Lazaro Aleman
ECB Publishing, Inc.
A utility rate review by the Florida Rural Water Association (FRWA) of Monticello’s water and wastewater systems has given city officials food for thought. City officials specifically are contemplating rate increases for the two services.
The findings of the review, which FRWA analyst Andrew Greene discussed with the Monticello City Council on Tuesday evening, Oct. 4, paint a dire future scenario if the city doesn’t implement rate increases over the coming four years.
A nonprofit, non-regulatory professional association, the FRWA’s stated primary purpose is to assist large and small water and wastewater systems across the state with every facet of their operations.
The gist of the 10-page FRWA report is a recommendation that the city make adjustments to the base and usage charges for drinking and wastewater, beginning in 2023 and running through 2026 to make both operations economically viable.
Per the adjustments proposed by the report, a 20-percent increase should be applied in the base and usage charges for drinking water in 2023, followed by rate increases of five percent each year in 2024, 2025 and 2026.
For wastewater, the proposed rate increases in the base and usage charge is also 20 percent in 2023, followed by a 15-percent increase in 2024, and increases of 10 percent
each year in 2025 and 2026.
Graphs of the revenue requirements for drinking water and wastewater for the four-year period show revenues remaining static and operating expenses and capital expenditures growing, with the margins between income and expenditures getting bigger each year if the rates remain unchanged, especially for wastewater.
Per the figures, the city will need $499,400 in net revenue to operate the water system by 2026. The net revenue is calculated by adding the operating expenses and capital expenditures and subtracting revenues from other sources. The $499,400 is up from $362,000 in 2022. At the present rate, per the report, the system will continue to generate $379,200 annually, creating a $120,300 deficiency by 2026.
By contrast, if the city implements the recommended rate increases, it will generate $526,700 by 2026, representing an additional $147,600 in revenue, and ultimately translating into a $27,300 surplus, versus the $120,300 deficiency.
The picture for the wastewater system is direr. Per the report, the city will need $1,646,000 in net revenue by 2026 to operate the wastewater system, based on its operating expenses, debt service and capital expenditures. This is up from $751,300 in 2022.
At the present rate, according to the report, the system will continue to generate $902,000 annually, creating a $743,900 deficiency by 2026.
By contrast, if the city implements the recommended rates, it will generate $1,506,200 by 2026, or an additional $604,200 in revenue, ultimately leaving a deficiency of $139,700 in 2026, which is better than the $743,900 deficiency if the rates remain unchanged.
Under the proposed rate increases, the monthly base charge inside the city for a 5/8-inch line would go from the current $8.11 to $11.27 by 2026. Outside the city, the base charge would go from the current $10.14 to $14.46 by 2026.
The usage charge inside the city per 100 cubic feet (cf) would go from the $1.62 to $2.25 by 2026, while outside the city, the charge would go from the current $2.03 to $2.82 by 2026.
For irrigation, the base charge inside the city for the 5/8-inch line would go from the current $4.77 to $6.63 by 2026. And outside the city, it would go from the current $5.96 to $8.28 by 2026.
The usage charge per 100 cf inside the city, meanwhile, would go from the current $1.62 to $2.82 by 2026. And outside the city, it would go from $2.03 to $2.82 by 2026.
For wastewater, the base charge for the 5/8-inch line inside the city would go from the current $19.47 to $32.51 by 2026. Outside the city, the base charge would go from the current $24.34 to $40.64 by 2026.
And the usage charge inside and outside the city per 100 cf would go from the current $4.89 and $6.11 to $8.16 and $10.20, respectively.
The report also touched on the debt service coverage and unrestricted fund balance.
City Manager Seth Lawless emphasized the evaluative nature of the review; it was study, not a done deal, he said.
Mayor Julie Conley questioned some of the projected capital expenditures, noting that the city at present had no capital outlays planned.
For his part, Greene acknowledged that the information for the report had been drawn from the Diamond Maps, a simple cloud-based GIS/mapping application designed to help municipalities and rural utilities map their sewer and water infrastructure and track maintenance. Meaning that a closer look at the on-the-ground realities could well make adjustments of the numbers necessary.
Conley called the study a good first step.
“The next step is for Seth to do a deep dive of the figures,” she said.
Lawless agreed to look closer at the figures and the city’s needs and report his findings to the council. Off the top of his head, he said, the areas that he saw needed addressing were the waterlines, hydrants and manholes.
Councilman Troy Avera capped the discussion, observing that if nothing else, “the study shows that we’re going to be in dire need if we don’t do something.”