Marco Island Utility Advisory Board: Special assessment for some or rate hikes for all?

MARCO ISLAND — The city’s Utility Advisory Board (UAB) is working on ways to reduce a planned six percent utilities increase for fiscal year 2012. Marco Island water and sewer customers have seen a rate hike each year since 2009 to help reduce the debt the city incurred in purchasing the utility department. But with an anticipated cost of services increase next year, which may have the average user see a 19 percent increase in their bill, city officials and council members worry that an additional six percent boost could pose a financial burden on consumers. However, a six percent increase will provide a balanced budget for the utility.

One suggestion to reduce the increase is by issuing a special water and sewer assessment on owners who have vacant lots on the Island. The measure could bring in more than $1 million in fiscal year 2012, and the proposed rate hike could be lowered to three percent. Even so, the utility budget would still be nearly $1 million short. If the assessment were continued over 10 years, the savings would be even more substantial and could possibly remove the need for anticipated rate hikes in 2013 and 2014.

At a UAB workshop held Wednesday, chairman Ken Honecker expressed concern that the city’s own spending plan, developed by an outside consulting firm to pay off the debt of purchasing Marco’s utility system, is not being followed. Since a nine-and-a-half percent rate increase was assessed in 2009, and customers are paying an additional 10.5 percent increase during this fiscal year, Honecker said those additional amounts should show up on the city’s revenue reports.

“No one’s gone back to see if that happened,” he said, adding that funds are just being redistributed and used to pay other projects.

“The Ponzi scheme is coming to an end.”

One reason for the current situation is that when city leaders purchased the utility, officials estimated that Marco would be ‘built-out’ by 2010, meaning there would be no vacant lots on the island, and the city would benefit from the additional revenue generated by new citizens and businesses. The economic downturn has changed everything, and dozens of lots remain. Additionally, with higher water bills, some citizens are self-restricting their personal water use and irrigation, which also reduces potential revenue for the city.

“The problem I see is we did an upgrade and the plant for $68 million and we never charged the customer for the plant,” Honecker told city staff members. “It’s all coming to roost now.”

At a budget subcommittee meeting held July 6, city councilman Bill Trotter proposed removing the rate hike entirely by deferring several capital improvement projects, putting off some staff hires, reducing overtime for city workers and delaying a seawall project at the Northwest Treatment Plant (NWTP), and directed the UAB to find additional solutions. Finance manager Patricia Bliss countered that city staff has already considered Trotter’s suggestions, many of which have already taken place or are not viable.

One deferment of particular concern is the seawall surrounding the NWTP, which has been undergone several temporary repairs in the past four decades. The city has hired Martin Pinkney, a structural engineer on the island, to evaluate whether construction of a new seawall is needed as soon as possible, or whether city workers could hold off on the project until 2013, removing the approximately $1.2 million cost from FY 2012 and moving it to FY2013.

The seawall, which begins near Cedar Bay Marina and runs the length of Barfied Drive, is of importance because it protects water tanks at the treatment plant, along with more than $100 million of the city’s assets. Should there be a hurricane, flooding could loosen soil and cause the tanks to move or tip over, leaking the intake of bacteria-filled water into local saltwater canals.

“No one better be wrong on this,” said Bruce Weinstein, a senior project manager for the city, in addressing potential plans to put off the seawall construction.

“There’s a huge disaster waiting if we’re not careful,” added planning board member Bob Brown, who served on a city utility ad-hoc committee before the formation of the UAB.

The UAB will wait until Pinkney’s structural report on NWTP seawall is complete to make a recommendation, and bring its vacant lot assessment to city council at a future meeting.