MARCO ISLAND — 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.