Counting all increases, utility bills could go up more like $50 by October 2027. Impact fee laws are 'in the developers' favor,' DeLorenzo says.
To fix the City of Palm Coast's water and wastewater treatment capabilities, a consultant is recommending incrementally raising residents' monthly bills by more than $30 per month by Oct. 1, 2027. Stormwater and trash pickup also go up automatically with inflation.
Is there a choice?
WNZF's "Free For All Friday" hosts David Ayres and Brian McMillan interviewed three city staff members — Acting City Manager Lauren Johnston, Chief of Staff Jason DeLorenzo and Stormwater and Engineering Director Carl Cote — on Feb 14, to understand why the $700 million of improvements are recommended. What follows is an edited transcript of the episode. Watch the YouTube feed here.
David Ayres: Are we in trouble right now? Let's talk first of all about sewer capacity. People remember when [Hurricane Milton] was here, and the sewer plants were ready to blow because it was over, and then we got zapped with a [Florida Department of Environmental Protection] thing like, "Hey, Palm Coast, you better get your [stuff] together, because it's something's got to be done." Is that pretty accurate?
Lauren Johnston: Let me just take a step back before we get there. Why are we doing this? Why are we at this point? And I want to go back to our National Community Survey results that our residents took last year, and they rated us 41% of quality that they thought our utility was, and they rated us in importance 93%. That is a huge gap between what is quality and what is important, and that's why we're here, right? The residents want us to put together a plan of fixing our infrastructure.
Jason DeLorenzo: Are we in trouble? Yes and no, and more yes than no. We have two wastewater treatment plants. Wastewater Treatment Plant 1 is our original one. It's on Utility Drive, and it has a capacity of 6.83 million gallons per day. That's what we are permitted by the DEP to pass through the through the plant.
We also have Wastewater Treatment Plant 2. It's on Peavey Grade, which is off U.S. 1. It's a 2 million gallon per day system with an upgrade that's going to be completed in April, with an additional 2 million gallons. So if you think of it from system wide, we are OK.
The problem is that our system is not completely interconnected, and we can only have so much of that flow go to Plant 2 because of how the city was built out. We inherited this system from ITT. To date, we've been able to change flows of 300,000 gallons to Plant 2. We have two more phases of that. We're going to move another 550,000 gallons per day to Plant 2 once the upgrade is done.
But at Plant 1, we have about 300,000 gallons per day of capacity remaining right now, and for a city with our growth rate, that is roughly a year, maybe even a little bit less than a year of growth.
The upgrade of Wastewater Treatment Plant 1 is expected to be done in late 2028, so we may have a gap there still.
So the answer is, system wide, we're kind of OK, but for the amount of flow that goes to Plant 1, which we have little ability to change beyond the additional 550,000, we are in trouble.
WHAT WILL RESIDENTS PAY?
David Ayres: Inflation — everybody gets it. Everybody feels it. And you got to really feel for the people that are on fixed incomes, because they're kind of trapped. I mean, if they're retired and they're living on just their Social Security and for whatever reasons in life, they didn't really get to prepare for their retirement. That's the reality that they live with. And they moved here to Palm Coast to live their life, and it was very affordable, and not just living in Palm Coast, but anywhere it's getting more and more expensive.
So every little thing gets a lot of emotional kickback. So let's talk about the reality. You guys have a $700 million price tag on what we need to do. So what's the nut that we need to come up with to get this going?
Carl Cote: We worked with our city financial consultant and our rate consultant going through various options for best ways to move forward that are going to have the least impact on the residents, in terms of the rate. And what was presented and recommended to council was a phase in of rates over the next four years: it would be four 8% increments. So it would be 8% in April, 8% in October, and then the two following Octobers would be 8% as well. And then from there, we would move on to just your regular Consumer Price Index, the inflation annual adjustment.
David Ayres: So everybody can expect their utility bill to go up no matter.
Carl Cote: Yes, that'd be across the board for all parts of the bill and all customers.
Jason DeLorenzo: You mentioned being on Social Security, right? And then Social Security members normally get an annual CPI increase. One of the reasons this doesn't align well with CPI is that we've analyzed the cost of construction, and the cost of construction is outpacing CPI by — what?
Carl Cote: Double, or more.
Jason DeLorenzo: It makes it really difficult for our residents that are on limited income. But we're up against it. That's just the cost of what stuff costs now to build.
David Ayres: How do we rank with other cities comparable to us around the state, as far as cost of living and utility bills?
Lauren Johnston: How about we start with, we have the lowest millage rate? We are very unique in that situation that our millage rate is only 4.18, and the City Council the past couple of years has continued to lower the millage rate. We have the lowest millage rate in the county between all of the other cities, and if you compare our utilities to other communities, just here locally, we're still lower than Flagler Beach or Bunnell. And you know, there's other additional taxes that Flagler Beach has that the city doesn't have right there. They have a utility tax on top of their utility bill. So, and that's one thing that Palm Coast does not have.
