VERO BEACH — The Vero Beach City Council is expected again today to discuss possibly eliminating four year’s worth of water and sewer rate increases. With only three members of council in attendance at the last meeting when the issue was broached, the repeal failed.
The rate increases – if they stand – would bring in more than $13 million over the next four years for the water and sewer utility, and were recommended by the city’s hired utility consultant about a year ago. At the last meeting, Vice Mayor Sabin Abell was absent and Councilman Tom White had left early, leaving Mayor Kevin Sawnick and councilmen Brian Heady and Ken Daige to discuss and vote on the matter.
Heady voted against the repeal, saying that city staff had not shown him how the water and sewer enterprise funds would remain financially viable without the influx of cash provided by the rate increases.
“We did a study to show that we needed these increases and there’s no comprehensive report that we have that shows that we don’t need them,” Heady said prior to the June 4 vote.
A year ago, Henry Thomas of Public Resources Management Group said the city needed the gradual rate hikes to pay for capital projects, maintain, to repair and renew the system and finally to keep some cash reserve on hand. Thomas recommended the city have about 90 days of operating cash for financial stability and good bond ratings.
Utility activist Dr. Stephen Faherty said the proposed repeal is simply bad business.
“The PRMG rate consultant projected revenue requirement increases of about 26 percent for water and about 25 percent for wastewater from October 2010 thru 2014,” Faherty said. “Where have expenses been reduced in the future by that amount unless $38 million in capital expenses are eliminated, maintenance is deferred, and more loans are obtained for water-sewer operations?”
Faherty and CPA Glenn Heran have examined the budgets and financial statements of the water and sewer enterprise funds and plan to present their data to the city council Tuesday during the public comment period — prior to the vote on the rate hike repeal.
“The proposed resolution states the water-sewer system is ‘an enterprise fund supported only by revenues from the ratepayers and not property taxes’,” Faherty said. “This isn’t the same song the city usually sings about its utilities, which it says is paid for by the city taxpayers. An enterprise fund should be run like a business and as the city notes, all customers including those outside of the city, not the city taxpayers, have been paying for the utility systems including the debt.”
Heran called the plan a “shell game” and said that what the city is really doing is postponing the inevitable until after what is expected to be a hotly contested election with four seats up for grabs. “There is no way, in the long term, that they can afford to keep the system running without the revenues from the scheduled rate increases, without seriously postponing needed capital projects to prop up the city’s aging water and sewer system,” Heran said. “Their own rate consultant told them that their system has 87 percent fixed costs, how else are they going to make up those fixed costs?”
Water and Sewer Director Rob Bolton told the council at the last meeting that he had a multi-front strategy to reduce costs to the point where the increases would not be necessary. Whether he will present that strategy at Tuesday’s meeting remains unknown.
Mayor Kevin Sawnick and Councilman Ken Daige voted on June 4 to repeal the increases. Daige acknowledged Heady’s concerns, but said the immediate suffering of ratepayers outweighed everything else. He strongly disagreed with the council’s failure to act at the last meeting.
“I understand what Mr. Heady is saying, these are concerns we need to think about in the future, but now we need to pass this,” Daige said.
The Vero Beach City Council meets at 6 p.m. Tuesday in council chambers at City Hall.
