On Tuesday the Vero Beach City Council is expected to approve a set of water, sewer and irrigation water rate increases spanning the next five years to help pay for the new $164-million One Water plant and increased utility operational costs. The slate of rate increases approved and recommended by the Vero Beach Utilities Commission earlier this month is necessary to show bond agencies that Vero will have sufficient revenue to pay off an estimated $125 million borrowed to fund construction of the new plant at the Vero Beach Regional Airport. The balance of the project cost is being funded by state and federal grants. Once the proposed rate increases are fully in effect in 2030, the typical customer using 4,000 gallons of water per month will be paying up to 47 percent more compared to today’s rates. The combined average water/sewer service that now costs $83 per month will increase to $122 in 2030, bumping up $10 or $12 per year with a final increase of $5.77 in 2029-30. Currently Vero’s rates are in the middle of the pack for municipal-run water/sewer utilities, but the proposed rate hikes could make Vero one of the most expensive utilities in the region by 2030 unless other cities also impose stiff rate hikes. Indian River County Utilities remains the least expensive in the area, with the typical 4,000 gallon per month customer paying $67.70 The City of Vero Beach skims off 6 percent of all utility revenues into its general fund to keep property taxes artificially low. City officials call this practice a fair return on city residents’ investment in the utility. The practice is allowed under Florida law, but under the plan recommended by Bolton and approved by the Utilities Commission, only the revenues used for operation of the utility would be subject to the 6-percent bite – not the revenue required to pay back the $125 million loan needed to build the new plant. Bolton explained that he anticipates paying about a 4.55 percent interest rate on the $125 million bond issue. Payments on that would run about $8.7 million per year. But if the city took 6 percent of that $8.7 million and deposited it in the general fund, it would be as if the utility was paying a much higher interest rate of 10.55 percent. “Payments on the debt service will make up about $10 per month on the typical customer’s bill,” Bolton said. So for every $10 paid, 60 cents of that would go to the city’s general fund if the Vero City Council rejects Bolton’s financial plan next week. Limiting the general fund transfer to operating revenues would deprive the general fund of about $2 million over the next four years, but according to Bolton, it’s the right thing to do. Bolton said that money should instead be re-invested into capital improvements in the utility system, and the Utilities Commission agreed with him. This action by Bolton and the Utilities Commission butts up against a proposal by Vero Beach Mayor John Cotugno, who said he wanted to increase the general fund transfer from 6 percent to 8 percent, making the water/sewer utility into an even bigger cash cow for the city. If the utility only served customers inside the city limits, the transfers would be a mere accounting exercise – city residents paying more in their utility bills to pay less in property taxes. But nearly 40 percent of Vero utility revenues come from customers outside the city limits in the Town of Indian River Shores and the unincorporated South Barrier Island. Bolton’s plan would limit the extra money outside customers would have to contribute to Vero’s general fund. Vero Beach Utilities’ reuse irrigation water produced from treated wastewater and pumped onto lawns and golf courses and into community lakes is popular across the barrier island and much in demand on the mainland, too. Vero customers who subscribe to reuse irrigation water will see steep, 25-percent rate increases each year for the next two years that have little to do with the new plant. With the opening of a reuse irrigation water pipeline that pumps stormwater out of the main relief canal by the airport and channels it to John’s Island through a separate system, all the costs of operating the city’s existing reuse irrigation water apparatus will be borne by fewer customers going forward. The economy of scale reuse irrigation customers once enjoyed with John’s Island as a major reuse customer has now been lost, Bolton said. A member of the Utilities Commission asked Bolton if the cost of decommissioning the existing sewer treatment plant on the river was included in the $164 million cost of the new plant. Bolton said no. “Hopefully the developer will pay for it, but if not, we’ll expense it ... [with] roughly $1 million we set aside for it,” Bolton said. “We’re discussing it with the developer at Three Corners. If they’re interested in the property, they would fund the decommissioning of that facility. So we don’t know at this point.” Bolton said the Youth Sailing Foundation found a low-cost demolition and salvage company in Tampa to take down a 5-million-gallon storage tank on the site of its new boathouse, and worst case, the city could contract with that same vendor to knock down the old sewer plant. “We would look at putting it out to bid, and if not, we would look at renting equipment and putting some operators in there to just crunch concrete,” Bolton said. Bolton said he doesn’t expect any additional expense for hazardous material cleanup or remediation at the sewer plant site. “[Most] everything that we have at that site is a biological-type treatment. Very little chemicals. Most of our stuff is three-level containment. We have double-walled tanks plus exterior containment. So we don’t anticipate any issues.”