MARCO ISLAND — Plans to reduce an anticipated six percent water utility rate hike could hinge on the backs of vacant lot owners. Under a proposal by city leaders and discussed among City Council members on Monday night, property owners of undeveloped land would be levied a non-ad valorem assessment for water system improvements, wastewater system improvements or both, depending on where the property is located on the island.
The assessment will help repay the cost of purchasing and upgrading the utility. While much of that debt is being repaid through rate structure fees and usage charges by existing homeowners, vacant lot owners are getting the benefit of the utility without paying for it.
The assessment would be collected over 10 years and include three parts for each undeveloped lot, at a charge of one Equivalent Residential Connection (ERC), regardless of lot size.
Under the proposed resolution, undeveloped land owners in the city would be assessed $446 for the water main extension and $3,740 for the plant capacity, resulting in a yearly assessment of $422.79 beginning in November, 2011.
Assessments for wastewater system improvements would consist of $480 for the wastewater main extension and $4,610 for plant capacity, also paid over 10 years. The yearly amount vacant lot owners would pay depends on the location of the land. Landowners within one of the island’s 17 STRP districts would not be assessed since fees have already been charged.
The annual assessment for vacant lot owners within the North Marco Utility Company (NMU) would be charged $4,610 over a decade for wastewater improvements, making their annual obligation $466.
Undeveloped land not serviced by NMU, but not in the STRP would have to bay both wastewater extension and wastewater plant capacity fees, expected to be $514 annually.
With the exception of land owners within the STRP, an additional one percent administration fee would be charged on all water and wastewater assessments.
If approved, the city could bring in approximately $1.1 million from both assessments in the first year, enough to reduce the anticipated utility increase from six percent to three percent. Funds generated from the vacant lot assessment will go towards water and wastewater improvements in fiscal year 2012, future improvements and repay the bonds that were issued to purchase the utility.
Councilors are still looking at additional spending cuts to eliminate the need for rate increases altogether.
Some council members expressed concerns about the assessment, especially the sense of urgency in which city officials want it passed.
“It’s a matter of unfairness,” said councilman Joe Batte of the proposal, who took issue with placing a levy on people who don’t live on the island or use the water or wastewater plants. He’d prefer the city consider additional cost cutting measures.
“I feel like someone saw how much money we could get and then crafted a policy (to get it),” added Frank Recker.
Measures to cut the island’s expenses have already been considered countered councilor Bill Trotter, a member of the island’s budget sub-committee.
“I don’t see it as a negative,” Trotter said, noting that the assessment provides equity among current and future homeowners, and spreads the burden of the utility upgrade. He also suggested that the assessment could spur construction or the sale of vacant lots. The fee would be transferable from one owner to another in the event a vacant lot is sold. However, when the land is developed, the owner will get credit for what has been paid towards the ERC.
One citizen who spoke out against the assessment said he hasn’t seen the benefits expected from the city’s purchase of the utility, and worries that so many fees are making Marco no longer affordable.
“The real losers are the residents and business owners who have to pay higher fees,” complained Phil Kostelnik.
Council members voted 5-1 in favor of the initial assessment resolution, with Batte the sole dissenter. The approval allows city workers to start the legal process required to inform residents about the matter at two upcoming council meetings in August, and begin sending letters to vacant lot owners with an estimate of the fee. The stepped up timetable is required in order for the assessment to be put on the city’s tax rolls starting in November.
Further discussion on the issue will take place during a special council workshop to be held August 1. Depending on the outcome of that meeting, Trotter requested that council vote to cancel the six percent utility increase entirely.
Island residents will be able to make their opinions heard on the assessment on that date, and at a second hearing on the issue during the council’s Aug. 15 meeting.