Water/sewer rate increases have Marco looking to speed up sewer project

Utility rate increase of 13 percent proposed on Marco

Article Highlights

  • foreclosures lead to unpaid sewer assessments, service shut offs and less income from water usage.
  • The consultants who performed the rate study said that if the STRP was delayed it would result in an additional 4 percent rate increase.
  • Florida Water Service purchase was not a "pig in a poke"

— Rate increases heading down Marco’s water and sewer pipelines had many residents wondering if the city should slow down their sewer project, but a possible acceleration of the STRP is what came out the other end of the discussion Monday.

Prior to the council meeting, residents had said they wondered if the proposed 13 percent water/sewer rate increase was an indicator it may be time to look at slowing the septic tank replacement program.

“You've gone past the point of no return. I know I lost the STRP fight. After conceding that, I have to do what is best for the citizens of Marco Island. So now, what is the least expensive way to go forward?” Councilman Ted Forcht pondered aloud.

Water and sewer rate increases of 13 percent are proposed for October. If the average bill is close to $100 today, it will be close to $113 on Oct. 1. Another 13 percent increase is proposed October 2010.

Council members said they’re hoping to diminish the proposed increases and agreed to set up an advisory committee to study the issue further.

The primary reasons for the increases are decreased water usage, bond insurance issues and stricter bond or loan requirements related to the city's 2003 purchase of Florida Water Services and upgrades to the system to accommodate the STRP, reported the city’s hired consultant, Public Resources Management Group.

“I wouldn't recommend stopping the program. You don't want to be Cape Coral and keep changing your mind,” responded Robert Ori, president of the Public Resources Management.

The STRP began in 2005 and 1,700 more properties, of the original approximate 5,600, are left to be added to the system, Public Works Director Rony Joel reported.

Ori added that Cape Coral's rates looked to increase even more dramatically when they chose to stop their program after it began in 2008.

Foreclosures, of which there are nearly 300 in Marco, according to Realtrac.com as of Monday, also play a role in the challenge. The foreclosures lead to unpaid sewer assessments, service shut offs and less income from water usage.

“Utility system late payments and cut-offs remain high,” City Manager Steve Thompson reported in a budget presentation.

Utility disconnections have nearly doubled in 2009 from 2008. Also, accounts delinquent by 30 days or more are up 17 percent from 2008, he reported.

About $1 million of needed bonds is due to decreased water usage caused by watering restrictions and customer’s choice to use less water, Thompson reported. He added that about 2 percent of the 13 percent 2010 proposed rate increase is to cover decreased usage.

Resident Phil Kostelnik said Marco purchased a “black hole” of a water utility in 2003.

“There’s an economic theory: Don’t throw good money on top of bad money. Maybe we should let the water utility go into bankruptcy rather than throw more rates on the people. Look at alternatives, even if they turn out not to be viable,” Kostelnik said.

Former councilman and STRP proponent John Arceri said that consultants were hired in 2003 to find every possible fault in the utility company’s system to lower the purchase price by millions of dollars for the city.

“I agree totally with Mr. Arceri. We did the right thing to buy the water company,” said Amadeo Petricca, a member of the Marco Island Taxpayers’ Association board.

Petricca added quickly that he also agreed with Councilman Chuck Kiester that the water company financing should have been fully in place, including upgrades, before starting the STRP.

“It’s possible the STRP was put into place to fund the upgrades to the water and waste water treatment plant,” Petricca said.

Chairman Rob Popoff said he is hearing more people talking about deferring their payments and he wondered what influence that would have on the utility rate system.

Thompson said there has not been an increase in the number of people choosing to defer payments and that it doesn't have a large influence in the equation leading to the current rate increase.

Of about 2,100 properties, 10 percent deferred payment until the sale of their home or up to 20 years; 40 percent paid cash up front and 50 percent chose annual payments, he reported.

What is driving the increases, primarily though, is the financial market and securing bonds, he said.

“Would it have been nice three to four years ago to have a crystal ball and know the economy was going to tank and it would become nearly impossible to float bonds? Yeah,” said Forcht in advance of the workshop.

While he has always opposed the STRP, he said it wasn’t fair and likely wouldn’t make economical sense to delay the project, which is now about five years under way.

The consultants who performed the rate study said that if the STRP was delayed it would result in an additional 4 percent rate increase.

“With the treatment plant almost finished, cutting off new revenue requires rate increases to make up for this loss. If you were to defer or stop the STRP you lose the new assessment revenues and monthly service fee ($50) that would have been realized if the program had continued... Any good business decision would drive one to look at accelerating the program and bringing additional customers on as soon as possible,” Arceri said.

