- March 9, 2025
Tomorrow at 9 a.m., at the Palm Coast Community Center, the City Council will discuss increasing rates for utilities to help pay for infrastructure and refinancing.
What are people saying about the Palm Coast utility rate increases?
The following is adapted from an email sent by Flagler County Tea Party Chairman Tom Lawrence to the Tea Party email list:
“Based on public comments and options reviewed at the Feb. 12 workshop, the council has narrowed their options to two: One, increasing our water and sewer rates 24% over a 22-month period commencing this March, and a second increasing rates 17% over the same 22-month period.
“This is harsh treatment to residents in these difficult economic times – Flagler County has the second highest unemployment rate in the Florida and the 11th highest foreclosure rate in the entire United States! …
“This increase is being justified by the need to refinance the existing bond debt with bonds that have an A bond rating requiring an “all in debt coverage” of 140%, increase the renewal and replacement expenses from 5% to 10% of gross revenues and assumes a growth projection of new customers of less than 1% per year. All of the above are extremely conservative and create a need for very high rate increases.
“On Feb. 19 let’s ask our elected City Council members to
1. Look at options to spending $10 million to comply with new EPA regulations being imposed on our properly permitted plant. Options include negotiating a longer timeline to upgrade this properly permitted plant. If unsuccessful then seek an administrative ruling to extend the time. If all fails the imposition of a fine may be more economical than spending $10 million of capital.
2. All studies show that our Utility Fund debt to total plant investment already exceeds desired levels. No new bond debt should be incurred. Instead evaluate paying for new capital needs from annual one-time special assessments paid monthly for one year. Alternatively these special assessments could be added to the tax bill.
3. Form a “Water and Sewer Commission” composed of three elected members and two appointees from the Water and Sewer Enterprise. This commission would have policy and rate making authority and assure the residents of constant participation in this critical activity in our city.
4. Postpone action on the proposed rate increase for a minimum six months until the impact of the above actions fully sort out.
City Manager Jim Landon responded to the proposals this way, via email to the Palm Coast Observer:
“Proposal 1
“The immediate need for the Palm Coast Water Plant 2 improvements has been publicly discussed by our City Council numerous times.
“Federal law requires a city to receive a permit from the state/federal governments to discharge water waste into a natural water system. The current Palm Coast permit expires next month. I do not consider intentionally violating federal law to be a responsible option.
“Our utility department is confident that we will receive an extension on our current permit provided we show progress on finding a permanent solution that is consistent with the state/federal rules and regulations. We could attempt to fight these rules and regulations, but our experts tell us that our chances of winning that fight are very small. The fight itself would be very expensive as we would have to hire technical experts and attorneys. The likely outcome would just be a delay in the required improvements.
“In addition to the cost of arguing against the regulations there is also great potential of paying higher interest rates if we delay going to the bond market with its current record low interest rates. We also save major dollars by combining our new bond issue with the proposed refinancing of our current debt. The timing has never been better to combine our new bond issue with a refinancing package and the need for the dollars are immediate to renew the water discharge permit that will expire next month.
“Proposal 2
“As I understand this proposal, a one-year tax would be assessed on all Palm Coast property owners, in lieu of issuing bonds that are paid off over time with water/wastewater monthly charges. The amount of the one-year assessment would be the same as the proposed bond issue... $15 million. The current annual property taxes collected by Palm Coast is approximately $15 million.
“So this proposal would double the city property tax for all Palm Coast property owners for one year, whether or not they receive water and sewer service. This is clearly not a city proposal.
“Proposal 3
“In the past, Palm Coast had a utility advisory committee. This committee dissolved from the lack of participation and interest of citizens wanting to serve on the committee. Water and sewer is not an interesting subject for most residents, except when rates are being discussed and this is only the second time in over 13 years that Palm Coast has discussed utility rates.
“I believe a public utility authority could be established to own and operate a public utility. This authority would then purchase the utility from the city. It sounds like another layer of government for a very specific purpose... like a special purpose district. This type of additional government layer would require duplications of functions and positions that would clearly increase the cost of operating the utility. A good example would be the utility bills. The new authority would send out the water and sewer bills, but the city would still have to send out bills for stormwater and trash. So there would be a duplicate cost for the duplicate utility bills/customer service and our customers would pay the cost for both through their rates.
“Proposal 4
“I addressed the consequences of delays in Proposal 1 above.”
