Public workshop offers first view of Marco Island's water and sewer rates

City of Marco Island staff listen to rate study findings presented by Burton & Associates at City Council's workshop Wednesday. From left are Jeff Poteet, utilities general manager, Patricia Bliss, finance director and Laura Litzan, city clerk. Cheryl Ferrara / Eagle Correspondent

City of Marco Island staff listen to rate study findings presented by Burton & Associates at City Council's workshop Wednesday. From left are Jeff Poteet, utilities general manager, Patricia Bliss, finance director and Laura Litzan, city clerk. Cheryl Ferrara / Eagle Correspondent

Chuck Nelson from Marco Shores asks Marco Island City Councilors to treat his neighborhood equitably when considering rate increases. Marco Shores is located just off the island and shares water and sewer facilities with Marco Island. Cheryl Ferrara / Eagle Correspondent

Chuck Nelson from Marco Shores asks Marco Island City Councilors to treat his neighborhood equitably when considering rate increases. Marco Shores is located just off the island and shares water and sewer facilities with Marco Island. Cheryl Ferrara / Eagle Correspondent

An overflow crowd watches Burton & Associates' presentation from the entranceway to Marco Island's Community Room Wednesday during city council's workshop on utility rates. Cheryl Ferrara / Eagle Correspondent

An overflow crowd watches Burton & Associates' presentation from the entranceway to Marco Island's Community Room Wednesday during city council's workshop on utility rates. Cheryl Ferrara / Eagle Correspondent

Michael Burton, president of Burton & Associates, presents rate designs Wednesday for Marco Island's City Council to consider. The firm completed three studies for the city including cost of services and rate sufficiency. Cheryl Ferrara / Eagle Correspondent

Michael Burton, president of Burton & Associates, presents rate designs Wednesday for Marco Island's City Council to consider. The firm completed three studies for the city including cost of services and rate sufficiency. Cheryl Ferrara / Eagle Correspondent

— City Council heard recommendations from its consultant Michael Burton, president of Burton & Associates, Wednesday in its first workshop to determine future water and sewer rates. The firm completed three studies for council: a revenue sufficiency study, and two rate designs, the M1 and M54 approaches.

In a slide presentation, councilors were shown side-by-side graphs of the two rate designs as they would affect homeowners on Marco Island and in Marco Shores. The designs offered new methods for calculating water and sewer bills, a step that council is considering as it goes forward to raise utility rates equitably.

Using the most commonly sized lot of 9,000 by 15,000 square feet with a monthly water usage of 16,000 gallons, Burton concluded the M54 design predicted a rate increase of 9.7 percent or $14.41 monthly. The M1 design at the same level raised rates 3.1 percent or $4.62. About 35 percent of water and sewer bills were issued for this size lot.

Within the lot size using either design, new rates against current bills varied by usage. In the M54 design, higher demand resulted in gradually increasing rates to 13.7 percent or $28.37. Rates also increased as demand dropped. Lowest consumers experienced increases of 12 percent or $6.71.

The M1 design predicted larger swings in rates. Increases for the largest single-family users rose to 16.7 percent or $34.64. The smallest single-family consumers received a rate decrease of 28.2 percent or a reduction in billing of $15.70.

Rates for multi-unit users, such as condominiums, also varied by usage. An average 30-unit condominium using 80,000 gallons saw a small rate decrease. Commercial users, on the other hand, saw significant rate increases under the M1 design. Commercial users are calculated on meter size rather than lot size with categories ranging from 5/8 inch to 6 inches.

Councilors debated how servicing the debt for purchase of facilities and continuing upgrades should be allocated among water and sewer users. In debt calculations, “equivalent residential units” or ERUs are weighted by category of user. Most single-family homes are weighted as one ERU based on the flow of 440 gallon of water per day and 220 gallons of wastewater. Multi-family units equal about one-third of an ERU.

Councilor Trotter felt accumulated debt should be spread equally among all users. Debt service is assumed under the M54 design in usage charges.

“We should treat all users as equal shareholders of the system,” he said. “(It should be a) fair and equitable plan based on how the plant was purchased for total build-out.”

Council Vice Chairman Larry Magel disagreed.

“It looks like you’re using a political solution here. We’re ignoring the recommendation of our consultant,” he said. Magel pointed to irrigation as a large differentiator in usage.

“Acquisitions were not equal. Upgrades were not equal. Seventy percent of water usage occurs between midnight and 6 a.m., Magel said. “We have to have expensive storage tanks to store water to meet irrigation needs.”

Public speaker Muriel Bell said she was attending her first council meeting.