David Ayres: So we've been getting away with murder as far as on the other tax, and we've been living pretty cheap.
Brian McMillan: We haven't really been getting away with anything because we're almost to capacity. We got dinged with the state saying, "You have to do something." We're getting fined right now by the state, right? And so this seems like something you can't really ignore.
David Ayres: We have to take action pretty quick on this, right? This is not something to put off till next election cycle or something like that. We got to deal with it right now.
DID THE CITY OVERPROMISE?
Lauren Johnston: The reason why we're trying to move quickly is because we need to start construction on Wastewater Treatment Plant 1, and we need to go out for a bond for construction of that project.
Brian McMillan: The capacity at Plant 1 is 6.83 million gallons a day. What would the expansion get it to?
Jason DeLorenzo: 10.83 million gallons per day.
David Ayres: So all these expansions and capacity increases — that would put us in pretty good shape for how long? And for the developments already approved, do we have that built into what the capacity? We didn't overpromise developers or builders that, "Oh yeah, we can handle that," when we really couldn't?
Jason DeLorenzo: Yes and no. We have what you would call "paper capacity," and we are over capacity, if you consider that paper capacity. But it's not straightforward, because the paper might include a subdivision of a couple hundred units, but they don't come on at one time. They come on one house at a time. So the number, if you count them in totality, would put us over capacity, but when they start actually flowing, then that reserved capacity, or committed capacity falls off of that table, because you're just dealing with that one house at that point.
Brian McMillan: So is that a mistake? I mean, was that an error from the city to give that to promise that on paper, even though it would have put us over capacity?
Lauren Johnston: Even the ITT lots, a master plan community, you're overcommitted on paper capacity, just in current ITT lots.
Jason DeLorenzo: In 1970 ITT plotted 45,000 lots and had a wastewater treatment plant for 330,000 gallons, right?
Brian McMillan: So we have 7,000 or 8,000 undeveloped lots in the traditional ITT lots, and if they all were built tomorrow, then we would be overcapacity.
Jason DeLorenzo: Yes. So what you're trying to do is time the capacity, right? Because you also want to time it with those future residents, so they are paying for that benefit.
I would say we are late. You'll remember that we brought a potential rate increase to City Council in November 2023 (which was rejected), so we're behind.
IS GROWTH OR AGAIN INFRASTRUCTURE TO BLAME?
David Ayres: You hear people say, "We've lived here in Palm Coast. Why do we have to pay for the sewer and water of people that haven't moved here yet?"
Jason DeLorenzo: It's a good question. A big chunk of what we need is to actually maintain the current system. But it's just how it works, right? Someone has to pay for it.
Carl Cote: We do charge impact fees, and developers do pay a cost when they come in. But you can't wait till you collect all the money and then build the expansion. They need it before hand. So you build up some kind of dollars to help contribute towards those expansion plans, but then you're overbuilding for those future residents who will contribute towards the use of that.
Lauren Johnston: Can I go back to the timing? So let's just go back in time a little bit. So we did a rate analysis in 2018, and it had a growth projection in there, a stable growth projection of like 3 to 4% right. But nobody predicted COVID, right? And nobody predicted the growth impacts to Florida from COVID, and nobody predicted the cost increases or supply chain issues from COVID? It was unpredictable.
So when we're trying to time these things, we looked at 2022 numbers that were way different than 2019, and we looked at the increase in 2021, and then city staff actually brought forward the rate: "Hey, we need to expand here," in 2022, and even that was controversial.
And here we are back in 2025, so we've been trying to do our part in managing the timing of growth and and development.
Brian McMillan: So the costs have gone up, and that's that was unpredictable. But looking back, is it safe to say that we did not charge enough for the impact of new residents coming in?
Jason DeLorenzo: They're always lagging right? The timing of the payments?
Brian McMillan: Is development paying for itself, or is it not?
Lauren Johnston: You also have to consider that a lot of this is [governed] by state statute, right? There is a a limitation that we can only go and raise impact fees on minimum four year cycle, right? Council approved that last year.
Jason DeLorenzo: The impact fee law is not in the city's favors, not in the citizens' favor — it's in the developers' favor.
$50 PER MONTH INCREASE BY 2027
David Ayres: What are we looking at for the average homeowner here? And also, we've got to remind everybody: Look at your water bill; there's a lot of things on there. It's your trash, it's the stormwater, it's water, it's sewer. What is the average bill?
Carl Cote: We did break it up into two categories, because you have a smaller home, a two-person home at 2,500 gallons per month, and then we have a family home, at roughly 4,000 gallons a month.
The current bills now for the smaller home is about $73 per month, and for the large ones, about $90. So at the end of the increases, the smaller home will see a $30 a month increase by Oct. 1, 2028, and then the larger home will see roughly a $37 increase a month by 2028.