Life and safety issues, followed by utility projects already underway, should remain the top two priorities, Forcht said. “We should probably declare a moratorium on everything else,” he added.

“We cannot have these things polluting. I look outside my house and all I see is water. It may be expensive. You’ve got to keep the canals clean. It’s the cost of living in paradise,” he added.

As for setting up a standing utility board, Forcht said he has mixed feelings about the idea.

“I hate utility boards. They’re not answerable to the people,” he said of a proposed board appointed by council.

On the other hand, he added, council doesn’t have the time to review the details of the large utility projects the way they may need to be reviewed.

Council is to address the utility rate increase and creation of a utility board again in August.

© 2009 marconews.com. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Comments » 25

happy6 writes:

arceri is incompetent....and the council is listening to him? he bought the utility in the first place....i guess if the power goes out lcec will charge more for power to make up for the loss.....layoff some parks people, layoff some city people, layoff the city mgr....san=ve the 900k that mysteriously appeared....
come on council...do your job...now...i'll hear from monte and ed issler for sure and they'll talk about the election of past years....but they should stick their heads in the sand on this issue. what a bunch of crapola.

marcoredeagle writes:

The Marco Island Empire continues and grows.

"Let's get bigger so we can SAVE money." Biden's philosopy is home in Marco.

Let me give the Council some free advice .. that they won't be able to comprehend ... "If you tax something you get less of it."

You continue with the empire and raising taxes next year you will be needing another tax increase. Like I said if you tax something (utility taxes) you get less of it (less use of water by the people getting taxed).

NobodysFool57 writes:

The Public Works director and subordinate City staff who brought us to this point with their multi-million dollar construction projects should be sent down the road, or "up the river", take your pick. You can bet they're licking their chops at the prospect of burdening us with Veteran's Park, the Smokehouse Bay bridge, and the Town Center district rehab. Cauterize the wound, before its too late.

JohninMarco writes:

What Mr. Arceri did not say, is that the numbers don't add up. To get the amount of money from this project the islands SINGLE family residences must build out. I doubt this will happen in the next 10 to 15 years if then. As Cape Coral found out the building boom is gone. We are turning over existing homes with no growth. This means the price of this project will continue to grow at an alarming rate.

strike3 writes:

Below was a comment I wrote 2/21/2008 regarding the bond market. Guess I was correct in my doubt about the people running the city. I did miss the fact that the bond market would become nearly non-existant. I will make another prediction: The 300 homes foreclosed on today is only a drop in the bucket. Prediction isn't really the word I want to use but more like....common sense knoweledge of market trends.

February 21, 2008
9:42 p.m.
Suggest removal
Reply to this post
Written on Sewer hookup violators get their day in quasi-court:

Can someone tell me how much the city has actually issued in muni bonds to pay for this?

Hopefully not much. Rates to cities on these bonds are sky rocketing. Though I have serious doubt there is anyone smart enough running the city to know this.
..

Marconian writes:

The anti sewer points are mute cape coral just proved what happens when the minority gets there way the rest of the city suffers! their strp stoppage came along with a 92 percent rate increase for all residents with existing city utilities. As I see it we need to get this strp finished and put to bed so all you nay Sayers can find something else to gripe about!

JohninMarco writes:

in response to Marconian:

The anti sewer points are mute cape coral just proved what happens when the minority gets there way the rest of the city suffers! their strp stoppage came along with a 92 percent rate increase for all residents with existing city utilities. As I see it we need to get this strp finished and put to bed so all you nay Sayers can find something else to gripe about!

Has nothing to do with being pro or anti sewer. The problem is the funding. Even a blind man can see all the private communities going bust off the island. Without growth on the island the utilities bills skyrocket up. The costs are based on people not empty homes and lots. Ask the people at Fiddlers, Hammock Bay, Treviso Bay. Lack of a build out will cause huge money problems.

jwputnam writes:

What you all MAY be missing is that the rates for sewer and water were skewed very favorably to the condos and commercial properties. In some cases, the condos receive a rate as much as five times less than the homeowner when you compare equal amounts of water usage. (I can provide the numbers for the naysayers.) If the rates were truly equitable, do you think that there would be as much animosity?

I personally opposed the STRP because it was totally unnecessary. I still believe that entire project was and is only a cover and cash generator for the insane purchae of the utility with totally inadequate due diligence. We didn't even examine the pipes until year's after and those videos have STILL not been released to my knowledge. We will be replacing the entire system over time (not long) as more leaks and spills develop as they have like clockwork. Unfortunately for the home owners, they will pay the lion's share of the cost. That was always the plan.

This is but one man's opinion.