“I listened very carefully to Mr. Burton’s report. I’m puzzled why with so much detail you would question and try to rearrange the numbers to be considered,” she said. “Condo and single family owners have been pitted against each other. I don’t feel that one-family homeowners should be penalized because they want a green lawn and gardens.”

In the revenue sufficiency analysis, Burton & Associates concluded that no rate increases were necessary for fiscal year 2012 ending Sept. 30. In the 2012 through 2017 analysis, rate increases were recommended at 6 percent for 2013 and 2014 and 3 percent for 2015 through 2017 to meet utility needs.

The study also concluded that surcharge adjustments could be made. In 2012, road resurfacing surcharges could be adjusted from 4 percent to 3 percent, and Septic Tank Replacement Program (STRP) surcharges could be adjusted from 8 percent to 3 percent. The study recommended reductions as soon as possible.

In 2016, road resurfacing surcharges could be eliminated, and STRP surcharges should be increased from 3 percent to 5 percent, the recommendation concluded.

Additional recommendations included adding an affordable block for water usage from 0-6,000 gallons per month and capping sewer charges for single-family residences at 6,000 gallons per month.

Council decided to continue discussion of rate designs and the cost of services study at its next workshop to be held at 1 p.m., March 14, in the city’s Community Room, 51 Bald Eagle Drive.

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Comments » 5

JohninMarco writes:

I question Mr Magel about his comments. Seeing that he is a member of Hideaway Beach and has a very large voice in their association matters, is this not a conflict of interest?

deltarome writes:

When Burton was asked a few months ago if he would implement a rate system according to the COS study, he said "No". The reason why was that it wasn't politically viable to charge different groups different amounts, for the same thing.

ajm3s writes:

This quote is so appropriate:

"I’m puzzled why with so much detail you would question and try to rearrange the numbers to be considered,”

Because it is the rearrangement. Consider, the fact that the "classes" and meter size as defined lead to disproportionate cost of service. Why do I consider this as fact?

Consider the fact: there is a business that figured out that if he changed meter size to a 5/8" he could rearrange the "cost of service", or as I like to say the cost of HIS service. And it is legal under current ordinances.

To date, the cost of service study arrived at a .35 for condos and a 1.0 for SFH. And we are to accept, because we have a cost of service based on.......................

One thing we can all agree, it is in the numbers. Now its time to pick and chose, but one number is the size of your meter and those pesky ERU's and AWWA equivalents.

And then there is that "number" we call acquisition debt, which I call capital debt, capacitance debt, fixed debt, overhead debt, or whatever debt you want to call it. But it exists whether a single drop of clean water is produced or a single drop of waste is returned. So again, pick your meter, pick your M1 or M54, but the BIG NUMBER is debt and how are we to apportion? 0.35 for condos and 1.0 for SFH?

Remember, the consultants stated quite clearly, you can evaluate other methodologies, you just need to justify and apply to all users? Is the answer to divide and conquer?

Note: A free meal is available to those who can name the business that made a smart business decision, but perhaps not fair and balanced to all water/sewer users and property owners.

Or did I miss the comments at the workshop?

TheFox writes:

Look whose ox is being gored

Seawaller writes:

Consider this: with STRP the capital cost (installing the pipes, plant capacity etc.) for each district was equally applied to all users. With the water rate structures being considered now the capital costs (plant aquisition, expansion etc.) are being built into the rates each class of customer pays. So why are capital expenditure allocations between the two programs different?

The answer is simple. When STRP went in it only affected one class of residents with no unified voice and certainly no representation on the council. The rate structure debate affects all classes and some have more unified voices and more representation on Council.

So if you define fair and equitable as everyone should share the burden of an over priced and overbuilt water infrastructure equally, and everyone should pay the same rate per unit for what they use, you will lose. This is all about who has the most influence with Council.

An argument could be made that the purpose of STRP was not environmental, but rather an attempt to expand the contribution base of an over priced, antiquated system used by some classes of users on the Island. What wasn't foreseen by the perpetrators, however, was this was not enough.

Now back to square one. How does the original influential user class mitigate their losses?
Smoke and mirrors of course. COS studies, M1's, M54"s, accept the first principles (see ajm3s comments above) make it look complicated and at all costs make sure you secure your preferred status.

I suppose there is nothing wrong with anyone's desire to preserve a preferred status. As one blogger on here often states: Council reflects the will of the taxpayers on Marco Island.

I for one can only hope for the day when Dr. Seuss's vision in the "Sneetches" comes true on the Island:

"until neither the Plain nor the Star-Bellies knew
whether this one was that one... or that one was this one
or which one was what one... or what one was who."

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