Pinellas News

Tarpon tentatively OKs water-sewer rate increase

Mark Schantz
Published: January 15, 2010

TARPON SPRINGS - City commissioners swallowed a bitter pill Tuesday night, tentatively agreeing to raise water and sewer rates even more than they planned less than two years ago.

Faced with the higher costs, they had no choice but to raise rates to keep one of the city's largest enterprise funds financially sound, commissioners said in adopting the revised rate increase plan on first reading.

Commissioner Chris Alahouzos, who cast the lone vote against the revised rate increase plan, said more thought should be given on how to reduce water and sewer system costs.

A plan the commission approved in 2008 set in place a series of annual increases in the city's drinking water and waste water rates.

For example, the city's drinking water rate rose by 8.75 percent Oct. 1, 2009, the start of the city's 2010 fiscal year. The plan called for the drinking water rate to increase by another 8.5 percent in fiscal 2011.

Under the revised rate plan from consulting firm Burton & Associates that commissioners voted on Tuesday night, 2 percentage points would be added to each of the annual increases set out in the 2008 plan. That would mean, for example, that the 2011 drinking water rate increase would be 10.5 percent, not 8.5 percent.

The 2011 sewer rate increase would be 3 percent, not the originally approved 1 percent.

A customer who will pay a total $65.46 a month for water and sewer service during the current fiscal year would pay a combined $98.55 a month by fiscal 2017 if the revised rate increase plan gets final approved, according to a Burton & Associates analysis. If commissioners stuck with the 2008 plan, the same customer would only pay $86.27 a month in 2017.

By failing to approve the rate plan revision, however, the city would fail to meet the financial requirements of the water and sewer system, Burton warns in its analysis.

The second and final hearing on the revised rate plan will be held Tuesday, Jan. 26.

Instead for further raising rates, commissioners should direct staff to work with city's budget advisory committee to identify ways to reduce utility costs, Alahouzos said. Since many city utility customers are on low, fixed incomes, he said, "We should not do this to our residents."

In remarks during Tuesday's rate hearing and via e-mail, some city utility customers told commissioners of the financial hardships they face because they are on a fixed income or are out of work.

In response, the commissioners who favor the revised rate plan said the city is stuck between a rock and a hard place.

It has to pay more for the potable water it purchases from Pinellas County, they said.

In its analysis, Burton and Associates notes that "the recession has caused historic negative economic impacts" since the 2008 plan was approved. The collapsed of the housing market has meant fewer new water and sewer customers for the city than anticipated in the 2008 plan.

As a result, the city is taking in less revenue than planned under the 2008 plan, according to Burton.

At the same it is paying Pinellas County 8 percent more for water, not the 6 percent projected in 2008.

The city is planning to build a reverse-osmosis treatment plant to reduce its dependence on drinking water from the county. The date for that plant to go into production, however, has slipped by 18 months, to October 2011.

As a result, the city will have to pay about $2.3 million more for drinking water than was projected in 2008, according to Burton.

Alahouzos said the sewer system is placing the biggest financial burden on the city utility system, not drinking water.