OldMarcoMan writes:

Forchtie doesn't say much, but when he does he hit it on the in the Bulls Eye.
Good job.

playballonK writes:

Is it just me or am I begining to sense that this Eagle newspaper likes to antagonize it readers;(bloggers).
One day an article to imply STRP is over, couple days later the STRP is moving full steam ahead.
There are ways that a media can be partial to both sides but the Eagle has found a recipe of antagonism that keeps the bloggers com'n back (advertisers love that).

sailingalong writes:

Our council just finished reading Joe Biden's new book "We have to keep spending more money so we won't go bankrupt." and obviously believed it. Where is the sanity?

Marconian writes:

PlayballonK ,You hit it out of the park with that comment! That is exactly what the eagle did they took cape corals story minced it in to a marco issue that has been dormant for some time except for a few strp references thrown about time to time by Mr.Keister at meetings and just like throwing bread to the ducks we came running with our opinions, quack! quack! quack!

lauralbi1 writes:

I love a Democracy (except for electing Obama) !!! People get to express their opinions and the results of the Ballot Box rule the direction of our Island. I think we can all agree that the Council is carrying out the will of the majority of the People. Hopefully the majority will elect a replacement for Mr. Kiester (almost a certainty) and all will be right with Marco Island and it's future. Keep on Blogging !!!
Ed Issler

dc5799 writes:

Ed,
You are such a low life creep. All will be right with Marco when you leave.

happy6 writes:

ed...don't you want to get rid of walduck too? he stirs up much more than anyone with his "guest commentary" crapolas...i guess you finally got a leash on him..at least we seem to agree on obama.

EdFoster writes:

“I wouldn't recommend stopping the program. You don't want to be Cape Coral and keep changing your mind,” responded Robert Ori, president of the Public Resources Management.

As I recall the Council used Cape Coral's decision to sewer their city as a primary example of why Marco should do the same. Asking the dodos in Cape Coral what they did was considered performing "due diligence" back then. Now, following their lead in stopping is s----- according to Marco's new consultant. But then consultants are usually hired to tell you what you told them you wanted to hear.

"John Arceri said that consultants were hired in 2003 to find every possible fault in the utility company’s system to lower the purchase price by millions of dollars for the city." I'm impressed, John! Your consultants found "every possible fault" with 3 days of technical inspection? Impressive! I guess that's why you threw out their report and hired Rony's old company, CDM, to do another!

"If you were to defer or stop the STRP you lose the new assessment revenues and monthly service fee ($50) that would have been realized if the program had continued... Any good business decision would drive one to look at accelerating the program and bringing additional customers on as soon as possible,” Arceri said. Wow! What logic! You spend millions of dollars now and sock people tens of thousands of dollars now to collect a few extra bucks a month which likely will not be sufficient to pay off the bonds you may not be able to float! John, you must think the best way to to lose weight is to double the number of Big Mac's you eat!

And Ted, I'm beginning to worry about your memory ... or is it your logic? All that water you see wasn't polluted before the STRP began. Go look at the data! If it's polluted now, you can thank the STRP for causing it!

John, face it! You s-rewed up big time buying the utility and the entire island knows WHO bought it. It's your pig, John. Put all the lipstick you'd like on it, but it's still your pig.

Ed Foster

happy6 writes:

i'd say marco is in deep poop right now...

ChuckKiester writes:

Ed Issler, Thank you for what I consider to be my best endorsement for reelection yet. Chuck Kiester

marcoislandres writes:

That was good Chuck

sunkissed writes:

Who are these clowns? I say we run them all out of town in a good old fashion democratic way!
A bunch of crooks taking advantage of families during hard times, never would I imagine that I would live in an area that has such cold, heartless politicians just looking for more revenue to spend and raises to give each other. Get rid of this group

marcofromthesidelines writes:

The website for the foreclosures is www.realtytrac.com

lauralbi1 writes:

All right Mr. Kiester !!! I hope that my statement IS (I repeat IS) the best endorsement. If that is the case, our future on Marco is looking brighter. For if anyone thinks that the 20 or so people that blog on this site have any control of what happens, they are sorely mistaken.
By the way, Chuck, it has been proven at the polls that my "thinking or vision" is much more in line with what the majority of Marco Island wants for it's future than yours. That has been proven.
Ed Issler

OldMarcoMan writes:

Geehs Foster, don't they have a City Council where you live now?
You M-O-V-E-D !! Your at best JUST a Tourist.
I bet your new town has problems that you could comment on.

NtJstUrMarco writes:

I love the comments about Obama and Biden. The only people left in the Republican Party are angry old white people and religious nuts. Which are you?

happy6 writes:

hey ed issler...if there only 20 or so people on this site...why in the world do you wasste your time expounding your crap? surely 20 people can't threaten your agenda.

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