen expenses or for starting a new fiscal year — will be exhausted in 2011.
Burton and Associates recommended Deltona head off such losses by raising its monthly water and sewer rates by 17.25 percent in the coming fiscal year, and them implement rate increases of the same percentage in each of the four following fiscal years. The 2012-13 fiscal year is the last year in the consultant's planning horizon.
Without additional income for the utilities, Burnham warned, Deltona could be in technical default on bonded debt for water and sewer improvements.
"This really is a bond-requirement issue," said Mayor Dennis Mulder, in defense of the proposed rate changes. "Ten years is a very long time without a rate increase."
Deltona has about 29,000 homes and businesses that are "water-only" customers. These customers rely on septic tanks to dispose of sewage.
The city plans to expand its sewer system to low-lying areas, especially around lakes, to prevent septic-tank failure and contamination of the lakes.
While Deltona's land-development regulations require new development to connect to the municipal sewer system, Denny said older homes with septic tanks on higher ground need not be required to connect to the system. Deltona currently has about 6,000 sewer customers.
As for the dollars-and-cents effect upon customers, the rate schedule proposed by Burton and Associates calls for the average "water-only" customer's monthly bill to rise from $19.27 to $22.59. An average bill is based on a usage of 10,000 gallons of water.
The average sewer customer — who is also a water customer using 10,000 gallons — would see his monthly bill increase from $85.61 to $100.38.
If the plan is adopted, the rates will increase by 17.25 percent in each of the subsequent years through 2013.
The rate examples pertain to customers inside the city limits of Deltona. Out-of-city utilities customers will pay a 25-percent differential, Denny said.
In addition to boosting monthly bills, Deltona proposes to raise the impact fees for water and sewer service. The fee for water would rise from $1,146 to $1,429, while the charge for connecting new construction to sewer service will rise from $1,780 to $3,376. The combined charges for water and sewer impact fees, now $2,926, will surge to $4,806.
The extra revenues will be used to cover approximately $37 million of debt connected with a wastewater-treatment plant, along with utility relocations and new storage tanks.
The City Commission unanimously directed the city administration to prepare for increases in water and sewer rates. The commission may act on the rate proposal at its Oct. 20 meeting, which will include a public hearing on the matter.
If the City Commission adopts the new rate structure, the higher charges will probably appear in the November billing cycle.
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I agree totally with increasing the Impact fees for water and sewer, they need to be more compettive with the surrounding area, and I also understand an increase in water rates may be required. What I don't understand is why now, why when we are being ripped off by the power companys, phone company, cable complanys City tax surchage. And what are those going to? I have not seen any improvements in any of those areas or in the service they provide but yet that City tax is going somewhere.
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