David Ayres: So that's substantial for a lot of people.
Also on there is trash with FCC, and their contract with the city calls for inflationary adjustments every year.
Lauren Johnston: We have a seven year contract with FCC, and it is on a CPI increase. The stormwater rate is also on an index.
David Ayres: So all those could be going up, right?
Brian McMillan: I'm sure they will, right? Probably a few percent each.
Lauren Johnston: Palm Coast is different for how we have trash serviced. Just consider: There's no landfill here in Flagler County. So when we're going and hauling our trash, it's going all the way to Daytona, so up and down I-95 lots of times a day. Think about gas, diesel prices, staff time to go down there, pick up the service. So when you're trying to compare Palm Coast to maybe New Smyrna or Daytona, well, it's a lot closer to get to the landfill than it is from Palm Coast.
David Ayres: What's it take to start a lot landfill? Yeah, let's — Brian, you and me —
Brian McMillan: Let's start a movement to have a landfill here!
David Ayres: Well, the trash bill is gonna be going up too. So people going, "I'm trying to plan a family budget here." And so what number — trash, water, sewer, stormwater, all that kind of stuff — What should they say? Just plan on an extra $50 a month for everything?
Carl Cote: By the 2028 time, it will probably be $50 bucks more a month for everything.
COST OF DELAYS
Brian McMillan: How much did it cost us to delay making these improvements?
Carl Cote: I mean, the project changed slightly. As, you know, a couple years ago, we knew we were moving forward, so we started the process in terms of doing a study and analysis, and what can we fit on the existing plant site? The project increased in size slightly from before. So I think cost went up like 25%.
Brian McMillan: Twenty-five percent?!
Carl Cote: Roughly, because we got further into design. This isn't a brand new plant. We're modifying the existing plant. I know we talked a lot today about capacity and expansion related stuff, but we have old stuff, too. That Plant 1 is over 50 years old. Over time, we get more and more regulatory requirements we have to comply with: how we discharge our wastewater, how we treat the water. So that plant is outdated, and we need to bring it up to current requirements.
The same is true for our water plant. We hear water quality issues from residents. What can we do there to to help with odor, color? We did a whole sustainability assessment on the facility. It's old. We have a lot of R and R.
Brian McMillan: Which is repair and something, rehab and renewal?
Carl Cote: Renovation and rehabilitation.
Brian McMillan: Not rest and relaxation.
Carl Cote: No, opposite.
Lauren Johnston: We get it, Wastewater Treatment Plant 1, we need the first series of bond to cover that project, right? But Water Treatment Plant 2 is one of those facilities that we want to make sure we're modernizing the technology. Water is very, very regulated. So we want to make sure we're giving the cleanest, the best tasting, the beautiful — all of the above for the service of our water.
Brian McMillan: With the cost of construction going up 7 or 8% in the past couple years, it probably went up 15%. Is that about right for the overall construction costs?
Carl Cote: That's a good number.
ANY HELP FROM THE STATE?
David Ayres: To pay this, there's bonds. And of course, we go to the state Legislature, hat in hand, like, "Please, please help us out with our utility shortfall here," right?
Jason DeLorenzo: Last year, we requested $35 million for the Wastewater Treatment Plant 1 project, and $1 million made it into the budget, but the governor vetoed that million dollars, so none of it made it back to us.
David Ayres: So we got to come up with $700 million.
Carl Cote: The bonding pays for a good portion of it, like 65%.
ON A FIXED INCOME
David Ayres: We talk about all these rates going up. The retirees are crying that, "I'm on a fixed income." I'm crying for the young people that have never had a chance, and it just keeps being further and further from reach with inflation and things like that.
Lauren Johnston: You know, David, to tie that back to our main conversation today about utilities: You need strong utility service to attract economic development, and we need the economic development to help our current citizens. We need a place for them to work so they want to stay here in the community, and that's one of the things we struggle with. But to tie it all together, you have to have the infrastructure to be able to support that next business that wants to come.
Brian McMillan: Somebody could come in with a great, clean manufacturing jobs. There's only one problem from the city's perspective: "We may or may not have water capacity for you; we're kind of waiting and seeing. We're trying to get this passed." That's kind of a it could be a deal breaker for somebody.
Lauren Johnston: That's definitely a reality.
David Ayres: We do have a public hearing coming up, right?
Lauren Johnston: March 4. You'll learn the importance of the major capital projects that are attributed to the rate increase. We're going to give a bigger picture about water and wastewater capacity and why that's important. We know our residents want us to fix our infrastructure, and this is our plan to do it.
I think the mayor was really great a couple meetings ago whenever he said, "Can you give us a little bit of grace?" Because they inherited these decisions, and it is a very hard decision, and it's a very hard balance, and nobody wants rates to go up — nobody. But also we want to fix our infrastructure. So kudos to the city council that are making the hard decisions, because it is extremely difficult.